Making an offer on a Topps distribution license

[Maverik]

A friend and I are looking to make an offer on a Topps distribution license from a guy we have been buying from for about 15 years.

His allocation is quite small (typically 1-2 cases per release and zero on some of the real high end stuff). He is getting up there and years and is looking likely looking to wrap things up soon. We'd like to make him a reasonable offer for his distribution license with Topps.

What things should we consider?

What is a reasonable starting point for an offer?

Thanks for any thoughts for those that may have some insight.

[rngrdanny22]

Originally Posted by Maverik

A friend and I are looking to make an offer on a Topps distribution license from a guy we have been buying from for about 15 years.

His allocation is quite small (typically 1-2 cases per release and zero on some of the real high end stuff). He is getting up there and years and is looking likely looking to wrap things up soon. We'd like to make him a reasonable offer for his distribution license with Topps.

What things should we consider?

What is a reasonable starting point for an offer?

Thanks for any thoughts for those that may have some insight.

Well, in most company buyouts, you'd want to see his income and profit statements.

After that, I'd expect you'll probably need to pay 4-5 years of profit to seal the deal.

[smapdi]

Also find out if the license is transferrable.

[ewokpelts]

Originally Posted by Maverik

A friend and I are looking to make an offer on a Topps distribution license from a guy we have been buying from for about 15 years.

His allocation is quite small (typically 1-2 cases per release and zero on some of the real high end stuff). He is getting up there and years and is looking likely looking to wrap things up soon. We'd like to make him a reasonable offer for his distribution license with Topps.

What things should we consider?

What is a reasonable starting point for an offer?

Thanks for any thoughts for those that may have some insight.

sounds like he’s a dealer and not a distributor. 1-2 cases is what my LCS orders.

[mossoholic]

If we all knew for sure things would stay as is this would be a great thing to own. Unfortunately, if Topps and Panini get a clue here soon and significantly cut distributors product at MSRP you could be in for a bloodbath.

[Stech36]

Originally Posted by smapdi

Also find out if the license is transferrable.

This. From what I understand they are not easily transferred.

[glen87]

do you have a physical store?

i believe that is part of the requirement (at least it used to be)

[Uwfootball1]

Should also see if you have potential to expand the license if you want to get some high end stuff.

[auctionjmm]

You can't buy the license outright. The license follows the store. You buy the store, you get the license. If you want to move/relocate the store you can ask Topps for permission to do so and the license should follow the store assuming you keep the same name. You must also keep the store in-business as a retail storefront. Topps will ask for pictures/proof that the store exists and occasionally will send a rep to visit the store to ensure you are following their protocols.

[Dr. K]

Originally Posted by auctionjmm

You can't buy the license outright. The license follows the store. You buy the store, you get the license. If you want to move/relocate the store you can ask Topps for permission to do so and the license should follow the store assuming you keep the same name. You must also keep the store in-business as a retail storefront. Topps will ask for pictures/proof that the store exists and occasionally will send a rep to visit the store to ensure you are following their protocols.

Does Topps offer these to new stores anymore or is the only way to obtain them is as you outlined above?

[beavers]

Originally Posted by rngrdanny22

Well, in most company buyouts, you'd want to see his income and profit statements.

After that, I'd expect you'll probably need to pay 4-5 years of profit to seal the deal.

This is a good approach to valuation.

[LVDan]

Seems like a risky time to pay up as Topps strategizes for more direct to customer offerings going forward and possible labor discord looming.


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[JohnnyHatesJazz]

Don’t think too hard just offer tree fiddy.


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[auctionjmm]

Originally Posted by Dr. K

Does Topps offer these to new stores anymore or is the only way to obtain them is as you outlined above?

I'm not sure. Previously you needed to be in business for X number of years before you could even apply to be a Direct store. I thought I had heard that Topps had capped its direct accounts at a certain number and I'm not sure what happens if/when those stores close up. One of our LCS owners in the area passed away last year and the shop was sold to a new owner with the license transferring. So that one stayed in tact. I don't know what happens in the long run if enough stores start forfeiting their licenses either through closure or death. I would think in this market, there are plenty of buyers ready to take on a shop when the next guy drops dead.

[Maverik]

Originally Posted by rngrdanny22

Well, in most company buyouts, you'd want to see his income and profit statements.

After that, I'd expect you'll probably need to pay 4-5 years of profit to seal the deal.

Agreed, but may not apply here since he doesn't make too much money. Mostly sells to people he's been selling to for a long time, basically at cost. Def a good thought

Originally Posted by smapdi

Also find out if the license is transferrable.

good idea!

Originally Posted by ewokpelts

sounds like he’s a dealer and not a distributor. 1-2 cases is what my LCS orders.

