Guarded optimism. That was the main thought of several hobby shop owners around the country after learning about Fanatics’ acquisition of Topps’ trading card and sports entertainment division.
The move, officially announced Tuesday, means the Jacksonville, Florida-based sports merchandise retailer will assume Topps’ current licenses with MLB and the MLBPA almost immediately. In August, Fanatics secured future licenses to produce cards for baseball, the NBA and the NFL. Tuesday’s deal accelerates the process.
While the actual price of the transaction was not revealed, The Wall Street Journal, CNBC and The Athletic reported that it was in the neighborhood of $500 million.
Under the new deal, the leagues and players’ unions would have a stake in Fanatics’ new trading company, which will be led by former StockX co-founder Josh Luber, who is the new company’s Chief Vision Officer. Fanatics Trading Cards is designed as a separate business valued at $10.4 billion.
“As a collector, I am very excited that all of the Topps brand will survive,” said Joe Davis, who runs J&J’s Sports SuperStore (GotBaseballCards.com) in Loganville, Georgia. “As a shop owner, I am kind of waiting to see what the next steps are.
“I’m not sure whether to be excited or concerned.”
Don Joss, who runs DJ’s Sportscards in Renton, Washington, confessed that he “didn’t know what to think.”
“Fanatics does a lot of direct-to-consumer business,” said Joss, 50, who has run his business since he was in high school. “Nobody from MLBPA has told us anything, We’re in the dark.
“I’d be lying if myself and other shop owners weren’t concerned.”
A third shop owner, Chad Weldon, who runs Sports Card Junction in Pittsburgh, said he was “in the same boat as anyone else.”
“Our shop’s heartbeat is optimistic,” said Weldon, 29, whose family has run the shop since 1995. “But it’s still up in the air. They’ll be cutting out the middle man — does that mean wholesale or shops?
“It depends on how they define middle man. Fanatics does a lot of direct-to-consumer, so there’s a lot of mixed messages,” Weldon said. “You’d like a direct statement.”
The sale includes all parts of Topps’ worldwide trading cards and collectibles business – both the physical and digital divisions — which is sold in more than 100 countries and has physical operations in 10 countries, including the United Kingdom, Germany, Brazil, Italy and Japan. Topps would retain control of its candy-confectionery and gift card divisions.
Topps employs more than 350 people, and Fanatics indicated Tuesday that those employees would keep their jobs.
Could not be more excited for the future of our trading card business with the acquisition of Topps, the preeminent and most trusted trading card brand worldwide!! https://t.co/4N1D1DpmZX
— Michael Rubin (@michaelrubin) January 4, 2022
Ed Schauder, a longtime sports and entertainment lawyer specializing in corporate and securities, called the deal “A major business corporation transaction.”
Schauder, who is based in Palm Beach Gardens, Florida, called Fanatics “a disrupter,” pointing to their stunning deal to secure the licenses in August. He added that Rubin, the company’s CEO, was “a genius,” who did Topps “a bit of a favor.’
“There are pleasant acquisitions and there are settle-a-score acquisitions,” said Schauder, who works for the firm Nason Yeager Gerson Harris & Furnero. “This one was pleasant. It was a fair deal.
“Topps could have gone down the garden path.”
Schauder’s predictions do not bode well for card shop owners, though.
“You will have a Topps brand with a Fanatics spin,” he said, emphasizing that Fanatics got into the cards and collectibles business to make money. “The distribution of Topps will change.
“I think (card shops) are going to be phased out. Fanatics wants to be a more direct-to-consumer operation. A lot of mom-and-pop shops will go out of business.”
Luber has visited hobby shops across the country and at least in online interviews stated that he believes they’re important to the hobby’s overall success.
“I think that they’re going to be visiting a lot of shops across the country and take a good peek at who their potential partners are and make decisions based on their analysis of what does that business offer,” said Rob Veres of Burbank Sports Cards in an Instagram post Tuesday. “‘What’s the value add? What are they doing that we can’t do on our own? Do we want this shop to be representative of the Fanatics brand?’ I think they’re going to support most shops in some kind of way but will they support them on an equal measure?”
What remains to be seen is whether card shops, if they do survive, will still be able to move product from Topps as they have in the past.
“We have preorders of Topps products for the next eight or nine months,” Weldon said. “Are we still getting it?”
There is also the social aspect. Can card shops remain a gathering place for collectors to meet and chat about the hobby if the amount of product available to buy in-store is decreased?
“They want to into the store and b.s., like in a bar,” Weldon said. “If Fanatics plans to keep the base and let stores keep the product, then that’s good.
“Apparel doesn’t have emotion behind it. Cards are different. Most of collecting is about the experience of going to the store,” he added. “Shops are the front line. I can’t tell you how many times that parents and grandparents have come into the shop who needed stuff explained to them — what to buy, how much to buy.”
Weldon said he was encouraged by Rubin’s tweets about the acquisition, noting that he mentioned hobby shops directly.
“I saw that as a good sign,” he said.
“I envision that Fanatics is going to respect the hobby while bringing in new ideas that will help the hobby move forward.”
In a tweet Tuesday, Topps stated that “after 70 years of being on the forefront of the trading card industry, there is one thing we know: this is only the beginning as we look to enhance the experience of collectors, fans, partners and hobby shops.”
It’s go time. 🤝 Let’s do this, @Fanatics! pic.twitter.com/TUU59cXQ0A
— Topps (@Topps) January 4, 2022
Again, another encouraging sign for card shops. How encouraging remains to be seen.
“There’s a question about which brands we are going to be able to sell,” said Davis, who opened his shop 31 years ago, fresh out of school from Berry College near Rome, Georgia. “I am hopeful they are all going to be included.”
Schauder believes that Fanatics, while currently keeping Topps’ employees, may winnow out some of the workers.
“I’ve done a lot of corporate deals,” he said. “They eliminate the redundancies. That’s how they make money.”
Schauder also believes Fanatics will enhance Topps’ future in digital products, perhaps even in non-fungible tokens (NFTs).
“It’s logical on a digital product to not only capture the market but to expand the market,” Schauder said. “There is no doubt in my mind that (Fanatics) will make their own mark.
“Topps’ NFTs started off with a bang but sputtered. I think you’re going to see Fanatics put their stamp on NFTs.”
While sports cards and collectibles have a future, the card shop owners are hoping they will remain a part of it.
“I’m going to the Topps conference next month, so hopefully we’ll get more information then,” Davis said.
“I’m super excited but there’s a devil on my shoulder saying that my livelihood can be affected,” Weldon said.
“I hope things can continue,” Joss said. “We spent a lot of decades clawing to survive.
“I hope they don’t take it away once we got to the mountaintop.”