The Hobby Boards

https://www.espn.com/espn/story/_/id/38 ... d-industry

Panini alleges that Fanatics engaged in "calculated, intentional, anticompetitive conduct" by securing long-term, exclusive licensing deals with leagues and players associations, according to the lawsuit. Panini also claims Fanatics signed rookie NFL and NBA players to exclusive deals, disseminated "false, derogatory statements" about Panini and poached its employees in an effort to create "insurmountable barriers to entry" in the trading card business.

A healthy dose of irony doesn’t mean they’re wrong

green_stiller wrote: ↑Thu Aug 03, 2023 8:15 pm https://www.espn.com/espn/story/_/id/38 ... d-industry

Panini alleges that Fanatics engaged in "calculated, intentional, anticompetitive conduct" by securing long-term, exclusive licensing deals with leagues and players associations, according to the lawsuit. Panini also claims Fanatics signed rookie NFL and NBA players to exclusive deals, disseminated "false, derogatory statements" about Panini and poached its employees in an effort to create "insurmountable barriers to entry" in the trading card business.

A healthy dose of irony doesn’t mean they’re wrong

Fanatics has not been shy telling people it wants everything about sports cards. I think card grading is the last piece of the puzzle. We all know in reality, law surves the rich and powerful. So let's see the big guns fight.

I posted this on 'the other forum that shall not be named' but for me the most interesting thing about the lawsuit, is that it gives an insight into Panini's operations / production chain and why their release schedule has not recovered post the pandemic. The lawsuit describes how Panini has for a number of years used a specialist manufacturer / printer of trading cards called GCP Packaging LLC (GCP). It states that:

- of three such manufacturers in the US, only GCP can meets Panini's requirements and plays a 'critical role' in Panini's operations. GCP made 90% of Panini's trading cards.

- GCP had 18 machine lines capable of producing trading cards to Panini's standards and GCP dedicated 15 of those lines to Panini.

- In March 2022 through two transactions, Fanatics acquired a controlling stake in GCP. Following the acquisition by Fanatics, it alleges that GCP reduced the number of machine lines available to Panini by half.

- Panini had scheduled with GCP in advance to produce 22 releases for Nov 2022 and 18 releases for Dec 2022. With only 10 days notice Panini was told that GCP had 'shifted its priorities', resulting in the releases scheduled for November & December 2022 being reduced to six-to-eight releases each month.

- Panini alleges that through acquiring control of GCP, Fanatics now controls the critical means of manufacturing Panini's trading cards.

Yikes!

Some excellent insight into the lawsuit, can be found in Paul Lesko's twitter feed.

https://twitter.com/Paul_Lesko/statu...69360593780737

That’s some excellent detail to add to the post. Helps round out the antitrust reasonings. I don’t think anything will happen with licensing but that sort of stuff could see some impact.

Any law people know if this thing has any legs and will have any tangible results? Obviously in an ideal world there's no monopoly on the license but I'm sure there's even benefits to avoiding it in the supply chain too.

Fanatics has filed a countersuit.

https://www.sportscollectorsdaily.com/f ... otiations/

It’s sounding like all of this may have come about due to a buyout deal for the remaining years falling through. It’ll be interesting to see what comes of this as both companies have plenty of money to throw around to turn this into a long drawn out battle lol.

I wonder how this will affect the collector. Will there be a blackout period where no cards are produced?

In my opinion, unless there's an early dismissal/settlement (buyout) these legal battles will only be hurting the collector/hobby in the short-term.

Fanatics won't stop signing players to exclusive deals, so the remaining years of Panini's exclusive rights could get real ugly, especially when focusing on autographs.

auburn35 wrote: ↑Thu Aug 10, 2023 10:55 pm In my opinion, unless there's an early dismissal/settlement (buyout) these legal battles will only be hurting the collector/hobby in the short-term.

Fanatics won't stop signing players to exclusive deals, so the remaining years of Panini's exclusive rights could get real ugly, especially when focusing on autographs.

