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Manufacturers looking for ways to handle growing group breakers

By Susan Lulgjuraj | Beckett Sports Card Monthly Editor

Want a chance at a hit from a high-end product? Collectors have turned to online group breaks as a way to satisfy that craving.

It may be tough for some collectors to spend $500 on a box of cards, but a $50 slot in a group break is a more affordable gamble. Group break collectors can walk away with big-money cards or get “skunked,” the term collectors use when they wind up with nothing from a break.

Despite opposition from some hobby shops and manufacturers, group breaks are gaining appeal. The explosion of group breaks started a couple of years ago. It has become part of the National Sports Collectors Convention and The Industry Summit, with breaks happening live on camera.

Group breaks occur every night at various price points as the cards are shown off on camera.

While group breaks have become another collecting option, they have also become a place of concern for longtime hobby shop owners. Group breaks are often streamed online, showing breakers opening cases on YouTube or BreakersTV. This means a collector with a PayPal account doesn’t have to leave the house and can watch their breaks online. A few days later, their cards are in the mailbox.

The topic of group breaks was addressed at The Industry Summit in Las Vegas in March with representatives from Panini America, Topps and Upper Deck discussing the craze with a room full of hobby shop owners.

“Obviously, group breaks in general are a positive in terms of being able to expose people to products they wouldn’t normally see,” said Topps’ Vice President of Sales, David Reel. “It’s something that is going to continue to grow.”

Reel estimated group breaks make up about 8 to 10 percent of sales, with that number rising to about 15 percent by 2015. However, other industry insiders speculated the number is much higher on high-end releases.

Upper Deck and Panini America have created group break programs. Upper Deck only sells to hobby shops that do group breaks and Panini had taken applications from more than 100 breakers.

The rise of group breaks has created a new set of problems for manufacturers. The companies want to make sure they are paired with breakers that are going to represent them well.

“The individual case breakers, we make sure you are vested in the industry, putting money back in,” said Panini’s Tim Franz, Director of Sales. “I can sit at home in my garage and open cards and make a living. It’s what I do with that at that point. Support for us is a factor. We do our diligence, partner with the right case breakers and, believe me, these guys are sharp. I have met several of them, we have watched over 100 different YouTube videos. Again, we are very cognizant of what is going on.”

Manufacturers have considered different measures to deal with group breakers, including changing allocations or prices for group breakers.

Group breakers are seen as competition to physical card shops — especially shops that are not part of the case-breaking craze that rely on selling cards through the shop, and maybe online portals such as eBay and Check Out My Cards.

Many of the top online breakers have proved to be adept at online marketing and tapping into the collecting base looking for only hits.

“I think from Topps’ perspective, we looked at certain configurations that lend itself more to case breaking, but our primary distribution goes back to brick and mortar stores,” Reel said. “There are aspects of products that could relate to them.”

Upper Deck has made its program for breakers simple. It will not include case breakers in its program unless they own a brick and mortar store.

“It’s tough for us because there are some great group breakers that good job and they can’t be a part of our program,” said Upper Deck’s Mike Phillips, Vice President of Sales “I talked to many of those guys. Ideally, I would like to have them be part of the program — and we have opened up our services from a marketing and a financial side to incentivize these great breakers to open a shop and be a part of our program.”

One of the biggest issues card companies see regarding case breakers is the lifespan of these outlets. Companies pop up in online forums and Breakers TV, only to vanish a month or two later. When Panini announced its program for group breaks, it received 130 applications. Within six months, 12 of those companies were already out of business – nearly 10 percent.

In any business, there are good and bad companies. The key is figuring out which case break companies the card manufacturers want to associate with.

“I think the case breaking community, we can address it, it’s very viable, it’s a category that has to be healthy. It’s got to be long term.” Franz said. “We want a program that embraces case breaking. The guys we had at our booth at the National, we researched them. We know who they are. The guys who are here (The Industry Summit), I know these guys … I watched a lot of YouTube videos, BreakersTV guys that just make me want to vomit.”

As card companies consider how to deal with case breakers, the collecting facet continues to grow and evolve, the chance for big-money cards without buying a full box or case.

“We don’t have anything in terms of giving (breakers) special pricing,” Reel said. “We allow them to be competitive, but we have our distribution network and manage that. They know our objective is to sell to brick and mortar primarily.”

