Byline: Karen Cohen
Hunks of old racetrack from the Indianapolis 500 fill several shelves in the Dreams Inc. warehouse in Plantation. They are waiting to be cut small, shaved thin and framed with an autographed photo of one of the winners of the iconic Indy car race.
The sports memorabilia business has been estimated by experts to be a billion-dollar industry, and Plantation-based Dreams Inc. hopes to tap into fans’ seemingly insatiable desire to own a piece of their favorite sport–quite literally.
“It brings the game closer to home,” says Pete Quaglierini, manager of NFL auctions at the National Football League.
An actual hunk of Indy 500 racetrack or a game-worn jersey from a top athlete typically costs more than the average fan can afford to pay. Montages such as the ones created by Dreams Inc. mean that instead of selling hunk or race track or a game-worn jersey to one collector, it can be cut into hundreds of pieces, each framed with a signed photo. That means many more customers get a “unique”–and affordable–memento, which often sells for less than $100.
For the consumer, the finished product “brings a nostalgic value to a simple image,” says Ross Tannenbaum, Dreams Inc.’s CEO.
Dreams Inc. is a sports licensing and memorabilia conglomerate. The publicly traded company (DRMS.OB) has contracts with some of the biggest names in sports, including Major League Baseball, the National Football League, and NASCAR. It sells sports memorabilia and licensed products through 10 company-owned Field of Dreams retail stores and 19 franchised locations, promotes and organizes athlete appearances through The Greene Organization, and creates and distributes mementos such as the Indy 500 frame through its Mounted Memories wholesale division.
Those types of products and their licensed brethren, such as bobble head dolls or footballs with a player’s photo, seem to be increasingly popular. Karen Bush, assistant vice president of trading cards and collectibles for Players Inc., the NFL Players Association marketing and licensing arm, says that the association has seen revenue grow 35 percent to 40 percent during the past three to five years.
These trends have worked in Dreams Inc.’s favor.
Dreams Inc.’s revenue was up 29 percent for the fiscal year ending March 31, 2006, to $42.7 million. The company also showed $4.3 million in net income, after losing $637,000 the previous year. For the quarter that ended June 30, Dreams Inc.’s total revenue increased 30 percent to $7.9 million.
Tannenbaum says the improved financials come from infrastructure and other investments that finally paid off in the past year. Those include the acquisition of Web retailers FansEdge.com (in 2003) and ProSportsMemorabilia.com (in 2004), which came complete with their own marketing and management.
By upgrading inventory and shipping procedures at its Chicago warehouse, which serves the Internet sites, the company could offer same-day shipping on most soft goods (primarily apparel) during the 2005 winter holiday season, down from three- to four-day shipping offered during the 2004 holiday season. And while order volume ran around 5,000 a day for the 2005 holiday season, approximately double last year’s volume, the order fulfillment error rate decreased to 0.3 percent from 6 percent the year before.
Tannenbaum says that being able to fulfill Web orders more efficiently sent combined sales from the two Internet sites to $20 million, up from $7 million when they were acquired.
Last year, Tannebaum added some big names to the company’s star athlete roster–including coach Bill Cowher, who led the NFL’s Pittsburgh Steelers to their 2005 Super Bowl win. It also signed an exclusive deal to run the Hall of Fame Pavilion, where athletes sign autographs and memorabilia is sold, at the August Pro Football Hall of Fame induction ceremony.
Tannenbaum expects sales could increase 20 percent this year, as the company adds Field of Dreams stores and expands its other businesses. He also has acquisitions in mind that could focus on manufacturing, Internet retailing or areas the company has yet to go into, such as catalogue sales.
The market in sports memorabilia has grown during the last decade, says Joshua Leland Evans, founder of Leland’s Auction House, a Seaford, N.Y.-based firm that deals in vintage sports memorabilia. He thinks people are drawn to the immediacy of sports. “It’s almost like the reality TV craze,” he says. “People want more and more of the real thing. They are turned off by canned entertainment.”
The Mounted Memories montages of jerseys, pieces of race track and baseballs or bats “are taking memorabilia to a different level,” he adds, and customers find that appealing. They “can own things they never could have owned, and this is a way to get closer to the players, and closer to the game itself,” he says.
Evans says Dreams Inc. is also riding a wave of change in the sports memorabilia business, which is seeing sales move from small specialty stores or collectors to larger chains.
In part, say those in the industry, consolidation is sparked by the movement of memorabilia sales to the Internet, where authenticity concerns have driven sales towards known entities–generally the larger chains such as Dreams Inc.
Howard Schwartz, president of New York-based memorabilia seller Grandstand Sports & Memorabilia Inc., says that negative publicity about fraudulent merchandise “is a very good thing for Grandstand Sports and Dreams Inc.s’ Mounted Memories.” It drives people, particularly those buying on eBay and similar sites, to buy from known entities. Grand-stand sells Mounted Memories products among its merchandise.
If the risk for buyers goes down as a company grows, the risk to the company does not–especially because it us dealing with live personalities such as athletes. If someone gets into legal trouble, or garners bad publicity, it could impact the desirability of merchandise associated with the individual.
Dreams Inc. employees watch closely sports world events and choose merchandise accordingly, Tannenbaum says.
“Mark McGwire. When he was hitting home runs, he was untouchable,” Tannenbaum says, referring to the baseball great. Later, he adds, demand trickled down. But catching the wave of sports news is part of what makes his job fun, he says. While Dreams Inc. plans for regularly scheduled events, such as the Super Bowl or World Series, it is always ready to react to the unexpected.
“Every day there is an opportunity coming up in sports,” he says.
COPYRIGHT 2006 CEO Publishing Group, Inc.
COPYRIGHT 2006 Gale Group