By Kevin Glew
“There is nothing wrong with change, if it is in the right direction.”
– Winston Churchill
Spoken more than a half-century ago, Churchill’s words could also be applied to today’s sports card industry.
An unparalleled series of changes hit the hobby in 2009. Exclusive licensees became the norm. Many of our favorite brands are disappearing. And the weak economy has dogged card companies, storeowners and collectors.
At times like these, it’s easy to get misty-eyed about the way things once were, but if we want this hobby to persevere, we must adapt. So let’s not wax nostalgic about the past, but rather discuss the present and the future. What do these changes mean? How are we coping with the recession? Is our industry heading “in the right direction?”
Recap of exclusives
Among the four major professional sports leagues, the NHL’s pact with Upper Deck was the only exclusive card license in place prior to 2009. That changed, however, in January when Panini was awarded the sole NBA license.
In August, Major League Baseball dropped another bombshell when it tabbed Topps as its exclusive licensee. The deal will take effect on Jan. 1, 2010.
Not to be outdone, Upper Deck inked an exclusive agreement with the Collegiate Licensing Company that same month. Effective April 1, 2010, the pact will enable the card maker to produce pasteboards featuring athletes in their collegiate uniforms from more than 200 U.S. colleges.
Topps stole the hobby spotlight again in November, when they sealed an exclusive, multi-year agreement with Minor League Baseball that gives them sole rights to produce minor league prospect cards starting in 2010.
Card Company Licenses Chart
Co. MLB NFL NHL NBA
Panini X X
Upper Deck X X
Are exclusives good or bad for the industry?
Longtime hobbyist Bob Brill, who now blogs for SportsBuy.com, believes exclusive deals could be good for the hobby.
“I don’t have a problem with exclusives. If a company is only focussing on baseball, for example, they’re going to do a really, really good job on baseball,” he said.
But Calgary-based collector Ryan Cracknell isn’t so sure. He believes that competition motivates companies.
“With someone behind you, there’s a bigger drive to try out new things, add value and evolve the hobby,” he said.
Cracknell agrees that a reduction in brands would benefit the hobby, but exclusives could also create confusion.
“So now there’s going to be a bunch of licensed and unlicensed products side-by-side in shops and I’m guessing some will be confused why one has logos and others don’t,” he said.
The “Big Three” card companies
With the whirlwind of changes in the industry, coupled with the weak economy, how are the “Big Three” card companies faring?
After Panini landed the exclusive NBA license in January, they purchased Donruss in March. Scott Prusha, former Donruss employee and now Panini America’s marketing manager, says it has been a smooth transition under the new ownership.
“Panini has been great. Their goal was to successfully start a trading card business in the United States and the sale of Donruss came together very well. They kept everybody from Donruss in place,” he explained.
Pierre Noboa, a basketball collector in Long Island, N.Y., believes the Panini pact is a positive step for the hobby.
“There were so many brands to choose from that I think it diluted the value of the cards,” he said. “I think the exclusive deal will help.”
Partnering with a European company also gelled with the NBA’s goal of increasing global sales.
“I think Panini was a good choice for the NBA, because Panini has the worldwide distribution that other manufacturers don’t,” noted Brill.
Inking Kobe Bryant to an exclusive autograph deal in September was another coup.
“Kobe is probably the most global icon in the sport,” noted Noboa.
The Lakers great signed cards that were inserted into Panini Prestige, the company’s first hoops release. Early feedback on Panini’s basketball products has been positive.
“Collectors seem to be very pleased with the design,” said Brad Lohr, premier account manager at Dave & Adam’s Card World in Amherst, N.Y.
Panini will continue to produce many of the traditional Donruss football lines, and they recently unveiled plans for a Donruss Elite Extra Edition baseball set that will feature prospects and legends in their college uniforms.
Though Panini America has felt the pinch of the weak economy, Prusha says 2009 was a triumphant year for the company.
“We’re proud of where we’ve come from. The signing of Kobe and keeping the football license, I think it has been a very successful year and we plan to grow that in 2010,” he said.
When it was announced that Topps had been awarded the exclusive Major League Baseball (MLB) license, it caught many in the industry by surprise.
“There is a greater chance of organizing the marketplace with a singular partner,” explained Tim Brosnan, MLB’s executive vice-president for business, in a story on MLB.com.
The multi-year deal will take effect on Jan. 1, 2010, and the company’s first release under the new pact will be Topps Series 1 in February. Topps also secured the exclusive Minor League Baseball license in November.
But while the MLB exclusive was a highlight for the company, losing their NBA and NFLPA licenses (the NFLPA license expires at the end of February) were setbacks. Topps released two 2009-10 NBA products before their license expired, but plans for future releases remain unclear.
“We had an opportunity to get an exclusive in basketball but when we looked at the economics of it, it just didn’t make sense from a financial perspective,” said Warren Friss, Topps vice-president, in a recent interview with Sports Collectors Monthly.
