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Sports cards battle slump
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December 30, 1997: 2:16 p.m. ET
Trading card makers fall on hard times after championship seasons
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NEW YORK (CNNfn) - Muscles, shoulder pads and helmets have not been enough to help protect sports trading card companies from a serious slide in sales and profits.
The latest casualty: Topps Co. Inc. The company - one of the major players in sports trading cards - said last week it expects to post a loss for the fiscal year due, in part, to "continued weakness in the domestic market."
It has been a roller-coaster ride for the entire trading card business, which has seen sales slump from $1.2 billion in 1991 to only an estimated $400 million this year.
Trading card companies have been dragged down by the very sports leagues, such as the National Basketball Association and the National Football League, that they have sought to chronicle, says Greg Miller, owner of trading card wholesaler Potomac Distribution.
"Leagues have refused to lower the licensing fees, and companies need to keep pumping out cards but nobody's making any money," says Miller. Calls to the NBA and NFL were not returned.
The fees are a burden to trading card companies, which have razor-thin profit margins, says Miller. Leagues and players associations often require royalties of up to 22 percent of sales and also charge minimum fees, which can total $4 million for some sports.
Sports cards' championship seasons
It wasn't always this way for trading card companies. Despite the heavy royalty fees, a run-up in sales during the early 1990s helped companies like Topps (TOPP) and Upper Deck Co. hit home runs.
High sale prices for Mickey Mantle cards and other such rarities spurred people to enter into the trading card market, buying cards which they believed would jump in value in the future.
"The manufacturers printed a few more and the scarcity left the hobby," said Greg Ambrosius, editor of Sports Cards Magazine. "Very few cards printed in 1991 are valuable today. They were mass-produced."
Game cards are the hot rookie
One rookie is making a strong improvement in the collectible card industry, although its numbers are still small.
Game cards, used in role-playing and other types of entertainment, are one of the few bright spots for the trading card sector. However, they constitute only about 5 percent of the market. Baseball cards make up 37 percent, with football cards close behind at 34 percent.
Among game card companies, Wizards of the Coast Inc., a Renton, Wash.-based firm, is the leader. Its trading card games, such as "Magic: The Gathering" and "Legend of the Five Rings," are among the most popular with collectors.
Surprisingly, game cards are often quite simple when compared with sports cards, which may make use of foil packaging and advanced imagery techniques.
However, card wholesaler Miller said they have one advantage. "With sports cards, you can see that athlete on TV, but you can't play with them."
Sports cards attempt comeback
Industry watchers say that card companies have a lot to overcome, including lethargy among fans who became disgruntled with pro sports during such events as Major League Baseball's strike in 1994.
But card companies are not ready to hit the showers yet. "We're trying to attract the next logical tier of collectors," said Marty Appel, a spokesman for Topps. "We're doing that by trying to get more involved with ball clubs, stadiums and so forth to expose the product to that potential audience."
Collectibles firms are also trying to reach international markets, particularly with basketball, which has garnered the most interest overseas. But Appel admitted that "we have not been as successful as we'd like to be."
American card companies have also been reluctant to make forays into cards for other countries' soccer teams, despite the almost universal popularity of the sport.
And while some trading card companies may struggle, there is a strong secondary market for trading cards. Recently, a buyer paid $27,000 for an Eddie Matthews rookie card and a record $63,500 for a Mickey Mantle card. Trading card companies are not involved in that market, however.
-- by staff writer Randy Schultz
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