August 09, 2023

Fanatics Strikes Back: Countersues Panini in Court

Shaiel Ben-Ephraim
Shaiel Ben-Ephraim
Fanatics Strikes Back: Countersues Panini in Court

On August 3rd, 2023, Panini sued Fanatics for alleged violations of federal antitrust laws. Fanatics responded with vehement criticism of the move, calling it a “baseless last-gasp, flailing effort by a company that has lost touch with its consumers, is failing in the marketplace, and has tried unsuccessfully for years to sell itself.” So we were unsurprised when Fanatics filed an aggressive countersuit on August 7, 2023, in a federal court in Southern New York.

Background To The Lawsuit Fanatics vs Panini

In 2021, sports apparel giant Fanatics entered the hobby market with a bang. They purchased exclusive rights to manufacture NBA cards, NFL cards, and MLB cards. At that point, Topps had the rights to baseball cards, while Panini had the rights to basketball and football. Fanatics soon bought Topps and has since used that company as the basis for a 10.4 billion dollar enterprise.

In the meantime, Panini held on to their NBA and NFL rights, but they are running out in 2025. In June, Panini filed a lawsuit against Fanatics. They accused the apparel giant of poaching executives and illegally extracting trade secrets from them. The case is going to trial in 2024. Then in August, as mentioned, Panini filed a lawsuit alleging antitrust violations. They centered on the length of the exclusive contracts Fanatics had signed with the league (15 to 20 years) and the lack of an open bidding process. They also alleged that Fanatics had put the squeeze on the Texas-based company by purchasing GCP, the Texas company that produces 90% of the cards sold by Panini.

What Is Fanatics Alleging?

The basic contours of Fanatics' argument are that Panini lost its position as the leading card company due to its negligence and the business excellence of Fanatics. They deny that they unfairly used any structural advantage in a manner that violates federal anti-trust laws.

The filing states: “Like a sprinter benefiting from a head start, Panini had a sizable lead as the incumbent. Before Fanatics Collectibles’ entry, and for the last 14 years, Panini held exclusive licenses for sports and entertainment collectible cards in the U.S. according to long-term agreements—and Panini has long touted itself, even today, as the ‘world’s largest sports and entertainment collectibles company’ as a result.”

Negotiations In Bad Faith

They also countered the charges with a series of their allegations. We discovered in the filing that in 2022, Fanatics and Panini were negotiating over Panini canceling their existing deals early. However, Fanatics alleges these negotiations were not held in good faith. Instead, the filing says, “Panini was “trying to pass off knowingly-inflated earnings projections that translated to an unreasonably high deal price. All the while, Panini knew early termination would never happen because Panini would never be willing to agree to a termination fee that matched its own accurate, real-world earnings projections.” They base this on comments allegedly made by Mark Warsop, the Chief Executive Officer at Panini America.

Creating a Hostile Work Environment

Fanatics also alleged that they did not poach workers from Panini. Instead, they claim that workers were flocking to leave due to an oppressive and allegedly racist work environment. The filing states, “In the ongoing litigation, Panini’s former employees have testified to the emotional turmoil, failures of transparency, and bleak trajectory that led them to seek a brighter future at Fanatics Collectibles.” In addition, Fanatics says, “Panini’s racially insensitive practices have drawn the attention of social activists, who have blasted the company for having no Black leadership in the United States despite employing hundreds of employees in the United States and deriving 75% of its business from selling depictions of Black and Brown athletes.”

Final Word On Fanatics Countersuing Panini

The filing made by Fanatics does not appear particularly sound from a legal standpoint. A lot of it is simply trying to make Panini look bad. The Texas-based company called the lawsuit “a press release masquerading as a lawsuit.” There is some truth to that. The complaint is padded with social media comments and other fluff.

However, it gives us an idea of how Fanatics plans to defend itself against allegations they have violated anti-trust laws by claiming that they offered superior service and won the competition fair and square.

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