Super Bowl Fakes Distract from Seller Crackdown

After the Chicago Cubs won the World Series this fall, retailers who sold Major League Baseball (MLB) merchandise in their brick-and-mortar and online stores rejoiced. But joy quickly turned to disappointment when they were suddenly unable to sell many of the legally acquired MLB merchandise on Amazon.

We've talked to numerous sellers who say they're caught in the middle of a crackdown and who fear going public due to possible reprisal from the suppliers and leagues on which they depend.

Now stuck with inventory they purchased from licensed manufacturers but that they are unable or afraid to sell, many have individually contacted attorneys for advice. But legal fees are compounding their financial woes as they've experienced revenue loss as a result of being accused of Intellectual Property infringement for their legitimate, league-licensed inventory listed on Amazon.

The major sports leagues point to fakes as a reason for cracking down on marketplace sales. A new article by Bloomberg today describes how counterfeit Super Bowl goods are helping organized criminals launder money from illegal drug sales and human trafficking.

The article acknowledges that there is evidence that the crackdown is sweeping up legal vendors as well as counterfeiters: "Amazon's dragnet is annoying legitimate vendors, who say it can take weeks to be re-approved." 

But the article omits the fact that leagues changed the definition of "legal vendor" last year.

The online merchants I have spoken with since the fall each operate at least one Brick and Mortar retail store and have longstanding relationships with suppliers of licensed goods. The majority of their revenue comes from online sales, and say they would be happy to have sites like Amazon get rid of the actual counterfeit goods with which they must compete. 

But the NFL and MLB rolled out new eligibility requirements that make it impossible for many legitimate sellers to continue selling licensed products. According to a letter the MLB sent to licensees, they can only sell league-licensed goods to retailers who meet a number of criteria including the following:

- In the previous calendar year, the proposed retailer sold $2 million or more in MLBP-licensed product.

- Retailer generates more than 25% of its overall revenue from physical sales at brick and mortar stores operated under names or trademarks owned or controlled by such retailer.

The NFL and MLB informed manufacturers of new rules in the spring of 2016, but merchants say they weren't notified and say many manufacturers continued to sell and ship them licensed goods anyway, knowing the merchants didn't meet the new criteria. Merchants are now stuck with those products - and with products they had purchased before the league rolled out the new rules.

Many sellers describe the developments as a power play by major sports league and Fanatics.

Bloomberg referred to Fanatics an "online store" - but it is far more than that. It is the leagues' preferred ecommerce partner, and it's a manufacturer with exclusive rights to manage manufacturing and distribution of various merchandise across several major leagues. And there have been reports in a sports publication that at least one league has an equity stake in Fanatics.

(When contacted in the fall for our coverage in EcommerceBytes 411, Fanatics referred us to the leagues.)

There are rumors that the Justice Department may be mulling an antitrust investigation - though that could be wishful thinking on the part of some merchants.

Meanwhile Bloomberg says a different part of the US government is supporting the leagues' crackdown on fakes. See the EcommerceBytes Blog for more on this aspect of the story.

Note: Photograph above was taken from ICE February 2, 2017 press release about "Operation Team Player."