A couple of weekends ago the NFL’s New England Patriots held a jersey swap, where owners of the team’s number 81 jersey for tight end Aaron Hernandez could swap the jersey at the team’s pro shop for a similarly styled jersey for another player. This event was held in reaction to the arrest of Hernandez for the murder of Odin Lloyd, a friend of Hernandez and a semi-pro football player in the Boston area. I won’t recap the entire story here, which has transcended typical sports news channels, but if you are unfamiliar with it you can start reading about it here at USA Today. The graphic below was taken from the Patriots Web site.

This unprecedented event garnered many headlines in itself, including this one from Bloomberg BusinessWeek, which questioned and challenged the swap event. Where wonder over such an offer to fans is not unsurprising, this story by Kyle Stock missed the main points for why the team may have made such a move, and to a reader who was unfamiliar with the team, story or the league itself, it would give them an incomplete story. After reading it I was compelled to write this post.

Let Me Be Completely Transparent

Allow me to provide my background and interest in writing this, which I believe provides greater context to this story. First and foremost, I am a Patriots fan, and as someone who grew up in Massachusetts I have followed the team since I was a kid. I am also a 19-year season ticket holder of the team, which goes beyond the current ownership of the team by Robert Kraft. My fandom also extends online to the Web site GoPats.com that myself and a friend have run since the mid 1990’s (though it has lagged the last several years, but I digress). All of this said, I have no special insight or relationship to the team. I have met Kraft before, but I don’t even have a picture to capture that moment.

Beyond my interest in the success of the team, I am looking at this jersey swap story from the standpoint of a business owner, and someone who has followed not only the team on the field but the off-field activities of the team, from their then record-setting sale price 20 years ago to the new stadium and retail and entertainment complex that surrounds it south of Boston, and all that went into taking this losing team to 3 Super Bowl championships in a decade.

I have tapped into both of these points of view in the writing of this post.

A Little Pre-Reading

Before you read on I encourage you to read the article from Bloomberg BusinessWeek and this is a link to a PDF capture of the story in the event the article link does not work. I also encourage you to read this article from the Patriots own Web site about the sale – this is a link to the page and this is a link to a PDF capture of it. As well, this is the terms of the jersey swapped, with both a link to the Patriots site and a copy of it here at The Hot Iron.

Let’s begin!

(Re)building A (Patriot) Nation

In the third paragraph of the story a comment is made to the jersey swap having “been lauded by much of Patriot Nation as ‘classy.’” The quote of classy came from a comment posted on the Patriots article page by a reader, but the more important mention is of “Patriot Nation.” Where this may have been written by the author as a tongue-in-cheek reference to Patriots fans, it certainly should not be dismissed as it encompasses all of the reasons for why this jersey swap happened.

Prior to Kraft’s purchase of the team, even despite an appearance in Super Bowl XX, the Pats would rarely sell-out a game and were a regarded lower than the other Boston sports teams. People wouldn’t openly brag about being a fan, let alone a season ticket holder. The efforts made by Kraft and his team both on and off the field were the rebirth of the team, making them the competitor they are today and elevating the team’s value to second among all NFL teams at over $1.5 billion dollars according to Forbes magazine. Fans of the team are proud to call themselves a member of Patriot Nation, whether they are from the US or internationally.

The terms of the jersey swap stated the swap must be in person at the Patriots Pro Shop adjacent to the stadium in the complex called Patriots Place in Foxboro, MA. This move by the team was brilliant, as the pro shop is a gleaming, several thousand foot complex that sells everything from jerseys and hats to furniture with the Pats “flying Elvis” logo. Though I did not see any numbers on additional sales, it would not surprise of any numbers of how many people bought additional merchandise – at full price – when they swapped their Hernandez jersey. The article reference the sales of Tim Tebow jerseys, for the quarterback which recently signed with the team, but this was a pure outsider’s assumption as the top selling jerseys were for veteran players Vince Wilfork and Tom Brady, according the Boston Globe.

The timing of the jersey swap also couldn’t have been any better, as it followed the announcement of the new typeface to accompany the team’s logo. What a better way to move “old” merchandise, especially in the off-season in preparation for the new styles – and typeface – to stock the pro shop.

By The Numbers

The article then gets into justification for why this could be a bad move, first talking about how many players have been arrested – “almost 30” – and the average length of the career of an NFL player – 3.2 years. To begin with, you will never fins a jersey or t-shirt with the name and number of every player. Only the top starts of the team are ever prepared and sold. As of this writing, on the Patriots Pro Shop’s Web site you can get prepared jerseys for 20 players, of which a few are for players who are no longer on the team. Sure you can get a custom-made jersey for any player or number (or your own name) but you will pay a premium for one. If someone is going to the extent to custom order a jersey for a particular player, they really want that player’s jersey and most likely wouldn’t be looking to return it.

Arrests are not the only reason a player’s jersey would be taken off the shelf. Retirement, injuries, free-agency signings and trades come to mind. These actions don’t typically call for a recall of jersey, and in many cases if someone doesn’t want to wear a player’s jersey, they would just leave it in the back of their closet and buy a new one. Another option I have personally seen in the past is putting duct tape over the name over the player’s name.

When considering costs associated with the jersey swap, there is no mention made in the article of actual cost. Does a jersey that retails for US$100.00 cost that much? Half that? A quarter of that? Of course the cost is nowhere near the retail cost. I do not have specific number on the average actual cost of a jersey, but recalling the experience of my Aunt (full disclosure – also a Patriots fan!) who worked in the headquarters of a retail department store for many years, she said there is plenty of markup on all clothing, which allows for plenty of markdowns as well as profit.

Following the jersey swap, the Patriots reported that it cost them US$250,000.00. The report doesn’t include any actual costs, if they were included or not, nor what they will do with the jerseys they collected. I sincerely doubt the team will sell the jerseys on eBay, as the article insinuated, as Kraft did not make his billions by such petty means, plus such an action would completely negate the “classy” goodwill the team garnered from the swap. If you simply take the $250,000 and factor it into the “more than US$3Billion” NFL merchandise market, and it is not a “pricey” percentage. By factoring where that cost of $250,000 will be charged in the team’s accounting – in marketing, merchandise or somewhere else – and the actual loss is not as large as it may appear.

Decisions, Decisions

This is not the first time the Patriots have taken action due to a player’s reputation. In 1996, the Patriots drafted and then released Christian Peter after rape allegations were found out after he was drafted by the team. A controversial move, as well, but one which the ownership felt it had to do.

Over the years I have heard sports team owners say you don’t buy a team to make money. Granted most team owners have other income sources so we should not pity them, but it takes a large investment, time, and granted some luck for a team to payoff. This eventually happened for the Patriots.

At the end of the day, any decision made by a business comes at a cost and some with a benefit as well. In the short term, these costs can have a negative impact, but as long as the overall, longer-term impact is positive, then the business will not only survive but thrive. If it doesn’t, then someone else can take over the business and continue it. This is exactly what happened with the Patriots.

I welcome your thoughts on any of this – the original article in Bloomberg Businessweek, my analysis, the Hernandez case – please leave them in the comments to this post.

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This is from The Hot Iron, a journal on business and technology by Mike Maddaloni.

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