MLB Drops Topps After 70 Years, Trading Card SPAC Deal Terminated

One of the most talked about SPAC deals in the sports world has been terminated and will not go through as originally agreed upon.

What Happened: Topps, the iconic trading card company that started producing Major League Baseball (MLB) cards in 1951, was set to go public once again with a $1.3 billion SPAC deal.

The agreement between Topps and Mudrick Capital Acquisition Corporation II MUDS has been terminated Friday morning, days before shareholders were set to vote on the merger.

The merger cancellation comes on the heels of news that Fanatics won an exclusive deal with MLB and the MLB Players Association (MLBPA) for the trading card rights. Topps has the rights with MLB and the MLBPA through 2025 and 2022, respectively.

Topps was given the right to match the deal from Fanatics but was unable to reach proper terms, according to sources. Fanatics was recently valued at $18 billion, or around 14x more than Topps.

StockX founder Josh Luber is set to run the new trading card entity owned by Fanatics. MLB and the MLBPA will both have equity stakes in the new Fanatics entity.

MLB and Topps aren’t the only entities affected by Fanatics push into trading cards. The Wall Street Journal reports that the NBA and NFL unions reached exclusive deals with Fanatics as well. Fanatics has not reached deals with the leagues yet.

NBA and NFL trading cards are exclusively manufactured by Panini through 2025 and 2026, respectively, under current deals. Panini was recently a SPAC merger rumor with Slam Corp.SLAM.

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Why It’s Important: Without the MLB deal, Topps could see a big drop in revenue after the deal expires. The company will have existing deals with several soccer leagues but will lack an exclusive deal with any of the major four U.S. sports.

Topps posted revenue of $567 million in fiscal 2020, up 23% year-over-year. The company reported that 55% of revenue was from physical cards and 6% from digital cards. Topps was guiding for fiscal 2021 revenue to hit $692 million at the time of the SPAC deal announcement.

Since that time, Topps has raised its guidance multiple times with a new 2021 range of $830 million to $850 million, announced earlier this week.

Topps had also come under scrutiny with several media outlets reporting on the large windfall of money Topps CEO Michael Eisner, who previously led the Walt Disney Co DIS, was set to receive by taking the trading card company public via SPAC.

Fanatics, which has more than 80 million customers as the world’s largest seller of licensed sports apparel, has pushed into new areas of the sports industry with this sports card deal and a bid on a license for sports betting in the state of New York.

Fanatics formed an NFT partnership with Michael Novogratz and Gary Vaynerchuk called Candy Digital that received exclusive rights to digital collectibles for MLB and its 30 teams.

Michael Rubin is the founder and chairman of Fanatics and has multiple ties to multiple sports leagues and unions through his team ownership of the Philadelphia 76ers and New Jersey Devils.

MUDS Price Action: MUDS shares are down 2.47% to $9.86 Friday morning. 

Photo by Mick Haupt on Unsplash