Thursday, February 18, 2010

Have I Been an Alarmist With The Upper Deck Lawsuit?

I have posted a lot of commentary recently about the pending MLBP lawsuit against Upper Deck, most of it very negative in nature. Although the outcome for the lawsuit is not necessarily clear as to a favorite, I have approached it from sort of a worst case scenario. Per multiple sources, MLBP has objected to Upper Deck's motion of splitting the ruling and damages phase of the lawsuit, for a few reasons. One, that UD will seek protection from bankruptcy during the break, or two, just go out of business. This would be to make it harder for the damages to be collected, and obvioiusly MLBP doesnt want the hassle.

However, what if this wouldnt be the final straw for the 20+ year old company out of Carlsbad? I was joking around recently with someone close to the outcome of this event, and he was busting my chops about how I wasnt really giving UD much of a shot. After thinking about it, I guess that is pretty much true, considering that no one at UD has really come out and said anything about it. Then I really put my mind to it, and it no longer seemed absurd that UD may be able to survive after tangling with two huge companies seeking damages.

First off, UD has one of the most profitable football and baseball lines on the market. Even moreso with the release of the immensely popular Ultimate Collection. It is also rare that Blowout doesnt announce that a product has sold out at the factory, which I guess warrants some consideration that the company may not be bad off to begin with. This also begs the question as to the state of the company after the Konami suit was settled, to which we have nothing to go off of. There is a good shot that the two would not have settled unless there was some compromise in order, meaning that each company would end up with the means to continue.

Secondly, much talk has spread about last year's closing of the UD Nevada Facility , and how that relates to their financial state. It was widely reported that they were amidst major problems at the time, but the year since then has suggested it was more of a strategic repositioning rather than closing for money sake. Although financials probably played a part, many people on the boards and blogs have suggested it was more of a planned closing than a necessity closing.

Also, Upper Deck is a huge company, HUGE, even outside of the sports market. Although they have lost Yu-Gi-Oh and World of Warcraft from their line, they still have a number of valuable properties according to a gaming shop I visit. Upper Deck Authenticated is also a huge part of their continued success, as distributors around the world are using UDA as their sole source of autographed memorabilia.

Lastly, there is still a very good chance that UD could beat the second lawsuit. According to Jeff over at IAJC and Grant (a lawyer reader of the site), Upper Deck has great representation and a good case. It has the ability to go either way, which also could mean a new era for the hobby.

Does this mean that UD is out of the woods? Not by a long shot. Despite my recent conversations, I still have a lot of reservations about the future of the company. However, I would say that my fear is slightly less now that things have become a bit clearer in my mind. Plus, when you factor the following they have built, maybe the rumors of their (future) death have been greatly exaggerated. My apologies on that.


  1. The denial of a reverse bifuricated trial, is probably not favorable to Upper Deck.

    Upper Deck in their base set went to great lenghts to hide the logos of the players. Why did they not just airbrush the logo that could be seen. There would be no lawsuit.,

    The USA Today takes pictures of players in their uniform and shows logos everyday. They don't pay a license.

    However, Upper Deck sells cards in packs with a chance at "rare inserts", which goes into the price of their cards.

    USA Today sells "news" - What UD sells what amounts to a lottery which contains MLB trademark logos in which they are not authorized to use.

    This hurts the consumer. Would you drink FDA approved milk or milk that was not approved by the FDA.

  2. My guess is that the move to North Las Vegas in the first place was a Tax Savings which was pretty much a sham as McWilliam still maintained his Carlsbad location, It might be that the State Board of Equalization recognized that as such. As the original VP of Sales at UDC '88-92 I had to defend the bankruptcy rumors on a daily basis. Sounds like not a lot has changed. The talk of UDC still owing MLB 2.4 million comes as no surprise as that is the way McWilliam (CPA background) has always operated, often pushing his obligations to the very limit.......Jay McCracken