FANATICS BASEBALL CARDS DEAL

Fanatics has become a dominant force in the sports merchandise industry since their founding in 1995. Starting as an online retailer, Fanatics has expanded into areas like licensed sports apparel, collectibles, and most recently acquiring exclusive rights to produce baseball cards for the MLB, NFL, NBA, and NHL. This major deal has shaken up the trading card industry and solidified Fanatics’ position as the top player in the licensed sports product space.

The trading card industry had been dominated for decades by companies like Topps, Panini America, and Upper Deck. These “Big 3” held exclusive licenses with various leagues and teams to produce official trading cards featuring current players. However, Fanatics saw an opportunity to disrupt this model and pursued acquiring the coveted MLB license, which was the most lucrative in the industry.

In 2020, Fanatics outbid the incumbent Topps for the exclusive MLB player license starting in 2026. This 10-year deal was valued at over $1 billion and granted Fanatics the sole right to feature active MLB players in trading card sets. It was a massive blow to Topps, who had held the MLB license continuously since 1948. Fanatics also acquired rights to produce licensed NFL, NBA, NHL, and MLS trading cards starting in 2021-2022.

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Fanatics’ strategy was to leverage their massive e-commerce platform and data-driven approach to better monetize the trading card category. They planned to release more set variations, insert cards, autographs, and memorabilia cards to drive higher average sales prices compared to traditional wax pack models. Fanatics also aimed to better integrate the physical and digital card experiences by launching an NFT and digital collectibles business.

The transition has not been entirely smooth. Many longtime collectors were skeptical or even hostile towards Fanatics entering the space due to loyalty to brands like Topps. There were also production issues as Fanatics ramped up card printing operations to meet unprecedented demand driven by the pandemic. Early Fanatics sets like 2021 NFL Draft suffered delays and quality control problems that disappointed customers.

However, Fanatics has shown a willingness to listen to collector feedback and make improvements. Their 2022 offerings have seen better organization, more parallels and serial-numbered cards in higher end products. Fanatics also acquired the respected Blowout Cards retailer to strengthen their collectibles business. Perhaps most importantly, Fanatics has delivered on exclusive new license deals that were previously unattainable.

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In 2022, Fanatics signed a landmark 10-year agreement with MLB to be the exclusive trading card licensee for retired players starting in 2025. No other company will be permitted to feature former MLB stars in sets, a huge coup. Fanatics also acquired rights to the Premier Lacrosse League, bringing that sport into the trading card realm for the first time. These deals demonstrate Fanatics’ financial muscle and vision for the long-term growth potential in licensed sports collectibles.

The trading card market has exploded in value and popularity in recent years, driven in part by the pandemic. In 2021, overall trading card sales reached $5.3 billion according to The NPD Group, more than double the level from just a few years ago. Fanatics is well positioned as a technology-driven company to capitalize on this growing interest among both casual and hardcore collectors. Their massive e-commerce presence allows for streamlined online sales and fulfillment.

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Fanatics’ model of acquiring exclusive long-term deals for entire leagues and sports is a major paradigm shift. It consolidates rights under one roof rather than dividing them among multiple competing companies. This provides more certainty for investors and allows Fanatics to plan ambitious multi-year strategies. Of course, monopolizing the marketplace also concentrates power and control in one entity. Time will tell if this approach sustains collector interest versus a more competitive environment.

In the coming years, all eyes will be on how Fanatics evolves the trading card industry. Their focus on innovative new products like NFTs and memorabilia cards could help attract new audiences. But maintaining quality control and pleasing loyal collectors will also be crucial. If Fanatics can hit the right balance, they are poised to take trading cards to new heights globally. But any missteps in such a dominant position may have major consequences and backlash. Either way, Fanatics’ ambitious vision has already left an indelible mark on the business of sports collectibles.

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