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SportsBiz: Baseball betting it all on Topps
Question of the Day
Major League Baseball this week announced an exclusive deal with Topps to produce baseball cards featuring minor league players, broadening a relationship that could bring some much-needed clarity to the collecting hobby.
The announcement comes after Topps brokered a similar deal for trading cards of the big leagues last spring.
While the exclusive deals will make it tough on Topps' competitors, most notably Upper Deck, baseball officials said the agreements were motivated largely by a push for simplicity.
The baseball card collecting hobby was once big business but has declined since the early 1990s in part because too many products were cluttering the marketplace. According to MLB, there were more than 90 baseball card products released in 2004, making it hard for collectors to keep track and impossible for retailers to keep up.
"You can't collect stuff that never shows up on the shelf," said Howard Smith, MLB's senior vice president of licensing. "We were absolutely drowning the retailer, and we were killing ourselves."
Smith said overall licensing revenue this year will be about flat because of the slow economy. But in the decade he has been with MLB, there has been year-over-year revenue growth in every licensing segment - except one.
"The only business that declined over the same period was trading cards," he said.
In an effort to reduce clutter in the marketplace, MLB cut its partnerships to two companies, Topps and Upper Deck, but the sales trends didn't change, Smith said. Baseball eventually struck an exclusive deal with Topps after being swayed by Michael Eisner, the former Disney CEO who bought the card manufacturer in 2007. With Eisner, baseball is hopeful Topps will bring young fans back into collecting.
"The collectors are still in the business," Smith said. "We need to bring in new collectors. We need to simplify it. We need to get the viability back into the marketplace, and we need to get somebody investing in the business."
One big downside to the deal is that Upper Deck, a company that has produced cards since 1988, now has no rights to use official team names and logos on their cards. (Imagine cards featuring players not in uniform and playing on generic fields.) And there is always a fear that an exclusive deal with Topps will provide no incentive to produce compelling, reasonably priced cards.
But Smith said Topps products should be as good as ever. The company and MLB have been aggressive in coming up with ways to target younger buyers, whom they hope will resurrect the hobby.
"We met with their team for three hours, and about half of it was about how we're going to get kids and what grass-roots events we're going to plan for next year," Smith said. "Literally, it got down to the point where we got down to going to every single employee and trying to figure out how to tie in grass-roots activities into the individual towns to create some great pilot programs."
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