Digital Brands Group bets on 36 billion dollar sports merchandise market as NIL sector booms

The global licensed sports merchandise market is a rapidly growing segment of the wider apparel industry. The sector, valued at 36.4 billion dollars in 2024, is expected to increase in value to 49 billion dollars over the next five years, according to Grand View Research, as the number of sports enthusiasts and their fervour for casualised sportswear skyrockets.

North America dominated this segment in 2024, holding the largest revenue share of 51.7 percent. In turn, the US is expected to also see the fastest growth compared to other regions over the projected period, at a CAGR of 5.4 percent, as the massive fan bases of major leagues like the NFL, NBA and MLB drive forward performance. A smaller, yet still widely impactful subsector of this market is college apparel, a division that some of the biggest players in sportswear – from Nike to Dick’s Sporting Goods – already have a major hand in.

DBGI partners with University of Alabama on private label deal

Yet, there is one more contender also stepping onto the field with big plans. Digital Brands Group, Inc. (DBGI), the DTC and wholesale parent company of brands like Ace Studios and Sundry, has now announced its "launchpad", and coinciding “aggressive” expansion strategy, into the Name, Image, and Likeness (NIL) college apparel sector. To do so, the company has established an exclusive three-year private label manufacturing agreement with Yea Alabama, the NIL programme of the University of Alabama.

The deal allows DBGI to exclusively design, manufacture, and distribute collegiate apparel under private label for the university’s bookstores and online storefront, with an initial line of products already available to shop. Further capsules are also set to drop in the following months, cementing what DBGI’s CEO, Hil Davis, said will ultimately be a “DTC, data-driven scalable model”.

Shifts in NIL legislation bolster opportunities

Entering the NIL market will be a challenge, putting DBGI up against already well-established, global leaders in this field, with the likes of Lululemon, Adidas and American Eagle well versed in this sector. Collegiate apparel's scale, however, makes it an appealing venture.

Reports in 2013 suggested the sector was already raking in 4.6 billion dollars annually, yet changes to NIL legislation in 2021, allowing college athletes to monetise associated products, has opened up further avenues of growth. With support from a dedicated fandom, bolstered by an increased interest in women’s sports aided by female fans, it is a sector that promises opportunity.

A necessary pursuit in a challenging, yet promising market

For DGBI, exploring a new market may be necessary as it continues to address waning financial performance. The company has been struggling with widening operating losses in recent years, a trend that continued into the first half of FY25, for which net losses came to 4.2 million dollars – though this remained notably flat compared to the year prior. Revenue also dropped year-over-year, from 7 million dollars in 2024 to 4.1 million dollars.

Despite such results, management has remained optimistic. In the report, the company said it was anticipating certain revenue recovery on the back of doubling its domestic retail output alongside international expansion. In this respect, it is clear the group sees potential in college apparel domestically. So much so that DGBI has already outlined plans to expand the strategy with the onboarding of additional universities mirroring its deal with Alabama.

Such structures will revolve around a private label manufacturing advantage that comes at a “lower price than traditional offerings”, with established partnerships to contribute to a “unique alignment of interests” competitors are unable to offer. DGBI also hopes to tap into the ongoing rise of women’s sports, supporting female student athletes through NIL market-driven opportunities.