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- Created on Tuesday, 18 March 2014 19:01
I was able to sit on the sofa the last few days and follow the 2014 Industry Summit via twitter and all the
"inside" sources I have .... which are none. Maybe I missed it, but I didn't see an announcement bragging about
a 'record breaking' number of attendees. That's ok - less is more often times.
Seemed to me (from the sofa) Panini stole the show with some 'innovative' ideas they've been working on.
A patch card DB, Panini Rewards - that replaces redemption cards, and 14/15 NBA rookie cards are all things
(if Panini pulls them off) should go a long way in engaging collectors even further.
Topps (from the sofa) seemed about the same. Said they were making less product and they are "made to order"
so I guess that means the sales are down. They plan to advertise on Nickelodian. I bet that's not cheap. If sales are
down, it's because your product isn't compelling - not because you don't have ads on Nickelodian. Good luck.
Upper Deck is 25 years old, but acts like one twice as old. At least there are signs of life in SoCal.
Don't expect many innovations as they are just buying time to sell once that's possible.
Group Breakers. The companies are on record they account for about 10% of sales. That's no chump change
when you add it all up. That's probably why I've been very vocal on looking for ways to legitimize that business
model. They should work together on figuring out ways they can operate without risk of breaking raffle and
lottery laws. Trust me, 10% of $100,000,000 is enough to get a lawyer out of bed one day.
Thanks to the tweeters from the event. My comments below are not meant to patronize their work in any way.
Brian Gray is here. #lvis— Sooz (@yanxchick) March 16, 2014
After posting a sheepish apology on Leaf's Facebook page
Leaf acquires the rights to Sportkings http://t.co/KHLvUx4jEr— Sooz (@yanxchick) March 17, 2014
For a heck of a lot less than you think .....
Topps: This year, we have them signing already (during spring training) and about 5 months ahead of the game #lvis— Sooz (@yanxchick) March 17, 2014
So .......... they just figured out this would be a good idea?
Topps: redemption site is antiquated and will merge that with regular site soon. #lvis— Sooz (@yanxchick) March 17, 2014
This is probably more difficult than making the cards bro!
Topps' David Reel: This year we are going to sell significantly more hobby than retail. #lvis— Sooz (@yanxchick) March 17, 2014
That's because it's not selling through at retail.
Topps: New for 2014 Topps Tek, Stadium Club and Topps Dynasty (a high-end like no other) #lvis— Sooz (@yanxchick) March 17, 2014
Tek wasn't that popular back in the day, but Stadium Club was pretty cool.
Topps: Average collector is older than we would like. Engage kids at Play 60 (nfl), ads on TV for BB on Nick, CN, Disney #lvis— Sooz (@yanxchick) March 17, 2014
Ads on TV are hard to measure, expensive and in the hands of an amateur - a great way to burn money.
So along with buying cards from a website, a collector can also pick the option of picking cards up at a physical shop, no shipping charges— Sooz (@yanxchick) March 17, 2014
Referring to a Beckett Business Solutions service. Seems like a good idea.
BBS: there is a need for a employees. One of the ways we failed is by having 1 or 2 employees at shops #lvis— Sooz (@yanxchick) March 17, 2014
I owned a card store. You can't have employees if margins are < 10%
Larry: After a due diligence process we did what we needed to do what was best for the industry and UD exclusive was the way to do. #lvis— Sooz (@yanxchick) March 17, 2014
Where "due diligence" = who offered the most guarantee $$$$$$$$$$
Larry: The things we felt with an exclusive outweighed those aspects. Bringing down # of brands, bringing a .99 cent brand back #lvis— Sooz (@yanxchick) March 17, 2014
Remember the NBA said similar things when Panini originally got an exclusive. Panini now releases 20+ products per year.
NHLPA is running a promo. Putting up $75K. Card show owner provides a plan on how to get kids in and collect hockey cards #lvis— Sooz (@yanxchick) March 17, 2014
That's the million dollar question - but they are only offering up 75k.
— Sooz (@yanxchick) March 17, 2014
Panini is still supposed to do (NHL) stickers still, so I hear #lvis
That's because fat cat in Italy screamed - STICKERS MAKE MONEY!!!!
