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| 22 Jul 2005 10:52:23 pm |
 LOSS OF DONRUSS BASEBALL A GIFT TO THE HOBBY |
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There continues to be an up roar in the dealer community and perhaps the collecting consumer community over the loss of the third remaining baseball license by Playoff/Donruss/Leaf. For ease sake we’ll call the company PDL. As mentioned previously the powers that be at Major League Baseball Players Association chose not to renew PDL’s license to make baseball cards in 2006. The reasons are many and there are more changes being made mandatory with the remaining two companies.
PDL has been making baseball cards for about six years picking up after the demise of Pinnacle Brands. Fleer finally went belly up a month or so ago so a baseball card license went away leaving only PDL, Topps and Upper Deck. Now MLBPA is choosing not to renew the PDL license.
While PDL made quality products this is not a bad thing. It is certainly not as bad as it’s being made out to be. In fact, in the long run it says here this will be a good thing.
We’ve all cried for years, too many years, there are way too many brands, way too many companies and far too much collector confusion. Fleer dropping out was a start and it was expected. There were rumblings two months ago PDL was going to be next. Word circulated PDL was not having an easy time making its royalty payments. We don’t know this for sure and only the MLBPA and PDL can say with certainty and they are not talking. If this was the case the last thing this industry needs is another company facing financial issues. Dealers remember the disaster as Pinnacle and Fleer were having problems. These companies were dumping product so fast it would make your head spin. The only way they could get cash to pay the bills was to produce products and sell them for whatever they could just to get cash.
MLBPA has wanted to cut down to two manufacturers for some time. The market is just too overcrowded and one of the biggest reasons people give for why they don’t collect anymore is ‘too many brands’ also known as collector confusion.
‘I dropped out when they issued so many different kinds of cards,’ is the common answer we hear at the hobby shop level. This is not the only reason but it is the biggest.
If you were to eliminate a company after Fleer which would it be? Upper Deck the original innovator and certainly the one making the most money for the MLBPA? Of course not. Topps, the grand-daddy of them all and the name most associated with trading cards? Of course not. Or PDL which was making baseball for six years was the weak sister despite making really nice cards and offering good value? The obvious choice is PDL, unfortunately for those who liked the brands and for those who work there.
There are other issues. PDL is really good at making retro products. These are the products with players such as Ty Cobb, Ted Williams, Babe Ruth and more. Upper Deck just locked up a license which handles the big names from the retro era. This is an exclusive deal. PDL cannot truly make a strong retro product without these names and they were not going to have them.
This means bat, jersey and autographed cards of Cobb, Hornsby and nearly all the other Hall of Fame deceased greats are exclusive with Upper Deck. PDL is out of luck.
Turning to Topps we suggest something else. The Rookie Card issue is a reality again. Part of the deal with the new licenses in 2006 is Rookie cards (or RC) can only be cards of players who are on the major league roster and playing. In other words players which Topps had the exclusive rights to sign under the old agreements are no longer RC’s until they come to the majors. A special Rookie Card logo is now mandatory starting in 2006 for a card to be a RC. This is going to be a powerful boost to the hobby.
So it looks now as if Topps will be contributing more or at least something different to the MLBPA. Previously Topps had a special arrangement with the Players Association because of its history in helping the MLBPA get started and becoming what it is today. Now there is no need for Topps to shell out thousands of dollars for players who may never make the major leagues.
We are not sure how this financial arrangement will work but if it is as it reads in the news release from MLBPA, Topps and Upper Deck will both be funneling their money into the royalty package with the amount enough to make up the loss of PDL.
So we have one less company which means fewer brands and less collector confusion. We have a new RC designation which should result in people chasing RC’s again. Add to the mix a very big and much called for third element. No new baseball cards until February, 2006 after the final issues of this season. What does this mean? Baseball cards in baseball season.
Collectors and dealers for years have been screaming for this and now we have it. Not only will this cut down on the amount of new product dealers have to buy in the fourth quarter (product which even during the holidays drains cash flow), but it will mean a longer shelf life for other baseball products. Dealers will be willing to stock older products through the holidays for their gift buying customers which also means prices should stabilize. For a hobby store to survive this is a real key; stabilization of the market.
