Fanatics buys PWCC

[BobC]

Originally Posted by Rhotchkiss

Based on the article above, it looks like PWCC may have been in trouble financially. Reading between the lines, it looks like PWCC borrowed a bunch of money to lend on cards, the interest rate on that loan went way up while the value of the cards they lent on plummeted. PWCC takes back a ton of cards. PWCC cannot service it’s debt bc the lender does not want to get paid in cards. Now the entire company is at risk bc the assets are pledged as collateral; and perhaps the owners have personal liability too. Fanatics comes in and effectively assumes the position of the lender- they pay off the lender and take all of PWCC’s assets. I am not sure the owners got paid anything- it depends on how desperate they were; maybe they kept a slice of ownership.

Bottom line, I am guessing Fanatics had all the leverage in this deal, meaning they not only got a new platform/business, but they probably got a pretty good deal to boot

Again, I know nothing about this deal other than what is in the article and my (likely poor) intuition

Makes a lot of sense Ryan, and also may point to an obvious technique/tactic used in business to take advantage of situations. Fanatics ownership/management appear to be quite savvy and up to the task from a business standpoint. After the move was made to strip Topps of their future player licensing agreements to be able to print cards of MLB players a little while back, the IPO Topps was in the process of completing was crushed, and soon after Fanatics swooped in and bought them for what would seem to be a huge discount. Whether the timing of the move by Fanatics to take over those future licensing rights was calculated and intentional, we'll probably never know for certain. But I wouldn't put it past Fanatics to have made that announcement, stripping Topps of future MLB licensing rights when they did on the eve of Topps' IPO, as a way to inflict the most noticeable and public damage to Topps' name and brand, and most significantly, its value. The timing of all those factors seems almost too good for Fanatics ultimate benefit to be simply coincidental.

This PWCC acquisition looks to be maybe a little more of an opportunistic move by Fanatics, rather than one they may have helped create. But again, shows their apparent ability, and desire, to take full advantage of the potential distress of other companies in the hobby industry, and possibly be able to grab them at greatly discounted prices.

As for Fanatics possibly going after a TPG next, I did not know about the relationship of Michael Rubin being a major owner/investor in Fanatics and also in CSG. Thanks for pointing that out Casey. with that kind of mutual ownership/rapport between Fanatics and CSG already existing. can easily see some kind of working arrangement/partnership, so to speak, being set up to mutually benefit the two companies. Sort of like the already existing partnership between CSG and Ebay regarding Ebay's Authenticity Program, and the services provided by CSG for it. Or even the existing partnership that CSG already had with PWCC prior to this acquisition of PWCC by Fanatics. In nothing else, this likely strengthens that pre-existing partnership between CSG and PWCC. And I wouldn't put it past Michael Rubin's involvement with CSG as a possible source of info that Fanatics used that allowed them to better negotiate and step in to acquire PWCC as well. After the fact, when more and more coincidences seem to start turning up, it becomes more likely those weren't all just random coincidences to begin with. LOL

So maybe Fanatics doesn't go after a TPG after all. Seems they don't necessarily need to in order to have a special working relationship with one that they can use to their mutual advantage. And as others have opined, not so sure that Fanatics would need to acquire a Breaker, as they already have their distribution system/network in place. And this acquisition of PWCC just further expanded their own marketing platform as well. The trick for Fanatics and their owners/investors will be to somehow supplant/replace the current Breaker distribution/sales system/network in place for the sale/distribution of sports cards so they can take those profits the Breakers have been realizing for more than a decade now, and put those in their own pockets instead going forward. And it may not be that difficult. Just like Fanatics saw to Topps being cut off from the future licensing to provide images of MLB players/teams, what is to stop Fanatics/Topps from figuring out ways to circumvent and not have to sell to Breakers? Breakers are really nothing more than retailers, and are totally dependent on being able to buy and acquire products they "Break" from wholesalers/manufacturers. I don't believe there are any laws that would force a company like Topps to have to sell their product through Breakers. Quite a few businesses these days directly market to the public, especially with the added ease and pervasiveness of the internet and online marketing and retailing. And Breakers would still be able to acquire products from other card manufacturers, like Panini, so trying to play the illegal monopoly card likely wouldn't work in their favor either. There can be many different ways for Fanatics/Topps to work things going forward. Hopefully what they choose to maximize their profits won't boomerang and work against the hobby itself, sort of how the junk wax era turned out for everyone, and turned many off to the hobby. But look how the hobby survived and came back anyway. These corporate entities may need to learn to temper their profit aspirations and goals at times, so as to not jeopardize the hobby itself, and the desire and passion of collectors/investors who are the sole reason for those profits to begin with. Sort of like the old adage, "Don't cut off your nose to spite your face!"

Will be very interesting to see and follow where this all goes.

[Aquarian Sports Cards]

Originally Posted by BobC

Makes a lot of sense Ryan, and also may point to an obvious technique/tactic used in business to take advantage of situations. Fanatics ownership/management appear to be quite savvy and up to the task from a business standpoint. After the move was made to strip Topps of their future player licensing agreements to be able to print cards of MLB players a little while back, the IPO Topps was in the process of completing was crushed, and soon after Fanatics swooped in and bought them for what would seem to be a huge discount. Whether the timing of the move by Fanatics to take over those future licensing rights was calculated and intentional, we'll probably never know for certain. But I wouldn't put it past Fanatics to have made that announcement, stripping Topps of future MLB licensing rights when they did on the eve of Topps' IPO, as a way to inflict the most noticeable and public damage to Topps' name and brand, and most significantly, its value. The timing of all those factors seems almost too good for Fanatics ultimate benefit to be simply coincidental.

