The NFL stands as a $20 billion organization. While a substantial portion of this revenue is attributed to TV rights and Advertisements, the NFL also earns a significant amount from merchandise sales, licensing to third parties, and ticket sales. Given the substantial benefits of affiliating with the NFL, companies are willing to pay lucrative sums for such partnerships.
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One notable example is New Era, which entered into an exclusive deal with the NFL in 2012 to become their official sideline cap supplier. With a history of cap manufacturing spanning over a century, New Era already dominated the cap market in baseball since 1993 when they became the exclusive supplier of on-field caps for Major League Baseball. In 2016, New Era became the official on-court cap of the NBA, thereby becoming the official supplier to three major US leagues.
Presently, the majority stakeholder in the company is the Koch family, led by Chris Koch, its fourth-generation CEO. The company founded by a German migrant Ehrhardt Koch, in 1920 in Buffalo, New York, saw its first institutional investment when ACON Investments invested in January 2021.
In 2022, ACON Investments raised $700m by partially selling their existing share in the New Era and increasing their ownership stake. Additionally, they also brought in new investors such as Apollo, GCM Grosvenor, Hamilton Lane, and Neuberger Berman. The new investment resulted in the NFL, MLB, and NBA acquiring a minority stake in New Era. ACON’s current equity stake is in the 15-20% range as per PR Newswire.
#NFL, MLB and NBA become New Era investors as Acon closes US$700m continuation funding round#sportsindustry #sportbizhttps://t.co/bcB5pUAuxe
— Financial Sports® (@FinancialSs) August 9, 2022
The company will soon be offering an initial public offering (IPO) in New York that could value it at $4 billion to $5 billion. All the new investment will be used for expansion outside America and increase their retail presence in Asia, South America, etc.
Despite catering to the biggest American leagues, New Era hasn’t been making their products within the country for quite some time now, with the majority of production taking place outside of the States.
Where are New Era Caps Manufactured?
Like many other American companies, New Era primarily manufactures its products in factories located in China and Vietnam. The sole exception to this is the MLB on-field caps worn by Major League Baseball players, which are produced at New Era’s plant in Florida. The specific manufacturing location is a result of MLB regulations stipulating that on-field caps be made in the USA.
The overwhelming majority of New Era’s products, with less than 5 % being manufactured in the USA, originate from factories in China and Vietnam. Notably, the factories in Asian countries are not owned by New Era but are operated by third parties, producing caps and hats for the company as per Park Wholesale.
Before the shift in production to China in 2018, New Era’s Derby plant in New York annually manufactured 4 million caps. Currently, 80% of New Era’s merchandise is sourced from China.
As the NFL extends its reach beyond American borders, there has been a surge in demand for merchandise. To meet this growing demand without significantly raising prices, companies are opting to move production out of the country. Given there is nothing more American than the NFL, should there be a rule that a certain percentage of its merch be produced within the country?