Goldin employee: my boss wants to be the Jeff Bezos of the industry (re: putting money back into company) #lvis
— Sooz (@yanxchick) March 17, 2014
Amazon doesn't make a profit. Shareholders have though ....
Panini: Adding a Flawless Hockey card in each National Treasures BOX to say "thanks." #lvis— Sooz (@yanxchick) March 18, 2014
That's nice. If I spent $500 on a box of trading cards, I'd think the company would thank me.
Update: Check that, no thanks
Panini will be doing ... FLAWLESS FOOTBALL! But not at the same price point. #lvis— Sooz (@yanxchick) March 18, 2014
Yes, that's because it will be $16,000 a box.
Panini: colors galore in Prizm, lower box price point with still two autos in every box #lvis— Sooz (@yanxchick) March 18, 2014
Sweet. Hope they still do JUMBO boxes that deliver further value.
For the NBA Draft Rookie Exchange, you will get a card numbered 1-25 and get the player drafted in that slot #lvis— Sooz (@yanxchick) March 18, 2014
Worked well back in the early 2000's - not sure why they don't do this every year.
I thought I was the only person in the world who questions business models?
With a QR code on back, you can scan the card and find it on the Panini site. If the patch doesn't match photo - it's fake #lvis— Sooz (@yanxchick) March 18, 2014
So, in other words Panini is creating a patch database for high-end cards. #lvis— Sooz (@yanxchick) March 18, 2014
Hope everyone else in the business copies this.
Panini announces Panini Rewards, which will replace redemptions moving foward #lvis— Sooz (@yanxchick) March 18, 2014
A reward card in pack (can use on IOS and Android, or web). Register card and build rewards toward cards, items, experiences #lvis— Sooz (@yanxchick) March 18, 2014
Rather than a redemption for a specific player, you get a reward point. So you pick the card you want (if you have enough points) #lvis— Sooz (@yanxchick) March 18, 2014
I wonder if Kevin Isaacson would call this innovative?
Panini: 2013 was a mixed year. Football had a lot to do with that #lvis— Sooz (@yanxchick) March 18, 2014
Can't say I didn't tell all ya'll (on August 11, 2013)
Panini's Tim Franz has seen some YouTube vids or Breaker.tv that "makes me want to vomit." #lvis— Sooz (@yanxchick) March 18, 2014
I thought they were saving the hobby!!!!!!!
Manufacturer guesses on what % of wax moves through breakers Topps 8-10%, UD 10-15% and Panini did not guess.— Michael F (@MikesStadiumSC) March 18, 2014
I bet sales to un-opened box retailers are down similar percentages.
Topps: We get about 3,000 orders a week, send about 4,000 #lvis— Sooz (@yanxchick) March 18, 2014
They say this to a group of hobby shop owners mind you.
Topps: Taking steps to be more transparent with weekly updates #lvis— Sooz (@yanxchick) March 18, 2014
What a great idea Topps!!!!
Topps: 6 months ago was bad, it's not perfect yet.We are getting there slowly #lvis— Sooz (@yanxchick) March 18, 2014
6 months ago was bad? Before that must be a term not appropriate for children then.
Topps: Even 30 days out tough for CL. Making changes up until day of packout. #lvis— Sooz (@yanxchick) March 18, 2014
Exactly. If the product is live and there's no CL - then you can complain.
Kevin Isaacson asks if people are checking Twitter ... Definitely, not me. #lvis— Sooz (@yanxchick) March 18, 2014
Shows you how clueless this guy Isaacson is.
UD: Hockey 2014-15 calendar: Aug: MVP; Sept: OPC; Sept: Fleer Ultra; Oct: Artifacts; Dec: UDS1 #lvis— Sooz (@yanxchick) March 18, 2014
So if you like high end hockey .... you've got plenty of time to save up!
Topps today, after Panini's Industry Summit announcements pic.twitter.com/Qw02N6ois0— MikeE P (@CubsfanP) March 18, 2014
Nothing cool ever happens this day .... at the Summit that is.
- Created on Friday, 28 February 2014 00:36
Let's Be Exclusive
I remember in high school you'd go exclusive with a girl you thought was just right - even if it meant missing out on the benefits of being single. First and foremost, it's guaranteed pu$$y, additionally it's less work to just call one girl than have to go out each friday night and find a new one.
