Monday, August 23, 2021

A Few Thoughts on Fanatics Acquiring the MLB/MLBPA LIcense.

By now, unless you've been living under a rock, the biggest news story in the century plus history of sports cards broke last week.  Major League Baseball and its Players Association have granted their exclusive trading card licenses to a new company to be formed by the sports licensing and e-commerce juggernaut Fanatics, Inc.  The MLBPA will have equity in this new scheme, along with MLB, which previously (along with the NFL) invested in Fanatics years ago.  As I write this, Fanatics has just acquired the exclusive NBA and NBPA licenses, and as with the baseball deal, also includes equity for the league and PA.  It is expected, sometime shortly, that the NFL and the NFLPA will follow suit.

The MLBPA's current Group Licensing Agreement with Panini America expires at the end of 2023, while MLB's with Topps is through 2025.  Meaning, for the next few years anyway, Panini will continue to produce partially-licensed baseball cards, as they have since 2011, while Topps will continue to print fully licensed baseball cards until at least December 31st, 2023.  

As for 2024 and 2025, Topps has always operated differently when it comes to player acquisition.  Because they predated that establishment of the MLBPA, they've always been exempt from their Group Licensing Agreement -- a blanket agreement that gives access to all players currently on a 40-man Major League roster, who are also PA members.  By signing players to individual contracts (so-called "steak dinner checks"), this gave Topps a competitive advantage over their competition by allowing them to produce the first MLB-licensed trading cards (and therefore Beckett Definition "Rookie Cards") of dozens of Minor League prospects -- a loophole they exploited to great effect with their Bowman brand in the mid-90s and early-2000s, until the establishment of the current Rookie Card rules in 2006.  They have missed a few players. (Alex Rodriguez did not appear on a Topps card until 1998.  And in recent years Matt Wieters, Ichiro, and Madison Bumgarner have let their Topps contracts expire.)  It is currently unclear if Topps will still be allowed to sign MLBPA members to Steak Dinner Checks, and include big leaguers in what will still be MLB-licensed products for 2024 and 2025.

I'll get to what this means later, but as of now, Panini America will be out of the licensed baseball card business on December 31st, 2023.  The next day, Fanatics will assume Panini's MLBPA license and produce their first partially-licensed baseball cards in 2024.  Topps will continue to make fully licensed baseball cards for 2022 and 2023.  For 2024 and 2025, Topps may or may not be allowed to continue printing fully-licensed baseball cards, but they'll still have the MLB license.  On January 1st, 2026, Fanatics will acquire Topps' MLB license and will be the exclusive licensor from then on.

My thoughts when this news broke was, at first shock, and then Schadenfreude.  Losing their exclusive baseball license is one thing.  Losing it just days before Topps was to go public via a SPAC -- thus denying Michael Eisner a $600 million pay day -- is cosmic justice.  For the last fourteen years, and especially since 2010, we baseball card collectors have had to put up with a lot of bullshit emanating from One Whitehall.  Mediocre products, bloat, meaningless inserts, repetitive designs, appealing to the lowest common denominator, dead-horse beating reprints, dumb gimmicks, and an attitude towards collectors that just oozed with of contempt.  Over the last dozen years, we collectors just didn't matter to Topps.  They acted like any firm with monopoly power: What else are you going to collect?

(With that said, I'm still not a fan of exclusive licensing and I wish MLB and the PA would grant another company a second license (Upper Deck as a sub-licensee?)  As long as it doesn't go to Topps.  Because fuck them.)

With that said, with a new company -- essentially a start-up -- may come new ideas.  Fanatics brings a lot of things to the table that could be positive to The Hobby (marketing, distribution, et al).  However, it has never produced a trading card set before.  It has been speculated by some that Fanatics might try to do what Panini did when they acquired the exclusive NBA rights in 2009.  Back then, Panini did not have much of a presence in the USA, and did not have any experience producing an "American" style sports cards set -- just soccer stickers and TCGs like Panini Adrenalin.  So, they went out and bought an American trading card company, Donruss-Playoff, and renamed it "Panini America."

Purchasing one of the existing card companies -- if only for their intellectual property and trademarks -- could be a wise move for Fanatics.  I'm only speculating here, but I can see Fanatics cutting Michael Eisner a nine-digit check for Topps (although much less than $600mm), spinning off the candy and gum operations (or keeping it with Eisner), and continuing the Topps brand name in cards for 2026 and beyond.   

If Fanatics decides to go this route, great.  I think most in The Hobby will be happy.  

(OBTW, ever since this news broke, I've been seeing a lot of folks lamenting that this is "The End of Topps As We Know It!"  The Topps they're lamenting ceased to exist in 2007 when the Shorin family sold out to Eisner and MDP.)  

What I hope Fanatics doesn't do, is keep around the same folks that have been responsible for much of the garbage products and gimmicks Topps has excreted over the last dozen years. (Especially Clay Luraschi.  Kick that jabroni to the curb.  Or if you have to keep him for contractual purposes, have him do something that'll keep him away from cards. Ship him to the candy and gum division, I don't care.)  What this Hobby needs now, more than anything, is new blood.  We need people in positions of product development and marketing with new ideas.  It would help if these people, you know, actually collect baseball cards.

(If anyone at Fanatics is reading this, yes, I am available.  Enquire within.)

2026 could give The Hobby a fresh start.  A reboot, if you will.  By then, if history is any indication, most of the "New Money" that's seeped into The Hobby over the last 18-24 months, will have exited, and The Second Junk Wax Era we are now living through will have ended.  I don't put much stock into predictions, and I've been wrong many times.  However, I believe that The Hobby of 2026 will resemble the way things were in the mid to late 90s.  

Card manufactures were forced to appeal to a smaller audience -- the die hards.  We saw innovation and creativity (etched foil! die-cuts! material inserts! Game-Used! DUFEX!), and products that were challenging, but fun, to collect (late 90s Flair Showcase!).  Companies that relied on monotonous products and/or gimmicks (e.g. Pinnacle Brands) were kicked to the curb.  Maybe, even under an exclusive license regime, could we be in for a repeat?


Anyway, I recently appeared on special editions of the About The Cards and Hobby Hotline podcasts to discuss Fanatics and their future in the baseball card business.  The About The Cards episode was a special edition recorded Thursday, August 19th, the night of the announcement.  Special guests included Beckett's Ryan Cracknell and Hobby legal analyst Paul Lesko.

For Hobby Hotline, a show which I regularly appear  on usually every three-to-four weeks, we had a special edition at our usual time (Saturday's at 11:00am Eastern; 10:00am Central; 12:30 in Newfoundland) with most of the rotating cast of panelists including Dr. James Beckett, Rich Klein, Jeremy Lee of Sports Cards Live, John Newman of the Sports Card Nation podcast, and others.


Jafronius said...

Thanks for the recap. I was stunned to hear the news; I first thought the monopoly was over...I didn't think for a minute that Topps would be left out completely.

John Bateman said...

I have seen reports the MLBPA expires after 2022.