Mega deal: Fanatics buys Topps trading cards business

NEW YORK — Fanatics, the online sports merchandise retailer, has struck a deal to purchase Topps’ trading card business.

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Update 5:42 p.m. EST Jan. 4: The move will allow the Jacksonville, Florida-based company’s new trading card division to assume Topps’ current licenses with the MLB and MLB Players Association and begin guiding the baseball card market almost immediately.

While an actual buying price was not revealed, The Wall Street Journal, CNBC and The Athletic reported that it was in the neighborhood of $500 million.

“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 add a leading trading cards company to build out our business,” Fanatics CEO Michael Rubin said in a news release. “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.”

Topps is owned by the private equity firm Madison Dearborn and former Disney CEO Michael Eisner’s Tornante Company.

“The strong emotional connection between Topps collectibles and consumers of all ages – built through 70 years of tradition, starting with the Shorin family -- will make it a jewel in the Fanatics portfolio,” Eisner said 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.”

Original report: A deal is expected to be formally announced on Tuesday, The Wall Street Journal, CNBC and The Athletic reported. The deal will include only Topps’ name and sports and entertainment division, not the company’s candy and gift cards line, according to CNBC.

Fanatics and Topps declined to comment on Monday night.

Fanatics is owned by Michael Rubin, the co-owner of the NBA’s Philadelphia 76ers and the NHL’s New Jersey Devils, The Athletic reported. The apparel giant, based in Jacksonville, Florida, shook up the sports collectibles industry in August when it cut a deal with Major League Baseball and the MLB Players Association to acquire the exclusive license to produce baseball cards, shutting Topps out after 70 years.

The deal thwarted Topps’ plan to go public through a combination with a special-purpose acquisition company, according to The Wall Street Journal. That deal, with Mudrick Capital Acquisition Corp. II, valued the combined entity at about $1.16 billion, the newspaper reported.

Fanatics is now positioned to manufacture and distribute baseball trading cards immediately, The Wall Street Journal reported. Topps’ current deal with MLB expires in 2025, while their deal with the MLBPA ends this year. Fanatics will also obtain rights for Major League Soccer, UEFA, Bundesliga, and Formula 1, CNBC reported. Those leagues also have active agreements with Topps.

Action Network reported that Topps was the most valuable license to the MLBPA, paying the union $20.4 million in 2020, according to the union’s annual report with the U.S. Department of Labor.

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In addition to obtaining the baseball card license in August 2020, Fanatics reached agreements with the unions representing players in the NFL and the NBA, along with the NBA itself, The Wall Street Journal reported.

The NBA and NFL union deals with Panini America expire at the end of 2025 and 2026, respectively, ESPN reported.

Topps’ intellectual property, which includes a catalog of baseball card designs accumulated over seven decades, would be a valuable asset for Fanatics.

Fanatics is hoping to capitalize on a sports trading card business that is projected to reach $98.7 billion by 2027, The Wall Street Journal reported, citing Verified Market Research.

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MLB renewed its baseball card deal with Topps in 2018, according to CNBC. Topps produced its first baseball cards in 1948, a subset of 19 cards that appeared in the 252-card Magic Photos product. After producing several small sets in 1951, Topps unveiled a 407-card set in 1952, a product that included the company’s first card of New York Yankees Hall of Famer Mickey Mantle. That card remains the most valuable post-World War II baseball card, with one card selling for $5.2 million in a January 2021 private sale to actor Rob Gough.

After winning a battle with rival Bowman and absorbing the company in 1956, Topps was unopposed in producing licensed baseball cards until 1981, when Fleer and Donruss obtained licenses to compete.

In 1964, Topps lost the NFL market to the Philadelphia Gum Co. but regained the license in 1968, just in time for the NFL-AFL merger two years later.

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Topps was bought for $385 million by Tornante Co. LLC in 2007, The Wall Street Journal reported. The deal was led by former Walt Disney Co. chief executive Michael Eisner and private-equity firm Madison Dearborn Partners. Those entities will continue to own what remains of Topps: confectionary and gift card divisions, the newspaper reported.

Ed Schauder, a sports and entertainment lawyer specializing in corporate and securities, predicted in late August that Fanatics buying Topps was a possibility.

“There’s an excellent chance (of a mutual deal). It’s not dead,” Schauder told Sports Collectors Daily. “It is not uncommon to ruffle feathers and then come back for the kill.

“(Fanatics) might think, ‘Look, we stole the pie, but let’s work together,’ and Topps might decide, ‘Something is better than nothing.’”

Apparently, that is what happened.