Panani Buys Donruss/Playoff

**cavsfan** · 03-11-2009, 05:47 AM

"Hey guys found this on The Sports Card File...(Panini buys Donruss/Playoff!)

Mar 10, 2009

The deal was finalized two weeks ago once the details of the final purchase price and employee retention were worked out between officials from Panini and Ann Powell, former owner of Donruss-Playoff, LP.

The interesting part of this story is the sequence of events that led up to it.

Donruss has been for sale for over a year. The company has been mired in debt related to their attempt to launch a new line of TCG’s and toys under the brand name BibleQuest. While their football card product lines have been profitable for years, the failed attempt to expand the company has resulted in a significant build up of debt. The company’s operating revenues have not been sufficient to keep the company running while simultaneously paying down their debt.

Initially, there were three groups in the running to purchase Donruss – Upper Deck, Topps and TCG Digital/4Kids. Throughout 2008, each company at separate times was rumored to be the frontrunner in a race to buy the company. Each suitor had different business reasons for their interest in Donruss. Upper Deck would have eliminated a competitor in football, and, more importantly (in his mind), Richard McWilliam would have bought Powell out of the industry. There might have even been a plan to shift part of the Upper Deck’s Carlsbad operations, such as prepress and production, to Donruss’ Arlington, Texas headquarters. During the time I was at Upper Deck, purchasing and retaining Donruss as an independently operated entity was discussed hypothetically; the benefit being that we could maintain two separate licenses with NFLP/NFLPA.

I would assume Topps would have had similar intent to retain Donruss as a distinct operation. If they had been the ultimate purchaser, Topps’ big advantage would have been having the resources to bring their design and prepress work in-house. For the TCG Digital/4Kids group, this purchase would have put them in the sports trading card industry, combining it with their TCG production. Given the fact that they market their products to a demographic that is younger than the tradition sports trading card demographic, their entry to the sports market could have potentially benefitted everyone.

During the months of December and January it was believed within the industry that Upper Deck would emerge the victor. Negotiations had gotten to the point where a certain member of Upper Deck management reached out to me to ask about key personnel at Donruss. The prevalent opinion among the folks at Donruss was if McWilliam purchased the company most would lose their jobs and those that retained their jobs would soon wish they had not.

But in the last week of January Panini officials and Powell, not McWilliam, signed a letter of intent, signaling a closed deal was forthcoming. During this time, McWilliam reportedly attempted to spoil the deal by trying to bully Powell into selling Donruss to him, going so far as to fax her a letter of intent with a 12-hour deadline for signing and returning it to him. He also attempted to convince officials at Panini that they would be better off buying Upper Deck rather than Donruss. I am sure this will not be the last time McWilliam attempts to sell Upper Deck in the foreseeable future given the fact that the company’s revenues have dramatically diminished during the past 6-12 months due to the economy and the losses of the Yu-Gi-Oh and NBA licenses.

This purchase will prove to be a tremendous coup for Panini. It is a win on several levels. Panini acquires a company with a solid stable of product lines, an outstanding operational system and a quality personnel group. Had Panini chosen to start up a U.S. office from scratch, they would have faced an uphill battle getting products ready for distribution by October. It would have been an organizational nightmare trying to build products while also trying to build a company from the ground up. With this purchase, they are buying into a company that is fully operational and that has already proved it can handle the production of additional trading card products.

For the employees of Donruss things will never be the same without Ann owning the company, but this scenario was the best possible solution for them. There will no longer be internal concerns about making payroll, paying for player contracts or royalties on a timely basis or trying to market a product that is dragging down your core business. They can now focus on what is important: strengthening their football product lines and building the foundation for their basketball portfolio.

We do not know how the rest of 2009 will play out in the industry, but this development will add to the intrigue and also to the potential of the sports trading card market for years to come."

**DaClyde** · 03-11-2009, 09:00 AM

Why would Panini have a distribution problem? Their stickers are everywhere.

**OnePimpTiger** · 03-11-2009, 09:34 AM

I don't know much about Panini, but Donruss/Leaf are my favorite products...hope they don't screw them up! Thank God Upper Deck didn't get their hands on it!!