There are those who state this all could have been done by keeping PDL and having all three companies cut down on the number of brands they issue. Not so at all. Two issues are involved here.
One, is you would still have far too many brand names which will not cut down on collector confusion. This is one of the issues which got us into this mess in the first place. The second is simple. These companies, especially Topps and Upper Deck are very large companies. To have them cut down on the number of brands in a competitive market place would not work. The only way a card manufacturer gets money is to ship product. Revenue comes upon shipping. The fewer products you ship the less revenue you get. It would have been financial suicide for these companies if they were told to cut their brands or issues by one-third.
By not renewing the license for PDL a third of the brands of baseball cards are eliminated and there will likely not be an increase in the number of new issues Topps and UD can produce.
In addition, the new rule from MLBPA is more low priced brands to attract younger collectors. The increased competition was causing the increase in pack prices to race at a ridiculous pace to higher levels. Picture it as Mr. Greenspan slowing the economy by tightening the hobby’s belt.
The loss of PDL, while regrettable in many ways, is a gift to the hobby. Having only two licensed companies making baseball cards will only strengthen the hobby in the long run…a hobby which was in danger of crashing and burning if some drastic moves did not take place. |
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Category : General
| By : kckings |  Comments [0] |  Trackbacks [6741] |
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| 20 Jul 2005 11:07:09 pm |
| DONRUSS OUT OF THE BASEBALL CARD BUSINESS? |
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On the heels of the demise of Fleer Trading Cards it looks as if there will be one less company making ‘baseball’ cards in the near future. Reports are Playoff Corporation will lose its baseball license beginning in 2006. Playoff holds the Donruss and Leaf brands as well as others. There has been uproar in the dealer community as with many hobby stores Donruss/Leaf have been very strong sellers.
There are indications the company has been behind on royalty payments and if this is true it is certainly a good thing the license is not being renewed. Weaker card manufacturers cause more problems than they should. Playoff was a strong player when it only had an NFL license and should return to this mode if the baseball license is completely pulled as it looks like it has.
One of the tell tale signs is the push toward retro products including the purchase of a game used Babe Ruth jersey the company shelled out big bucks to get. Donruss made nice retro products but with Upper Deck locking up the vast majority of big names in the vintage field, the writing was on the wall. Upper Deck has become a juggernaut in cards and with Topps indecisive about its future (they are discussing selling the candy company and doing something with the entertainment division) UD could be the last man standing at some point.
This is not a bad thing. Trading cards were healthy when there was one manufacturer. The eras from 1956-59 and 1964-1979 were healthy times. Of course there were few card stores then and selling/buying was quite different. There also was no internet. Having one card company, dictating the rules might not be a bad thing and maybe it is necessary to put some controls on an industry which badly needs them. The hobby does not police itself. Perhaps if there are fewer players at the top the policing can begin. No one likes to have someone dictate terms to them but in the case of this hobby/business it may be the only way to fix it. |
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Category : General
| By : kckings | Comments [0] | Trackbacks [6061] |
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| 18 Jul 2005 06:03:41 pm |
| UPPER DECK AND THE FLEER REDEMPTIONS |
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When Upper Deck won the auction for a portion of Fleer Trading Cards with a $6.1 million bid it sent a message out to the industry. The bid was for the intelectual properties and the die-cast business. This included the die-cast inventory. It did not include the inventory from the rest of the card company. That inventory includes the autographs, game used cards and other trading cards.
Thus when collectors think Upper Deck should be filling their redemption cards under the Fleer name, they are in for a surprise. Upper Deck did not acquire those items, at least not at this point. Another auction is planned.
Reallistaclly UD did the smart thing. Little is known about what would or will happen to anyone purchasing the autographs because there are some clouds over those issues.
1. Since the players who signed those cards were not paid for their signatures would the company which buys the autographs have to pay the players before they could use them?
2. Since the autographs were obtained under the guise of a license with the leagues and players' associations, would the company which buys them have to settle up with those entities first?
3. If the company buys the signed cards to redeem them for collectors who are now holding worthless Fleer redemption cards, would they have to fulfill all redemptions even if there were not enough in the Fleer inventory to meet the requirement?
