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US Polo Association punches above its weight with $1.6bn licensing programme

• National polo federation generated $1.6bn in licensing revenue last year
• Programme trades on heritage of polo and “classic American styling”
• Brand came to blows with pre-existing Ralph Lauren Polo brand over fragrance launch

For a federation that does not command huge sums for its media and sponsorship rights, the US Polo Association (USPA) qualifies as something of an outlier in the sports licensing business. Last year, the national federation’s licensing programme generated an outsized $1.6bn in revenues according to a study by License Global, ranking it seventh on the list of the biggest sports licensors in the world and leaving higher-profile rights-holders like the PGA Tour and National Hockey League trailing in its wake.

“I’d say we’re probably the reverse of a lot of other sports,” acknowledges Michael Prince, who earlier this year became the chief executive of the USPA Global Licensing (USPAGL), the for-profit steward of the USPA’s intellectual property. “The lion’s share of our business comes from our licensing.”

The federation’s disproportionate success in this category looks to be attributable to a farsighted and disciplined strategy, mixed with a degree of good timing. Though the USPA might not acknowledge it explicitly, it undoubtedly owes a debt to the efforts of Ralph Lauren and his ‘Polo’ menswear brand – created in 1968 and celebrating its 50th anniversary this year – for establishing the sport as a signifier of timeless luxury.

Unlike a lot of rights-holders that outsource their licensing programmes to a specialist agency and derive a royalty from their efforts, the federation decided from the start that it would be better served by a dedicated in-house capability. It established USPA Global Licensing in 1981 and in the following years it built out its expertise through a series of hires and strategic partnerships.

Michael Prince, chief executive, USPA Global Licensing (USPAGL)

International

Prince says the new organisation achieved modest success in its early years but the business really took off under the leadership of his predecessor David Cummings, who led the company for 15 years before moving into the role of chairman earlier this year.

Cummings hired marketing, design and licensing specialists with the right credentials to build-up the in-house team. One of those hires, Brian Kaminer, a design director who had worked for bigger brands like Tommy Hilfiger, Gant and Nautica before joining the company, describes how he had to work out of a garage in the early days as the workforce outgrew the federation’s office space. He says the licensing operation expanded “organically” from these humble beginnings.

Initially, the USPAGL started off as a wholesale business operating “shop in shop” concessions in larger US retail department stores. Its first licensee, a division of manufacturer Jordache Enterprises, helped it build out its apparel business in the US, while its second, Turkish company Aydinli, helped it to break into Turkey, the Middle East and Russia.

Prince believes the global business flourished thanks to these sorts of partnerships, and an appetite among consumers for Americana. “I think it was a time when the brand resonated that classic American styling, that American persona,” he says. “Politics aside, people love that just classic American style.”

In the early years, the licensing programme’s success was built on apparel products that reflected the equipment, colours and materials of the sport. To this day, the apparel category continues to make up more than two thirds of the USPA’s business.

Unsurprisingly, the polo shirt has always been the best-selling product in the licensing programme, but Kaminer says the USPA’s range of branded Oxford cloth shirts runs them a close second. A range of white jeans was inspired by the white jodhpurs the players wear, while brown leather products, especially in the luggage category, reflect the horses’ saddles and the boots worn by players.

“We’re inspired by all things polo,” he says. “Our sport has a lot of tradition attached to it, so we felt our brand needed to reflect that heritage.”

The red, white and blue stripes and American flags that adorn many of the products are a nod to the federation’s American heritage. “It all is inspired by the flag,” says Kaminer. “You’ll see patterns with stars on them, stripes, all of them are pieces that I took out of the American flag, which I think is important and it’s become a much bigger part of what we do.”

Notwithstanding that Prince and Kaminer both believe the “bright and colourful” brand is apolitical, it had the good sense to dial up its all-American attributes in its home market and Europe but accentuate its connection to equestrianism and the traditions of polo in markets where that sort of messaging might not be to consumer tastes. The success of the business in Iran, the country where the sport was first played, and the rest of the Middle East shows the success of this strategy.

“I think there’s just this interest in equestrian sports in general that is kind of global,” Prince says. “In Turkey, they don’t necessarily follow polo, but they love horses and so having that connection back to the other athlete, the horse, is very important,” he says.

Mono-branded stores

The other benefit of the licensing programme’s expansion into Turkey and the relationship with Turkish licensee Aydinli was that it encouraged the USPAGL to think about creating its own mono-branded stores. The stores allowed the federation to control the look and feel of its retail operation more effectively and sell more merchandise. But of equal importance for a national federation, they also helped to promote the sport.

USPA guidelines for one of its mono-branded stores.

As the business has developed, this has become an even more fundamental tenet of its strategy. Where other brands are closing their bricks and mortar operations and transitioning online, the USPAGL continues to work with partners to expand its international footprint and introduce more people to polo. As it stands it now has a physical presence in 166 countries, operates over a thousand branded stores and opened 100 shops in 2018 alone.

Prince explains that he has spent the last year working with partners on a long-term strategic plan called Whitespace 2025, which envisions the brand expanding to more than 1,300 retail stores worldwide and exceeding $2bn in global retail sales. He will also lead the effort to launch a new “high-energy” retail concept in 2019 that strives to encompass even more elements of the sport throughout the stores on large LCD screens and even virtual reality headsets.

