What Does The NFLPA-Panini Ruling Mean For The Hobby?

It has been a very long time since Panini had some good news in its battle to stay in business and against the emerging Fanatics monopoly.

But it has finally gotten some good news, after a court rejected NFL Player Association claims to void their contract with Panini, which may aid it in its broader legal battles.

It made big headlines on August 23, 2023, when the NFLPA announced that it sought to terminate its contract with Panini. Since then, the two had been locked in a legal battle until the court found in favor of the sports card giant.

What happened?

This week, the court rejected the NFLPA’s attempts to declare their contract with Panini as void. They initially tried to claim that because Fanatics had hired several of the top Panini executives they had worked with, a “change in control” invalidated the deal.

However, Panini argued that this was not the real motivation for the switch. Instead, they claimed that the NFLPA was looking for a flimsy pretext to move over to Fanatics, which had promised them more money.

Indeed, Fanatics had pledged to the players’ union and the leagues that it has tied into long-term deals with an unknown amount of equity in the company.

Panini attorney David Boies said, “The unanimous decision of the arbitrators confirms what we have said from the beginning: The NFLPA’s termination of its contract with Panini violated its legal obligation to Panini, its moral obligation to fans and collectors, and its fiduciary duties to its members. The PA’s actions cost its members millions of dollars in damages and lost royalties. The damages would have been many times greater except for Panini’s commitment to protecting fans and collectors, and the players themselves, by continuing to supply cards despite the PA’s purported termination.”

There were also damages involved. Due to a 50-day delay in producing football cards for Panini, the NFLPA was ordered to pay over $7 million to Panini. In response to the ruling, the NFLPA refused to respond to media requests for comment.

The Fanatics angle

The arbitration results are confidential. Nevertheless, a source told Puck News that the arbitrators did not find evidence that Fanatics and the NFLPA colluded, as Panini had alleged. After reviewing various communications between the apparel giant and the players’ union, they did so.

“The effort to terminate Panini was wrong from the start,” Stuart Singer, Panini’s lawyer from Boies Schiller Flexner LLP, said in a statement to FOS. “We now look forward to holding Fanatics responsible for their anti-competitive and wrongful actions in our pending suit in federal court.”

How the case involving the NFLPA and Panini started

When Fanatics took over the rights to the NFL and NBA, they had to wait until Panini’s existing deals with the two leagues and their player associations expired to begin production of lisensed cards in those sports—or at least so we thought. However, it appears that the apparel giant began to pressure Panini in various ways.

The Texas-based company alleges that several things have happened in that regard. Fanatics bought the Texas-based printer that Panini used for most of its cards.

According to the anti-trust lawsuit, “This acquisition—a direct violation of GCP’s contractual obligations to Panini—undermined Panini’s ability to perform even in the short run under Panini’s existing licenses, thereby hoping to force Panini into a sale.”

It is also said to have poached executives with sensitive information from Panini and was accused of using the information to gain an unfair advantage. As a result, Panini filed an antitrust suit against Fanatics. The Florida-based company replied kindly and filed a counter-suit to the antitrust claims. So, there is a good deal of outstanding litigation involving the two companies.

How the Fanatics-Panini war spread to other cases Fanatics is not directly involved

Soon, players associations and leagues sought to break free from Panini. On August 28^th, 2023, Panini received notice from the WWE that it was terminating its contract due to a breach of contract by the Texas sports card giant.

The agreement was meant to continue until 2025, but the WWE said that Panini had not produced all the cards and NFTs it had been obligated to. The center of the WWE complaint is that Panini “did not engage in good faith efforts to exploit the rights licensed to it under the Agreement.”

A similar move from the NFLPA soon followed that. They released a statement to the following effect:

“NFL Players Inc. has terminated its trading card agreement with Panini. Effective immediately, Fanatics has the exclusive right to make NFLPA-branded trading cards. This decision does not impact individual layers’ contractual agreement(s) with Panini. If you represent any Player(s) with an existing Panini agreement, the NFLPA recommends that you encourage the Player(s) to fulfill his contractual commitments to Panini.”

Many collectors panicked that they would not see football cards that season. However, to their relief and the NFLPA’s chagrin, the arbitrator decided that Panini should be able to issue cards until further notice.

Panini lawyer Stuart Singer of Boies Schiller Flexner LLP stated: “Panini is pleased that the NFLPA’s request for emergency relief has been denied. Panini will continue to produce and sell fully licensed NFL player trading cards under its license agreement, which it has and will continue to outperform in all aspects.

The WWE motion enjoyed a similar outcome, which allowed Panini to continue producing cards for both sports until further notice.

How will this affect the cases between Fanatics And Panini

As noted, Panini lawyer Stuart Singer has already stated that his company plans to use the results of this arbitration and the WWE one as leverage against Fanatics in their ongoing disputes.