Yeah very true. Hopefully they can settle outside of a long court battle, but I guess we'll see over the next year or two.

if it goes to court I’m curious how the hell they explain it all to a jury I assume would be devoid of card collectors

Here's a new article from The New Republic released about the lawsuit situation. It talks more to an outsider looking in rather than anyone following this with some prior knowledge, so may be redundant for some, but I thought it was well written nonetheless.

https://newrepublic.com/article/175107/ ... i-fanatics

Here are a couple paragraphs I thought were worth quoting.

Not all of Fanatics’ planned innovations are necessarily friendly to collectors or customers in general, however. One of its planned changes is to more closely inject itself into the secondary market—the network of brick-and-mortar hobby stores and online marketplaces that allow collectors to easily buy and sell cards. For sports-cards and other similar trading-card communities, a producer like Panini only makes money when the cards are sold to the initial customer. Fanatics claimed in its lawsuit that its rival should have been trying to make money on subsequent trades and purchases as well.

Another proposed innovation on Fanatics’ part is to engage directly with what are known as “box breakers,” a popular and controversial new trend in the sports-card world. A “breaker” typically buys large amounts of unopened card packs and boxes and then opens them live on YouTube, Twitch, or TikTok. Before the packs and boxes are opened, collectors can buy a portion of whatever comes out of them. The breaker then ships those cards directly to whoever wins them.

But box breaking is also uncomfortably similar to gambling. Most of a break’s participants will not break even—if they did, then the breaker would be better off opening the box themselves—and the livestreams often rely on a fear of missing out to lure in new customers. Panini has generally refused to sell products directly to breakers or incorporate them into its business model.

Fanatics, on the other hand, wants to make them a core feature of its new approach. “The emergence of breaking represents a remarkable shift in the way consumers engage with trading cards, transforming it into a shared, community experience,” the company claimed in its lawsuit. “It offers another layer of excitement to the hobby, akin to the thrill of opening a pack of cards, but amplified by the sense of anticipation shared with others.”

If Panini prevails in its lawsuit, Fanatics will have to disgorge itself of GCP and cease its alleged anticompetitive conduct. That will slow but not stop the firm from dominating the sports-card industry. (If Fanatics prevails on its claims, Panini will mainly have to pay it a lot of money.) And while sports cards are just a hobby, they may also become a textbook example of how one company can come to dominate an entire market—and then use that dominance to do whatever it wants to those who’ve invested so much time and effort into it. It would be a quintessentially American fate for a quintessentially American pastime.

Bottom line, we're moving from one monopoly to another. Time will tell which monopoly is "better", but in no world do I see a monopoly being good for the end consumer.

threepointplay wrote: ↑Fri Aug 04, 2023 9:10 am I posted this on 'the other forum that shall not be named' but for me the most interesting thing about the lawsuit, is that it gives an insight into Panini's operations / production chain and why their release schedule has not recovered post the pandemic. The lawsuit describes how Panini has for a number of years used a specialist manufacturer / printer of trading cards called GCP Packaging LLC (GCP). It states that:

- of three such manufacturers in the US, only GCP can meets Panini's requirements and plays a 'critical role' in Panini's operations. GCP made 90% of Panini's trading cards.

- GCP had 18 machine lines capable of producing trading cards to Panini's standards and GCP dedicated 15 of those lines to Panini.

- In March 2022 through two transactions, Fanatics acquired a controlling stake in GCP. Following the acquisition by Fanatics, it alleges that GCP reduced the number of machine lines available to Panini by half.

- Panini had scheduled with GCP in advance to produce 22 releases for Nov 2022 and 18 releases for Dec 2022. With only 10 days notice Panini was told that GCP had 'shifted its priorities', resulting in the releases scheduled for November & December 2022 being reduced to six-to-eight releases each month.

- Panini alleges that through acquiring control of GCP, Fanatics now controls the critical means of manufacturing Panini's trading cards.

Yikes!

Some excellent insight into the lawsuit, can be found in Paul Lesko's twitter feed.

https://twitter.com/Paul_Lesko/statu...69360593780737

wow - I mean it's been pretty evident how immediately predatory Fanatics has been upon entering the space, but this really shines a light on it. Don't think this bodes well for the hobby unfortunately. This is 100% "we don't give a shit about collectors" or anyone else but our bottom line. I had a bad feeling about this and now feel worse about it. It's almost more insane than the weird list of demands Fanatics was floating out there about how brick&mortar shops should operate.