“For us it is stores first and then digital second,” he says. “I think 10 years from now, digital is going to become more and more important, but right now it’s a nice balance between the two.”

Affordability

A happy by-product of the USPA’s desire to make the sport more accessible is that this has helped it to carve out a niche as what Kaminer describes as an “upper-moderate” brand.

“We’re a brand who’s in malls and we’re not a couture brand,” he explains. “Most people can afford to purchase our product and enjoy the sport.”

Scott Bouyack, co-head of sports licensing at Creative Artists Agency, and a professed admirer of the USPAGL’s licensing programme, says this has proved a masterstroke considering the pricing of some of its polo-branded competitors.

“I think they’ve found a nice void in the market where there is an appetite for the luxury and the lifestyle aspect of polo but at an attainable price point,” he says. “And I imagine not only is it a commercial opportunity for them at that juncture but is an opportunity to try to get more interest in the sport.”

Trademark disputes

USPAGL’s arrival as a lower-priced but authentic polo-branded competitor to Ralph Lauren has on occasion brought the two brands to blows in court.

A 1984 order barred the US Polo association from using “confusingly similar” symbols to the Ralph Lauren Polo logo but gave it permission to use any picture of “a mounted polo player or equine symbol” that did not look like the Ralph Lauren Polo trademark. The same order granted it the right to “refer to the sport of polo”.

Later efforts by the federation to expand its licensing programme beyond the confines of its core offering brought it into conflict with its competitor again. A court ruled in 2011 that the USPA’s attempts to launch a fragrance carrying its double-horseman logo infringed Ralph Lauren’s trademark rights because of the likelihood of confusion between the two brands in this category.

The USPA’s defence has always been that as a national federation it has just as much, if not more, of a right to exploit equine imagery and the generic term ‘polo’ in promoting its licensed goods.

“What I like to say is there’s no other brand in the world as close to the sport of polo as we are,” says Prince. “If you think about it, we’re the official brand for the United States Polo Association itself, but we’ve taken that DNA and we’ve exported excellence globally.”

After the initial disturbance caused by the USPA’s entry into the market, the two brands have learned to coexist. This is exactly as Robert Sweet, the US district judge who ruled in the fragrance case, recommended it should be. Referring to an earlier case, he said: “There is […] clearly room in our vast society for both the USPA parties and the PRL [Polo Ralph Lauren] parties to engage in licensing activities that do not conflict with one another, and nothing contained in this opinion should be construed as precluding such activities.”

Marketing

To reinforce its connections to and rights over the imagery of the sport, the USPAGL sponsors a large number of polo tournaments in the US and abroad. “Where the sport goes, the brand goes,” is the catchphrase Prince frequently uses to summarise this marketing strategy.

The licensing arm’s close relationship with the USPA allows it to control the branding at events organised by the national federation and in September this year it announced a deal with the Federation of International Polo to be the Official Apparel Supplier for the 2018 FIP European Polo Championships. In the same month, the USPAGL and its Chinese licensing partner Yicai Brands Management announced a similar deal with the 2018 China Open Polo tournament.

China represents the next phase in the expansion of the brand’s retail footprint with plans afoot to build 300 USPA stores in the country over the next five years. The federation became the first global brand to relocate its Chinese operations to the city of Changshu, dubbed “Apparel City” by the Chinese government as it looks to turn individual cities into centres of excellence. Prince says the satellite office will focus on “IT operations and all things digital” and that a large team at the centre will build the brand’s presence on Chinese social media platforms like WeChat and e-commerce platforms like Alibaba-owned Tmall.

As further proof that the strategy isn’t all about bricks and mortar, Prince explains that part of his remit as the new chief executive is to transition the USPA into a “digital and content-driven brand” that will be able to command rights fees for its content. The hope is that a higher profile for the sport will in turn drive the licensing business.

“Because of the strength of the brand and what we’re doing with the sport and the impact the sport’s going to have in the foreseeable future, I do see the opportunities to bring in sponsors and to get paid content,” he says.

Product development

From a product perspective, the strategy is to expand the womenswear and homeware businesses in the next two years. As it presently stands, menswear is the highest performing part of the business. Overall, apparel makes up roughly $1.1bn of the USPAGL’s annual sales, footwear accounts for around $200m, bags and accessories a further $200m and underwear roughly $100m.

Kaminer doesn’t discount the idea that the federation might try to license its brand to a chain of restaurants or resorts, as other federations have done. The key, as ever, will be to painstakingly research the market first and ask if it is consistent with the brand.

“We bring in consultants and experts,” he says. “You have to know when to go for it or not. I’ve been involved in businesses where the experts have told me not to do something and at least when we ignore them, we knowingly know we’re ignoring what they told us not to do.

“We’re not pushers of volume. We let water seek its own level,” he adds. “We do what we believe is right for the brand and we develop categories well. We don’t want to be all things to all people; we want to do the right thing for people that want and like our brand.”

Bouyack thinks it is this discipline that has allowed the licensing programme to thrive. “It really is remarkable what they’ve managed to do. It would be very difficult to draw up a plan like that which succeeds for nearly 40 years,” he says. “I think they’ve tapped into enduring qualities. Aspirational luxury at an affordable price has become a bigger and bigger segment of retail and segment of fashion, and they’ve moved with that. I think they’ve done a nice job of being disciplined and strategic about how they’ve grown.”

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