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SPMA 2P27 (8)
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NOV 21st.docx

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Department
Sport Management
Course
SPMA 2P27
Professor
Chris Chard
Semester
Fall

Description
SPMA2P27 Nov 21, 2013 Financials of Licensing Licensees should consider the following points: 1. Royalty rate 2. Advances and guarantees 3. Investments 4. Volume 5. Inventory and Pricing 1. Royalty Rate Rates vary from property to property, simple calculation: Royalty rate X items sold ($) ie. 8% x $150,000 = $12,000 2. Advances and Guarantees Minimum LICENSEE agrees to pay Licensor… Contractual obligation How does the LICENSEE determine if the GUARANTEE is too much? typically in a negotiated license deal the guaranteed is the minimum CASE STUDY: CHL wants a $40,000 guarantee from Sportz Threadz (sports shirts) Sportz Threadz thinks they can sell 150,000 units this year Royalty rate is 5%... units are sold for $5 each, 150,000 x $5 x 5% = 37,500 Is it worth it? If guarantee is <37,500 it is worthwhile, if guarantee >37,500 there better be other compelling reasons to do the deal Such AS: (prestige, proving competency, Awareness) LOOK AT IT A DI
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