Saturday, May 3, 2008 | Kerri Stockholm is the director of sports marketing at The Upper Deck Company. The Carlsbad-based baseball card manufacturer revolutionized the industry when it released its first set in 1989, offering glossy cards in gum-free packs made of foil. But through the 1990s, baseball card collecting endured a serious financial hit. The $1.2 billion industry declined in value to a $300 million industry by 2006, according to estimates from Beckett Media, a price guide magazine. Card sets proliferated, pack prices went up, and kids stopped collecting. Now, on the verge of its 20th anniversary, the 480-employee Upper Deck continues to work to entice kids back to baseball cards. We sat down with Stockholm to talk about the state of the industry, where things went wrong (and right) and what you’ll get if you spend $100 on a pack of baseball cards.
Finish this sentence for me: Someone who hasn’t bought a pack of sports cards since gum was included would be surprised to find …
… how many cool things are in packs of cards today. I think the industry has evolved so much in the last 20 years, it’s mind blowing. Regularly we include cards with player autographs on them, swatches from a player’s jersey, pieces of a player’s bat, or signatures cut from other materials from deceased players. It’s really remarkable how much closer you can get to the player or the game through the card today. It’s changed quite a bit.
You use the word evolution. What role has this company played in that?
When we started in 1988 and released our first product in 1989 with Upper Deck Baseball, it was a revolutionary card. We were the first company to use a hologram-backed card, to use a full-bleed design, with the photography extending throughout the card, UV coating, there were a lot of elements in that card that were unique and had really never been seen before. I think along the way we constantly are pushing the envelope in terms of technology, innovation, attributes. And that’s really the vision of the founder of the company, our CEO, Richard McWilliam. His mindset is constant innovation. I think we’ve tried some things in the past that actually came out before their time, and maybe didn’t succeed at that time because they were probably too innovative and too ahead of the curve.
Have all of the changes been for the better?That’s a good question. I think in some ways it has. I think the product certainly got better. If anyone opens a product today and compares it to what was available 20 or 40 years ago, there’s a dramatic improvement. It looks and feels better. But I think in some cases we lost a lot of consumers as we made cards better and better and better. It certainly wasn’t the objective. But I think what happened was the cards were so good you started to appeal to a consumer that was probably more focused on value and what the card was worth. As that started to happen, we lost a lot of kids. It became so complicated, so difficult to understand, that kids stopped collecting and buying cards. We’ve been trying to reverse that trend over the last couple of years. We’ve had success, but that was one of the side effects of the sudden growth when we came on to the scene. We did lose a lot of the kids.
In my mind and a lot of peoples’ minds, baseball cards are synonymous with childhood, from kids putting Mickey Mantle cards in their bike spokes to me and my friends growing up. How do you draw them back?
That’s the million-dollar question. And that’s a really good point. As we made cards more and more valuable, people wanted to protect them, protect that value. It became more about putting it in a plastic sleeve away in the closet — and not doing what you said, putting it in the spokes and trading it 100 times, so they looked like crap — excuse me, but they looked terrible, but kids got to exchange them and share them. Those things are really important for kids. So what we’re attempting to do now is a combination of things. First and foremost we need to make cards relevant to kids today. We have to do that in a way that’s different than we may have 20 years ago.
A lot of that is through some Internet initiatives. I think we’ve done a really good job of giving real world cards an online application, so kids can share that experience in a digital format with a greater number of people in a much larger area. We also want to make product that’s kid-appropriate. And that means getting them used to collecting their favorite player, collecting their favorite team, collecting an entire set. And not make it about what’s the best, ultimate card you can get — but reinforcing the idea of collecting something. That’s an important piece of it too.
When Tony Gwynn went into the Hall of Fame with Cal Ripken Jr., people lamented it as this kind of coda, an end of an era of players with whom fans could connect before sports had been corrupted by free agency. Does that play a role in turning kids off, because they may not have their hero or favorite player on a team?
I don’t think so. I think kids are somewhat accustomed to that now. I think kids still have a very strong allegiance to teams, and I think they get to know a couple of players on a team. But what’s emerged in its place is the idea of the superstars that transcend team popularity. You’ll have kids who love the Padres but they may say their favorite player is Derek Jeter or Albert Pujols. The emergence of these superstars has definitely had a big impact on how kids collect. In a way, it gives us more opportunities, because this handful of players are popular everywhere, and it almost doesn’t matter what team they go to. These are the superstars that kids want to get out of a pack.
