The sports trading card industry is heating up as two of its major players, Fanatics and Panini, are suing each other over the rights to produce cards for the NBA and NFL. The legal battle could have significant implications for the future of the collectibles market, which has seen a surge in popularity and value in recent years.
Fanatics Accuses Panini of Interference and Breach of Duty
Fanatics, a leading e-commerce platform for sports merchandise, filed a countersuit against Panini on Monday, alleging that the latter tried to sabotage its business and extort money from it. Fanatics claims that Panini engaged in “a protracted, unlawful, and deceitful campaign of unfair trade practices, strong-arm tactics, and tortious misconduct” to hamper its nascent trading card division.
According to Fanatics, Panini was unhappy that it lost the exclusive rights to produce cards for the NBA and NFL to Fanatics, which secured long-term deals with both leagues and their unions last year. Fanatics alleges that Panini then tried to interfere with its relationships with the leagues and the unions, as well as with other partners such as Topps, which Fanatics acquired in August.
Fanatics also accuses Panini of negotiating a “sham agreement” with the NBA Players Association (NBPA) to terminate its license early in exchange for a large payment, which Fanatics says was intended to pressure it into buying out Panini’s licenses. Fanatics says it refused to pay Panini’s “extortionate” demands and instead filed a lawsuit to protect its rights and interests.
Panini Alleges Antitrust Violations by Fanatics
Panini, a global leader in trading cards and stickers, initiated the legal dispute last week by filing an antitrust lawsuit against Fanatics in a federal court in Florida. Panini alleges that Fanatics engaged in “calculated, intentional, anticompetitive conduct” to establish a monopoly in the trading card industry.
Panini argues that Fanatics used its dominant position in the sports merchandise market to secure exclusive deals with the NBA, NFL, MLB, and their unions, effectively shutting out Panini and other competitors from the market. Panini claims that it was not given an opportunity to bid or compete for the licenses that Fanatics acquired.
Panini also contends that Fanatics’ acquisition of Topps was part of its strategy to eliminate competition and consolidate its control over the industry. Panini says that Fanatics’ actions have harmed consumers, collectors, retailers, and distributors by reducing choice, quality, innovation, and price competition.
Panini seeks an injunction to prevent Fanatics from enforcing its exclusive deals, as well as damages and divestiture of Topps.
The Future of the Trading Card Industry
The trading card industry has experienced a remarkable boom in recent years, fueled by factors such as nostalgia, celebrity influence, digital innovation, and increased demand during the pandemic. According to Sports Collectors Daily1, the U.S. trading card market was worth $2 billion in 2020, up from $1 billion in 2019.
The legal battle between Fanatics and Panini could have a major impact on the direction and growth of the industry. Both companies have invested heavily in expanding their product offerings, distribution channels, and customer base. They have also embraced new technologies such as blockchain, NFTs2, and mobile apps to enhance their digital presence and appeal to younger generations.
However, the outcome of the lawsuits could also affect the relationships between the companies and their partners, such as the leagues, the unions, the players, and the fans. The lawsuits could also invite scrutiny from regulators and lawmakers over the competitive dynamics and consumer protection issues in the industry.
As the sports trading card industry continues to evolve and attract more attention and investment, Fanatics and Panini will likely face more challenges and opportunities in their quest to dominate the market.