Friday, March 5, 2010

UD Lawsuit Provides Insight Into Hobby Biz

Upper Deck's legal troubles has provided collectors and hobby enthusiasts alike, an opportunity to see a glimpse at the financial side of the privately held company.

One of the most interesting statements by UD's Director of Sports Brands Jason Masherah, in his February court filing, was "Series I typically accounts for about 10-20 percent of Upper Deck's baseball trading card revenue in a given year."  Upper Deck produced 15 baseball sets last year, so the importance of UD Series 1 to Upper Deck is significant. Sales are fueled by mass retailers Target and Wal-Mart having the cards on the shelves year round.

Upper Deck dogged a huge bullet when the terms of the settlement with MLB Properties allowed UD to continue selling the three baseball sets that were released after their trading card license had expired. 2009 Signature Stars, 2009 Ultimate Collection, and 2010 Upper Deck Series I. These sets accounted for a combined revenue of approximately $10 million.  Masherah made a special point to note that having to pull 2010 UD Series 1 off the shelves would have been "catastrophic."

Other interesting notes:

According to Masherah, about 80 percent of all sports card products are purchased and opened within 60 days of release.

2010 Upper Deck Series 1, is the industry's second-largest sports product release of the year.  I am assuming that Topps Series 1 takes the top bill.

Masherah says "the sports trading cards category has been in decline over the past two years." I would argue that it's been a lot longer then that.

Finally, one of the most ominous statements.  It will be interesting to see what news trickles out of the Carlsbad, CA company the next few months. Because this quote doesn't paint a positive picture.

"I am aware of past instances where MLBP brought legal actions similar to this one against baseball trading card companies such as Pacific and Donruss, and those companies are no longer in business. If we cannot use the uniforms, we cannot compete and most assuredly there will be only one baseball trading card company — Topps — when the dust settles."

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