"You root for them. You believe in them. Now invest in them." The Topps Co, which makes bubblegum, candy and trading cards, has been making that televised appeal to baseball fans in an effort to create an online boom in card collecting.
In ads running during ballgames in New York, Seattle and other markets, the company directs fans to its etopps.com Web site.
There, a weekly round of six "IPOs," or initial player offerings, awaits. The cards cost from US$4 to US$9.50. Like stock investors, card collectors can buy offerings and track the value of their portfolios based on prices in a secondary market run by eBay.
Cards can be bought and quickly resold, or held indefinitely. If kept as an "investment," Topps holds the actual cards in a climate-controlled warehouse in Delaware until the owner wants them. Card holders also receive a dividend-like "performance bonus" when a baseball player performs above a statistical threshold set by Topps.
The online venture is the latest effort to rejuvenate Topps, a 66-year-old company that sells Bazooka bubblegum and Ring Pop candy as well as sports and Pokemon cards. In recent months, Topps itself has been a lackluster investment. Its shares have fallen more than 17 percent since the beginning of the year, trailing the Standard & Poor's 500-stock index by 12 percentage points.
Some analysts like the company primarily because of the growth of its core candy operations, its debt-free balance sheet and aggressive share buyback program. But others believe the online card-trading venture has the potential to reverse a decade-long decline in retail sales of sports trading cards and, eventually, to increase the company's profits.
Online trading is "definitely a potential growth driver for this company, though it won't hit the bottom line for a few years," said Robert Routh, a senior analyst with Arnhold & S. Bleichroeder, a New York securities firm.
"If Topps can go beyond traditional card collectors and attract new customers, such as general sports fans and online stock investors who like sports, they will have a real business," he said.
At the same time, if the online trading venture fails, it may not do lasting harm to Topps shares, which closed on Friday at US$9.95, or about 16 times trailing earnings.
"The stock price is really trading on the value of the candy business and the cash on the balance sheet," said David Green, a portfolio manager with Hotchkis and Wiley Capital Management, which holds the stock in its mutual funds. "You are getting the rest for a nominal amount."
So far, the secondary market for the new Topps cards has had some of the excitement of the Internet boom.
For example, the offering price of the Barry Bonds 2001 IPO card was US$9.50 in October. But the same card has recently traded on eBay for US$67.75. And the 2001 card of New York Mets infielder Edgardo Alfonzo, originally offered for US$6.50, traded for US$276 on April 20, making it the highest-priced IPO to date. It traded on Friday for US$199.50.
Several cards, not just a handful of star players, have performed well in the secondary market. The Kaplan Index -- a compilation of Topps IPO card prices in four sports, which is maintained by Jeffrey Kaplan, an e-commerce consultant in New City, New York -- jumped more than 300 percent in the six-month period ending last week. Topps executives downplay the notion that sports cards are serious investments, like stocks or hog futures.
"People shouldn't be buying these cards to save for their kids' college educations," says Warren Friss, vice president for Topps' Internet businesses and the executive who created the IPO concept.
But Friss readily acknowledges that "there are people who use this to make money."
And the Topps' advertising campaign doesn't shy away from playing up the investment angle. One print ad running in a card-trading magazine uses the language of Wall Street with the tagline, "Where your love for sports can pay dividends."
Arthur Shorin, the company's chief executive, said the venture is aimed primarily at adults, since it requires a credit card purchase. But that doesn't mean that "fathers and sons and daughters" can't buy and sell cards together, Shorin said.
John Gast, 30, a sixth-grade teacher in Westlake, Ohio, is the kind of buyer the company is looking for.
"These IPOs are the best game you've got going in baseball cards right now," said Gast, who has been trading cards since he was 10 years old. "And Topps has the market to itself."
Still, industry watchers remain cautious. Kaplan said early purchasers of the topps.com cards had benefited from the relatively small number of cards issued in October, before Topps publicized the venture.
In the end, baseball cards may be no safer than dotcom shares.
"A lot of speculators could decide to sell off with these high prices," Kaplan said.
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