Monday, January 14, 2013

Upper Deck and Richard McWilliam:The Death of An Era

Remember going to the store and buying a nickel pack of Topps baseball cards with a stick of gum?

How about taping the cards to the spokes of your bike?

Did you toss them against the wall in a contest?

Did you dispose of the Mickey Mantle or Willie Mays rookie card?

All that changed in 1989 when Upper Deck entered the baseball card market in direct competition with Topps.

The Upper Deck card was novel. It was printed on quality stock, complete with a hologram and great photography. The number 1 card of the inaugural set was the rookie card of Ken Griffey, Jr. Upper Deck hit a grand slam.

The Ken Griffey rookie card sold for over $100.00.

Upper Deck became the standard. Topps cards looked cheap and prosaic. Upper Deck acquired licenses from the NBA, NFL, and NHL.

It pioneered the insertion of limited, numbered “insert” cards, also called “chase” cards, which could include limited series, autographed cards, and pieces of player jerseys. It was no longer enough to complete the base set, which you could cheaply do with many card sets by buying factory sets. Now you also had to build a seemingly infinite number of chase card sets, which necessitated the purchase of more card packs and caused an explosion in card shows.

The industry jumped from $50 million in sales in1980 to $1.5 billion in 1992 with Upper Deck leading the way. Competitors to Topps and Upper Deck multiplied: Donruss, Fleer, Leaf, Pacific, O-Pee-Chee, Pinnacle, Pro-Set, Score, and Skybox. Topps sold premium priced cards under the names of Bowman and Stadium Club. Upper Deck expanded into sports memorabilia.

And then the market collapsed; the speculative excesses were wrung out of the market.

A number of reasons existed for the collapse. First, the industry got away from its roots. Very few children could afford to buy the cards. Cards were marketed to fathers through nostalgia.

Parents lost interest as the prices shot up. For example, it became hard to justify paying $1500 for Michael Jordan’s Fleer rookie card. Most of these little pieces of cardboard became as valuable as tulips after the tulip bubble collapsed in 1637.

Third, it became increasingly impossible and prohibitively expensive to collect just the cards of your favorite players. A superstar might have scores of cards from the various manufacturers and subsets of chase cards.

The fourth reason was the machinations of Upper Deck and Richard McWilliam, the company’s CEO. They apparently did not believe that a contract created a bond between the parties, but simply a license to bring a lawsuit.

Quality, innovation, and litigation were the hallmarks of Upper Deck.

The history of litigation includes employees, vendors, and licensors, Mickey Mantle, Ted Williams, and Kareem Abdul-Jabbar. Richard McWilliam was a co-founder of Upper Deck, but he soon eased out the other founders, resulting in litigation between them. Upper Deck admitted to counterfeiting cards on one occasion.

Rumors existed that Upper Deck shipped valuable inserts out the back door.

The market caught up to Upper Deck. It rose like a meteor and crashed like a meteor. Major League baseball cancelled its license in 2009, 20 years after the first set of Upper Deck cards were issued. The NFL followed in 2010.

McWilliam died last Saturday at the young age of 59. He built and destroyed a successful company through greed.

Topps survived.

No comments: