Throwing a Curve at the Fakes : Sports: As All-Star game approaches, local officials join with Major League Baseball to protect a $2-billion merchandise industry from counterfeiters.

By H. G. REZA

June 30, 1992 12 AM PT

TIMES STAFF WRITER

Baseball paraphernalia is big business for Major League Baseball--accounting for about $2 billion in retail sales in 1991--and local law enforcement officials said Monday that they have joined baseball Commissioner Fay Vincent’s office in cracking down on merchants who hawk counterfeit merchandise, just in time for next month’s All-Star game in San Diego.

Led by San Diego City Atty. John Witt, a team of local law enforcement officials that included FBI and U.S. Customs Service agents trooped to a news conference at San Diego Jack Murphy Stadium to line up solidly behind baseball in an effort to bust retailers of unlicensed merchandise.

At stake are billions of dollars generated by licensed manufacturers, whose profits, and those of Major League Baseball, are being undercut by unscrupulous counterfeiters, Witt and the other officials said.

“The copyright laws will be enforced,” Witt said forcefully. “ . . . We’re also in it to protect the interests of the fans to make sure the products they buy . . . are authentic.”

“This (crackdown) is for the protection of the fans,” said Andy Strasberg, San Diego Padres vice president for public relations.

Richard E. White, president of Major League Baseball Properties, which licenses and markets baseball merchandise, was more blunt about the reason for the crackdown.

“MLB Properties are for-profit ventures associated with the All-Star game,” White said. “ . . . We’re not apologetic for it. We’re capitalists, and this is a profit venture.”

In the past, MLB officials have said they lost “tens of millions” of dollars to counterfeiters. Those losses are now believed to be only “in the millions,” White said.

Profits from the sale of merchandise are so important to professional baseball that Major League Baseball investigators are already in San Diego working with local undercover officers at swap meets, the Convention Center, the stadium parking lot and other retail outlets, looking for merchants selling fake MLB and All-Star game merchandise.

The All-Star game will be played at San Diego Jack Murphy Stadium on July 14. The All-Star Game Fan Fest, billed as a magical baseball theme park, will be held at the Convention Center from July 10 to 14.

On Monday, Witt warned sellers of unlicensed merchandise to stay away from both locations, where “authentic” merchandise is sure to be available at prices that are marked up significantly.

Just how important are the profits from the sale of MLB-licensed merchandise to the owners of the 28 major league teams? White said the profits are shared equally by all teams and “are a significant revenue source for the clubs.”

However, he refused to say how much is distributed to individual ball clubs, saying that information is secret.

But White explained that a silk-screened T-shirt that retails for $16 costs the manufacturer only $7 or $8 to make. Major League Baseball receives 8.5% in royalties of the wholesale price from the manufacturer. He said the typical retail markup on MLB merchandise is about 50%.

White said Major League Baseball has 400 licensed manufacturers, who make 3,000 products.

Ricky Clemons, MLB spokesman in New York, said retail sales of Major League Baseball merchandise totaled about $2 billion in 1991.

Assuming the wholesale price of all merchandise sold in 1991 was $1 billion, and MLB received 8.5% of the wholesale price in royalties from the manufacturers, then Major League Baseball received an estimated $85 million from sales of licensed products.

Dividing the pot equally among the 26 ball clubs (excluding the new franchises in Denver and Miami) means each club received about $3.2 million from the sale of Major League Baseball merchandise last year.

White also reiterated claims that the crackdown on counterfeit merchandise is necessary in order “to protect the interests of the fans.” White and other officials at the news conference said they are concerned that fans may be buying inferior merchandise from counterfeiters.

Although some unauthorized items displayed at the news conference were clearly of inferior quality, it was difficult to differentiate other counterfeit items, such as jerseys, from the licensed ones.

The only apparent difference between some unauthorized items and the licensed ones was the absence of the paper tag with the MLB logo.

Officials said people convicted of selling or manufacturing unlicensed merchandise face fines of $5,000 and up to a year in jail.