Sports - June 2005

Tar Heels' victory suits Soffe to a T
By Chris Roush

Pete Gilman showed up for work at M.J. Soffe Co. around midnight. His job as sales manager for the Fayetteville apparel manufacturer’s collegiate division usually requires him to work while the sun shines. What happened this night had changed that. As he walked from his car to the back door of the plant, he found a crowd. Someone asked him whether Soffe had any shirts to sell yet.

All of them had been propelled to this place by the same event: Less than an hour earlier, the University of North Carolina men’s basketball team had won the National Collegiate Athletic Association championship. The assembled fans wanted to claim bragging rights. Soffe was getting ready to feed their need with its own sartorial salute to the Tar Heels. Inside the plant, Gilman, 66, donned gloves, took hot shirts off the screen-printing machines, folded them and put them in boxes

Soffe is one of a handful of apparel makers with a license to print T-shirts commemorating UNC’s fourth NCAA men’s basketball championship. It paid $2,500 to Atlanta-based Collegiate Licensing Co., which handles licensing rights for Carolina, and will pay royalties of 12% to the school and 3% to the NCAA. By the end of April, Soffe had sold more than $200,000 of shirts honoring the 2005 team.

Not bad. But CEO Jim Soffe says sales of national-championship T-shirts are down compared with 1993 — the last time Carolina won the men’s title — because the company has more competitors. Beaverton, Ore.-based Nike is the exclusive producer of the official shirts and caps worn by Carolina players for the TV cameras after the game. “I blame most of it on Nike,” he says. “They paid for that right, though. I don’t want it bad enough to pay for it.” Even though sales are down, a Carolina championship always sells more shirts than a Duke one because there are more UNC fans.

College sports didn’t always influence the company’s fortunes. Started in 1946 by Soffe’s father, who had been stationed in Fayetteville during World War II, it sold pipes, cutlery and binoculars to military bases. In the early 1960s, it won bids to produce laundry bags and T-shirts for the Army. Soffe became president in 1970 after his dad died, and the business expanded in the 1970s and ’80s to sports clothing such as jerseys, baseball pants and cheerleader shorts. It started making shirts bearing college names in 1971.

Sales increased from $3 million in 1970 to more than $100 million in 2001, the company’s best year. Carolina’s hoops championships in 1982 and 1993, N.C. State’s in 1983 and Duke’s in 1991, 1992 and 2001 helped fuel that growth. Duluth, Ga.-based Delta Apparel Inc. bought the company in 2003 for $72 million. Shareholders were Soffe; his brother, Dick, executive vice president; and Tony Cimaglia, vice president of operations and the first employee. Soffe, 59, hopes to work at least four more years.

Total annual sales have dropped below $95 million because of a computer glitch in 2002 that led to lost and canceled sales. But they’re on the rise. In the quarter that ended April 2, two days before Carolina’s championship, sales were $22.9 million, up 1.6% from the same quarter in 2004. Operating income fell to $2.1 million from $2.8 million because of higher expenses. The company said in May that it will cut 160 jobs in Fayetteville, leaving 735 there and 924 in North Carolina.

National championship shirts typically make up less than 1% of the company’s sales, but they’re high-margin products that are guaranteed sellers. And if Soffe didn’t make them, one of its competitors would — and possibly use them as leverage to steal other business.

Preparation for the championship game began about six weeks beforehand. Late in the regular season, Gilman asked Soffe art director Dave Robertson to develop designs for three schools: Duke, Carolina and Illinois. He picked the first two because they would be easy to sell to stores in North Carolina. He picked Illinois, then undefeated and top-ranked, thinking he could find a screen printer in that state who would want a design if the team won the championship. After the schools approved the designs, they were sent to the buyers at the schools and to Soffe’s sales representatives, who then took orders that would be executed only for the winning school.

Soffe developed nine designs for Carolina, with four aimed at college bookstores, three at sporting-goods stores and two at other retailers. Selling shirts for NCAA championships is a regional business; stores typically order from nearby manufacturers.

Soffe employees watched the first rounds of the NCAA tournament with interest. Some entered the orders into the company computer system and checked its shirt inventory while others prepared the designs for its screen printers.

Soffe, a graduate of Presbyterian College in South Carolina, went to bed at halftime of the championship game. “I get mad when they start losing. I find it better if I don’t watch it.” But Robert Humphreys, CEO of Delta Apparel and a graduate of Auburn University, was watching and rooting for the Tar Heels. “We found over the years that we don’t pull for the team that we think is better but the one that we think will be better for retail sales.”

In Fayetteville, 52 employees came into work at halftime. Once Carolina wrapped up the victory, the screen-printing machines started churning out the shirts. “When you bring in 50 people to work all night, it’s a rush,” Gilman says. “The attitude is fantastic. They were very upbeat about the whole thing, probably because most of them are Carolina fans.”

By 5:15 the next morning, Gilman was on his way to Chapel Hill in a truck with 8,000 T-shirts. The people who greeted him at the back door hours earlier had already left, empty-handed. “We told them to go to the store,” he says.

It was a special night, but business is business: Selling shirts that way would have violated Soffe’s license.