How Did Fanatics Replace Topps and Panini
Most sports fans are aware of Fanatics, a sports paraphernalia company operating out of Jacksonville, Florida. The company started in 1995 with a modest brick-and-mortar store focused on the Jacksonville Jaguars.
Over the years, they expanded aggressively. Most notably, when they bought out rivals Dreams, Inc. in 2012.
With all this business, you will not be surprised to hear that Fanatics is worth a lot. In 2014, Fanatics was marked as worth $3.1 billion. They now sell roughly $2.5 billion worth of merchandise annually. Therefore, a recent estimate valued the company
at $18 billion.
In recent years they have consolidated a preeminent place in sports-oriented e-commerce. They run the platforms for the MLB, NBA, NHL, and NFL. They also operate merchandise distribution for CBS, FOX, and NBC Sports.
Working in close tandem with the major sports leagues, Fanatics have built up trust. That trust has paid great dividends for the e-commerce platform as they create a new monopoly on the sports cards business. That allowed Fanatics the in that they needed to make an offer.
According to the MLB and Topps contract, the latter has the right to match the offer. However, reportedly Topps was unable to do so. Considering the far larger size of Fanatics, this is not surprising.
Though their entry into sports cards was not expected, it suits Fanatics’ aggressive strategy of seeking a monopoly on merchandising for all major sports.
Why This Is Massive News
Topps came up in the early 1950s as a baseball card company. It has since enjoyed either partial or exclusive rights to MLB cards throughout the ensuing 70 years.
Topps RC’s have been the standard marquee card for stars from Mickey Mantle through to Shohei Ohtani. More recently, Bowman cards released by Topps have become equally fundamental to the hobby.
At this point, we don’t even know if these cards will still be issued in a few years. So the hobby as baseball collectors have come to know it, it may now be transformed completely.
Meanwhile, Panini is the world’s largest sports card company. It started as a soccer sticker company formed in 1961 in Italy. However, it began to expand aggressively into the card market in January 2009 when it obtained the rights to NBA cards.
The two companies have shaped the sports card market in the United States. Collectors and investors are struggling to understand what the market will look like after these developments.
Panini Prizm Football is just one of the iconic releases Fanatics will try to replace or reproduce (look for Mahomes stained glass cards on eBay).
Can Fanatics Replace Topps and Panini?
As we know, Fanatics has massive e-commerce capabilities. As a result, they should be able to distribute cards more efficiently than either Topps or Panini. That was undoubtedly one of their main selling points from the NBA, MLB, and NFL perspectives.
However, Fanatics does not have a history of printing cards. Therefore, they must already have a plan. Otherwise, the canny operators at the big sports organizations would not get into bed with them.
While Fanatics does not have a history of making their own sports cards, they are very good at entering and disrupting new markets. It has made similarly aggressive moves into the worlds of memorabilia and
sports betting. It has managed those transitions successfully, for the most part. So it is a very practical and solutions-oriented company.
Fanatics Replace Topps and Panini: Acquisition On The Way?
Fanatics’ most likely path ahead is to purchase a major card company and use their expertise and assets as a starting point. Rumors have already spread that Fanatics may buy Topps.
Keep in mind that while Topps is a sports card giant, their income for 2020 was $567 million in sales. Fanatics make roughly five times that amount. In addition, Topps without baseball will be worth significantly less and may not have a path forward to survival.
Another advantage for Fanatics is that they can continue to use products collectors have come to love by buying Topps. It would be hard for Fanatics to develop lines as successful as Series 1 and 2, Chrome, Bowman, Heritage, Gypsy Queen, and other beloved releases.
Panini is another option and may be affordable to Fanatics. However, they may be less likely to sell. If the Italian company can hold on to soccer, it can remain a viable player in the sports card market. But Panini USA is a subsidiary of the larger company and may be sold separately to Fanatics for the right price.
The two other apparent candidates are Upper Deck and Leaf. But they would not bring the benefit of Topps recognizable releases.
What’s Next For Topps
Topps has been making some serious moves to increase its competitiveness in recent months. First, a slated deal with Mudrick Capital was set to take the company public. The deal is reportedly worth $1.3 billion.
However, there is a much smaller incentive for Mudrick Capital to invest heavily in Topps if they lose their MLB exclusive rights. The final vote on the deal by shareholders will take place next week. This news may spell the death of all the fancy plans Topps had of growing by leveraging NFT releases. The Mudrick Capital stocks lost 4% of their value on the day of the news, which is not as bad as could be expected.
Keep in mind that Topps is by no means without significant assets now. They have licensing rights to the UEFA Champions League, the Bundesliga, Star Wars, and Garbage Pail Kids. Nonetheless, their baseball lines are the jewel in the crown and the main legacy of the company.
Topps may begin to release unlicensed baseball cards. However, they have been hesitant to go that route in the past when they lost rights to the NBA and NFL. In light of its previous behavior, Topps may not be comfortable with the idea.
Topps had a plan to lead growth through NFTs (get Topps MLB NFTs on eBay).
What Is Next For Panini
Globally, the main product Panini sells is its soccer cards and stickers. However, Panini America is heavily focused on NBA and NFL cards. Its Prizm series, in particular, has to lead it to massive success in the US market.
The move seems set to completely undermine the Italian powerhouse in terms of its hold on US markets. It does, however, leave them open to cooperation with Fanatics on rights to some releases.
Of course, Panini regularly releases unlicensed baseball cards. Therefore, it may attempt to do the same thing for the NFL and NBA. However, since unlicensed cards are unpopular, this is not a great path forward.
How Does Fanatics Replacing Topps and Panini Influence Retailers And Local Cards Stores?
Fanatics is first and foremost an e-commerce leader. They store and distribute products on a massive scale. They already have experience shipping sports cards and running their operation in that regard.
On its face, they do not have a great need for the major existing distributors of sports cards. Will they continue to ship a significant amount of wax to retailers? What about local cards stores? Fanatics will be tempted (and able) to bypass these traditional sellers and deliver directly to the consumer.
Fanatics is unlikely to sever relations with card stores to fit into the hobby and avoid alienating collectors. However, the Jacksonville-based company will have a major bargaining advantage over card stores and retailers to a lesser extent.
Will Fanatics distribute retail? (get Panini Prizm basketball boxes on eBay).
Bottomline On Fanatics Replacing Topps and Panini
The massive Fanatics deal is the product of the amounts of money now flowing in the hobby. Once considered a semi-profitable but somewhat peripheral hobby, sports card collecting is now recognized as a major cash cow by investors. And the American form of capitalism tends to lead to substantial corporate monopolies. Therefore, from this perspective, the consolidation of the hobby in the hands of one company is not surprising.
What remains to be seen is how much of a rupture this will be in the hobby. Will existing and beloved lines and releases disappear? Will the products be available in retail and card stores?
While there is much that remains unclear, Fanatics and collectors share an interest in avoiding significant changes. Therefore, the new monopoly will put effort into reassuring collectors that there will be an acceptable level of continuity. So, expect Fanatics to try and incorporate (r.e. take over companies and buy the rights to products) existing formats into their future releases.