This PWCC acquisition looks to be maybe a little more of an opportunistic move by Fanatics, rather than one they may have helped create. But again, shows their apparent ability, and desire, to take full advantage of the potential distress of other companies in the hobby industry, and possibly be able to grab them at greatly discounted prices.

As for Fanatics possibly going after a TPG next, I did not know about the relationship of Michael Rubin being a major owner/investor in Fanatics and also in CSG. Thanks for pointing that out Casey. with that kind of mutual ownership/rapport between Fanatics and CSG already existing. can easily see some kind of working arrangement/partnership, so to speak, being set up to mutually benefit the two companies. Sort of like the already existing partnership between CSG and Ebay regarding Ebay's Authenticity Program, and the services provided by CSG for it. Or even the existing partnership that CSG already had with PWCC prior to this acquisition of PWCC by Fanatics. In nothing else, this likely strengthens that pre-existing partnership between CSG and PWCC. And I wouldn't put it past Michael Rubin's involvement with CSG as a possible source of info that Fanatics used that allowed them to better negotiate and step in to acquire PWCC as well. After the fact, when more and more coincidences seem to start turning up, it becomes more likely those weren't all just random coincidences to begin with. LOL

So maybe Fanatics doesn't go after a TPG after all. Seems they don't necessarily need to in order to have a special working relationship with one that they can use to their mutual advantage. And as others have opined, not so sure that Fanatics would need to acquire a Breaker, as they already have their distribution system/network in place. And this acquisition of PWCC just further expanded their own marketing platform as well. The trick for Fanatics and their owners/investors will be to somehow supplant/replace the current Breaker distribution/sales system/network in place for the sale/distribution of sports cards so they can take those profits the Breakers have been realizing for more than a decade now, and put those in their own pockets instead going forward. And it may not be that difficult. Just like Fanatics saw to Topps being cut off from the future licensing to provide images of MLB players/teams, what is to stop Fanatics/Topps from figuring out ways to circumvent and not have to sell to Breakers? Breakers are really nothing more than retailers, and are totally dependent on being able to buy and acquire products they "Break" from wholesalers/manufacturers. I don't believe there are any laws that would force a company like Topps to have to sell their product through Breakers. Quite a few businesses these days directly market to the public, especially with the added ease and pervasiveness of the internet and online marketing and retailing. And Breakers would still be able to acquire products from other card manufacturers, like Panini, so trying to play the illegal monopoly card likely wouldn't work in their favor either. There can be many different ways for Fanatics/Topps to work things going forward. Hopefully what they choose to maximize their profits won't boomerang and work against the hobby itself, sort of how the junk wax era turned out for everyone, and turned many off to the hobby. But look how the hobby survived and came back anyway. These corporate entities may need to learn to temper their profit aspirations and goals at times, so as to not jeopardize the hobby itself, and the desire and passion of collectors/investors who are the sole reason for those profits to begin with. Sort of like the old adage, "Don't cut off your nose to spite your face!"

Will be very interesting to see and follow where this all goes.

Was it a Topps IPO? I thought they were selling to someone else. Either way the point remains the same. The Fanatics announcement torpedoed Topps' plans.

[BobC]

Originally Posted by Aquarian Sports Cards

Was it a Topps IPO? I thought they were selling to someone else. Either way the point remains the same. The Fanatics announcement torpedoed Topps' plans.

My mistake Scott, I misrepresented the deal as an IPO. I had heard that term used in regards to this Topps deal in the past from somewhere, and it sticks in my head. Sorry. LOL

Topps was going to do a merger with Mudrick Capital, which was already a publicly traded company, that would instantly make Topps considered a publicly traded company as well. The reported value assigned to Topps in the merger was something like a value of $10.87 per share of Topps stock, which I believe gave them a supposed market value of somewhere right around $1.3Billion. IIRC, the Fanatics purchase was for about half that amount, maybe $500K, a pretty serious cut in value just a few months after the Mudrick Capital merger fell through, and basically a perceived steal by Fanatics.

[trambo]

Originally Posted by Aquarian Sports Cards

Was it a Topps IPO? I thought they were selling to someone else. Either way the point remains the same. The Fanatics announcement torpedoed Topps' plans.

It was a proposed IPO. I can't remember if they were putting it in a SPAC or a more traditional IPO but I do remember thinking I'd buy some stock in Topps if it were public again.

Edited to link an article about the SPAC:

https://marketrealist.com/p/what-happened-to-topps-ipo/

[Brian Van Horn]

I may have to admit myself to Smart Alecs' Anonymous because of the following lines:

"Betts wrote that buying PWCC “will give us the opportunity to further build and strengthen on the foundation that exists today and ultimately deliver a lot of value to our fans/collectors.”

The companies didn’t report terms of their deal.

PWCC’s 125 employees will remain with the business, according to Betts, who said “it’s business as usual” for the time being."

https://www.oregonlive.com/business/...-fanatics.html

Thank goodness he saved himself with the following:

"It is critical that we take the time to properly evaluate the business, best practices and compliance,” Betts wrote. “Long-term health is vital for our business and the ecosystem at large, which is why we’re going to thoughtfully integrate the PWCC platform into Fanatics Collectibles.”

In my opinion you should have done more evaluation before you purchased this gelding.