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Old 07-23-2014, 10:15 PM   #1 (permalink)
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Default Predicting the Panini Exclusive License Death Spiral

My thoughts on why the reported Panini exclusive license will further destroy Panini's product and hopefully open the door for multiple licenses again down the road.

Assumptions:

1) Panini is paying, at a minimum, the combined amount that Topps and Panini pay the NFL for licensing today. Otherwise, this wouldn't make financial sense for the NFL.

2) All things equal, Panini will not pick up Topps' complete market share of football cards due to Brand/Release loyalty. Any losses in market share will become significant.


What Will Happen:

Given the two assumptions above, Panini will need to do one of three things to improve their profitability over today's standards:

(1) Make substantial improvements/new offerings/etc that would not only equal today's combined market share of Panini and Topps, but would exceed it. This would be needed to cover the higher licensing expense;

(2) Panini could lower their costs substantially to increase their margin on the product they do so. The assumption here is that as the only NFL licensee in the game, there would be a certain amount of market share that would buy no matter what; or

(3) Raise prices of products to increase margin.


The first option is the most risky. There is no assurance what products will be popular and Panini doesn't currently bat a high percentage on new releases. The second two options are much more effective in the short term. However, as prices increase and products get watered down with low end hits, more collectors abandon, which leads to the need to double down on quality reduction and price increases. After a while, the exclusive license fails to be profitable as the dual license structure.

Even if 10-20% of Topps buyers don't transition to Panini, it would be significant due to the snowballing effect of my theory. Not to mention I'd suspect the NFL would be conscious of the cross-marketing gains cards may have for their brand by reaching young collectors and therefore would not be thrilled with a nose-dive in product sold even if they were getting paid (I assume there are still a handful of these around).

Of course, Panini could revamp their products and knock next year out of the park and make the exclusive license work...but I am skeptical.

Thoughts?
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Old 07-23-2014, 10:22 PM   #2 (permalink)
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I buy basically whatever looks the best to me, especially if it includes on card autos…Panini makes a few decent brands like Prime Sigs, and Contenders, but they don't regularly deliver a nice looking product, just look at the absolute crap they have put out so far in 2014. Elite is nice, but I think only the Rookie Premier guys are on card.

2012 was Panini's best year ever and the best year the hobby has probably seen in a long time. Good luck meeting my expectations going forward Panini. Topps did it on a regular basis.
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Old 07-23-2014, 10:22 PM   #3 (permalink)
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It's official now?
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Old 07-23-2014, 10:26 PM   #4 (permalink)
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Quote:
Originally Posted by ECCC View Post
It's official now?
I included 'reported' as a caveat. Not official to my knowledge, but seems to be a whole lot of smoke for no fire.
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Old 07-23-2014, 10:27 PM   #5 (permalink)
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Quote:
Originally Posted by NYGiants72 View Post
I included 'reported' as a caveat. Not official to my knowledge, but seems to be a whole lot of smoke for no fire.
Oh okay, that's what I thought. Far as I know, some guy tweeted about it and then this sub blew up. Thanks for the info!
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Old 07-23-2014, 11:53 PM   #6 (permalink)
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Guys, this is ludicrous to act like the sky is falling over a rumor.
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Old 07-23-2014, 11:56 PM   #7 (permalink)
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Guys, this is ludicrous to act like the sky is falling over a rumor.
I'm thinking the same thing.
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Old 07-24-2014, 01:00 AM   #8 (permalink)
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We just love the hobby and maybe are overreacting but we do not want an exclusive.
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Old 07-24-2014, 01:41 AM   #9 (permalink)
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Or, what you fail to realize is the most money for a company that makes it's money printing and selling cardboard is at the venues to push the cheapest cardboad at the highest volume. Any exclusive contract would be to attach the retail chains and the retail chains alone. Topps makes a KILLING with their retail product. If Panini and Topps didn't care about retail and selling it, they wouldn't make special sets retail only. I think that's where the money is. Could be wrong, but seems like it to me
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Old 07-24-2014, 01:58 AM   #10 (permalink)
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I collect just one player, and don't really care who makes the cards.
But of my top ten cards, I would say nine are Panini.
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Old 07-24-2014, 09:21 AM   #11 (permalink)
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Something I was thinking about regarding the cost of getting the NFL exclusive....They are losing their NHL deal after this season so they have all the $ that they put into NHL products to put behind the NFL products.
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Old 07-24-2014, 09:39 AM   #12 (permalink)
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Quote:
Originally Posted by garpike View Post
Something I was thinking about regarding the cost of getting the NFL exclusive....They are losing their NHL deal after this season so they have all the $ that they put into NHL products to put behind the NFL products.
This is a good point, I didn't even think of that. Maybe if this is all untrue, they'll put it towards soccer as that seems to have been a great release for them. Ran the printers on that one and it still sold out for them.
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Old 07-24-2014, 10:15 AM   #13 (permalink)
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If the NFL were smart, they would build in the contract with Panini that they expect a certain amount of quality for all of their products, and that they have a certain amount of control when it comes to what's released.

To be honest, I actually even think that the point system that they are using could have been the NFL's idea since so many customers hated redemptions. Since Panini wanted to get the exclusive, they did as the NFL asked...
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Old 07-24-2014, 10:21 AM   #14 (permalink)
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When a company has a large amount of cards that say "Panini authentic auto" on the back and the front doesn't have an auto and they say well the card wasn't supposed to be auto'd but then they have a large supply of Player A that they now are giving away if you buy more product that rubs consumers the wrong way ala Damian Lillard... they couldn't get his auto in a product so they had redemptions for autos (Past & Present) and the cards weren't auto'd and Panini felt compelled to put an "Im sorry" letter into the package then suddenly they had tons of autos that weren't ever packed out.
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Old 07-24-2014, 10:34 AM   #15 (permalink)
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Quote:
Originally Posted by garpike View Post
Something I was thinking about regarding the cost of getting the NFL exclusive....They are losing their NHL deal after this season so they have all the $ that they put into NHL products to put behind the NFL products.
While this makes total sense, the money they were spending towards their NHL license was probably peanuts compared to their NFL license. I doubt that money would have caused them to up their offer enough to make the NFL say goodbye to Topps (if that is true). Just my opinion of course.
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Old 07-24-2014, 10:42 AM   #16 (permalink)
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Here are my extended takes:

Twitter Hints At Panini NFL Exclusive in Near Future – Could This Be the Hobby’s Worst Nightmare? | Sports Cards Uncensored

Further Implications of Possible Panini NFL Exclusive | Sports Cards Uncensored
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Old 07-24-2014, 10:53 AM   #17 (permalink)
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I'm not sure if this has been brought up yet or not in another thread, but my lcs owner had mentioned yesterday that Panini is going to be buying UpperDeck. He said the deal should happen sometime around the February/March time span.
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Old 07-24-2014, 11:01 AM   #18 (permalink)
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Quote:
Originally Posted by Whodatiz View Post
I'm not sure if this has been brought up yet or not in another thread, but my lcs owner had mentioned yesterday that Panini is going to be buying UpperDeck. He said the deal should happen sometime around the February/March time span.
that would explain why they didnt try to outbid ud on the nhl contract. they were just going to buy the company anyway.
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Old 07-24-2014, 11:03 AM   #19 (permalink)
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that would explain why they didnt try to outbid ud on the nhl contract. they were just going to buy the company anyway.
I would be fine with this. Upper Deck could make their fantastic brands: Spx, Sp Authentic, Exquisite and also have some college cards that are licensed.
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