That sounds more correct, agreed

Originally Posted by glen87

do you have a physical store?

i believe that is part of the requirement (at least it used to be)

hmmm....that's one thing I don't know. He has run it out of his house, for as long as we've known him.

Originally Posted by Uwfootball1

Should also see if you have potential to expand the license if you want to get some high end stuff.

Man, this seems almost impossible right now

Originally Posted by auctionjmm

You can't buy the license outright. The license follows the store. You buy the store, you get the license. If you want to move/relocate the store you can ask Topps for permission to do so and the license should follow the store assuming you keep the same name. You must also keep the store in-business as a retail storefront. Topps will ask for pictures/proof that the store exists and occasionally will send a rep to visit the store to ensure you are following their protocols.

Really good info. A storefront is definitely possible though. We have space available next to the business we already run

Originally Posted by LVDan

Seems like a risky time to pay up as Topps strategizes for more direct to customer offerings going forward and possible labor discord looming.

Yea...we'd like to help him continue to serve the same batch of customers he's had for years and keep his licensing from dying when he does

[Maverik]

Thanks for the all the info and responses. Super helpful

[auctionjmm]

Originally Posted by Maverik

Thanks for the all the info and responses. Super helpful

Just to be clear, is his license direct with Topps, meaning he buys the cards from Topps themselves, or is the license a distributor such as GTS, Peach State, etc. who are basically middlemen for Topps? When you said he runs it out of his house, it made me think perhaps this isn't a direct Topps account. Topps direct accounts are a valuable asset. A distributor account is pretty useless. You could sign up for a distributor account yourself right now. No point in offering him money for something you could get right now. The only worthwhile move here would be if you were acquiring a Direct account. There are less than 250 direct accounts in the entire country.

[jewcer2k5]

Originally Posted by auctionjmm

Just to be clear, is his license direct with Topps, meaning he buys the cards from Topps themselves, or is the license a distributor such as GTS, Peach State, etc. who are basically middlemen for Topps? When you said he runs it out of his house, it made me think perhaps this isn't a direct Topps account. Topps direct accounts are a valuable asset. A distributor account is pretty useless. You could sign up for a distributor account yourself right now. No point in offering him money for something you could get right now. The only worthwhile move here would be if you were acquiring a Direct account. There are less than 250 direct accounts in the entire country.

You may be able to sign up for an account and get exactly zero boxes allocated per product.

[Dr. K]

Originally Posted by Maverik

Thanks for the all the info and responses. Super helpful

Keep us up to date as you learn more.

[auctionjmm]

Originally Posted by jewcer2k5

You may be able to sign up for an account and get exactly zero boxes allocated per product.

Sure but would any of those distributors allow one dealer to transfer his account to another with the same allocations in tact? I guess that's the question. A Topps direct account can follow a store. Can a distributor account follow in the same vein or does that person start from scratch? I do not know the answer.

[kyle1707]

Originally Posted by auctionjmm

Just to be clear, is his license direct with Topps, meaning he buys the cards from Topps themselves, or is the license a distributor such as GTS, Peach State, etc. who are basically middlemen for Topps? When you said he runs it out of his house, it made me think perhaps this isn't a direct Topps account. Topps direct accounts are a valuable asset. A distributor account is pretty useless. You could sign up for a distributor account yourself right now. No point in offering him money for something you could get right now. The only worthwhile move here would be if you were acquiring a Direct account. There are less than 250 direct accounts in the entire country.

In between topps direct and places like gts peach etc. there are direct distribution dealers

All sports marketing and southern hobby

They have been cutting people like crazy the last year

I would be very careful it has to do with them. They both used to be a card shop only distributors. But know they have pretty much turned into a card breaker dist

They want to get rid of guys in there house and even small shops

[jewcer2k5]

Originally Posted by auctionjmm

Sure but would any of those distributors allow one dealer to transfer his account to another with the same allocations in tact? I guess that's the question. A Topps direct account can follow a store. Can a distributor account follow in the same vein or does that person start from scratch? I do not know the answer.

Yes you can sell your allocation and status to someone else if you use a distributor. But those allocations can change at any time for any reason so if you’re buying then be careful

[NYBBFAN]

Originally Posted by kyle1707

In between topps direct and places like gts peach etc. there are direct distribution dealers

All sports marketing and southern hobby

They have been cutting people like crazy the last year

I would be very careful it has to do with them. They both used to be a card shop only distributors. But know they have pretty much turned into a card breaker dist

They want to get rid of guys in there house and even small shops

I used to use All Sports Marketing years ago. Tried to hop back on that train and they wanted me to reapply. Not ready to take on the kind of allocation that would keep them interested in me so I passed.