Sometimes less is more.
NHL owners don't care about cards. Remember the money the NHL gets from these companies is divided up among many NHL owners. It's not much money for people who are usually already very wealthy.
That being said, most of these guys would bend down and grab a quarter off the ground - so you better believe they'll let people make cards with their teams' logo on it for money.
One of the biggest reasons why leagues like exclusives is it's less work for them. Remember, each card needs to be approved by a rather lengthy approval process. It's explained well in this article:
To date, Panini & Upper Deck have pumped out over 41,000 cards during the 13/14 NHL season. And the seasons not over!
Imagine paying someone to approve all that. It'd be a full time job, and the NHL licenses 1,000's of other products.
Sometimes less is more.
Panini got into the trading card in a big way beginning in 2009. Since then, based on reports, I'd estimate Panini has spent $60,000,000+ on just "endorsements, rights and memorabilia deals." They also employ 110+ people.
That's a ton of money. ... No wait - that's a **** ton of money.
Why would you invest all that money and let Upper Deck outbid you for a license that the NHL is only going to sell to the highest bidder?
Because it's not worth it. Today's "decision" by the NHL was as much Panini's top brass sticking to a price that will actually make them money. Remember, if Panini had come up with more cash they would have the exclusive ... and the fact Upper Deck bought it shows you how much an NHL license is worth.
Not much. Especially to a company that is trying to sell for 1 billion Euros.
Don't be surprised the top brass at Panini Group divest even further from the trading card business in the future. That goes for current or future potential buyers of Panini. Making high end trading cards is both labor and capital intensive - stickers aren't.
Sometimes less is more.
Personally I think collectors are the only ones who loose in this situation.
#1 Upper Deck lands an exclusive license they needed, especially having Gretzky locked up.
#2 Panini ditches something that doesn't make them much money, and allows them to focus more man hours on the sports they do still have. Not to mention, the company has been for sale for over a year. Maybe potential buyout groups want this to be a sign of things to come? Panini's never going to come out with a press release and blame anyone but the NHL - that's because they can't say "we didn't bid high enough because our strategy going forward is going to be different"
#3 The NHL gets to cut down on the number of cards/sets they need to approve - therefore cutting headaches on their end. They don't care about Upper Deck or you. When Upper Deck's license expires, they'll squeeze the next idiot who wants to pay the most for it. These NHL owners all didn't get rich being nice to people.
Personally I see today as more of a strategy shift that will be taking place at Panini than the NHL making a big move. Leagues care about money, not companies, cards or collectors. Blame who you want - but Panini ain't gonna make it rain like they have the last 5 years.
- Created on Wednesday, 05 February 2014 20:36
Let's Keep it Dry For a Second
For baseball, the largest market, Topps has exclusive rights in the trading card category from MLB Properties and has the companion MLB Players Association license. Competitor Panini America also has a license with the MLBPA. Because Panini doesn't have the MLB Properties license, they can't use MLB logos and team names on their cards. They can show images of players but MLB licensed logos have to be 'airbrushed' out on player jerseys and hats. Companies like Topps and Panini's entire business revolves around having a license from a sports league or players association. Imagine the EA Sports "Madden" video game without the real players or NFL teams. Think they would sell many games?
"Oh, and then there was the report last summer from FOX News on Panini America’s pioneering HRX Video Trading Cards. Both the CW 33 and FOX News reports would seem to indicate an industry that is not dying at all but transforming for a new generation."
Funny thing is, Panini didn't pioneer the technology, they just paid a vendor for it. I recently put in a phone call to the company who made the HRX video cards for Panini. The employee said they no longer had a relationship with Panini, but he asked if I wanted my own custom HRX card. I hear crickets coming from the Dallas, TX area... or maybe they are busy scanning QR Codes.
I guess what Panini failed to mention were that packs in the 1980s and early 1990's were sold for less than a dollar during that time. Boxes of cards produced today have wholesale prices in the hundreds, even thousands of dollars. The cards should hold their value if you increase the price 1000%. C'mon guys.
