Can Topps still play ball?

By Douglas MacMillan

updated 6:23 p.m. ET April 20, 2007

A peculiar scene plays out every year around February at Play Ball Sports, a trading card and memorabilia shop in Westland, Mich. Customers in their 60s, 70s, and 80s line up out the door, eager to get their hands on boxes of newly released Topps baseball cards. "It started in '92 or '93," says store owner Mike Odetalla. "Grandmothers and grandfathers became our biggest collectors." Their disinterested grandkids, once the prized consumers of the trading card industry, are presumably at home surfing MySpace pages and playing video games.

This sums up the challenges facing Topps, the New York candy maker that began sticking baseball cards in penny packs of chewing gum in 1952, and which today is the No. 1 player in the $1.51 billion trading card industry. Sales in the sports card division — which make up about half of the company's revenues — fell off 15% annually between 2000 and 2005, as more kids flocked to high-tech diversions as well as gaming cards like Magic: The Gathering and Yu-Gi-Oh. "There's an urgency in our industry to get the kids back," says Alan Narz, owner of Big League Cards in Orlando and columnist for Card Trade magazine.

Now, a big new player is stepping up to the plate for Topps. In March, the Tornante Co., the investment firm of former Walt Disney Chairman and CEO Michael Eisner, partnered with private equity firm Madison Dearborn Partners in a $385 million bid to take the ailing card and candy company private.

The proposed acquisition, which endured a 40-day go-shop period that ended last week and now will be put before shareholders on May 5, concerns some insiders who worry the price is too low. Yet Eisner, an entertainment industry power hitter who knows a thing or two about putting smiles on the faces of young ones, may be just the spark Topps needs to reconnect with its core consumer. As of press time, neither Eisner nor a representative of Tornante weres available for comment.

Baseball cards weren't always marketed toward kids. They got their start in the mid-19th century, when photography and baseball were both maturing. Sellers of cigarettes like American Tobacco used the novelty cards to sell packs of smokes. Honus Wagner, the Pittsburgh Pirate who was among the first five players to be inducted into baseball's Hall of Fame, was one of the first to publicly object to tobacco companies using his image on the cards, claiming that they appealed more to kids than adults (one of the main reasons his 1909 card set a new industry record of $2.13 million at auction in February).

Through the 1920s and '30s, more emphasis was placed on the young sports fan, as media outlets such as The Sporting News used baseball cards to sell magazines, and candy makers such as Cracker Jack and American Caramel stuck them at the bottom of packages of sweets.

Gum drop
During the Great Depression, American Leaf Tobacco became Topps, maker of Bazooka chewing gum. Decades later, in 1952, a young employee named Sy Berger designed the first Topps baseball card set, released with packages of Bazooka. Though the cards were by no means an instant hit (Berger famously dumped returned boxes of the 1952 set in the Atlantic Ocean to make room in inventory), their timeless design and substantial production set into motion the modern-day trading card industry.

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Growing demand for cards in the 1950s and '60s meant Topps could sell packs of cards by themselves, minus the gum. And by the 1980s, competition from companies such as Fleer, Bowman, Donruss, Score, Upper Deck, and as many as 70 other U.S. card makers fed off the massive base of dedicated young collectors Topps had helped to nurture.

But since 1991, earlier card collectors have grown up, and Topps and others have largely failed to entice new generations of sports fans. Beckett Media, the Dallas-based publisher of card collecting price guides, estimates that by 2006 trading card sales had dropped 73% over the 15-year period, to $300 million from $1.1 billion.

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