Fleer executives laid off the majority of the company’s workforce May 13 and suspended the company’s sports card operation, leaving the collectibles industry with a number of unanswered questions and fueling speculation on a number of topics.
It seems everyone from collectors to licensors is looking for information on questions ranging from the future of the company’s brands and coveted basketball license, the status of funds the company is holding for pre-ordered product to collector concerns about the fate of thousands of redemption cards they are either holding or had sent in for fulfillment.
One of Fleer’s remaining employees could do little to shed light on the situation. “The trading card operation has been suspended until further notice until ownership decides what the direction is going to be,” said the employee, who contacted SCD May 18 and asked to remain anonymous. “That includes all aspects of the trading card division. Die-cast is still going forward, business as usual.”
One of the main concerns of collectors and dealers is that they might not receive the cards for which they pulled redemption cards. The Fleer source wasn’t sure if redemption-card holders should send them in for redemption, but said they would pass along that information as soon as an answer was known.
Among the questions still to be answered are whether Fleer will be sold, or if not, if its debts are significant enough to force Fleer’s chief financial officer Chris Tobia to file for bankruptcy.
Licensors also did not return requests from SCD for comment on what the Fleer situation means for their respective organizations. Fleer was an active licensee in baseball, football and basketball.
The basketball license is sparking the most speculation in the card market because the absence of Fleer means the NBA would either enter the 2005-06 season with only two licensees (Topps, Upper Deck) or add a third licensee.
If the NBA were to add a third licensee, Donruss Playoff is believed to be the most logical candidate for that license because of the success it has enjoyed in the baseball and football card markets. It is known within the card industry that Donruss Playoff officials have been looking to expand the company’s card offerings beyond those two sports.
Hobby store owners had a range of emotions regarding the announcement, but surprise did not seem to be one of them. “I’m very disappointed but not really surprised,” said John Merkel, owner of Elite Sportscards in Chicago. “I’ve always been a big Fleer guy and have bought full allocations from them for several years. There had been rumors going on for almost a year that they were looking to sell, and even the sales people I dealt with at the company admitted they were looking over their shoulders.”
Mike Fruitman, owner of Mike’s Stadium Sportscards, in Aurora, Col., said Fleer’s recent track record of poor-performing products finally did in the company. “If a company’s products from 2003-04 basketball and 2004 football – the two best years those markets have seen in years – can’t be selling above cost, they don’t deserve to stay open,” Fruitman said. “The pricing for their products seemed out of line and the returns per box were not as good as the other manufacturers. It was time, like an aging relative on life support, to pull the plug.”
Steve Mandy, owner of Attack of the Baseball Cards in Union, N.J., said the possible loss of another manufacturer is troubling. “Anytime we lose another company, it hurts our industry,” Mandy said. “A lot of collectors say this is good because there are too many products, yet some of these people complain if we don’t have new products every week. I think the competition always helps our industry because it helps keep the quality high.”
Retailers are now turning their attention to two main issues: The status of pre-orders for four upcoming releases and the status of the company’s redemption cards. Patchworks Baseball and Autographics Baseball were supposed to be released May 4 and May 13, respectively. Ultra Football was due next week and Tradition Series Two Baseball was due June 1. Retailers who pre-ordered those products direct from Fleer have not heard confirmation regarding the status of those orders or whether any or all of their money will be returned.
“Stores are panicking because they have money tied up in products,” said Brian Gray of The Edge-Man, a Dallas-based wholesaler.
Others at the distributor level share the concern for those who pre-ordered product. Long-term, however, they believe the loss of Fleer will help the marketplace. “Most of the retailers I’ve spoken to are happy the market will be less crowded,” said Roger Barry, president of Magazine Exchange in Grants Pass, Ore. “This won’t fix all of the problems in the industry, but it can’t hurt to have 25 percent of the releases gone. Hopefully, some of that revenue will go to the remaining brands. My only concern is how much money will be lost (by store owners) in the prepaid orders.”
Kevin Hickman, national sales manager for
Sportsline Distributors in Buffalo Grove, Ill., also said he’s worried about the message sent by the loss of one of the industry’s oldest manufacturers. “What does that say about our industry?” Hickman said. “I think it has some people worried.”
The status of outstanding redemption cards also has some people worried. “Fleer has decked out products with redemptions,” said Gray. “All of their products over the past five months have been buried with redemptions and now my customers are very fearful they’ve been left out in the cold and the money they’ve invested in those products has been totally wasted.”
Merkel said he’s actually had a number of redemptions fulfilled in recent weeks, but all have been with replacement products. “That was a sign to me something was happening with the company,” Merkel said. “Collectors aren’t happy with replacement items, but they’re now realizing it’s better than nothing.”