Thursday 20 August 2009

When Nostagia Meets Business Reality: The Case of Baseball Cards

What happens when the nostalgia of youth is refracted by the lens of legal and commercial reality? I recently had occasion to confront this question after a London colleague drew my attention to an article that appeared on on 6 August. Entitled "Topps Gets Exclusive Deal with Baseball, Landing a Blow to Upper Deck," the article reported that the Topps Company will next year become the exclusive maker of trading cards for Major League Baseball in the US. As a result, Upper Deck, will apparently no longer be able to compete with Topps in this business.

For a baby boomer like me growing up in the American Midwest in the 1950s, the very mention of Topps and baseball cards evoke memories that go the very heart of my boyhood experience. In those days, Topps was the only purveyor of such cards. We would take our weekly allowance (5 or 10 cents, I don't remember), sneak out of the house, race to the corner confectionery store, and buy a new packet of cards, anchored in its wrapping by a slab of rigid chewing gum whose main role, I assume, was to protect the cards in the packet until it was opened. I don't remember how many cards there were in each packet. No matter--we would eagerly open the packet, quickly view the new the player cards, compare them with the cards already in my collection, and then plot my trading moves for the week.

For some of us, fascinated by baseball numbers, there was also the studied inspection of the back side of the card, which contained valuable information about the player not readily accessible in other fashion. (I have heard that Ben Bernanke, the Chairman of the US Fed, when not trying to save the financial world, is a great fan of baseball statistics. Perhaps this interest also was fuelled by his boyhood exposure to baseball cards).

Another Satisfied Baseball Card Fan?

The frequency of the cards available in the packages was apparently rationed by Topps so that in the aggregate there were a small number of cards containing the genuine superstars (such as Mickey Mantle, Willie Mays, and Stan Musial, if the reader remembers), and a seeming endless supply of copies of forgotten players (like Willie Miranda and Hal Griggs, who have been consigned to the most arcane of baseball trivia). The name of the game was to wheel and deal with your friends, to induce them to part with that card of Willie Mays for some combination of the near great, the merely average and the already forgotten.

The cards were about the thrill of the deal, the joy of having a piece of the persona of the player embodied in the card, and the challenge of committing yet another set of data to memory. Sometime during the late 1950's, my interest in baseball cards waned, and I gave no more thought to all of the time and money I had invested in maintaining my collection--no more thought, that is, until I was sent the link to the New York Times article. Nostalgia is irreparable, even it is vulnerable. Nevertheless, I decided to take a dispassionate look at the baseball card industry once again, through the prism of the deal reported between Topps and Major League Baseball. And here is what I found.

1. IP--One key to the new arrangement is exactly who has the right to use what intellectual property rights. Upper Deck is reported to have renewed its licence agreement with the Major League Baseball Players Association. Presumably, this licence is for rights of personality and the like. This means that Upper Deck can use the likeness (and name) of the ball players. (I do not know if the Players Association merely represents the rights of personality of the individual players, or somehow takes a proprietary interest, itself an interesting question.)

But this licence does grant any right in the names , logo, or other marks of the baseball teams themselves, which appears be controlled by the Major League Baseball, meaning the clubs themselves. As the article notes, it is Major League Baseball that has entered into the agreement with Topps. How this dual set of licences will work out is not clear.

2. Competition and Exclusivity--Major League Baseball has enjoyed a privileged position under the U.S. antitrust laws for nearly 90 years. The question is whether the grant of exclusivity to Topps is anticompetitive. The article points out that Major League Baseball has entered into a number of exclusivity arrangements. Thus, there is an official car (Chevrolet-- although it is a good thing that the US government bailed out GM to keep this arrangement in tact); credit card (MasterCard--does that mean I cannot use my Visa card to buy a pricey tee-shirt for my grandson?); soft drink (Pepsi--and not the other guy); and cap (New Era--does anyone really care who brands the cap?)

To the best of my knowledge, none of these exclusivity arrangements has been challenged on competition grounds. The question is whether the arrangement with Topps should be treated any differently? If nostalgia is a valid consideration, then the anwer is clearly "no". Exclusivity is what made collecting baseball cards so special 50 years ago. Exclusivity and the Golden Age seem to go hand in hand.

And so the adult in me, the IP lawyer and blogger in me, says, let's wait and see how these IP and competition issues play out, whether or not it is back to the future.

Find the Exclusivity Vectors

Oh, I almost forgot the mention: The current owner of Topps is Michael Eisner, the legendary CEO of the Disney company. What drove Eisner to acquire Topps and to seek to recapture its glory days of the past? In Eisner's own words:
"This is redirecting the entire category towards kids ....Topps has been making cards for 60 years, the last 30 in a non-exclusive world that has confusion to the kid who walks into a Wal-Mart or a hobby store. It's also difficult to promote cards as unique and original."
Eisner is about my age, I think, so I suspect his interest is a combination of nostalgia and business. At a certain level, that is not much different from mine.

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