Julio Rodriguez of the Seattle Mariners is the 2022 American League Rookie of the Year. Fanatics, MLB’s trading card partner, plans to introduce new rookie card features this season as part of a broader plan to increase the value of Topps baseball cards to collectors.

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Fanatics sent shockwaves through the sports and collectibles industry when it wrested Major League Baseball trading card rights from incumbent Topps in August 2021, ending a partnership dating back to 1952. The sports platform company made another big splash last January when it acquired Topps outright for about $500 million.

Now, after releasing its first major Topps set to coincide with the start of the 2023 MLB season, Fanatics is beginning to show off how it plans to expand into the trading card and collectibles space.

“Fanatics is focused on the best fan experience and collectibles is focused on the best collecting experience,” said Fanatics Collectibles CEO Mike Mahan. “That means having the most innovative, thoughtful, authentic products possible.”

Mahan, who joined Fanatics in June to lead the company’s trading card and digital collectibles business after serving as CEO of Dick Clark Productions, said that “the collecting experience in 2023 will be the best collecting experience ever, and 2024 the year will be even better.”

According to Mahan, this belief is driven by Fanatics Collectibles’ core areas of activity: educating and better engaging new collectors in the hobby, building marketing around collectibles, enhancing the existing collecting ecosystem and experience, and innovating.

Beginners play a big role in increasing the value of a baseball card

The innovation has fueled one of the new initiatives Fanatics is adding this year, usually one of the biggest buzz and value for card collectors: the debut cards of promoted rookies.

“One of the big questions we’ve been trying to answer is how do we make the maps really capture the important moments,” Mahan said. “Baseball cards have been interesting to rookies for so long, so if rookie cards are the most important thing in the sport, how do you make the best card? How do you bring people closer to that moment?”

This led to the MLB Debut Patches, which Fanatics touts as the first memorabilia made in partnership with a professional sports league specifically for inclusion on trading cards. In collaboration with MLB and the MLB Players Association, every player making their debut this season will have a patch on their jersey. After the game, the patch will be confirmed and placed directly on the rookie card in a future Topps set.

MLB Chief Revenue Officer Noah Garden said it’s the kind of thing that will continue the momentum among collectibles and trading cards.

“It’s that emotional connection that drives the hobby and brings fans closer to the game,” said Garden, who described himself as an avid baseball card collector. “They want to feel like they’re a part of the game, and what better way to do that than to have something that’s actually been a part of it?”

While the sports trading card industry has grown dramatically in recent years, the pandemic has boosted the hobby. Cards in various sports sold for record prices, including a 1952 Topps Mickey Mantle rookie card for $12.6 million, the highest price ever paid for a collectible card.

US Google searches for “best sports cards to buy right now” increased 680% from January 2020 to February 2023, according to data provided to CNBC by online visibility management SaaS platform Semrush. Over the same period, average monthly visits to Topps.com in the U.S. grew 218.5% to nearly 1.2 million, Semrush data showed.

But even as other collectibles that boomed during the pandemic have fallen out of favor, like NFTs and Funko Pops, trading cards have struggled to maintain their momentum.

Jeff Owens, editor of Sports Collectors Digest, the largest trade publication covering sports trading cards, said the resurgence of the hobby was “primarily due to a surge in buying and selling during the pandemic and a large group of wealthy investors looking for alternative assets.”

A softening economy caused the market for modern cards to fall last year, but values ​​and demand are still “much higher” than they were before the pandemic, Owens said, adding that the market for vintage cards such as Mantle’s rookie card is “very, very strong.”

Owens also pointed to the growth and support of card shows in the US, with nearly 1,000 planned for 2023, a significant increase over previous years.

Mahan said that from a Fanatics perspective, “now is a very good time to be in the hobby.”

The global sports trading card market is valued at $44 billion and is expected to approach $100 billion by 2027, according to Verified Market Research.

“We firmly believe that better days are ahead; we can’t control the economy as a whole and like any consumer product there is some correlation with broader spending, but go into any card show or store right now, it’s a very bright and healthy market,” Mahan said.

When Topps considered going public in April 2021 in a SPAC deal that would have valued it at $1.3 billion, the company reported 2020 sales of $567 million, up 23% year-over-year last year. This SPAC deal was later canceled after Fanatics acquired the rights to MLB, which eventually led to Fanatics acquiring the company.

Mahan declined to comment on Topps sales today, but said “the business and the industry continue to be in a great, great place.”

What MLB is getting out of the Topps deal

For MLB, the return of trading cards has also been a boon, which Garden said has parallels with video games or other ways the league seeks to attract new fans and turn casual fans into die-hards.

Garden noted fans like his son, who is an avid baseball fan but may not know every player on the West Coast team except for their stars. “When these players start to break through at the national level, you already know who to look for” based on rookie cards and other cards in the set, he said.

“The importance of cards in the evolution of fandom I’ve always thought was important,” Garden said, noting that’s how he got into baseball. “But business hasn’t seen innovation in forever, and in many ways it’s become harder to collect. … What Fanatics has done so far for product innovation and supporting the ecosystem has been nothing short of fantastic.”

While MLB cards remain the crown jewel of Topps, Mahan said Fanatics is excited about what the future holds not only for baseball cards, but also for other rights the company owns, including the possibility of producing NBA and NFL cards in the near future. . years.

“The good news is that trading cards and sports cards have been bright for a long time, they’ve been important for a long time, they’ve been significant for a long time,” Mahan said. “This is a business that has traditionally been cyclical and has had its ups and downs… We’re focused on education, innovation, marketing and community and bringing it all together – given where we sit today with all these good things to come, we we feel that the best of us is ahead.”

Earlier this year, Fanatics hired the former Tie up global head of content and partnerships Nick Bell will lead its new Fanatics Live business, which will focus on creating a digital shopping experience for customers where you can buy trading cards and other collectibles through curated and personalized content and entertainment.

Bell told CNBC that one of the first focuses of this new business unit will be around “hacking,” a form of social card shopping. Similar to a blind raffle, a set number of individuals buy a record called a “spot” from the dealer, and then the dealer opens the entire box of trading cards online and deals out each one. Fanatics received a portion of each card sale.

According to CNBC, Fanatics raised $700 million in December to bring its valuation to $31 billion. That’s capital it planned to use for potential M&A opportunities in its collectibles, betting and gaming businesses.

The company estimates that its revenue from Fanatics, including the Lids segment, will be about $8 billion in 2023.

Fanatics has been named to CNBC’s Disruptor 50 three times and was ranked #21 in 2022.

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