The Sports Card Industry Goes to Court
Panini sues Fanatics, Fanatics countersues Panini, the NFLPA terminates its license with Panini. Will we get any resolution that settles antitrust questions, once and for all?
Ever since Fanatics obtained the exclusive licenses from MLB, NFL, NBA and its respective players associations, the question was what came next for the trading card industry.
Since Fanatics obtained those licenses, the company purchased Topps, a facility that produces trading cards and an auction site. There’s even talk that Fanatics may try to acquire a company that grades trading cards.
And now, one company that has trading card licenses decided to take Fanatics to court.
Panini, which has owned the exclusive licenses to produce NFL and NBA trading cards, plus had an MLBPA license (though not one from MLB Properties), filed a lawsuit against Fanatics this past week, claiming antitrust violations by Fanatics.
Fanatics quickly filed a countersuit, claiming it had been in negotiations with Panini to buy out its licenses early but wouldn't negotiate in good faith.
On the heels of that came the NFLPA announcing it would terminate its license with Panini immediately and Fanatics would have the rights to start producing NFL trading cards now. (NFL Properties, though, made no such announcement.) Originally, Fanatics' license was to start in 2026, with Panini's to run through 2025. (Panini also has the NBA licenses through 2025, with Fanatics taking over in 2026.)
And that prompted Panini to file an arbitration request with the NFLPA. In the meantime, the company is still rolling out NFL trading cards.
Where to begin? We've got a big legal mess to sort out, but let's go back to the 1960s, when Topps was the primary producer of baseball cards and another company, Fleer, attempted to get into the market.
Topps, which had purchased rival Bowman back in the mid 1950s, claimed it had exclusive rights to produce baseball cards. Fleer ultimately took Topps to court and the legal battles dragged into the 1970s.
At one point, Fleer won an antitrust ruling in court against Topps but that ruling was overturned upon appeal. Ultimately, though, Fleer gained MLB and MLBPA licenses (as did Leaf, which produced Donruss trading cards), though Topps filed additional suits regarding what was being included with trading cards.
In the end, the MLBPA filed its own suit against Topps. The end result: Fleer and Donruss continued to produce baseball cards, and that ultimately took us into what is called the Junk Wax Era.
All of this is to say that we don't have a clear legal ruling about whether or not a company may have exclusive rights to produce a trading card set for a particular entity.
It's understandable that people don't like one company having a monopoly over an entire industry. On the other hand, in this case, it's one private company needing a license from another private company to produce a specific product. (There are companies who sign athletes and celebrities to individual contracts, but those companies lack licenses to use logos and team names.)
Even so, Panini's claim about antitrust violations looks silly when you consider the company has had exclusive deals with the NFL, NBA and WWE -- all organizations that will ultimately turn those deals over to Fanatics. But then you come to the point that Fanatics bought a plant that produces trading cards -- and it so happens to be the plant that is producing Panini's trading cards.
Fanatics could counter by saying that it's better for a company to own its printing facility, rather than contract the printing out to one. (Case in point: Topps used to own its own printing equipment.) But did Fanatics attempt to buy the plant that currently produces Topps cards? (Topps cards, in recent years, have been produced in another facility, not the same one that produces Panini cards.)
And what of other companies who produce trading cards? Upper Deck still holds the exclusive licenses with NHL and the NHLPA. The current Leaf Trading Card company continues to produce cards, though it doesn't hold licenses with any league. Has Fanatics attempted to interfere with those companies' efforts, as Panini claims Fanatics has done to Panini's operations?
There could be questions raised about whether or not Fanatics should have control over every aspect of the trading card industry. It's one thing for a company to argue it should own its printing facility, but should it have its own grading service? Do grading services need to get licenses from leagues and players associations to be authorized to engage in their services?
And then there's the question of the leagues and players associations. It's easy to point fingers at Fanatics, Panini or any other trading card company. However, it's the leagues and the players associations who determine who gets the licenses. These same entities may be concerned about the glut of autographed and memorabilia cards on the market. They may also see the grading industry, the money generated from that, and want a slice of that pie.
Finally, there's the question about football cards for the 2023 season. Panini has already released a handful of sets and hasn't changed anything with its release schedule at this point. It's hard for the NFLPA to argue that football cards already on the shelves need to be recalled. But what of sets whose production is completed but are yet to be released to the public? Or those sets that have been announced and, most likely, have production orders filed?
All of this is to say that we have quite a mess on our hands, one that's going to take time to sort out.
But the question for collectors is this: How do they want to approach the trading card hobby? And what is the best way to allow that approach?
For those who prefer to collect a favorite player or team, buying individual cards that came from opened packs is really the best approach. For those who love the thrill of opening packs to see what they get, unopened product is the way to go. Some may prefer to open their own packs and boxes, while others may want to jump into a box or case break.
Ultimately, it's each collector that needs to figure out his or her approach to the hobby. The good news is that the flippers who dominated during the COVID pandemic have lost influence. And while the market may not be going off the charts, there are more collectors who have entered the hobby.
Of course, the big question that remains unanswered is what becomes of the NFL trading card hobby for 2023, what will happen to Panini's planned sets, and what Fanatics will do if it only has the NFLPA license, but not the NFL Properties license, until 2026. While some sets are still coming out, it’s anyone’s guess as to what happens later in the NFL season.
But when it comes to the current lawsuits, if the times when Topps and Fleer fought it out in the courts are any indication, we may not get a definitive answer about what constitutes an antitrust violation in the trading card industry.
(Note: You may also want to read what a couple of legal experts had to say about the lawsuits Panini and Fanatics have filed, plus thoughts from Mike Cramer, former CEO of Pacific Trading Cards, for his take on the NFLPA’s move against Panini.)