In looking at the history of sports cards, 1989 when Upper Deck started, the explosion of card offerings started after that. All of a sudden there were all these competing franchise and card sets and it was no longer just Fleer, Donruss, Topps and Upper Deck. Did the emergence of Upper Deck play a role in sparking that kind of downward spiraling competition?
No, definitely not. Upper Deck came in the market and had a better product. What was revealed as a result of that, there was an incredible interest from the general population in our product. There was something out there among kids, sports fans, among collectors. Something resonated. After that, it kind of exploded. Whether or not it was managed correctly, with too many products or too many manufacturers, that’s something Upper Deck had very little control over at that point. It was managed by our licensors and Major League Baseball and the NBA. They make the decisions about how many products need to be in the market and who are the manufacturers.
I talked to the owner of a baseball card shop in San Diego, who acknowledged that Upper Deck is trying to entice kids back to the industry, but he said, “Then kids come in and see how much a pack costs.” Can baseball card collecting work for an 8- or 10-year-old kid who has to pay $6 a pack?
We offer quite a few products at a dollar-a-pack or $1.99 or $2.99. Kids are spending far more than that on video games and iPods and cell phones. So to expect them to pay a dollar or two for a pack is very reasonable. One thing we’ve seen, and it’s somewhat of a disappointment, is some of the retailers in the industry and the hobby specialty channel, don’t buy a lot of that product. And they cater to an adult collector who spends more. For that reason, they probably don’t have boxes and boxes of dollar packs. Because they have to sell a lot more of those packs than a pack that would cost $10 or $20. We offer them, we make them available and you could find them at thousands of retail locations around the country.
Is that a new phenomenon? The adult collector who wants to spend hundreds on a pack of new cards?
Somewhat new. I think it’s been happening over the last probably five to 10 years. We’ve seen it coming. I think we may have hit the max, especially with the recession. We were on this path of higher and higher price points, and collectors that would pay it. Certainly very, very serious adult collectors that do spend $10, $20, $30, $40, $100 a pack and up. That’s been an interesting phenomenon. Because store owners do become dependent on the one or two customers who spend that way. It’s important for us to keep that really, really serious collector involved. If one of them decides to leave, it may not affect our bottom line too much, but it could put a single store out of business. And that does affect our bottom line a little bit more.
What do you get for $100 a pack?
Usually for $100 a pack there’s a guarantee that you’re going to get something pretty good. A card with an autograph on it. A card with a piece of memorabilia or a piece of jersey on it. We make those so that when you do open the pack, you feel like: “I got something really, really special out of this.”
And not a Tony Clark autograph.
It’s funny, we hear this a lot — you spend $100, you should get a certain caliber of player. That’s difficult to do because it’s so subjective. There could be a player that’s appealing in one market but not in another. The players we select we think they have value. Will they have value to 100 percent of the collectors? No, but they’re great cards that will have value to fans and collectors.
Do you have any sense of the progress in reaching kids? Is that something you can measure?
We don’t have a lot of good data from 10 or 20 years ago. We do subscribe to some great market reports that track kids’ trends, everything from what fast food they like to what clothes they’re buying, what music they like. We do include questions about collecting sports cards as well as general questions about collecting. What we’ve seen since we really started to market and advertise to kids, which started happening about two years ago, in the fall of 2005 that report listed about 9 percent of boys aged 6 to 14 collecting sports cards. The most recent trend tracker had that number at nearly 50 percent. So we can use some measurements like that.
We are seeing signs that more kids are interested in sports cards, which is encouraging. As long as I’ve been here, I’ve understood the power of this product. You got to a lot of shows and events, and I see kids who are sports fans opening up packs for the first time or the 100th time, and it just is a product that resonates with them. It’s amazing in many ways how much it hasn’t changed from 50 years ago. It’s still a picture on a 2 ½ by 3 ½ piece of cardboard. And yet kids still respond to that, and still open that pack with excitement and enthusiasm. That hasn’t really changed. It’s a powerful medium, we just need to find a way to connect with them again.
I checked the price of baseball cards today for the first time in a while. Upper Deck’s 1989 factory sealed set is selling for $72. Which is less than half of what one card in that set was worth 10 years ago. What happened?A lot of that is driven by supply and demand. I think after a number of years, people were aware that there was a good amount of that product in the market. Some of the drivers of that set — specifically the Ken Griffey Jr. rookie card — has come down in value. It’s still a special and important card. But Griffey, while he’s been a great partner of ours, I think he didn’t live up to some of the expectations that fans may have had for him 10 years ago. That plays a big role in how you see the values today.