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Collectibles: The Story Behind Fanatics Acquisition of Topps Trading Cards

By Gary Symons

TLL Editor in Chief

If you can’t beat ’em, join ’em.

The venerable Topps trading card business has agreed to an acquisition offer from Fanatics … the same company that yanked its license with Major League Baseball in August last year.

It’s a move that The Licensing Letter predicted at the time, as well as the very real possibility that Fanatics will also make a move on other rival collectible companies like Panini and Upper Deck.

Fanatics says it has completed the acquisition of Topps trading cards, a top licensed trading card brand that has serviced collectors, fans, and retailers for more than 70 years. The acquisition of Topps’ sports and entertainment division includes all parts of its iconic worldwide trading cards and collectibles business—both the physical and digital divisions—which sells in more than 100 countries and has physical operations in 10 countries, including the UK, Germany, Brazil, Italy and Japan.

The speed of the acquisition is breathtaking, given Fanatics didn’t even have a trading card division until 2021. That was the point when Fanatics secured exclusive, long-term trading cards rights from several of the leading professional sports leagues and players associations, including Major League Baseball (MLB), the Major League Baseball Players Association (MLBPA), the National Basketball Association (NBA), the National Basketball Players Association (NBPA) and National Football League Players Association (NFLPA).

Fanatics says “the addition of Topps, which also has rights with Major League Soccer, Formula 1, UEFA and Bundesliga, significantly accelerates the buildout of the Fanatics Trading Cards business, as the company adds world-class expertise, infrastructure, an iconic brand and a broad range of capabilities from the industry leader. The deal jumpstarts Fanatics Trading Cards’ MLB and MLBPA rights to design, manufacture and distribute trading cards, which begins immediately versus the original combined start date of 2026.”

 “With trading cards and collectibles being a significant pillar of our long-term plans to become the leading digital sports platform, we are excited to add a leading trading cards company to build out our business,” said Fanatics CEO Michael Rubin. “Their iconic brand, commitment to product excellence and passionate employees worldwide will allow us to immediately serve our league and players’ association partners and our fans.”

To ensure seamless ongoing operations, all of the approximately 350 global Topps sports & entertainment employees will become part of Fanatics Trading Cards. Current Topps Global VP, GM, David Leiner, and VP, GM Topps Digital, Tobin Lent, will continue to run Topps within Fanatics Trading Cards, a separate subsidiary of Fanatics. Both executives will report directly to Doug Mack, Fanatics Inc. Vice Chairman and Fanatics Commerce CEO.

“The strong emotional connection between Topps collectibles and consumers of all ages—built through 70 years of tradition, starting with the Shorin family—will make it a jewel in the Fanatics portfolio,” said Michael Eisner, owner of the Tornante Company. “Michael Rubin is the perfect entrepreneur to lead this company forward.  Like any crown jewel, I and my partners at Madison Dearborn will miss our many years of ownership where we grew a highly profitable business through strategic licensing partnerships, global expansion, and digital transformation. We’re proud of what the Topps team has accomplished, and we look forward to seeing what Michael and his team do to continue growing the Topps collectible business while staying true to its iconic history and relevance to consumers.”

Fanatics also says “the combined vision and distinct strengths of both Fanatics and Topps will improve the collector experience,” a statement that has to be worrying for Panini and Upper Deck.

The acquisition of Topps is wholly in character for Fanatics, which has followed an extremely aggressive acquisition strategy in the area of sports merchandise. Fanatics also has a major advantage as it owns a database of more than 80 million sports fans globally, which will enhance and expand Topps’ existing digital capabilities and grow the market opportunity for all participants. In short, Fanatics was scary before the acquisition, and now it’s just downright terrifying.

To better understand what Fanatics is doing, and why, it’s worth looking back at the company’s savvy takeover of the MLB contract last summer. That was when the MLB announced it had dropped Topps from its trading card roster, and had given the lucrative licensing agreement to Fanatics.

The change would have taken place over time, due to the nature of the contracts. The Topps contract for player images expires in 2022, which the players’ union controls, while the contract for MLB team logos expires in 2025.

