August 10, 2009 2:51 PM
Baseball Card Contract Raises Antitrust Concerns
Posted by Matt Straquadine
If you’re like us, you collected baseball cards as a kid. By the time you went off to college you had filled shoe boxes with your favorite players and stashed them under your bed.
Never mind that mom finally got fed up and threw them out, Topps is out to show today's kids how much fun it is to collect those stacks of card stock. The company announced Wednesday that it has signed an exclusive deal with Major League Baseball to become the only retailer allowed to use MLB and team logos on its baseball cards.
It's the first exclusive deal the MLB has granted a card company in nearly 30 years, and a potentially devastating one for Topp’s main competitor Upper Deck. But as the trading card market continues to drop off, reviving the business requires a deal like this, says Howard Smith, MLB's senior vice president of licensing.
“An exclusive deal is the best way to get a manufacturer to commit to putting out a quality product and Topps was the right company do this with because of senior management’s experience marketing to kids,” Smith says, referring to former Disney CEO Michael Eisner, who became the owner of Topps through his investment company Tornante in October 2007.
Both sides were represented by in-house counsel. Warren Friss, a vice president at Topps, says the exclusive arrangement wasn't about pushing competitors out.
"It's about simplifying a complex and cluttered marketplace for trading cards so we can bring in kids and grow the category," he says.
Still, the deal is reminiscent of a high-profile lawsuit involving a hat manufacturer that sued the NFL for granting a competitor the sole right to make NFL hats. The manufacturer, American Needle, argued that the agreement violated antitrust laws. A federal court ruled in favor of the NFL, and the U.S. Supreme Court recently agreed to hear the case.
Will Topps' main competitor bring a similar suit against the MLB?
"We're weighing all of our options at this point," says Michael Bernstein, senior corporate counsel for Upper Deck.
But Matt Mitten, a professor at Marquette University's National Sports Law Institute, says there are important differences between the Topps deal and the American Needle case.
In 1922, the Supreme Court established a common-law exemption for major league baseball in cases involving antitrust laws, a decision most recently affirmed in 1972.
"Any potential challenge to this deal may be met with this particular defense,” Mitten says.Make a comment