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Susan Lulgjuraj is an editor at Beckett Media. You can email her here with questions, comments or ideas. Follow her on Twitter here. Follow Beckett Media on Facebook and Twitter.

27 Comments

Steve

The vast, vast majority of these group breakers have zero real business knowledge. They see this as an easy way to take advantage of those who can’t do the math and see just how much profit they are making off of their customers.

You see none of these breakers investing their profits in their businesses – they all have low quality web sites and rely on third parties like ustream or fly-by-night sites like breakers.tv to host their streams instead of spending a little to do it themselves.

I’ve been reporting many of these guys to the IRS as I can guarantee most aren’t paying taxes on their business (as shady as it may be).

And don’t get me started on the illegal raffles…

Posted May 14, 2014 at 4:18 pm | Permalink
Larry

Why should they give them discounted prices, so they can open up some cases and keep some for themselves or to sell for there personal gain? I don’t think so. Let them buy theirs just like the rest of us that don’t own a store.

Posted May 14, 2014 at 5:26 pm | Permalink

I have a lot of apprehension with this article, first i see this article as card manufactures trying to micro manage card shops, or GB, i can see them involved somewhat, for promo of there products like topps has done in past. (Upper Deck and Panini America have created group break programs. Upper Deck only sells to hobby shops that do group breaks and Panini had taken applications from more than 100 breakers.) this in my belief is why i have a problem. if i pay for a case i do not need to be told what i can do with it. i have seen many different breaks by many different people, for the most i don’t see a problem.
” As card companies consider how to deal with case breakers, the collecting facet continues to grow and evolve, the chance for big-money cards without buying a full box or case.”

“We don’t have anything in terms of giving (breakers) special pricing,” Reel said. “We allow them to be competitive, but we have our distribution network and manage that. They know our objective is to sell to brick and mortar primarily

i have a big problem with these 2 statements, no one ask them to deal with this, they took it opion themselves to interject, and that last paragraph sounds like a threat to me

Posted May 14, 2014 at 5:55 pm | Permalink
Tom Waldron

I’m a avid collector and I enjoy selling a little what I dont like that I get for what i do want.
When these guys break tons of stuff they flood Ebay with cheap prices for above average grade stuff and that puts other sellers at a disavantage. I’ve done break befroe for a chance and so far I have not got my moneys worth to me buying a box of average to hight product would be better.
So if these guys are going to be in the marketplace I think UPPER DECK has a good idea if you are a brick and morter fine if not you should pay a different priceing . Seems fair becasue group breakers compete directly with the local card shops and I want them to survive if not we are forced to the internet and group breaks.
thats my feelings .
TOm w

Posted May 14, 2014 at 7:00 pm | Permalink
Susan Lulgjuraj

Larry, special pricing didn’t mean discounted pricing. It could mean group breakers get hit with a higher price.

Posted May 14, 2014 at 7:20 pm | Permalink
Susan Lulgjuraj

Charles, card shops have asked about this. That’s why it was a topic during the panel.

Posted May 14, 2014 at 7:21 pm | Permalink

Group Breaking is every bit as legitimate as dealers at a card show or brick and mortar shops. It’s true that quite a few of them don’t have much business knowledge, but then again, neither do a lot of dealers I know. In fact there are a number of breakers that do it as just a side thing to their day jobs. I don’t see why they shouldn’t get a discount as an additional dealer outlet for manufacturers. In many cases, I know group breakers have to charge more than the actual case or box price simple because they have to buy the same boxes that are available to us at the same price. I don’t know many people who would want to work for free, so they should be allowed to be paid for their labor (which includes time spent breaking and sorting cards for packing and shipping). Brick and mortar stores that bitch and complain about how they can’t stay competitive with these new trends because of their higher overhead need to get with the program and actually join the party. They should already have a built in advantage of access to immediate inventory at hobby shop direct pricing. Those who don’t evolve are doomed to be extinct.

Posted May 14, 2014 at 8:01 pm | Permalink
Ed

Great Article!!

Why I think they are really worried is that on the day of release you can easily watch multiple breaks to see how the boxes are breaking. You know what I mean, hits, inserts, auto’s etc.

These breakers (over the last few years) have stopped me from buying boxes that I thought I might be interested in due to the individual box break.

I don’t see how the corporations can “control” these breakers. Anyone can buy cases and break on you-tube and be legit through ebay. Sounds Fun to me.

