(The author is a Reuters Breakingviews columnist. The opinions expressed are her own.)

 

NEW YORK  - Fanatics is turning the U.S. collectibles game upside down. The latest move by the newcomer is buying its old school rival Topps’ trading-card business. It comes just months after Fanatics effectively busted Topps’ deal to merge with a special-purpose acquisition company. Now it’s sweeping up its victim, too.

Founded in 1938, Topps is synonymous with sports trading cards including those associated with U.S. baseball and Bazooka gum. In 2021, the company seemed set for a SPAC victory lap. Ex-Walt Disney boss Michael Eisner’s firm Tornante and private equity shop Madison Dearborn Partners agreed to merge Topps with blank-check firm Mudrick Capital Acquisition Corp II in a deal valued at $1.3 billion. But Fanatics swooped in with its newly launched trading-card company and convinced Major League Baseball, one of Topps’ key contracts for decades, to switch teams from 2026. The hole in its future revenue led Topps' deal with the SPAC to fall apart last August.

Having nabbed one of Topps' jewels, Fanatics is pushing home its advantage and purchasing the business it already hollowed out for around $500 million. The price represents only a little more than 1 times the 2021 revenue Topps expected for the unit when its deal with Mudrick was announced last April. That's cheap compared with a median of approximately 4 times revenue for the sports and entertainment rivals that Mudrick and Topps cited in their merger presentation. Then again, at the time Topps wasn’t expecting its MLB income to drain away.

It's in keeping with Fanatics' aggressive recent land-grab. The company has wooed other valuable sports franchises including the National Basketball Association and the National Football League Players Association. The acquisition of Topps’ division, which also includes rights to Formula 1 and Bundesliga collectibles, means Fanatics can start selling baseball cards immediately rather than waiting until 2026.

Backed by the likes of Silver Lake and Hollywood superagent Ari Emanuel's Endeavor, Fanatics' trading-card business has attracted investment at a valuation of more than $10 billion, according to Reuters. Part of its game plan is to give the player leagues an equity stake. It has taken the unit less than a year since its launch to gobble up the old-time Topps at rock bottom.

 

CONTEXT NEWS

- Digital sports platform Fanatics on Jan. 4 said it had acquired Topps’ sports and entertainment division. The deal for Topps’ trading cards and collectibles business is worth about $500 million, Reuters reported citing a person familiar with the matter.

- Former Walt Disney executive Michael Eisner’s Tornante and Madison Dearborn Partners are the owners of Topps. The company is keeping the candy and gift card divisions and renaming itself The Bazooka Companies.

- Topps had planned to merge with special-purpose acquisition company Mudrick Capital Acquisition Corp II but the $1.3 billion deal was terminated in August after Major League Baseball handed its trading-card rights from 2026 to Fanatics instead of renewing with Topps, which had worked with the MLB for decades.

(The author is a Reuters Breakingviews columnist. The opinions expressed are her own.)

(Editing by Richard Beales and Amanda Gomez) ((For previous columns by the author, Reuters customers can click on SABA/ SIGN UP FOR BREAKINGVIEWS EMAIL ALERTS https://bit.ly/BVsubscribe | jennifer.saba@thomsonreuters.com; Reuters Messaging: jennifer.saba.thomsonreuters.com@reuters.net))