The short answer is no.
The long answer is also probably no, but it’s getting difficult to continue thinking it’s not their hobby endgame.
With the impending takeover of three of the top four major North American sports trading card licenses, a mini-monopoly of sorts on licensed professional sports apparel, their acquisition of Topps and their manufacturing capabilities, full distribution control, an auction platform with vault service, and their own Fanatics Live! breaking platform, it’s hard for the common collector in the hobby to idly stand back and not at least question their direction. The more recent announcement of the Events arm of the company now gives them an opportunity to also directly compete with the major card/memorabilia shows and conventions throughout the US as well. What’s left for them to gobble up?
Is Fanatics an evil empire? I’ll let you form your own opinion but it’s clear they have certainly become a hobby juggernaut. However, when you barnstorm – some would say bully – your way into all these arenas, attempt to take over a space, and construct barriers in order to suffocate those already occupying that space, it’s only a matter of time before one (or many) of those affected will speak up. Enter Panini.
Panini filed a 56-page case in Florida against Fanatics, accusing them of many things including using “collective force of these exclusive agreements to – even in the short term – coerce anticompetitive, exclusionary deals with Panini’s employees, a critical manufacturing supplier of trading cards to Panini, and star professional basketball and football players-all well before Panini’s existing licenses are due to expire.” In other words, and I’m no legal expert, it sure sounds like this is none other than a good ole’ fashioned Antitrust case.
For those of you that keep your nose out of the hobby drama that pops up quite frequently these days, maybe some background is necessary. In January 2022, Fanatics announced that it had completed the acquisition of Topps trading cards, the only brand that currently has the MLB/MLBPA license to make cards. The price they paid, as reported by the Wall Street Journal, was about $500M. That seems low to me for one of the largest trading card manufacturers on the planet but I digress.
Topps has been around for 70+ years, making some of the most iconic trading cards in all sports, of all time. Fanatics taking over includes acquisition of their sports and entertainment division, which is essentially their entire trading card and collectible business (that includes digital collectibles like NFTs) in all 10 countries they operate in. In the recent filing by Panini – which you can read in its entirety here – they further state:
“…because Fanatics had acquired 20-year exclusive deals with Topps’s primary business partners – MLB and the MLB Players Association – the reality was that Topps had almost no choice but to sell.”
Panini also alleges that the Topps deal came about only after Panini themselves refused to bend the knee to Fanatics. Makes you wonder if they are more concerned with the longevity of the exclusives rather than the exclusive themselves (because you know, kind of hypocritical?).
We already heard of the supposed strong arm tactics Fanatics used to coerce 36 Panini employees to come over to their company, including trying to poach their CEO. In fact, that was the basis of another lawsuit they had already filed against Fanatics earlier this year. Panini’s attorneys laid out much of that in this document, including accusing Fanatics of threatening Panini employees that if they didn’t jump ship, once the licenses shifted they would be out of work in this business permanently.
Perhaps one of the most interesting claims, at least to me, is that of Fanatics relationship with GC Packaging. GCP, as they are referred to in the document, are Panini’s custom manufacturer for their trading cards. Panini claims that Fanatics’ acquisition of GCP violates the contract between GCP and Panini, and is a direct attempt to undermine Panini’s ability to produce their cards, weakening them as a company and making them more likely to sell.
That makes Panini essentially at the mercy of what Fanatics decides to do with their business. If they simply didn’t want to service them, they could do so. Panini’s claim was that 15 of the 18 production lines GCP operated were used for Panini cards and Fanatics takeover put an end to that, thus hampering the release of up to 40 sets back in Nov/Dec of 2022. Maybe that’s not monopolistic but it is surely a pretty aggressive business tactic against a competitor.
Another issue Panini addresses is that a direct competitor now has access to all of Panini’s records with GCP. Every print job they’ve ever done. Why does that matter? They claim:
“Because of its contractual role as Panini’s specialty manufacturer and the firms’ close working relationship over many years, GCP also has access to a substantial amount of Panini trade secrets, such as information about its production runs, product mixes, and form breaks (detailed product specifications that are the “secret recipe” for producing a run of cards). Fanatics targeted and acquired control of GCP to weaken Panini.”
I think this is quite important in the grand scheme, not only from a contractual standpoint (which we don’t know what it actually says) but more as it shows a general business practice for a card manufacturer. Makes me wonder if that is typical or just something Panini did. With Panini claiming GCP is responsible for 90% of their releases, a takeover like that by a competitor would certainly cripple their ability to produce cards. Shutting down print lines or throttling service elsewhere hampers not only production, but most likely quality control, pack out, distribution, and release times. If their estimated numbers are true, I just wonder where the other 10% of their cards are produced.
There is plenty more to digest in this as well including the “bad mouthing” by Fanatics around the industry, the cutting off jersey supply for mem card production, and a bunch of other things too. Here’s the link if you want to read for yourself in its entirety, which you should.
Fanatics response?? Not a surprise at all. They claimed to ESPN that the “lawsuit is a baseless, last-gasp, flailing effort by a company that has lost touch with its consumers, is failing in the marketplace, and has tried unsuccessfully to sell itself.” (Full article here.)
I mean, really what else can they say at this point?
The bottom line is, Fanatics is going to fight this and they have ample resources to do so. I’m sure the first step will be to try and get everything dismissed but these antitrust cases traditionally drag on for a long time and are very costly for both sides.
Does Panini have a basis for their claims? Maybe. But it’s going to be hard to prove some of it, especially arguing that exclusives are bad for the hobby, the industry, or competition when that’s been their own cash cow for many years (as well as all the other manufacturers). The term “clean hands” may come up a lot in this case and rightly so.
Can we blame Panini for filing this, though? Not at all. What choice did they have at this point? I see this as a last gasp, throw it all at the wall and see what sticks kind of move.
But a couple of things could come out of this which I think is a bigger take away. This could become a full scale, pull-back the curtain moment in the hobby. We could get to see much more of the inter-workings of exclusive contracts that aren’t generally made public. We may get a glimpse of the production process that largely is kept secret by the manufacturers. We could have the process of how autograph licensing and memorabilia acquisition by the manufacturers exposed. But most of all, if Panini is successful at this, we could see a ripple effect that will wash over all aspects of the entire hobby, both high end and low end, with all manufacturers across all sports.
Tim Parish is a writer-at-large for Puck Junk. Follow him on Twitter @therealdfg.
Illustrations by Sal Barry.