From the Washington Times:
Not so long ago, baseball cards were the sun of the sports memorabilia universe. Kids couldn't get enough of them. Grownups treated them like shares of Microsoft, with hot-blooded rookie card speculation forming sort of an early version of day trading. Hotel ballrooms from coast to coast were booked with card conventions.
As a child, my favorite sport was football and I used to collect football cards. When I became a baseball fan in my late teens, I couldn't get enough baseball cards. I bought everything I could get my hands on and my buddies and I would get together and trade cards. But after I graduated from college in 1988, other things became more important: I went to graduate school, got married, and started working full time. My collecting fell by the wayside.
It wasn't my fault, honestly, but the market took a steep dive over the next decade.
Those days are gone, left in the wreckage of a baseball card crash that in the last month has claimed Fleer and Donruss as players in the industry.
Both companies were major pioneers, helping to break a 30-year monopoly held by Topps Corp. and usher in an expansive new era in collecting that saw the introduction of holograms and bits of game-used jerseys and bats in card packs. But a perfect storm involving an oversupply of card releases, out-of-sync pricing at retail and flagging fan demand prompted a $1.2 billion industry in its go-go days of the early '90s to collapse to less than $270 million in projected revenues this year.
This has led to a restructuring of the baseball card market, a movement led by the owners of the rights to images of baseball players: the Major League Baseball Players' Association.
With the card industry in tatters, Fleer Corp. fell $33 million into debt, declared bankruptcy and had its assets purchased by Upper Deck Co. And last week, the Major League Baseball Players Association, which licenses the production of big league baseball cards, gave new contracts to just Upper Deck and Topps in the hope of sharply reducing marketplace clutter and reviving interest in perhaps the most classically American of hobbies.
The demand for cards has fallen and there was too much competition amongst producers for what was left. So the MLBPA has whittled the supply side of the market down to two producers and has placed restrictions on the products they can sell.
"There's been simply way too much high-end, short-run product out there, all chasing the same customers," said Evan Kaplan, the union's director for trading cards and collectibles. "Not enough is being done to broaden the base of collectors and engage kids back into baseball cards. The idea of just going forward with two companies is to halt the decline, clean up the market and really move forward in an aggressive and organized fashion."
There are also new restrictions on who can appear on a baseball card. To decrease speculative activity, only players who play in the majors can be on trading cards.
Won't the decreased number of competitors for the rights to baseball player images decrease the licensing revenue the MLBPA can expect to earn? Not necessarily. Reducing the number of buyers gives the remaining buyers some power in negotiatons with the MLBPA. But since those buyers are not the ultimate consumer of the final product but are, instead, middlemen, consumer choice will be restricted in the market for cards. All else equal, this gives Topps and Upper Deck more market power in the market for cards, increasing their ability to earn a profit and, in turn, will likely increase the licensing fees the union can get.
HT to Mark Stratton