Wildcat strike: MLBPA deal stirs up troubled car biz – Major League Baseball Players Association
Terry Lefton
As the Major League Baseball season opens this week, its Players Association (PA) has fired a high, hard one at the league, granting Pacific Trading Cards a PA license in the sports licensing business’ most overcrowded category. The move puts MLB in an awkward position and could escalate tensions between the licensing sides of the league and the PA at a time when they have at least paid lip service toward working together for more synergistic marketing deals.
Major League Baseball now must either capitulate to the Player’s Association, granting a license that would allow the inclusion of MLB marks on the Pacific cards, or refuse and risk a resumption of hostilities.
“They were going to work together and now the PA is jamming this down their throats,” said one senior card industry exec.
Officially, all MLB will say is that it is “considering its options,” as far as granting Pacific an MLB license. Insiders say the deal was sprung on MLB Properties five days before the PA and Pacific went public with their deal.
“Pacific is a good company but if there was ever a case for cutting the number of licensees in a category, this was it,” said a senior baseball source.
Pacific has produced bi-lingual MLB cards targeted at Hispanics for several years, but the move by the PA to expand their license comes at a time when many industry observers were speculating that one of the licensees might be cut.
“I’m at a loss as to why anyone would allow another company in considering the health of the category,” said Jerry Meyer, chairman of Pinnacle Brands, the company that markets the Pinnacle and Donruss brands. “I just don’t understand the whole situation.”
The overall trading card market has shrunk by more than half over the past five years and was decimated by the 1994 strike. Of the five companies with MLB and MLBPA licensees, profits are scant, one brand, Fleer is in Chapter 11 and many are loaded with debt.
MLBPA licensing czar Judy Heeter said the deal with Pacific was struck to “get cards into the hands of younger consumers who aren’t yet card collectors.”
Industry estimates put the deal at close to $4 million. Many in the industry interpreted the PA’s move as a sign that it is strapped for cash, a notion rejected by Heeter.
“If that were the case, we would have licensed more broadly for years,” Heeter said.
“We try to make all of our licensing decisions on a long-term basis.”
But according to one MLB exec, “This is the ultimate short-term strategy.”
The PA has, by its own admission, spent millions defending itself against a breach-of-contract lawsuit by Mike Schechter, who ran its licensing from out-of-house for many years, and against a trademark infringement suit with Hillerich & Bradsby, which markets the Louisville Slugger baseball bat brand.
Schechter has already been awarded a total of almost $1.8 million plus interest (now on appeal), with the rest of his case set for an April 20 court date. The H&B case is also pending.
With the PA highly dependent on trading cards for revenues (estimates have cards accounting for around 80% of its overall income), the amount returned to players has decreased by more than two-thirds over the past few years.
There are two larger issues that make this case particularly interesting. If the league grants Pacific a license, it risks oversaturing an already oversaturated category, perhaps killing it and driving one or more of the licensees, most of whom do business with the other sports, out of business.
Then there is the issue of whether the two sides will ever be able to work together. MLB sources said they were taken by surprise by the action. “Its true they didn’t know we were going to grant a license, but they were familiar with our thinking on the category and we are being as cooperative as we can be,” said Heeter.
Pacific has promised to deliver cards to retail by the end of May, which means it will have to go into production soon. It is unclear whether the company will issue “pajama cards,” which feature pictures of players with the MLB logos erased, as some companies did with NFL cards back in the 1970s and others have done more recently for promotional card usage. That is seen as cheapening the image of baseball cards overall.
But if Pacific uses MLB marks in an unauthorized way, then is MLB willing to dig in its heels, incur the expenses of another lawsuit even as it is concluding one (See related story)?
As the season opens, is it an end to the supposed united marketing front both sides have trumpeted and a return to a Management-versus labor relationship, at the greater expense of the sport?
“We are marketing our sport together,” insists Heeter. “This is not an end to the era of good will at all.”
“On the larger issues, I would say our relationship is solid,” said MLB COO Paul Beeston. “I don’t believe this will impact the larger things we are doing like international play and trying to speed up the game.
“We might fire our own shot back some time, but hopefully these can be done in a friendly adversarial way, as opposed to an antagonistic way.”
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