More than a year ago, Panini announced that they had secured an exclusive deal to produce cards with current players through the NFLPA. As one of two major parts needed to block out competition, the writing was on the wall for the beginning of 2016, when the new deal would kick in. Then silence for a long time. A LONG TIME. So long that doubt began to creep in whether Panini would get the other half of the deal with NFLP, who controls the logos and licensed materials for the league.

Yesterday, Panini told distributors that the other half of the deal is now in place, which is literally the worst possible news for football collectors. Not only will this end any possibility of Topps using NFL logos or jerseys for the next decade, but it basically removes all hope that football cards will rebound from the decline in popularity we have seen over the last 10 years.

A Raw Deal

Exclusives suck in general, especially when the company who secures the exclusive deal doesnt produce anywhere close to the best cards in the sport. Compounding that is when the new company basically cancels out the continuation of 60 years of history and a name that new customers are more likely to recognize.

All of the above is my opinion, and I understand that my absolute hatred for their horrid products is not universal. On the other hand, one thing is indisputable, and that is the money associated with both sides of this deal. When the first leg was completed last year, everyone who was part of the industry, including some people at Panini mind you, were absolutely dumbfounded by how much was committed to the NFLPA. Based on what I have gotten first hand, there is not a single person who can figure out a way that Panini will walk out of the first deal with numbers that arent red.

Adding in the new NFL deal, those numbers have seemingly gotten worse, and again, the people I trust to have a good understanding of this side of the business are all scratching their heads. Here is what we know:

• Although the NFL remains the most popular sport in the country, it is losing popularity in cards. It currently sits behind MLB and NBA.
• NFL card products arent selling as well, singles are insanely soft, and the football hobby is losing more people than it is gaining.
• Minimum guarantees (the amount of guaranteed revenue promised during the course of the license) are astronomical, and create major problems in the methods needed to generate said revenue.
• MANY more products will need to be created to ensure that the guarantees are met
• Topps and Panini combined to make more than 30 products in 2014, and will do so again in 2015.
• Panini is expected to take over what Topps left behind, plus some, just to hit agreed targets. One team doing the work of two is most definitely not the best situation, even worse when the track record is as it is for Panini products.
• From what the industry professionals have told me, coming out ahead just isnt possible, and Panini will likely have to pay up to the minimum guarantee taking a major loss. This does not include fees and other payments to secure the license deal in the first place.

In case you dont want read the bullets, basically Panini will not make any money on the NFL, unless they pull out some sort of miracle. You can go into this with a positive perspective and say that they will find a way, hiring people or pulling their heads out of their collective asses when creating new brands, but that is a hail mary at best. The numbers are just too big for the card business the way it is now.

I cant find the angle here, other than one specific premise, one that has been on the table since 2009 – a war of attrition. Panini must think that securing all these exclusive deals will force other companies out of business or at least to their knees. They believe that come 2020, they will own 4 of the 5 major licenses (MLB, NFL, NBA, and NCAA), and the NHL will be with UD, who has shearing for millions in tax debt in the near future. Once all the other companies are on their last legs, the buy offers will go out. Either that, or they will be able to stomach the losses for the length of the deals while their competitors starve, and renegotiate later.

Manifest destiny RARELY ever works out for anyone, and usually leaves a trail of scorched earth in its wake. As mentioned before, Panini is making BIG promises in a hobby that has shrunk considerably over the last 10 years. No one is really sure how those big promises wont end in disaster.

In fact, the only people bringing in a steady stream of new people to the game is Topps, and they are not using physical cards to do so. Panini using this strategy is like going out and buying a newspaper company. Sure people still read the news, but its no longer prominently through newspapers delivered to their doors. That is what I dont get, even if you force your competition out the door, you gain access to 100% of a hobby that is shrinking, not growing. I have said that the hobby will never die, which is still true, but no one is denying that the people heading out the door than walking in.

Potential Impact

Before I start – here is another post I did on impacts that could be felt.

As said previously, the impact of this shitty deal is pretty profound, especially in the way it changes things around the hobby. Even though Topps is shut out out of the NFL, it doesnt mean they are completely out of the game. They can still produce unlicensed legends products that have no logos, as long as they are able to secure group license agreements with players to participate. This can be lucrative, especially if their products continue to have superior design and quality over the massive tidal wave of cookie cutter Panini garbage that will hit the shelves once the deal begins.

Additionally, Panini is going to take quite a large loss on this deal, especially if trends continue the way they are. At some point, Italy has to recognize that their USA pet project probably isnt shaping up the way they hoped it would. Right now, its clear that the current people in the American branch of their card business have a blank check from their sugar daddy, but business is business. Why continue to invest in a branch of your business that is hemorrhaging money from every orifice? If that is the case, the entire industry might be on shaky ground if Panini Italy decides its time to stop wasting money on a product that isnt going anywhere but down.

More importantly, Topps Digital doesnt look to be impacted by this deal. From this Q&A they did to start the team it looks like theymight separate from impact on physical. This means their golden goose should remain in tact, as long as the NFL wants to play ball. Not only does this continue to bring Topps closer to the forefront of the public consciousness, but all those new people they bring in will come to identify with the brand Topps puts out, not Panini. If Topps had football cards to tie to their apps, Panini might see more benefit than they would without that presence. Now there is no reason for Topps to do any programs that lead their digital users to the physical football hobby. In fact, its almost better to drive them more into the fantasy football side of the business instead of cards. Too bad really, because Topps Digital is looking more and more like the future of the industry, not Panini.

I am bitter about Panini finding a way to get their grubby little fingers on this exclusive, no doubt about it. I see them as irresponsible, unmotivated, and more interested in looking good rather than actually BEING good at what they do. Topps isnt perfect by any means, but they arent the people spending what they spent on a lavish VIP party either. Let us not forget that a lot of the people who were part of the brass at Fleer are now making a home at Panini. We all know how Fleer turned out, and it doesnt seem like they are learning from their mistakes.

To be honest, I really do want to be positive about this, but its hard to find a silver lining when the reality is so bleak. The sky may not be on top of our heads, but it is definitely falling from my point of view. It took a movie universe to save comic books, and unfortunately, there are no stories here that Hollywood would be able to churn out every year. This is a hobby that will eventually exist with no industry behind it, and that is becoming more and more clear with every exclusive that Panini signs. The question is whether or not the collectors will start to realize how terrible the exclusive deals are before its too late.