Who is King of the cardboard?
In a couple of posts, we will try to answer this question.
Easy question? Think again! Many of you would scream Panini straight away. In fact, Panini America. But are they? For the answer we need to start where it is all about; the cards. But many other factors will be involved so sometimes we have to make some sidesteps. Hope you can keep up.
Lazy player associations
Before anything else you need to have permission to make cards. For college cards you need to buy a license from the Collegiate Licensing Company or Licensing Resource Group. They represent different colleges around the United States. For professional athletes you need to sign with the players’ association of that particular sport. They represent the players for all kind of commercial activities. Such as portrait rights. And this is interesting . Players associations have to represent their members. In other words; get as much money as possible for the members. However with cards it seems like this obligation doesn’t count. With selling exclusive licenses to one company you don’t get the most money out of the players portrait rights. But it’s easier to do business with only one company instead of multiple. So they prefer the easy way. And that is how Panini America ends up with all exclusive license deals in professional sports.
We all know the brands that make sport cards. Upper Deck, Panini America and Topps are the main players. The companies that sell cards in pro uniform don’t make the cards themselves. Other companies do that for them. And cost of production increase fast. Why? What about inserts, memorabilia and serial numbers. How does a card get a serial number do you think. Someone needs to add it manually during the production process. Recently we see increase of thick cards as well.
Games and digital collecting
So what if we can cut some costs? The executives came up with the digital revolution. Sell cards without production. But do you need a license for digital content as well? We don’t know yet. But we see the following trends. We have some digital cards solutions: Upper Deck e-Pack, Topps Now and Panini Instant. All about collecting cards. Some can be converted from digital to physical cards as well. But if this can be done unlimited?
We also noticed that Panini Digital make some gaming apps for collecting cards. In this segment we see the first non-card company involved. Mynba2k16 is an online game collecting cards. The app is published by 2k sports. And 2k sports is well known for console games. We believe 2k sports has a license for console games. But can they use that same license for card games? What does that mean for the exclusive basketball license for Panini America?
Competition never sleeps
What to do when you a card company without a license to sell? You sign exclusive deals with top college prospects for the upcoming draft! Sounds like a risky business. Many prospects don’t make it as a pro. We explain this with the recent signing of Ben Simmons with Upper Deck. Panini America can sell cards of Ben Simmons in pro uniform for next season. But without autographs and memorabilia. Upper Deck can only sell cards of Ben Simmons in college uniform. But with autographs and memorabilia. Does the collector win? No way. Why do the card companies do this? We haven’t figured it out yet.
We don’t believe by signing a top draft pick will bring in big bucks. Does it make the products of the competition less interesting? Yes it does. But will it hurt them? We don’t know.
Back in the days you bought a pack of bubblegum to collect cards. If you haven’t noticed, these days are gone. In wholesale industries it is normal that consumers can’t buy directly. You need to go to your local grocery store to buy soft drinks and toilet paper. Same with cards. But can we specify cards as wholesale product? Most wholesale products that are sold via distribution are food and products that need professional product knowledge. And that’s not a criteria that belongs to sport cards.
All of the inventory and risk are moved from the card companies to the distributor and/or retail card shops. Wow that is easy. But is it fair? And in the best interest of the hobby? No way. Recently Panini America and Target had an exclusive agreement for selling some sets. But today most cards are bought online. And that brings up another topic.
Remember the license? Originally the licenses that are sold are for domestic use only. Which is a little old fashioned but that’s the way it is. And now you know why the cards companies have to use distributors in the United States only………..
So for now you are up to date with the primary market of card companies. Next post we will discuss on the number of sets that come out every year, the secondary market and value of cards.
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This article is the personal opinion of the writer. And not intended for anything else.