Licensing contracts are worth millions to players unions

THE BIG-MONEY CARD GAME

April 19, 1992|By Jon Morgan | Jon Morgan,Staff Writer

It's tempting to view the $1 billion-a-year sports trading card industry as "Big Business."

But "Big Labor" might be more like it.

Beginning with baseball in 1967, most of the major sports unions have obtained the rights to market the names and faces of their members in lucrative group deals for trading cards, board and computer games and other sports-oriented products.

The licensing revenues, boosted by trading card mania, have outrun dues as the main source of cash for the unions. Last year, the players associations of baseball, football and hockey grossed more than $90 million from the arrangements, according to federal reports and the associations.

The unions distribute most of the proceeds to the players, but can and do keep money when needed for contract negotiations or to fund the expensive legal fights common in pro sports. Last year, the NFL Players Association spent $7.5 million in courtroom scrimmages with the league -- money raised largely through trading cards.

Not surprisingly, there have been fights over that money. Just this month, players struck the National Hockey League, in part over proceeds from trading cards. A few days later, the National Football League Players Association began filing suits against members in an attempt to protect its licensing revenues.

"It essentially means a couple of things: They can't bankrupt you with litigation, and if you get into trouble, you have a savings plan," said Donald Fehr, executive director of the Major League Baseball Players Association.

Fehr's predecessor, Marvin Miller, pioneered the system after taking office in 1966. The union's treasury, which depended upon voluntary player contributions of $50 a year, had dwindled to about $6,300, said Miller, now retired.

At the time, cards were not as popular and one company, Topps Co. Inc., routinely signed up players for three-year, exclusive card contracts that paid $125 a year along with an occasional "gift" such as a refrigerator or oven, he said.

Miller organized a player boycott against this "monopoly" and convinced the players to sign over to the association the group rights to license their likenesses. His first deal, to put players' faces under Coke bottle caps, paid $60,000 a year and replenished the union's coffers.

The union now generates more than $50 million a year in licensing revenues.

"It gave us the kind of security that was essential," Miller said.

It also established a comfortable pattern that existed unchallenged until recently: Trading card companies pay royalties to the players associations for the use of player names and faces and pay the leagues for the use of trademarked team names and emblems.

For the heads of the sports unions, the licensing revenue also provides another advantage -- pay higher than that of most union bosses, although not as high as that of their millionaire members.

According to federal records, Fehr received $497,266 in salary -- and expenses in 1990. The NFL Players Association paid Gene Upshaw salary and expenses totaling $210,049 in 1989, its last year as a union required to disclose officer pay.

The NBA Players Association, which does not get much licensing revenue but hopes to in the next contract, paid Charles Grantham $343,032 in the year ending July 1, 1991. The NHL Players Association is based in Canada and does not file disclosures with the U.S. Labor Department.

The success of the licensing technique is due in large part to the success of trading cards themselves. While baseball cards have been around since the late 1800s, the business really took off in the last decade. Now there are cards for almost every sport, from auto racing to ladies bowling, complete with career data on one side and photos on the other. Baseball -- with its statistics-crazed fans -- remains the top seller.

Industry revenues are estimated at $1.2 billion annually, not including the secondary market in which individual rare collectible cards have fetched as much as $450,000.

Not surprisingly, the success has attracted attention from team owners.

A demand by NHL teams for a larger piece of the action was a chief cause of the recent strike, the first in the league's 75 years. The 11-day walkout ended April 11 with the players association retaining its licensing rights. The league estimates the union will bring in about $12 million this season from licensing deals, compared with about $8 million for the league.

"When they come after that, they are basically coming after the union," Bryan Trottier, a star forward on the Pittsburgh Penguins and acting president of the NHL Players Association, told reporters during the strike.

NFL owners, in a long-running battle with their players association, have paid selected players to cancel their deals with the association and sign separate agreements with the league.

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