4. What legal issues would arise upon purchasing the redemptions based on the above three questions asked?
No at the moment Upper Deck has done the prudent thing. Buying the die-cast company and it's inventory means UD can jump right into the licensed die-cast market. They can redeem a portion of what they spent immediately by selling off the die-cast inventory.
There are an estimated 30,000 redemption cards issued by Fleer by some estimates. There is also an issue regarding the redemptions which is up in the air and this stems from signed and memorabilia cards which were ready for future products. Two products were made and sitting in the printer's warehouse; Ultra Football and Fleer Traditions Baseball Series 2. Where do the redemption cards and autographs and game used stand when it comes to these products?
Presumably there were no redemptions in these but you can choose to believe that or not. We certainly don't.
Perhaps the best thing that could happen would be for the leagues and PA's to buy those cards, make a deal with the players involved, or pay them. and issue the cards to collectors who are owed. Don't bet on that happening either. |
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Category : General
| By : kckings | Comments [0] | Trackbacks [7229] |
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| 13 Jul 2005 11:53:29 pm |
| AUTOGRAPHED TRADING CARDS: FIXING WHAT'S BROKE |
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One reason for the high cost of sports trading cards these days is collectors are demanding more autographs in packs. These autographs often come at a cost which is highly prohibitive for the trading card manufacturers who already pay hefty royalties to the leagues and players’ associations for licensing rights. This is the legal right to produce pictures of baseball players on trading cards. The royalties cost the companies millions of dollars annually.
In addition these companies must purchase autographs from the individual players, jerseys and other items from the players; all to weave into the card to offer what are called ‘game used’ memorabilia. The industry has gone to this extreme to keep current collectors and attract new ones.
A huge problem stems from the cost of these autographs which can average anywhere from one per box, to one per pack. In some cases more than one per pack. This is one reason why packs of baseball cards cost $5-$500 per pack with most regular adult collectors purchasing packs which average $20-30 each. Autographs are the most important and costliest element in the equation.
Some fans will argue players should provide these autographs for free. After all they make a good living playing and being paid by the clubs who are supported by the fans. This isn’t realistic or even fair. Players should be paid a fair price for what they do and for their signatures. What is the key question is how much?
For instance the manufacturers certainly can get some common players for as little as $2-$5 per signature. They may buy 5000 of these or what may turn out to be a $25,000 pay check for the player.
However, players such as Albert Pujols (star of the St. Louis Cardinals) charge $135 per signature. This is an unheard of sum but it is what the manufacturer must pay to get Pujols to sign a card. In most cases the $135 is more than it costs the manufacturer to make, and even more than they sell the box to the hobby store owner. This is also why there are so few Albert Pujols autographs available.
The solution may be in a variation of what the NFL does. The NFL does not allow exclusivity. For instance, Lebron James of the NBA Cavaliers signed an exclusive deal for autographs and jerseys with Upper Deck. They paid a hefty price, millions of dollars. The NFL does not allow this.
What might be a solution is for baseball (and the other sports as well) to issue a blanket deal for player autographs and in return also reduce the royalty structure to incorporate this. For instance, if company A is paying $10 million in royalties and is actually shelling out another $5 million for autographs in addition, maybe the royalty could be reduced to $8 million and include signatures of all players (with a formula used to determine how many for each class of player). It might be $11 million including the autographs, or whatever makes sense. The numbers at this point are not important, what is important is the idea.
This money would go into the regular group licensing pot to be divided amongst all players as does the regular royalty money. The formula would need to be worked out and the distribution would be equal when it came to the card manufacturers.
The question of the super star players being worth more could easily be settled by following the NFL example of the Quarterback Club. The NFL faced the same issue a number of years ago but the QBC changed that. The super star players (mainly quarterbacks but other positions were added later) had a separate agreement. This team of the highest profile players would reach a different deal which was negotiated with the individual card companies. To be fair the price would need to be equal with each company.