Peace

Posted May 14, 2014 at 10:30 pm | Permalink
Trey

Susan,
Would love to see Beckett write an article on how many sports card/memorabilia only shops still exists in the USA and Canada. It seems like Upper Deck, Topps and Panini have been protecting an endangered species in “Hobby Shops” that continues to shrink but rarely if ever grows.

Posted May 15, 2014 at 1:32 am | Permalink
Dr. Mitch J

“Special pricing” wether it’s to help or deter case breakers is just wrong. Card manufacturers should be happy that some people have created a way to keep selling their cards in a marketplace that they have over-saturated with ‘too-expensive’ product . I’ve enjoyed several case breaks and i’s just like buying a box from the company, sometimes you win and sometimes you get skunked. I can afford to buy a team slot and get every card of that team out of a case and not have to purchase all the other cards of the case that I don’t want in the first place.

As far as “Steve” goes ….IMO, Reporting ANYONE to the IRS is reprehensible and you should be ashamed of yourself. Even if YOU are doing everything legitimately, would YOU like to be under the scrutiny of the IRS? Why would you accuse ANYONE of wrongdoing without proper proof and only your jealous assumptions to guide you? “Judge not, least ye be judged!”

Posted May 15, 2014 at 3:03 am | Permalink
Al

I think the card companies have done what they do best. Let the little guys fight it out. What the heck, we’re gouging all of them anyway! Even have collectors(?) turning in their brothers to the IRS. Nice!!! This all has come about simply because card companies have made the price of a box, let alone case egregiously high. Most high end boxes have a lot of crap and one or two good cards. The value is not there because card co’s can play our ignorance to their advantage. I’ve been collecting for 30+ years. Have used all the venues and try to sell some things on ebay. I’ve witnessed the demise of box value and the manipulation of collectors grow immensely over that period. Yes, breakers want to make as much as they can. Frankly they’ve just have picked up on the greed of the card makers. Collectors want a big hit. They’ve finally learned that the way things are boxed it’s a huge gamble anyway, so cut the crap and gamble outright. Instead of more manipulation, here’s a thought, how about card companies provide value in the boxes Whether through inserts, rookies, memorabilia or sigs- put in the box what you charge for it. When did good value become a sucker’s term and screwing your customer become good business? This happens and the market place will determine the winners and losers without all the acrimony and manipulation garbage. It might even draw younger, more savvy COLLECTORS and turn away quick buck Eddie!

Posted May 15, 2014 at 6:19 am | Permalink

Group breaking is one of the most exciting aspects of the hobby to come along in years.
The ability to provide consumers with an atmosphere on-line where they can engage with a host and other collectors has been a huge benefit for our retail store.
Blowoutcards-The Fantastic Store broadcasts live Mon-Fri live on Breakers.tv offering products from all manufacturers.

Posted May 15, 2014 at 6:55 am | Permalink
Badger

you better add LEAF and ITG’s logos to your graphic or you might get a nasty letter from crybaby’s brian gray and brian price.

Posted May 15, 2014 at 8:17 am | Permalink

I’ve owned a shop for 22 years. I have moved three times in the same shopping center over those 22 years to locations/situations I thought would be better for my business. Each time I moved, I was asked to reapply with the manufacturers. Over the years, in order to be an authorized Brick and Mortar retailer for the card manufacturers (Panini, Topps, Upper Deck), I was required to provide information to prove I had the means to sustain a viable business. I was asked to show pictures of my store, yellow page adds, my bank statements, my previous year’s income tax returns, my state sales tax certificate with copies of my sales tax returns, a business plan and more information.

These type of application requirements are typical of ANY type of retail sales (we also own a Gift Shop). Retail stores are representatives of the manufacturers whose products they sell. In every retail situation, manufactures must protect the good name of their products and insure that retailers’ sales practices will lead to the future growth of their products.

I have customers who are attorneys, IRS Agents, FBI Special Agents, and Law Enforcement Officers. They have always been aware that some breakers may be breaking the law. While most “breakers” operate within the law, some breakers’ practices appear to be questionable. I am sure they are good people. They just need to be educated and made to understand their responsibilities. Policing card show vendor practices may not be easy; however, it is easy to observe questionable activities filmed forever on the internet.

The manufactures want to be sure that everyone they approve to sell their products do not damage their name or the hobby in general. They must make sure their image remains untarnished and that their model for growth is protected. When we all do things the right way, it is best for the hobby.

