I’ve long been skeptical about how much money from the sale of licensed pink products goes towards charity– in this case, the American Cancer Society. But it turns out, according to a report from corporate shill Darren Rovell and some math by Business Insider, it’s not as bad as you may think.
On pink gear, the NFL says it takes a 25% royalty from the wholesale price (1/2 retail), donates 90% of royalty to American Cancer Society
— Darren Rovell (@darrenrovell) October 11, 2013
Cork Gaines of Business Insider teased that out:
In other words, for every $100 in pink merchandise sold, $12.50 goes to the NFL. Of that, $11.25 goes to the American Cancer Society (ACS) and the NFL keeps the rest. The remaining money is then divided up by the company that makes the merchandise (37.5%) and the company that sells the merchandise (50.0%), which is often the NFL and the individual teams.
Then consider that only 71.2% of money the ACS receives goes towards research and cancer programs.
In the end, after everybody has taken their cut, only 8.01% of money spent on pink NFL merchandise is actually going towards cancer research.
He even put together this handy little chart:
11% might not sound like a lot, but it’s actually a reasonable amount. Many feared it was more like 1-2%. And if 71% of that 11% is going toward actual research, that’s not too shabby. In other words– $8 out of every $100.
But some uninformed critics and bad-at-math 22-year-olds hired by 25-year-old media nepotists might disagree.
Still, there are unanswered questions about where the money is going and who is profiting.
The most popular place to purchase pink merchandise is at the NFL’s online shop, official team stores, and at the stadiums. In these cases, the NFL and the individual teams are acting as the retailer.
It is unclear how much of the 50% markup for items being sold directly by the NFL and the teams is going to the ACS, if any at all.
And here is the completely off-base, mathematically challenged take by a junior web producer at Philly.com. I’m not even going to mention his name, because it’s not his fault that he’s in way over his head at a major media company:
Therefore, for any pink merchandise purchased from the NFL’s official site, the league gets 12.5 percent for royalties (11.25 percent of which they donate to the ACS), but the league then receives an additional 50 percent by being the vendor of the merchandise. So in actuality, the NFL is not donating 11.25 percent of their 12.5 percent, but rather 11.25 percent from their 62.5 percent (slightly less if the gear is bought from a sporting goods store like Sports Authority or Dick’s Sporting Goods, who would divvy up the 50 percent with the league).
So while the NFL is parading out players with pink towels, cleats, armbands and tape onto a field emblazoned with pink ribbons and field goal post padding, know that the league is benefitting almost 500 percent as much from the merchandise fans buy than the ACS’s institute for cancer research.
NO. NO. NO. First: The league doesn’t donate 11.25% of their 12.5%– they donate 90% of their (12.5%) royalties. This is simple math, and logic. And though it’s obviously just awkward wording, he really spirals wildly down a rabbit hole that doesn’t exist with the next sentence: So in actuality, the NFL is not donating 11.25 percent of their 12.5 percent, but rather 11.25 percent from their 62.5 percent (slightly less if the gear is bought from a sporting goods store like Sports Authority or Dick’s Sporting Goods, who would divvy up the 50 percent with the league).
He’s insinuating that donating 11.25% of 12.5% is better than donating 11.25% of 62.5%, when they’re not doing either– they’re donating 11.25% of 100%. And no, it wouldn’t be slightly less if the retailer wasn’t the NFL. If Rovell’s report is to be believed (wholesale prices generally fluctuate a little, it’s not always half), the NFL is donating 11.25% of every sale, regardless of whether they made the sale, a team made the sale, or another retailer made the sale. Their royalty remains 12.5%, 90% of which goes to the ACS. The 50% given to the retailer, as far as I know, doesn’t get split with the league. That line seems to have been pulled out of thin, misinformed air.
But then what about if the league or teams sell the items directly? Should they donate a portion their profit as a retailer? Probably. But here, again, is where Gaines and our Philly.com kid miss the mark.
I used to work at GSI Commerce (now eBay), a local company that ran the online stores for all of the major sports leagues. I worked specifically on MLB, but all the licensed sports people sat near each other and there was plenty of overlap between the leagues. So, I have a pretty good idea of the price breakdowns on licensed sports gear.
That 50% the retailer gets isn’t just instant profit. There’s cost of doing business well beyond just the actual price of the product. Plus there may be advertising, affiliate or search costs if the item was bought online. If I linked to an item from this site, me, CB, as the affiliate, would receive 8% of the total pie, as an example. If you clicked on an item through search or a price comparison engine, there may be paid search or other affiliate fees to be considered. In the end, the actual profit for online retailers is more like 20-30%, not 50%. Could some of that money be going to the ACS if the NFL made the sale on its website? Sure. But the NFL and its teams are a business– you can’t expect them to forgo an entire revenue stream for a full month. That’s nuts. Are they making money on the pink gear? ABSOLUTELY. But I see no harm in making money if you’re literally creating money that goes to charity. It’s a win-win. Where there might be a problem doing that is if you’re a local sportscaster making money off a charity and then ripping off its donors, Don Tollefson.
I’m not entirely defending the NFL here. They certainly have as much of a business and publicity interest in this as they do a philanthropic interest. And, as I wrote here, there are better ways to heal the world. But if 11.25% of every sale on those pink items is going to charity, I’m down with that.
Couple more examples of Philly.com-related ineptitude.
Justin Klugh writes today that Andrew Bynum’s press conference was at Independence Hall. It was not. It was at the Constitution Center:
Andrew Bynum sat down at the table next to Jason Richardson, in front of a crowd that included Batman and a raucously booed Mike Missanelli. Bynum had to say very little to coax noise out of fans who were so excited they’d scream if a bird flew by the Independence Hall window.
The challenge now is even greater for the Sixers’ sales and public relations staff: This year, Independence Hall was vacant of deafening optimism. Now it’s all about hurrying up and getting the season behind them so Nerlens Noel, Michael Carter-Williams and everyone else can have a year of development under their belt and the team can be bad enough to grab that draft pick and get better.
Are there not people editing this stuff?
And then there’s the Daily News paying to promote this Tweet, today, about an Eagles win from six weeks ago:
Yeah, they really get this social media thing.