The way it would work is that the MLBPA would decide which six key players would be designated to be the first ‘All Star Team’ players. You of course would have Alex Rodriguez, Albert Pujols, and four other players of equal value. Each year the MLBPA would add two more players to the list. Once players retire they would be removed and would be free to cut their own deals as retired players. The list would never likely grow past 20 or 30 players as players drop off due to retirement attrition, or injury or just having several consecutive bad years causing their demand to drop.
In this way, the super star players would get super star treatment and paychecks while the rest of the players would be covered under the general agreement. This in turn should allow card companies to pay less for more and keep the rising cost down. It also in turn would allow the more popular players to keep their more popular paychecks while handing equality to the masses who collect.
This would save the companies in the long run as well because less money would be spent on negotiating each individual deal with the players needed. There are hundreds of players signed for these deals and the massive amount of work put into it could be eliminated.
It is not a perfect solution by any means, but it is a good start. It has the beginnings of some sanity and in the trading card industry there is a need for a good dose of that!
Please feel free to comment by clicking on the comment box below. We appreciate your feedback. |
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Category : General
| By : kckings | Comments [0] | Trackbacks [6883] |
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| 11 Jul 2005 09:01:48 pm |
| THE HIGH COST OF SPORTSCARDS |
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Owners of hobby stores which sell trading cards as their primary business are facing a continuing dilemma. It stems from collector demand, high player royalties, manufacturers in a quandary and the fact most hobby stores survive on fewer and fewer collectors. The problem in question is the continuing rise in the cost of a pack of trading cards.
While the average price of a pack of baseball, football or basketball cards today is in the $5 range, the bulk of adult male collectors (the staple of the industry) spend their money on packs which average about $30-$40 each. No it is not your father’s baseball cards anymore. It hasn’t been for some time.
It has been this writer’s contention (I too own a hobby store) as the price spirals upward we lose more collectors, while feeding the gambling frenzy of the pack ripping collectors who can afford it. Picture it as a pyramid. The higher we go, the more people drop out. The bottom line comes when a store is living on one or two customers. There are such stores now in just this position.
If you are surviving with just one or two heavy users it doesn’t take long to see your business disappear if one of them leaves, loses his job, transfers, dies or just decides he doesn’t need to collect anymore. Disaster strikes and the store either shuts down, or dies a slow death.
The problem is even more complicated by the fact we have lost a lot of the casual collectors either due to the price increases or because of the reasons mentioned in the above paragraph. To me, it is a lot of both but more due to the ever rising cost of packs. Collectors want ‘the good stuff.’ When the ‘good stuff’ was $5 a pack it was easy. Spend $75 and get 15 packs of cards. Now the good stuff costs $75 a pack for four cards. Sure the four cards will likely be as good or valuable as what you got out of 15 packs previously, but you get the picture.
The collectors who are supporting the hobby in the biggest way are at the moment willing to spend $75 or a hundred or even the $500 SRP Upper Deck offers for Exquisite Basketball. The cost on the secondary market is now $650 per pack of five cards but there are those willing to pay it.
I have friends who back what I am saying and others who say the high priced packs are good for the industry. Some people drive Fords and others drive a Rolls Royce. Different strokes for different folks. My contention is however the collector who can’t afford the higher priced packs, one who feels it is morally wrong to pay those prices or who is appalled by it, will drop out. He will no longer support the hobby store which in turn will lead to the closing of more such stores.
Let me say here, there is nothing wrong with these high priced packs. The problem lies in there are so many lower priced products being switched to higher priced SKU’s, the general collector is faced with fewer products he can afford. The problem is complicated by the death of the cash flow for the store owner. The store owner can no longer carry every product. If he does, even every high priced product (therefore bowing out of the lower priced inventory) he can easily go broke when a few of those products fail and sit on his shelf too long. The risk in holding on to 10 boxes which cost him $30 each, is far less than holding on to 10 boxes which cost him $135 each.
There is no easy solution but the industry, the manufacturers and yes even the dealers who make good money on these high priced packs have to make a decision. If the manufacturers would limit the super high priced brands to one and the middle range of high priced brands to just one, this would go a long way in changing the way the industry is going now. At the moment the trading card industry is spiraling and it is not an upward spiral when it comes to new issues of trading cards. |
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Category : General
| By : kckings | Comments [0] | Trackbacks [5987] |
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