There are some major issues with football cards right now, and many of them look to be getting worse rather than better. In many ways, the same could be said for all sports, but ill frame it in Football because of the pending exclusive that will be running train on the hobby in 2016 thanks to Panini.
One of the biggest issues that I have is product shelf life, which has taken hit after hit over the last few years, to the point where even good products have a shelf life less than 2 weeks. It used to be that when a new set hit, the cards would hold up well. They would start high, but only drop 20-30% over a long period of time. In today’s hobby, cards can drop 30% over the first week alone, and sometimes end up at 40-50% of their first day value. That is a sharp drop off from what we are used to seeing.
Even worse, if a product is a new set or a dog, the cards may not even have the luxury of 2 weeks. I have even heard manufacturers try to build product proposal plans knowing that the goal is to have over 60% of the run opened in the first two weeks. That never used to be a discussion that had to exist. Rookie class performance can also be linked to declining prices, or even how many products rely on them to be successful.
This begs the question of why the decline continues to persist, and what it might mean come 2016 with the pending transition to a one company model of doing business. There are a few theories that are worth considering, and Ill talk about a few of them below.
Theory 1 – The Hobby is Shrinking Rapidly
If you havent heard this theory floating around, you have had your head buried in the sand. Let me make sure to explain that when I reference the hobby, I am referencing the customers, not the manufacturers or dealers.
To be honest, this is not a crazy theory either, as its clear that there are less people in the hobby today than ever before. The debatable point is whether the decline will continue at the pace that it is at, or if the pace will slow/pick back up.
I stand by my assertion that the hobby will never die, as there will always be people who want to collect cards. If people collect old parts from boats, there will also be people that collect cards. However, this does NOT mean the industry will continue to be sustainable, which is becoming more and more evident by the day. I dont see many of the card companies rolling in money, including Panini who seems to have a relatively blank check from “Big Daddy Italy, Inc.” to produce cards on American soil. Card companies are in a tough spot, and it has led to business practices that have weeded out casual collectors at every turn.
Because the cost of existing in the card business has increased, and no one is willing to change the way they do said business, the industry has suffered. Product prices have increased without adding much content, and that has driven people away.
With collectors being driven away, there are less people to buy the cards for sale, which leads to a reduced perception of value in the end product, and lower sales prices. With lower sales prices on the secondary market, fewer people are opening boxes, which leads to less money in the pockets of the card companies, and you see where I am going.
Product shelf life reduction can be argued as a sub point of the above debate, even when initial prices are high. The reason the prices are high to begin with stems from the people who want to either A) collect a player, B) collect a team, or C) collect a set. There are other factors like national attention or player performance that can also impact things, but A, B and C are all the main reasons. Player and Team collectors will overpay, but if there are less of them around, prices will drop more quickly as the remainder pick up their target cards.
At the same time, casual collectors tend to be more susceptible to hobby trends and buying into hype, but with less around, those prices will no longer be supported as long. Its really too bad, because football is literally the most popular sport in the country, yet the card business for the NFL is the most unstable. Very interesting.
Theory 2 – The Economy is to Blame
Cards are all about spending discretionary income. Always has been, always will be. When people have money to burn, they spend it on items that contribute to 3 things – Power, Sex and Happiness. Cards obviously are adverse to the first two, but its always a good time to do something you enjoy.
During the last 10 years, the US economy has been in shambles, arguably until the last year or two. Even then, it still hasnt recovered fully. As a result, more Americans are opting to save their discretionary income rather than spend it, and that impacts all within an industry like Sports Cards. With the cost of a box on the increase, and available funds to purchase on the decrease, the formula doesnt work out.
In all reality, there is no way the economy cant be PARTIALLY to blame, especially when you consider how many shops closed up doors in the last half decade. The last estimate I saw was that fewer than 1000 sports card shops remained in the entire US, and I think that might be generous. Of those 1000 or so shops, Im guessing 5% are in a position where the store has no issues with hitting monthly numbers. The other 95% are likely struggling or at least on that edge of struggling.
Now, this isnt all a direct result of the economy, and many would argue that online retailers have cut drastically into the way these shops can make money, but its all a factor.
Theory 3 – Online Retailers and Ebay Have Ruined Things
I am not one that subscribes 100% to this theory, but it has a lot of merit. I have seen arguments made that eBay has brought value to the forefront of the hobby more than ever, and as a result, people have been conditioned to think in terms only related to money.