The loss of the NFLPA license was even more shocking to collectors.
“I didn’t even know that Topps had lost their license. Wow. That’s a brand that has been around since God knows when … There are some die-hard Topps collectors out there, so wow, that’s a shocker,” said Jayson Morand, a longtime football collector in Wichita, Kansas.
When contacted, Topps spokesperson Clay Luraschi declined to discuss Topps’ future football plans.
In the meantime, the company has manufactured WWE and Ultimate Fighting Championship sets, and Luraschi believes the company’s future is bright.
“Topps has been a vibrant company for over 60 years and will continue to be one well into the future,” he said.
When Upper Deck lost their NBA and MLB licenses in 2009, rumors were rampant about the company’s future. But in an interview published in the December 2009 issue of Sports Collectors Monthly, Upper Deck CEO Richard McWilliam dismissed any suggestions that the company was in trouble.
“This is the misconception that infuriates me and everyone else at Upper Deck,” he said. “We are obviously not a two-sport company. Upper Deck will continue to make baseball cards in 2010 and beyond. In fact, I think 2010 will offer collectors and fans one of the best portfolios of Upper Deck products we’ve ever produced.”
Upper Deck renewed their license with the Major League Baseball Players Association in July and has already unveiled an exciting list of 2010 baseball products that includes the introduction of Exquisite Baseball.
With exclusive autograph deals with LeBron James and Michael Jordan, Upper Deck will continue to release basketball products. The company was able to release several 2009-10 NBA products before the Panini exclusive kicked in.
“We will remain a dominant force in the basketball market,” said McWilliam in the December 2009 issue of Sports Collectors Monthly. “We are currently in the process of fine-tuning what kinds of products collectors and dealers want most and we’ll work to meet and exceed those expectations in 2010.”
Effective April 1, 2010, the company’s exclusive agreement with the Collegiate Licensing Company will allow them to produce pasteboards featuring athletes in their collegiate uniforms from more than 200 U.S. colleges. Upper Deck also continues to hold the exclusive NHL license.
Economy tough on dealers
Hobby stores are also facing challenges during this recession. Brill, who had operated KC Kings Sportscards in Ventura, Calif., since 1996, was forced to close his store last January.
“In October 2008, when the stock market crashed, business hit the wall. I mean there were days when nobody came in the store,” said Brill.
Howard Lau, owner of Houston Sports Connection, has also seen a drop off in business.
“This is as tough as I’ve seen it,” he said.
In contrast, Steve Laferriere actually opened his store, Card Collector’s Paradise in Cumberland, R.I., in July 2008 and moved to a larger location in June 2009.
“I’ve always been business minded, so I really wasn’t questioned too much about my decision to open,” he said.
So far, business has been good. A YouTube video of his store has been a boon for his business.
“That YouTube video has been priceless as far as an advertising tool. From online business to local customers, it’s brought me hundreds and hundreds of customers,” he said.
Rick Giddings, owner of Gizmo’s Sportscards in Davis Junction, Ill., has employed a number of strategies to keep his business going.
“In these tough economic times, I stay about 25 percent less inventory,” he said.
He also emphasizes the importance of topnotch customer service.
“Ninety percent of this business, in my mind, is customer service,” he said.
“Hobby shops must offer competitive prices, as well as something that the online experience can’t offer like friendship and community,” he said.
Lau concurs. The hobby veteran offers his store as a meeting spot for his customers. He also holds private signings and runs local card shows.
“The day of a person sitting in their store and just expecting people to come in, boy, that’s almost like a horseback wagon, it’s obsolete I think. You’ve got to go out and work it,” he said.
Buyer’s market for collectors
Collectors are also facing challenges during this economic downturn.
“When the economy tanks, sports cards aren’t really high on the list of priorities,” said Ben Henry, a collector in Brookline, Mass.
Giddings is fielding about 20-25 percent more calls from hobbyists who want to sell their collections. Troy Jilot, a Milwaukee-based football collector, has noticed the same trend.
“Over the past 18 months many co-workers have asked me to appraise the collection they were handed down from their grandpa or father. Many of them are looking for extra cash,” he said
Jilot says it has been a great time to buy sports cards.
“Personally, I have been on a buying spree the past 12 months. The mid-grade Pro Football Hall of Fame rookies have become rather affordable. The (PSA) populations have not increased much, if any at all, but there has been a drop in demand and that has led to lower prices,” he said.
On the rebound
The good news is that dealers are starting to see a light at the end of the tunnel.
“It’s a bad economy, but I have no fear about the hobby,” said Giddings. “The hobby, to me, is going to come back full-fledged.”
“There are a lot of uncertainties right now. And uncertainty causes people not to spend money it seems. I think once some of that uncertainty is lifted, the hobby will pick up,” he said. SCM