The single biggest revenue stream disclosed in the filing for the MLBPA is the video game segment. Annually, Take Two Interactive's MLB 2K franchise is a bigger revenue winner for the MLBPA than the entire trading card category. In 2011 TTWO paid the MLBPA $15.4 million, and add MLB The Show (Sony's) payment of $3.52 million and you get $18.92 million. Almost double what Topps paid in 2011; keep in mind it was Topps' best year from the numbers I have.
The MLB 2K game is popular, but no where near as hot as other video game titles such as Grand Theft Auto, Madden or Call of Duty. I wonder how many people in the sports card industry realize a 10th tier video game is a bigger money winner for the MLBPA than the totality of every baseball set Topps makes during an entire year.
Let's take a look at the royalty payments made by sports card companies to the MLBPA from 2005-2012. The figures are in millions. The MLBPA gets a % of every sale using MLB players. So, in effect, you can kind of tell the total revenue a particular category generated for the PA.
Also consider this revenue gets split up to all the members of the players association. The director of the MLBPA makes over $1 million a year. At the end of the day, the cards are pennies in the pocket considering the salaries some players are able to earn.
|*In addition to the $9M payment, Topps owed the MLBPA $8 million. It's believed the filing of the LM-2 was done prior to Topps' scheduled payment to the PA.|
If you're in the Topps camp you can spin the numbers in your favor. In 2005, Topps lagged behind Donruss and Upper Deck in MLB card sales. Just six years later, they are the only ones left standing with a MLB Properties license. If for some reason you only care about Topps and loathe every other card maker, the numbers are a thing of beauty. Private equity ownership Madison Dearborn Partners successfully eliminated any and all serious competition. Even before MDP bought Topps in 2007, the then current Topps management correctly predicted the fall of Upper Deck during a quarterly conference call with investors. It was almost like Babe Ruth calling his shot.
Put a blindfold over the card company names, and just look at the total payment to the MLBPA. It shows a less glorious story. Since 2007, the total royalty payments to the MLPA have declined, and fast. In addition to the falling revenues, collectors of cards have less choices starting in 2006.
Fleer was the first to go when they ceased operations in 2005. To show you how fast these card companies can fold up shop take a look at this timeline for Fleer. Note how quick they went broke.
Donruss lost their MLB license starting in 2006, and hung around long enough to sucker Panini into purchasing them in 2009. Would Donruss have gone broke? Probably. Can I prove that? Nope. The fact that the MLB didn't renew with Donruss should speak volumes. It also tells you all you need to know about the sports licensing game. A card company needs the license from the league WAY more than the league needs the card company. I mean it's laughable. The league can cut you off at any moment. That should be obvious. Wake up. These card companies are small fish and I treat them as such. They can be replaced or eliminated at any time.The Upper Deck story is far more complicated and somewhat sad. Glory days at the now vacant 246,668 sq/ft company headquarters were when Richard McWilliam (October 20, 1953 – January 5, 2013) would drive his Bentley on the sidewalks of the property. Upper Deck was ballin'. Somewhere along the way Upper Deck, and certainly McWilliam lost their juice. Former employees will recount tales of days they were worried their paycheck wouldn't show up on time. Upper Deck missed scheduled payments to various leagues including Major League Baseball. This all led to some ugly legal battles that have left Upper Deck in ruins. The company will probably go broke or get purchased in a similar way as Donruss. Just give it some time, it could go at any moment.
|The Bad Economy|
A favorite excuse of card company execs is to blame slacking sales on the Housing/Stock Market/Fake Rich crash of 2008. It's such a cop out. I remember getting on ShareBuilder during the 2008 stock market crash and it was like a 75% off sale at Blowout Cards. The market has rebounded to record highs, and when I go to buy stocks now, I wonder where the heck my coupon code is.
Ok, so you say the stock market rebounding is a poor example. Regular Joe Blows don't have the money anymore to buy sports cards. I can see that. Ok, why haven't the card companies done anything about it? Why are box prices continuing to soar in price? Whose fault is that? I don't run Topps or Panini. I can't change their business. That's their role. If they are pricing out a bunch of potential collectors, maybe they should change the business and configure products differently. Or maybe they are just trying to hit minimum sales targets set forth by the league?