Personally, I dont think this is all truth, as value has always played a part in cards- an intrinsic part – even before eBay. That’s why Beckett was able to make money drawing their price guide listings out of a hat and calling them gospel.
Where eBay and online retailers have made their mark is in availability. Ebay is open 24 hours a day. COMC is open 24 hours a day. At any given time, almost every card in existence is available for sale. Its no longer the same chase in a lot of ways.
The years of collectors driving show to show and shop to shop to complete their sets are relatively over, as are opening pack after pack of cards trying to pull that one short printed card. Chances are, you can get it right now, and it doesnt have to cost you all that much MORE money to do so.
Access to a product can diminish demand over time, as unavailable products are always more in need for the people that want them. I posted a few weeks back that its no longer worth it to open any box of cards, and that remains the truth. Its even more evident when you can buy whatever you want whenever you want, with few exceptions.
That’s not saying that price isnt impacted by eBay or that value isnt at the forefront of our minds. They are, especially when a new product hits shelves. If the perceived “ebay value” isnt up to par, the product tanks. Yet, we still see companies trying to cut corners and put out poor content with the hope that something will catch on.
Theory 4 – Distributors Impact Everything
Right now, a collector cannot go to Topps or Panini and buy a box at a competitive price directly. They have to go to a third party, or in some cases a fourth party. Even many of the shops out there dont buy direct from the manufacturer, because for decades, distributors have run the show.
Allegedly, they set prices, they hoard inventory, and most importantly, they offer the most competitive prices. Why is that such a big deal? Mainly, it can give the card companies an out if their product doesnt sell. The closeout structure allows them the opportunity to unload unsold products at drastically reduced prices, thus making it easier for them to clean up the bottom line, and rid themselves of the burden an unsold product creates.
None of the card companies want to sit on unsold inventory, because for the most part, it costs money they dont have. Warehouse space is limited when you produce 16-30 products a year, and they would rather unload it to someone who can afford to store it, than let it rot in their own space.
This leads to drops in prices, in most cases. It also puts the local shops in a VERY difficult situation mainly because they would have needed to buy it at normal cost. This is why online retailers can sell at 30 to 40% off hobby store prices in some cases. They just didnt have to pay as much. Its a vicious circle, as it can impact every stage of the game.
On the flip side of it, allocations on a hot product can also favor the distributors, who can put a stranglehold on the river of available product if they so desire. Theoretically, if a hot product is making waves, and they know that they can hold back allocations to increase price, there is nothing anyone can do to stop them. There are some products where a single entity can own huge percentages of a print run, and yet only sell it in small portions to manipulate prices.
The latter is a RARE situation, but it will have a negative influence over other products who are seen as very available and over supplied. In almost every case, the distributor is in a win win situation.
Hell, if a product cant be moved? Dont worry, here comes a Black Friday or Father’s Day promotion that will help. This is only the tip of the iceberg, trust me.
Which Theory is Right?
All of them. Plain and simple. All of them are correct in some ways, and that is what is so scary about this whole situation. With Upper Deck and Topps both in the hundreds of millions in debt, and Panini not really making all that much money (if any), one has to question where we will be in 10 years. Shit, one has to question where things will be in 5 years.
With the absolute fuckload of money that Panini paid for the NFLPA exclusive and more for the NFL exclusive, it should be obvious that they will need to do something drastic to make that money back. They need to be profitable, and its only going to happen one way. They have to make more products, and they have to expand their portfolio.
There are people who will likely say they have confidence that Panini will take that seriously and deliver higher quality goods, but their track record doesnt reflect that. Without incentive to be creative due to lack of licensed competition, apathy and indifference sets in. Look at every exclusive that has ever been instituted. It rarely works out well for anyone.
More importantly, the people who come out the other end looking the worst is the average collector. I have commented previously that Panini is out to own every exclusive that is possible. They currently own all but Hockey and Baseball. If things continue down the path we are on, they will be the only company left standing that produces pro league licensed cards.
The worst part is, it will not be because they have produced the best product, or even had the best business practices. Its because they have a parent company that has the money to float all the losses they incur. That only serves to reinforce how bad things have gotten, as the best company who produces the best cards isnt the one left standing.