For those who are not baseball fans, let me give you a quick update: The Chicago Cubs are really good this year. They won over 100 games in the regular season and have now jumped out to a 2 – 0 lead in their best-of-five series with the San Francisco Giants. FiveThirtyEight has them as the favorite to win the World Series.
If all of that is news to you, you should also be told that the Cubs have, frankly, sucked for a long, long time. They haven’t won a pennant since 1945 and a World Series since 1908. There is even a short story (The Last Pennant Before Armageddon) tying the Cubs winning a pennant to the end of the world. (To answer the obvious question, the World Series is scheduled to start on October 25th. Barring rain delays, the last possible game would be on November 2nd. The US presidential election is on November 8th.)
So if the Cubs make it to the World Series, there will be a lot of excitement around here. If they actually win the Series, Cook County will likely shut down for a month. And that all raises a question: How many Cubs t-shirts can be sold?
This is an interesting question for both retailers and their suppliers. The retailers would prefer to wait until the last minute to fix their order. Last year the Cubs were very good but not as dominant as this year. They made it to the National League Championship Series but were then swept by the Mets. Any retailer who bet big on the Cubs being in the Series got burned. On the other side, t-shirts can only be printed so fast. If a supplier starts printing designs before a series is over, who is on the hook if the team fails to deliver?
A recent Chicago Tribune story looked at how this is playing out for local firms (It’s feast or famine for Cubs gear sellers as postseason approaches, Oct 6). First up is Clark Street Sports, a Chicago-based retailer that has stores in the city and suburbs. It specializes in team gear; if you really need a Matt Szczur jersey, this would be the place to try. Last year, they ordered a bunch of Cubs gear after they advanced to the NLCS but then had to sit on it. This year they are in some ways being more cautious.
[Co-owner Jason ] Caref didn’t order as much early postseason apparel as he might have — he thinks optimistic fans are holding out for World Series gear.
He’s buying those items now, the biggest orders he’s ever placed. But in Chicago, where World Series experience is thin, there’s no precedent to say how much is enough, but not too much. …
Right now, Caref isn’t on the hook to pay for any of the late-stage postseason or World Series apparel he’s ordered unless the team makes it that far. But soon, he said, manufacturers will be asking him whether he wants to commit to paying for a portion of his order once the Cubs take a lead in the series to guarantee advance delivery of an immediate supply.
Next we have Marathon Sportswear, which prints t-shirts.
Today, the Blue Island business has 10 machines, which can each print 400 shirts per hour, and 80 to 100 employees, depending on demand, Piko said.
And demand always spikes when a Chicago sports team makes the playoffs, Piko said. That’s when Piko has to juggle bread-and-butter work printing shirts for schools and local running races with “hot market” contracts, where Marathon cranks out merchandise after events like a playoff win.
One client has an order for 25,000 Cubs shirts if the team wins the first round of the National League Division Series, due by 10 a.m. the morning after their victory, Piko said. If the Cubs win a second game in the five-game series, Marathon can print 7,000 shirts in advance.
I’ll do the math for you. 25,000 shirts at 400 shirts per hour requires 62.5 machine hours of production time. If the clinching game ends at 10:30PM central time, then Marathon would essentially need a full shift to get the total order done by the morning deadline.
This is at its heart a newsvendor problem. In principle, the retailer could commit to buying a fixed number of shirts upfront and bear all the risk if the Cubs (once again) disappoint their fans. Similarly, the supplier could just start printing shirts at the start of the playoffs and hope for the best.
What that analysis ignores is that information evolves. A best-of-five series is, in the baseball world, a short series. But it plays out over a week or so and allows supply chain partners time to adjust their plans as game results come in. For example, before anyone played any games, FiveThirtyEight gave the Red Sox a 19% chance of winning the World Series, the second highest chance they gave any team. Now that they have dropped that estimate to 7% since the BoSox have dropped their first to games to the Indians (who have seen their chance of winning the Series double).
The contract terms described above are actually a nice way to split the risk between the parties. Beginning production when the Cubs have won two games eases pressure on the supplier. 7,000 shirts is 17.5 hours of production time and would give the t-shirt printer a margin of error in getting the work done. Having a machine fail after the clinching game would be a pain in the neck, not a disaster. From Clark Street Sports’ perspective, committing to part of the order guarantees supply without betting the farm.