So you say it's hard to find these cards in stores? Whose fault is that? Hey Topps, Panini. Pick up the phone and make some calls. That's what you do when you have a product to sell. Hustle. Hobby shops don't want to stock your product? Call and schmooze them. There are lot's of regular sports stores, about 5 of them in my local mall. Call them and see if they want to buy some product to put on the counter. With all the other expensive crap these stores have, a pack of Panini Prizm for $5 appears cheap.
Funny thing is. I had a sports card store from 2006-2008. Wow. Talk about bad timing. Epic bad timing. I owe close to $20,000 on a loan I still pay for. In February 2013 I wrote an article on the top 5 reasons I failed at the business. I didn't blame the economy, I looked in the mirror. That's what you do when you fail. Don't make excuses. There are card stores still open today that weathered the 2008 crisis. Why couldn't I? I failed, it's okay to admit that and learn from it.
The irony is that I never made money in the sports card game until after the 2008 economic downturn. Always a net loser before 2009. So the bad economy thing, just doesn't resonate with me. If your business model sucks, change it or go broke. Real simple.
|Go Ahead, Make an Excuse Why Not|
Why don't these card companies authenticate their own cards? No I'm serious, like PSA & BGS would but don't even grade them. Charge some money, make a margin. I can imagine people buying a box, then sending the cards to Topps to "authenticate" them. Such a sick greedy business, I love it. Easy sucker money. Look how easy the grading money has been for PSA & BGS. Collectors Universe (PSA) does quarterly conference calls about raking in money from coin and card grading. Why do card companies let all the good business models go to other outlets they have no piece of?
Topps made failed attempts at running their own marketplace: The Pit and eTopps. Seems like fan boys would be slurping at the opportunity to list their cards on the "Official Site to Sell Topps Cards". There are way more people who want to sell cards than buy them. Why don't you grab some of that money? COMC has, and shoot, eBay sure has. I find it funny that the #1 place to buy and sell sports cards, eBay, has absolutely no ties or obligations to the industry. I look at it like this, these card companies need to find a way to continue to get revenue off sets they've produced long ago. eBay and COMC sure have proven a business model, I guess Topps and Panini will just let them take all the money.
Topps: Owned by private equity. When is the last time you've heard a statement from ownership? Do they have a CEO? Research a little bit what private equity does when they buy a company. Also, look into the few years at Topps before the 2007 sale to MDP. The plan all along was to eliminate competition, seek exclusive licenses and run a lean business. These guys don't care what you get out of your packs. If they did why would you have to wait years for redemption cards to be exchanged? Kids in their 20's are product developers on the famous Bowman brand. How much do the cards really matter to the ownership at Topps? If you like new baseball cards, you're forced to buy Topps and that's just the way they like it.
Panini: Who knows what will happen here. Could they go broke like Upper Deck and Fleer did? Yeah, that's probably the way I would lean. What are they doing different? I almost feel like they wish they had the culture and buzz Upper Deck had during the glory years. Sad thing is, Panini is just 20 years too late.
Upper Deck: When it gets to the point where employees are worried they won't get paid..... well. That does hit a soft spot. Hopefully they are able to sell the assets they still have before it gets to be game over.
Is the Industry Dying: I'm probably not the best guy to ask. The business aspect of the hobby gets my juices flowing, not sparkles in Series 1. I'd rather read through the old Fleer bankruptcy files then open a pack of cards. I don't think the business of making cards like Topps and Panini is a good model. Real bad actually. They not only have to get a license (where the card company is the *****), but they then have to get separate autograph deals with players, secure game/event used items. Shoot, they don't even print and manufacture the cards themselves. That's all outsourced. Have fun with that business.
That doesn't mean it's all bad. Over the years billions of cards have been printed and there are people who want them. If you have Michael Olowokandi autographs, then you can probably find me. It's the accessory businesses where you can find success and there are plenty of examples.
"Service" type businesses have proven to be a good way to connect collectors and keep the industry alive, primarily online. A platform to sell cards like COMC. A website or forum where information is shared or discussed. BGS and PSA have got to be making gravy train type money. I shouldn't have to tell you how much money eBay and PayPal make servicing sports card buyers and sellers.