Posted May 15, 2014 at 9:52 am | Permalink
Brian

Great article Susan. Topps has doubled production on most products due to group breaker orders which has all but killed value for the average collector opening a case of cards. I used to break 10+ cases of the core Topps products a few years back (Base, Heritage, Bowman, Ginter, Draft, etc) and you were all but guaranteed a fun break, some great hits and a nice profit. Topps has added some new inserts and autos to products like Bowman but to increase production and still offer X hits per box 90% of the autos in Bowman this year were $3 hits.

I personally will never undertand the appeal of group breaks. Most buyers don’t realize they are paying way more for their slots than the cost of a box and it takes months for these guys to deliver cards after a break. I enjoy opening my own products and would never pay a premium for someone else to do this and watch.

Posted May 15, 2014 at 9:59 am | Permalink
Tim

Group breaks hurt secondary market values. The flood of singles from new products creates an abundance of options in a short time frame. It’s definitely easier for collectors to find what they want but it also lowers the value of the cards as supply exceeds demand.

Posted May 15, 2014 at 10:02 am | Permalink
Jason

Investing in an online group break is just like any other purchase you make. Do your research to make sure you are dealing with someone reputable. I returned to the hobby as a collector back in 2011. I was fortunate enough to have four card shops within one hour of where I lived. Two of the places were unpleasant to be in due to the location and the owners running the places. Another had an owner who would take pre-sell orders only to waiver on price on release day if it was a hot product. The fourth was a decent place to visit but not ideal.

For the past two years I have spent thousands at places like blowout, DAC and ATL Sports simply due to convenience and top-notch customer service.

The hobby has evolved as life has evolved. I’ve done about a dozen online group breaks and they are fun. They fill that want of immediate ripping. If it is 10:30 pm on a Tuesday my LCS sure as heck won’t be open, my order from one of the online stores won’t be at my house in minutes so that leaves me with the instant gratification of an online break.

When there are options for everyone we all win.

Posted May 15, 2014 at 10:50 am | Permalink
Richard

There are some local people that do breaks out here.
They buy the cases from the local hobby shop at a very small mark up over cost.
The volume they bring makes up for it since many distributors require you buy a certain amount to get
better products, etc. They also team up with the shop for the shipping/sales.

I like the concept of breaks. Someone can choose just their team or even player and not have to deal with
the cards they are not interested in. As long as they are adults and know what they are getting into, its
a pretty good thing overall for these types of collectors.

Posted May 15, 2014 at 12:36 pm | Permalink

Sanders above said “I don’t know many people who would want to work for free, so they should be allowed to be paid for their labor (which includes time spent breaking and sorting cards for packing and shipping).”

Guess what, UMMM NO!!! If you choose to do breaks , thats your choice ,but the time/cost spent doing it, is not a responsibility of anybody but YOU!!!

Posted May 15, 2014 at 2:38 pm | Permalink

As far as card companies injecting themselves into the groupbreak arena, all they should be worrying about is providing a better value across the board instead of overloading certain teams and leaving such a big boom/bust dichotomy. I’ve been in breaks where half the entrants get skunked while a few others get a plethora of hits. If they’re going to keep releasing such ridiculously expensive products, they need to realize that eventually people are going to stop buying these lotto tickets after they fail to hit the jackpot time after time.

Posted May 15, 2014 at 5:23 pm | Permalink
Steve Leonard

It’s funny how they say breaks are the reason people stay home instead of going into a brick and mortar store. I have gone into breaks and gone into stores. It’s cheaper in breaks for me then going into stores. The card stores out there today are just like eBay for the most part. The price of the box depends on supply and demand at my local card shop in Nashville. The shop charges almost double of what it would cost them. . At are local card shows I see the price on on box of cards go up 10 to 20 dollars in a week because boxes are hot at the time. I collect certain teams and players and breaks make it cheaper then by a box of cards. So don’t blame breaks blame the brick and mortar and online for price hikes and they more or less force us to go the break route.

