Licensed sports apparel behemoth Fanatics on Tuesday cemented its position as the new king of the trading-card industry when it dropped its second industry-rattling bombshell in four months — the purchase of the venerable Topps brand.
Now that it’s happened, the move seems almost to have been inevitable. Fanatics, best known for its domination of the licensed pro and college sports merch market, stunned the collectibles world in August when it announced a series of trading-card license deals with Major League Baseball and the National Basketball Association, their respective player unions, and the National Football League.
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What it meant was that Topps, which had been in the baseball card business since 1952, would be left without its core product — licensed MLB cards — by 2026. That scotched Topps’ $1.3 billion plan to go public and created an uncertain future for the brand.
Fanatics CEO, chairman and lead owner Michael Ruben orchestrated a series of quiet deals to land the licenses, which undercut Topps more than card rival Panini, which has the NFL and NBA licenses that will switch to Fanatics in coming years. Panini has a robust international soccer sticker business it retains.
Because the trading-card and collectibles businesses have been white-hot for several years, the Fanatics-Topps deal sent shockwaves through that community. Both companies have their share of fans and detractors, and with a near-monopoly on baseball cards, what Fanatics does with Topps will influence a big segment of the collectibles market.
Below is an FAQ of what we do know and what is yet to come.
What will happen to the Topps brand?
The cards themselves will remain as consumers know them today and will be produced by the same Topps staff and facilities. The cards will be Topps branded as the public-facing product. No radical changes are known to be in the immediate works. Long-term, it’s not yet known if Fanatics will annually market all the same various Topps MLB product lines such as Bowman, Allen & Ginter, Project 70, etc. It’s very likely Topps under Fanatics will see its direct-to-consumer and digital products expanded. Prior to the Topps deal, Fanatics already had a licensed non-fungible token deal with MLB under a business called Candy Digital.
Will Topps cards still be sold in stores?
Yes. Fanatics is a direct-to-consumer e-commerce business at heart, and a robust DTC future is probably in store for Topps, but the plan is to also continue to sell trading cards across all retail channels — and that will include brick-and-mortar card shops and big-box chains like Target and Walmart. The card industry has long had a complex system of intermediary suppliers that sell to retailers (and is affected by industry politics and supply-chain issues), and it’s unclear if that ecosystem will evolve under Fanatics.
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What about prices?
Nothing has been said about any product price increases under Fanatics or retail partners, but it seems unlikely anything drastic will occur outside of traditional market forces (or by the artificial scarcity that now undergirds much of the modern card business, fairly or not).
What else is Fanatics getting in the deal?
The sale includes Topps’ card licenses for UEFA Champions League, Bundesliga, Major League Soccer, Overtime Elite, Athletes Unlimited, Formula One, Europa League, Disney’s Star Wars, Wacky Packages and Mars Attacks. Topps has done one-off e-commerce card sets for properties such as MetaZoo, Avatar, American Cornhole League, Muhammad Ali and Lil Wayne, and could continue to do such deals under Fanatics. Fanatics also gets Topps’ wholly owned Garbage Pail Kids products.
And football, basketball, and hockey cards?
The NBA/NBPA and NFL licenses remain with Italy’s Panini until 2026. Panini has had the exclusive NBA deals since 2009 (and nabbed the WWE license from Topps starting this year). Upper Deck retains the NHL licenses it’s had since 1990 and was extended in 2019. No word on whether Fanatics will try to buy Panini or Upper Deck, too. Topps has done football player cards without NFL licenses, such as last year’s artsy Trevor Lawrence special set before he was drafted No. 1 by Jacksonville (ironically, Fanatics’ HQ city). It could continue to create such sets until getting the NFL license in a few years.
It's go time. 🤝 Let's do this, @Fanatics! pic.twitter.com/TUU59cXQ0A
— Topps (@Topps) January 4, 2022
How much did Fanatics pay for Topps?
It’s been reported at about $500 million, with an EBITDA of $160 million off revenue of $550 million in 2021.
Who are the sellers?
Former top Disney executive Michael Eisner and his L.A.-based investment firm The Tornante Co. along with Chicago private equity firm Madison Dearborn Partners. They paid $385 million for Topps in 2007 and owned it equally. Eisner had this to say in a statement: “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.”
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Do the former owners retain any equity in Topps?
No.
Did Fanatics buy all of Topps?
No. It bought the sports and entertainment business, which is the trading cards, on-demand printing service (Topps Now), and various collectibles lines. Fanatics did not buy the candy business (led by Bazooka Bubble Gum and Ring Pops) nor the gift card operation. Those remain with the former owners. Topps’ candy and gift-card businesses made up nearly 40 percent of its 2020 revenue, per the Huddle Up sports business newsletter.
How did this deal occur?
With the loss of the critical MLB/MLBPA licenses, Topps’ former owners had limited options. Fanatics, unlike Topps and the other card makers, had given the sports leagues and unions equity in its new card business. That’s reportedly worth $1 billion in new revenue for the leagues and unions over the life of the licensing agreements. It’s unclear when talks between Fanatics and Topps’ former owners began, but it was sometime after Fanatics’ August licensing announcement. The sale wrapped in recent weeks.
Is Fanatics retaining all Topps employees?
Here is what Fanatics said in its press release: “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.”
Why did Fanatics get into trading cards?
With modern and vintage trading cards exploding in popularity amid the wider collectibles boom, Fanatics clearly saw an opportunity and took it. Fanatics Trading Cards is a subsidiary company of the Fanatics parent company. The new company was valued last year at $10.4 billion, before the Topps deal. The company’s strategy has been to expand its portfolio beyond licensed sports apparel and products, with sports gambling, broadcasting and media mentioned most recently. Fanatics had an $18 billion valuation last year and is expected to go public at some point. It also has expanded overseas, with a recent deal for licensing in China. Domestically, it has deals with 300 pro and college teams and leagues.
Who is Michael Rubin?
The Pennsylvania native early on ran ski shops and overstock sports equipment deals, then made his fortune launching and selling online consumer retail shopping sites, and at one point sold a company called GSI Commerce to eBay for $2.4 billion — later buying back Fanatics because eBay wasn’t interested in the retail portion of the GSI business. Under Rubin, GSI had bought Jacksonville, Fla.-based Football Fanatics (opened in 1995) a few months before the eBay deal. He paid a reported $277 million (reported as $171 million in cash and $106 million in stock) for Fanatics. His businesses have attracted billions in outside investment. In addition to Fanatics and other businesses, he’s a minority owner of the Philadelphia 76ers and New Jersey Devils. Forbes estimates Rubin, 49, is worth $8 billion. He’s also involved in social justice efforts.
Here’s what he had to say about the Topps acquisition, via a statement: “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 adda leading trading cards company to build out our business. 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.”
(Top photo: STRF/STAR MAX/IPx via AP images)
