Making a Profit on the Harvard Name

What's in a name?

If it's Harvard, about one million dollars per year. That's how much money some experts predict the University will make in royalties from its new licensing program.

Since Harvard's decision last fall to trademark its name, more than 80 manufacturers have agreed to pay Harvard 7.5 percent of net sales of insignia products and to obtain the approval of the University before marketing new items.

As one of the last major universities to jump on the licensing bandwagon, Harvard can now cash in on its prestigious name--something that merchants and their suppliers have been doing for some time now. "The selling of the name," as some derisively call it, is a multi-million dollar enterprise that involves manufacturers as distant from Harvard Yard as Spokane, Wash., merchants as close as Mass. Ave. and consumers from all parts of the world.

According to Sylvia H. Struss, trademark administrator at Harvard, the University is following many other schools which, in the past 10 years, have licensed their names to protect their image by forcing manufacturers to register their designs and to raise additional money for the school.

A Shirt By Any Other Name

Manufacturers of insignia-wear will not say how many Harvard sweatshirts, t-shirts and key chains they sell, but they all admit that merchandise bearing the Harvard name is extremely popular nationwide.

"Any which way you put Harvard on the shirt it sells--period," says Dmitri S. Tragos, manager of J. August Co.

"Certain schools will carry a charismatic charm," says Jim Rissing, vice-president of sales for Champion Products. "UCLA, Harvard, Yale have that certain charm. There are certain schools that will transcend any regional boundaries."

"The key is the national perception," Rissing says. "If I sold Dartmouth in Atlanta, it wouldn't do as well as Harvard or Yale."

Although retailers say that simple designs still sell the best, the influx of smaller companies competing with traditional heavyweights such as Champion and Russell has led to an increase in the number of different styles available.

"We're seeing a lot more non-traditional designs," says Dickie D. Zan Meter, who is in charge of licensing for Galt-Sands Co. "There's also more untraditional use of colors. At first there was resistance by some schools, but they sold very successfully."

Paul R. Corcoran '54, owner of The Harvard Shop, says that he has often been surprised by what sells well and what does not.

"Six years ago the salesman showed me [the "coed naked lacrosse t-shirts."] I didn't think they would go over. I thought they were too corny. I bought 50. They lasted two hours."

New competitors have also tried to complete by carving out their own market in the insignia business. Galt-Sands, for example, eschews the more common retailing route of college bookstores in favor of upscale department stores.

"It was the right time and the right niche," said Zan Meter. "We first introduced them through the Nordstroms stores on the West Coast. It was a non-traditional place for college merchandise to appear...and it was wildly successful," she says. "There is a market for college merchandise other than students and alumni, a market that likes to wear Harvard merchandise. It's a prestigious place."

While sportswear may be the mainstay of most licensing programs, other manufacturers have more specialized wares to hawk. "Pencils, key chains, caps, drinking glasses," says Struss. "You name it, they'll make it."

In fact, the first license issued by Harvard under its new program went to a small company with a product even more out of the mainstream. College Campus Prints, a company in Hyannisport, sells prints of a painting of Harvard which they commissioned.

Squabbling in the Square

While licensing money may make Harvard administrators smile, things are not so cheery across Mass. Ave. In the months since the University announced its plan to charge royalties, a controversy has erupted over whether certain local stores should be exempted from the fee.

Tragos says he believes that Harvard Square merchants should not have to pay the royalty.

"What's really significant is whether Harvard should exact a royalty fee...causing a 15 to 20 percent increase in prices at what students are going to have to pay."

Tragos adds that since Harvard products are now available "in every suburban shopping mall," there should be an incentive to come to Harvard Square. "Business is bad in Harvard Square. There's no parking. All the merchants had a terrible winter. Why do they need to raise prices?" Tragos asks.

The University is also being criticized by the Coop, which contends that it should be exempt from the fee as well, citing its close relationship to the University. Coop President James R. Argeros did not respond to telephone calls from the Crimson.

But other merchants say that Harvard is justified in charging royalties. Corcoran says that Cambridge merchants do not merit special treatment.

"I don't see why because we're located in Harvard Square that makes us more special than someone in Boston or someone on the West Coast," Corcoran says.

"It defeats the purpose to eliminate the Coop, J. August and ourselves," says Corcoran. "We've had a free ride. Now [the University] has chosen to do what their sister and brother schools do all over the country. It's a perfectly justifiable request."

Among the difficulties that will face officials if they decide to grant any exemptions is how to administer them. Royalties are assessed at the manufacturer level and are passed on to retailers by their suppliers.

Although Yale University currently forbids manufacturers from charging New Haven stores the extra fee, administrators fear that not all are abiding by this policy.

"My suspicion is that they've been charging the same prices," says Sharon B. Wilson, associate secretary for Yale University. "The original idea was that by not paying a royalty, local merchants could offer products more cheaply, but that's not what happened."

We were trying to benefit the local market, but with a preprinted price, it's the same whether you buy it in New Haven or you buy it in Ohio," Wilson says. "Therefore, someone is collecting money that might as well be going to Yale."

Harvard officials have not yet reached a decision regarding exemptions. Director of Alumni Jack P. Reardon '60, who is in charge of the matter, says that Harvard is reluctant to grant exemptions from royalties because the money raised goes to scholarships.

"If a store was in existence because Harvard started it, or if their prices saved students money" those might be reasons to grant an exemption, Reardon says. "I'd be interested in what store does those things. I don't think the prices in the Square are any bargains."

Marketing Overseas

Harvard may soon find itself looking much farther than the Square as it begins licensing programs overseas. While trademarks are already being filed in Australia and Canada, there has been talk of marketing in Europe as well.

"People want to do Europe--Italy, Germany, France," says Struss. In fact, the Harvard licensing program began overseas. Before attempting to license in the United States, the University held a trial run in Japan that earned it more than $100,000.

Larry E. Workman, controller at Russell Corporation, predicts that Harvard insignia products would be successful in Europe.

"There's no question, Harvard has international recognition. It would be a name that would sell in Europe," says Workman. "Harvard, Yale, Miami, Southern Cal, Notre Dame all have recognition on the Continent."

And Europe isn't the only place where Harvard is well-known.

Kong S. Chiu, a graduate student at the University of Lowell shopping at the Harvard Coop with his friend Lei Zhang, said that Zhang was visiting from China and wanted to get a Harvard shirt for her sister back in Beijing.

"I guess she wouldn't put up with a University of Chicago one," he joked.