While the service industry can thrive, the retail end can be brutal. People ask me quite often if they should open a sports card store. I reply: are you crazy? I actually think most buying and re-selling models in the sports card world are bad ideas at the moment. Things would have to dramatically change for me to sign off on them. Most are real low margin, lots of work. No barrier to entry. Anyone can open a store. Anyone can group break. Anyone can rip and flip. The odds of you making real money is slim. Good luck.
This thing isn't dead. There are dead business models but you better not say anything about it.
Disclosure: I've purchased zero retail rack packs of 2014 Topps Series 1 as of 2/6/2014
- Created on Saturday, 18 January 2014 21:18
Industry Evolves - Poorly Run Companies Don't
I was reading an article on a completely different business the other day, that described a 'cigar butt' type business. Basically a cigar butt business has been on a steady decline for many years - but still has one last puff of smoke left in it that can keep it alive for a little while longer, before burning out for good.
Sounds like an industry you know???
Sports trading cards aren't quite down to the cigars wrapper, but it's getting close. A while back CBS posted a piece that discussed how kids were long gone from the hobby - and that the hobby will 'die out with the (old) collectors' who are still around today.
Painini's reaction was immediate denial and understandably most collectors felt the same way. In the midst of 'hot' or 'double' rookie class years, things might seem brighter than they appear.
Also, I've never been to a collector coin show or a gun show. But I'd bet a Michael Carter-Williams RC it's all old men at those shows too.
I'm guessing those industries think we'll all get into guns & money as we get older.
They've been right for hundreds of years, so who's to argue with that logic?
So industries can survive, even if only old people are collecting the stuff ... but the card companies haven't evolved over the years to adjust to the times. What exactly does Topps & Panini do differently than the last card company that went broke?
Not much right?
The CBS piece I link to earlier blames, in part, video games for kids leaving the hobby. Appears now that iconic video game maker Nintendo is now realizing their business model is stuck in the 1990's too.
I must be getting old. Nintendo killed sports cards ... now Nintendo is dead?
The card companies business model has not changed since Super Mario 1 came out. And neither has Nintendo's. Sure the consoles, games and sports cards look a little flashier & cost more - but under the hood of Topps, Panini & Nintendo you have the same tired motor they were running in the 1990's.
One strategy I think would be effective for anyone in this industry to do - is to start being honest with your customers!
Often speaking up in the sports card world means you don't get free boxes, you're not welcomed to things like the Industry Summit and you don't rub elbows with the employees of the 'little guys' that run these sports card manufactures.
But look what Dominoes Pizza did a few years ago. They admitted their pizza sucked - and have embraced trying to make it better since then. The company embraced declining sales & quality - then used it to fuel their growth in the years ahead.
These sports card idiots have it all wrong!
When the prevailing perception of your product is that it sucks and could get a lot better - the best thing to do is embrace that fact!
Wide-eyed kids don't collect these cards anymore. Your consumers are older and have bills/responsibilities they didn't have when they were 10 years old. On top of that consumers are more educated & informed these days about the products they buy. They appreciate honesty. When Dominoes came forward and admitted something I've known about their product for years - it completely transformed how I thought of that company & I never tried their new pizza!
The elephant in the room of many sports card circles is that it's fading away. But when someone acknowledges that fact - they are belittled by a few hundred people and companies who still have the same practices they did 20 years ago. Your un-invited to industry events and certainly no one will send you something for free.
The very few industry events I've attended - even fewer people in this business are willing to candidly talk about the future of this business. Most are in denial. That goes for card companies, card shop owners, bloggers, group breakers and conference operators. This hobby is fading away in part because of that denial, and the unwillingness to listen to anyone that challenges decade old business practices that by all accounts aren't generating massive profits for anyone in the business.
Forgive me for wanting to help you guys make more money. Instead everyone is so focused on keeping their existing piece of the shrinking pie - they can't see 4 or 5 years in front of them. Anyone who wants to address that question is treated like they don't know what they are talking about.
Dominoes will tell you its profitable to listen to your customers ... even go as far as to put their negative comments in your own TV commercials. People in the sports card business could learn from that.