The back room at Panini America Inc., a collectibles company based in an office near Dallas/Fort Worth International Airport, is crammed with sports memorabilia. Clothing racks teem with jerseys; nearby bins are stuffed with splintered and battered hockey sticks. To a sports fan, it’s a hallowed hall, a treasure trove, a clearinghouse of sports relics. None of the items, however, are for sale. Alongside the memorabilia, teams of seamstresses work at each item, carefully dissecting sweaty jerseys stitch-by-stitch—or peeling black tape off the blades of hockey sticks—breaking down the items into tiny swaths to be inserted into specialized, high-value trading cards.
If the phrase “trading cards” still makes you think of the feeling of wax paper on your fingers and the crunch of that rock-hard gum that was best enjoyed while flipping past cardboard pictures of Henry Cotto or Dan Petry, then you’ve missed a decades-long evolution of an industry that has expanded far beyond the nickel kids’ treat. Panini, the world’s largest sports trading card company, makes products that range from sticker packs priced at just $1 to high-end hobby cards that retail at $1,250 per pack. The common denominator is the sense of thrill, that feeling of tearing open a pack and finding a valued treasure.
Thrill has everything to do with scarcity, and that makes Panini’s production model tricky, says Mark Warsop, Panini’s UK-born American CEO. Manufacturing scarcity means performing a delicate balancing act between producing limited numbers of high-value cards, yet continuing to provide enough perceived value in each pack so that the mother who buys stickers at Wal-Mart and the collector who drops $500 at a hobby store both feel like they’re getting what they paid for. And because much of the value in the high-end of the collectibles business is driven by the secondary market, it means the value of some of what Panini is marketing, at least in part, is out of the company’s control.
The business hasn’t always been this complicated. Panini started in Italy in the 1960s when two brothers working in the newspaper distribution business happened to acquire rights to some images of Italian soccer stars. They put the pictures on stickers and stuck them on their newspapers hoping to drive sales. “They realized more people bought the papers for the stickers,” Warsop says.
The Panini brothers then acquired a license from FIFA (Fédération Internationale de Football Association, soccer’s international governing body), and the company’s World Cup sticker series drove global expansion. Today Panini markets its products in 120 countries worldwide, with offices around the globe. But it is a relatively new player in the United States, where the collectibles market has been dominated by a couple of brands—Topps, Upper Deck—that cut their teeth on baseball cards. Indeed, in a country where the terms “trading cards” and “baseball cards” are synonymous, Panini is unique for not even having a license with Major League Baseball. Instead, it produces a baseball series using an MLB players association license, airbrushing out team emblems and names.
The Italian company opened operations in Texas in 2009 when it bought Donruss, an American brand that had recently lost its MLB license. Panini turned the focus to basketball and hockey, two sports with more dispersed global appeal. The strategy worked.
Panini now holds an exclusive license with the National Basketball Association, something it acquired, in part, by leveraging its soccer-driven distribution model at a time when the NBA was looking to expand its global brand presence. And in February, Panini extended its exclusive agreement with the National Basketball Hall of Fame.
Today, the company owns 100 percent of the NBA trading card market in the U.S., and says it has a 50 percent market share for both NFL and NHL cards. It employs 110 full-time workers in Irving, and at any given time will have up to 25 seasonal employees.
Panini’s global reach isn’t the only thing that gives the company a leg up on its American competition. As the kids who grew up on cheap packs of Topps baseball cards moved into high-end collectibles (or stopped collecting altogether), the companies weren’t developing new generations of consumers. Panini, and its soccer sticker-oriented business model, saw an opportunity.
“The manufacturers in the past were their own worst enemies,” Warsop said. “As the consumer demanded a higher quality card—more autographs, more memorabilia—the retail price just started creeping up, and the lower-end cards that were more affordable for kids just started to disappear. We had a long-term focus on getting kids back into collecting cards. We cater to whole spectrum, but marketing money goes to kids, just the excitement of opening the packet, the element of surprise.”
And at the end of the day, whether or not a 10-year-old opens a pack of hockey stickers to find a picture of Sidney Crosby, or a 42-year-old opens a box of Panini’s $350-per-pack Dominion Hockey brand to find a shard of Crosby’s hockey stick, what Panini has provided its customer is essentially the same. It’s that excitement, that sudden feeling of being close to a superstar.