In particular, the antitrust case has the most potentially far-reaching effects. He said, “We now look forward to holding Fanatics responsible for their anticompetitive and wrongful actions in our pending suit in federal court.”

Some elements of that case seem relevant here. Notably, Panini has claimed that Fanatics disparaged Panini repeatedly to many of their partners and colleagues in the business. That would presumably include the NFLPA and WWE, but other stakeholders as well.

According to the case, “Fanatics has done all this Anticompetitive Conduct to monopolize the markets for Major U.S. Professional Sports Leagues trading cards (and others) even before its exclusives begin. In short, Fanatics seeks to cripple Panini both for the short term— the remaining years on Panini’s current exclusive license agreements—and the long term.”

Why it will likely not have a huge effect on the Anti-Trust Case

However, the influence of this on the case may be minimal. It has little bearing on the main thrust of the case.

According to the suit, “By combining long-term exclusive licenses for every Major U.S. Professional Sports League, Fanatics positioned itself to drive Panini and other potential competitors out of the market, and erected barriers to entry blocking their return. A monopolistic outcome here will harm the public, consumers, and competition by allowing Fanatics complete control to set and raise prices for MLB player trading cards, NBA player trading cards, and NFL player trading cards.”

That is a classic argument about the monopoly that will emerge AFTER Fanatics receives the rights to the NFL and the NBA. It’s not what happened before. Nonetheless, it can bolster Panini’s claims that Fanatics is trying to strong-arm them unfairly to promote a monopolistic agenda.

For example, Panini claimed in that suit that “Panini was not allowed to bid or compete for the licenses Fanatics acquired. Panini only learned about Fanatics’ exclusive agreements after they were consummated, through reading about them in the media.”

Still, because it was determined that Fanatics did not collude with the NFLPA, I doubt they will get much leverage out of this decision. But it does serve to undermine Fanatics’ claim that Panini is just suing frivolously. So far, they have had a good deal of success in lawsuits against Fanatics.

The antitrust case and its countersuit are set to be tried in the southern district of New York, but they do not yet have a set court date.

What does this mean for the long term?

For Panini, this is a sweet vindication after a complex legal battle. To celebrate, they will likely open some champagne. But winning this case does little more than postponing the inevitable. They will still lose the rights in 2026 when Fanatics takes control of the NFL (and NBA) rights.

Worse yet, the shenanigans Fanatics is behind have set Panini’s printing schedule behind—or, we should say, even more behind than it was initially. All the sports card companies fell behind schedule during the worst periods of the supply chain crisis. Panini was one of the worst affected by this issue, although Upper Deck was hit worse at the time.

However, Fanatics allegedly trying to slow down the printing of cards and the lawsuits, which slowed down the production of some cards, have slowed it down even further. Therefore, we are still seeing 2023 NFL products coming out now, just as the football pre-season is set to begin.

All this has hampered the final years of Panini card production. Perhaps that is what fanatics had in mind all along. After all, the Texas-based company had relatively air-tight contracts worked out. The chances of taking away Panini’s rights to produce cards were never exceptionally high. It may just be hoping to hamper the last releases from their rivals so that fans are happy when Topps takes over the rights.

If this was the goal, there has been some success. As I wrote last year, “Many football card collectors have complained that Panini’s losing its licenses has led to poor products with bad quality control. Panini has also been accused of overproducing cards and going overboard with the number of products it releases, which some had called a “money grab” leading up to 2026 when it was initially scheduled to lose its NFL license.”

Fanatics even alluded to this in its countersuit against Panini earlier this month, saying that Panini “has lost touch with its consumers, is failing in the marketplace, and has tried unsuccessfully for years to sell itself.”

Then, sticking the dagger in the heart, Fanatics said, “It’s hardly surprising that Panini received an “F” grade from the Better Business Bureau.”

What does the NFLPA-Panini Ruling Mean For The Hobby?

We have learned something that should have been obvious: that contracts should be respected. It is shameful that the NFLPA and WWE tried to shaft Panini, which had made them so much money over the years, to get even more money sooner. But I guess that is business for you.

The arbitrators found no evidence that Fanatics was behind this move, but it seems doubtful that there was any involvement at all. Indeed, the apparel giant’s offer of equity and a lucrative contract seems to have triggered these lawsuits. That was the motivation for these moves.

In the short term, this decision means that Panini will likely be able to see the rest of its contract with the NFL (and the NBA and WWE) in peace. The move has shown that the company knows how to create airtight contracts and defend them in court. It seems like a waste of time to keep pursuing this particular remedy in court.

Nonetheless, this likely means little in the long term. I guess that the anti-trust suit will fail, or Fanatics will be asked to pay damages they can easily afford. It will not trigger any significant challenge to their increasing dominance.

It also seems unlikely that this ruling will have any material influence on the outcome of that case. But it is a vindication of Panini and, finally, something they can celebrate.