Posted May 16, 2014 at 6:33 am | Permalink
Larry

I agree with Steve about how card shops and online retailers jack the prices up if the boxes are hot at the time. Even blowout cards and dacardworld do the same thing, they are all just greedy. How much is a box of 2012 National Treasures Football now compared to the release date, yeah I know I’m right. There is no trust among these thieves

Posted May 16, 2014 at 9:19 am | Permalink
Dan

Group breakers, people who sell exclusively on ebay, and the like are VERY different than brick and mortar shops, and should not be treated the same in terms of pricing. Brick and mortar have more skin in the game via rent/insurance, offer a physical location to draw people especially younger demographics to the hobby, and are thus an important part of the procurement of new collectors to the hobby as well as supporting existing collectors including those who don’t buy thru the Internet (elderly, etc.).

Someone making a video of them breaking a case online is also drawing attention to the hobby, but it’s not directly comparable. The tired argument that hobby shops need to “get with the program” is nonsense, many hobby shops are doing or supporting breaks. If people want to do breaks and are able to be successful at it, more power to them, but the idea of special pricing to them is probably only supported by breakers themselves. They are logically no different than collectors who buy boxes or cases and resell cards they don’t want, and do not warrant any type of special resell pricing.

Posted May 16, 2014 at 10:41 pm | Permalink
Jason K

I’ve never done a group break (the wife and I enjoy opening packs/boxes together, and group breaks can’t allow that). However, I can definitely see why people are telling B&M stores that they need to change with the times. That doesn’t mean they have to change everything about the way they do business… It just means they need to understand how their business is changing and adapt to it.

Think of it like the music industry a few years ago. The record labels and record retailers were pushing back against file sharing rather than learning about why people were using file sharing (labels were amazed to find out it wasn’t just because the product was free). Now, digital singles outsell traditional singles, and traditional retailers have adapted by selling digital singles on their website, and ALSO offering the full length CDs and traditional singles at their B&M locations.

Posted May 19, 2014 at 3:38 pm | Permalink

Mr. DiPietro, I read what u said, and I understood that it takes a lot to run a shop, but then I came across the last Par.” The manufactures want to be sure that everyone they approve to sell their products do not damage their name or the hobby in general. They must make sure their image remains untarnished and that their model for growth is protected. When we all do things the right way, it is best for the hobby.” first if there is any damage done to the card companies, it is by there own hand. first there is redemption’s this was the biggest thing that collectors excepted from a product and should have been nipped in the bud from the get go, no one should ever have to wait year(s) for a product, next is this is it game used or were the companys and us decived. this seems to have been left in the wind, not to many owners said much about this injustice, people went to jail for this, this is not made up crap. so does this mean that SBAY who is making a killing repackaging stuff and I would bet is sold in brick and mortor shop like yours is ok, how many owners do u bet resale stuff to them at a very reduce price, this I bet would be ok with you. Just saying

Posted May 19, 2014 at 4:04 pm | Permalink

Hi Charles. Thanks for reading my comments. No one in business wants angry customers. However, it may take the manufacturers a while to figure out how to solve problems. Panini will soon ELIMINATE REDEMPTIONS with their Panini Rewards Program. Hopefully, the other manufacturers will come up with a solution to the redemption problem.

On the issue of counterfeit Game Used Jerseys in card products, I don’t know how many got in what products. The counterfeiters have been prosecuted and are being punished. At one time, these people were considered legit. The card manufacturers would have nothing to gain by knowingly buying counterfeit jerseys. And, this issue has resulted in all the manufacturers taking even more discretion with choosing sources.

I do not buy or sell SBAY products in my store. I don’t have any information as to the content of SBAY products. I only sell products my customers ask for me to supply them. All my memorabilia is certified by James Spence Authentication, Upper Deck Authentication, PSA/DNA, Steiner Sports. It is not ok with me to buy or sell counterfeit products. I am sure the vast majority of LCSs feel the same.

Again, thanks for reading my comments. And, thanks for allowing me to respond to your concerns.

Posted May 21, 2014 at 8:39 am | Permalink
Jonathan W. Iwanski

By this logic, if my Wife and I go out to dinner and split a dish we should be charged a different amount than if I came back the next night alone and ordered it for myself. I doubt that’s legal. Can gas stations charge more for cigarettes if you are splitting the price of a pack with someone? If I buy a twelve-pack of soda, no one cares if I will be drinking it all myself or if someone chipped in a couple bucks to split it with me. The card industry is getting even farther out of line. If they made reasonable products at realistic prices, people wouldn’t do this. Of course, when a player has dozens and dozens of 1/1s and some collectors still think they are actually worth something, companies can charge whatever they want.

Posted May 31, 2014 at 8:00 am | Permalink

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