The decision, which reportedly took Topps completely by surprise, was a devastating blow for the company. The MLB was not only one of Topps’ most important licensing partners, but the move also crushed the company’s plans for a $1.3 billion go public deal, backed by Mudrick Capital Acquisition Corp II.

As reported in The Licensing Letter in April (see link below), Topps had announced a deal to merge with a Special Purpose Acquisition Company, or SPAC. The merger was set to go to a shareholder vote next week, but the entire deal was cancelled the day after the MLB decision.

Topps’ executive chairman Andy Redman said the company had been effectively sucker punched by the MLB, and was left completely in the dark about the talks between MLB, the players’ union and Fanatics.

Topps was “… unaware that Major League Baseball was negotiating with anybody other than Topps regarding our rights beyond 2025,” he said, adding the company only learned days later that “… that a deal was completed, finalized and exclusive with Fanatics.

“Similarly, as recently as the All-Star Game on July 13, in two one-hour conversations, Evan Kaplan from MLB. Players Inc. never indicated to Topps that the union was negotiating with any other parties about our rights,” Redman added.

Fanatics has been very aggressive about its expansion into new sectors of the sports licensing industry. Much larger than Topps, with a recent valuation of $18 billion, Fanatics has been acquiring key competitors and has also been negotiating deals with major league teams that go beyond its traditional market in apparel, such as hats, T-shirts and hoodies.

It now appears the establishment of a new digital collectibles division called Candy Digital in June was the first step in a plan to move into the trading card market.  Seen in retrospect, the company’s work on NFTs (non-fungible tokens) was likely a precursor to an ongoing takeover of the trading card business by Fanatics.

Back in April of this year, Topps had launched its own NFT offering with the MLB, but in June, only two months later, Candy Digital also teamed up with the MLB in what the league called an “expansion” of its NFT program.

“I feel like this is e-commerce 25 years ago,” said Fanatics CEO and Founder Michael Rubin. “I’m not just talking about NFTs but leveraging sports digitally. We sell millions of MLB jerseys a year. Why shouldn’t a jersey come with an NFT? We haven’t even begun to imagine where this can go over time. It’s our responsibility to innovate and disrupt this business.”

It’s fair to say that Fanatics has disrupted the business this week, hitting a bases loaded home run versus their top competitor in the sports collectibles business.

Fanatics said at the time that the deal with the MLB will result in the creation of a new trading card company. Representatives of the MLB and the players’ union will be given seats on the Board of Directors, and the league may even get a stake in the company. It is that company that will likely be merged into a new division with Topps, making it now the major player in the trading card arena. While perhaps not surprising, the acquisition is a worrying development for others in the collectibles industry. Fanatics has a history of acquiring other companies after successfully taking away some of their business. For example, when Fanatics won the rights for major league uniforms from the company Majestic, it later acquired Majestic.

Back in August, The Licensing Letter predicted Fanatics would try to acquire one of its competitors, and with the collapse of Topps’ go-public deal, it was likely to be them, despite any hard feelings over the MLB strategy. That’s exactly what happened this week, and it is now equally likely Fanatics will now try to corner the market by bidding for Panini, Upper Deck, or both.

Even more worrying for competitors is the fact Rubin is very closely tied to all of the major leagues in North America. In fact, he is the current owner of the NBA’s Philadelphia 76ers and the NHL’s New Jersey Devils, and he has made lucrative offers to other major league sports executives. Reporting by the Wall Street Journal, relying on sources close to the deal, also indicated that in addition to the MLB and the MLB Players’ Association, the NBA, the NBA players’ union, and the NFL players’ union will all be getting a stake in the new trading card company being formed by Fanatics.

Right now, the NBA and the NFL have licensing agreements with Panini America. The NBA’s agreement with Panini runs through 2025 and the NFL’s is through 2026. Most observers in the space now expect Fanatics will make a play for those licensing agreements as well, a job made easier by the fact the NBA and the player’s unions were getting a stake in the new business.

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