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Drop in Apparel Sales Causes Aid to Fall

Officials say an overall decline in apparel sales, mediocre performances by UNC sports teams and other factors contributed to the decrease in revenue.

The Board of Trustees announced Thursday that licensing royalties earned from apparel sales dropped 16 percent for fiscal year 1999-2000.

About two-thirds of apparel and logo royalties are earmarked for financial aid, while one-third of the revenue funds athletic scholarships. "A decline of this size would be significant, though not devastating," wrote Shirley Ort, director of scholarships and financial aid, in an e-mail Friday. "Licensing revenues comprise approximately 2 percent of the financial aid that we offer to students each year."

Ort also wrote that the shortfall would amount to only about $100 per person if spread evenly among all financial aid recipients.

UNC's royalties are negotiated through the Atlanta-based Collegiate Licensing Co., which develops contracts with manufacturers. The manufacturers then pay 8 percent of wholesale profits to the University.

Several factors contributed to the drop in royalty revenue in fiscal year 1999-2000. "Since 1995, there has been an across-the-board decline in apparel sales across the country," said Rut Tufts, director of auxiliary services.

Although the University's royalty revenues dropped, its overall sales rank rose to No. 2, behind the University of Michigan.

Tufts said the performance of UNC's sports teams, such as the failure of the men's basketball team to make the Final Four in 1999, also affects revenues.

"When our sports teams do real well, there is a spike in sales," he said. "In recent years, teams have not been as strong."

Three percent of the licensing sales also pays dues and administrative costs for UNC's affiliation with the Fair Labor Association and the Worker Rights Consortium, two groups that monitor labor conditions in factories which produce UNC-licensed apparel. UNC's dues amount to $30,000 for each organization and are part of a $96,000 increase in labor rights-related expenses.

Fiscal year 1999-2000 was the first year UNC had to pay dues to the WRC, which the school joined in April 1999.

Retailers around the country also are starting to stock more regional university apparel, rather than nationally recognized sports teams -- and UNC derives a larger percentage of its sales from nonregional customers than most schools.

But based on early projections, royalties are expected to increase for the fiscal year 2000-2001, Tufts said. Sales in July and August are up 37 percent from the same time period last year.

Tufts said this year's unexpected trip to the Final Four contributed to the surge. "Year to date, there has been a significant increase over last year," Tufts said. "Right at the moment, things look very strong."

The University Editor can be reached at udesk@unc.edu.

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