If you arent familiar with Brian Gray, he is a no-nonsense type of guy, who is never afraid to speak his mind or give his opinion. As the CEO of Leaf Trading Cards, he has seemingly accomplished the impossible of existing and succeeding in a competitive market against the largest of competitors. He has made successful products in all four sports without the benefit of a league license, and is definitely one of the more passionate individuals in the trading card game. I have been a fan of his products for a while, and admire his tenacity, even with the detractors that come with it.
He has been outspoken in the past about how collectors experience cards, from everything in regards to redemptions all the way up to the way league licenses are handled. Many collectors identify with his personal mission to build products worth collecting, and I think its a huge reason why he has been so successful.
He was gracious enough to answer some questions negarding the recent NFLPA exclusive granted to Panini, a sport where he has done very well in pre-draft rookie products over the last 4 years. I was very interested to read his thoughts, and I believe he makes a lot of great points.
A big thank you to Brian for taking the time, I know he has been very busy with the national show – where he had another prominent position on the hobby’s biggest stage.
Sports Cards Uncensored: What made the NFL a sport you wanted to be so involved with in terms of releasing Leaf Trading Cards?
Brian Gray: The NFL is a premier brand. Unfortunately, they too have taken $ over what is best for the hobby and collector. I strongly believe the category will shrink due to this, the question is how much? Hopefully, Panini and more importantly the licensors will allow fair competition in the marketplace and steer clear of potential violations of Antitrust and Unfair competition laws which harm not only their competitors but the very consumer they exist to serve. I am hopeful all parties will allow fair competition in this category.
SCU: Lets start off by talking exclusives in general maybe for a little educational value – is there any point to them for a league? What about a manufacturer? What about the collector?
BG: Exclusives benefit the league in that recent deals have been larger than 2-3 licensees put together would have paid! It would benefit the manufacturer if the price were swallowable, however that just isn’t the case. The deals are so large no company can make money. It is abundantly clear the reason why these deals are being done and it is not about making money. Collectors do not appear to have been ever an afterthought. It is all about money!
SCU: How do you expect this exclusive to affect companies like Leaf who operate without an official license?
BG: As long as the licensee and licensors do not attempt to unfairly eliminate ALL competition, this could end up making Leaf (and similar products) a preseason alternative attractive to collectors.
SCU: Will you continue to produce cards in the NFL space? In what capacity?
BG: We will manufacture draft one way or another. Should we be forced to defend our legal right to compete, we will. However, I am hopeful for a friendly coexistence.
SCU: With an exclusive in place for NFL and NBA now, plus more licenses coming up in the next few years, is there trouble brewing for sports cards?
BG: Maybe. Everything depends on the lengths to which exclusive licensees go to eliminate competition. Without a variety of products (from multiple manufacturers) available, the hobby could face some challenges of boredom and loss of interest.
SCU: Do you feel this is a sustainable model for sports cards?
BG: No. Something will change in the next 5 years. I am hopeful that it will be the opening up what is/is not covered by first amendment for trading cards.
SCU: Are you going to fight this, considering you have so many products that could be impacted by this exclusive?
BG: Hopefully, they’ll be no need to. Hopefully, everyone will complete fairly. Im not naïve, there is a real chance for conflict. I will do my part to avoid this, but I cannot control the licensees.
SCU: Seems like there are a lot of “hopefully” statements in some of your answers, which I understand. Based on Panini’s past management of their basketball brands, do you think there is a good chance they will allow fair play?
BG: I mean exactly that, hopefully. In Basketball, I believe a legal challenge would be successful. There are multiple factors which turn that legal exclusive into an illegal monopoly. We are doing everything in our power to keep our business outside of the courts. If the same combination of behaviors occur in football (meaning licensees and licensors teaming up to stifle all competition), there will be a challenge.
SCU: If Panini doesn’t allow you to sign GLAs with rookies and vets thanks to similar player exclusives they have signed in basketball, then what is your outlook for football products post 2016?
BG: We will make what we can and look to the courts for protection from unfair competition and violations of US Antitrust law.
SCU: What would you expect some of the major changes collectors will see in pricing, content, etc just based on your knowledge of producing cards yourself?
BG: To make huge guarantees, you either have to sell huge amounts of product (high print runs) or increase your margins (reduce content). Neither looks particularly exciting. However, I think the licensees deserve the benefit of the doubt until we see the “real” result of an exclusive.
SCU: Is there any potential silver lining to this announcement that I am not seeing?
BG: I cannot see one at this point, but as I said I will give the benefit of the doubt until its no longer deserved.
SCU: A benefit of the doubt is an interesting way to put it. What is the absolute best case scenario and worst case scenario that might happen come 2016?
BG: Best: Competition is allowed and encouraged and we make great products.
Worst: We end up in court to defend Leaf, Hobby Dealers and the consumers harmed by unfair behavior. Again, I believe Panini has good intentions and am confident the best scenario will exist.
SCU: Im sure you know a lot of people who have all voiced their opinion – what is the general consensus around the hobby?
BG: It is generally negative, but most things in the hobby are. Let’s sit back and remember people are innocent until proven guilty. And lets hope they don’t become guilty of abuse.
SCU: With the seemingly unlimited resources available, what would stop Panini from buying everyone out? What about just forcing everyone out?
BG: Forcing everyone out will be found illegal should it be challenged in court. I would love to see Panini buy UD and Topps and leave us as the sole competitor for legal purposes. I believe we could coexist without conflict. With that being said, I would obviously welcome the challenge of being acquired and joining their team to help turn around their company in the eyes of dealers and consumers. I think the hobby would collectively applaud such a move. But, im equally happy fighting the good fight, listening to collectors and making great products.
SCU: You mentioned Topps and UD being bought out, is this a likely scenario in your opinion?
BG: Yes. I think both are sold within 12-24 months.
SCU: If you were a card shop or distributor right now, how do you see this shaping up?
BG: Prepare for very limited competition to exclusive licensees. Prepare for some loyal consumers of eliminated companies to leave the category with their favorite manufacturer. Conversion will be nowhere near 100%.
Bottom line, we all know that there will be changes coming when the NFLPA exclusive goes into practice come 2016. I think Brian did a good job of explaining his stance and hopefully he will continue to be able to produce in the NFL space. As he mentioned, “hopefully” is the best he can do right now, but it looks like this isnt the end of the discussion. Im sure there will be more to come.