Upper Deck to IRS: Industry Trolls Hurting Our Business!

Are you a sports card industry troll? In court documents filed on March 16, 2017, Upper Deck claims industry trolls are hurting its business!

Since 2012 Upper Deck has been involved in a dispute with the IRS.

One of the more eye-opening court documents is from July 2013 which states Upper Deck had “combined deficiencies exceeding $160 million from 2000-2004.”

This is on top of a 2008 settlement with the IRS and California Franchise Tax Board for a combined $97 million in back taxes and interest.

On March 16, 2017 the U.S. Tax Court struck down a motion from Upper Deck to seal all records of the ongoing 2012 case.

A new court document reveals explosive details about alleged ongoing harassment Upper Deck and its employees have received as a result of the tax information being public:

“Competitors, former employees, business partners, and industry trolls are using confidential information about [Upper Deck’s] business strategies, and financial stability to destroy [Upper Deck’s] ability to maintain favorable commercial and consumer relationships.” – Upper Deck, 2017.

Specifically, Upper Deck cited these examples of harassment and blackmail threats:

  • Angry phone calls from former employees of UDC seeking payments in 2013
  • A lawsuit filed against UDC and various UDC employees in 2013
  • Threatening emails from a former UDC executive to a current UDC employee in 2014
  • Threats and attempted blackmail against UDC’s general counsel, Brittany Hysni and other UDC employees in 2013 and thereafter
  • A UDC distributor was emailed a copy of “tax court litigation documents” before UDC’s annual distributor meeting
  • UDC employees have received emails from distributors, regarding UDC’s tax litigation documents found online
  • convict performed surveillance of a UDC employee’s property

The next legal step in the case calls for Upper Deck to respond to the IRS’s motion for summary judgment by May 29, 2017.

Shockingly, money shouldn’t be an issue for Upper Deck.

While the hobby world praises Topps for it’s “Now” instant card service, it’s actually Upper Deck who is revolutionizing the industry once again.

On Upper Deck ePack, collectors can open packs, boxes or cases instantly online; trade cards and chat with fellow collectors; build collections and sets to get exclusive rare cards.

To make the platform possible, Upper Deck has partnered with payments specialist Dynamics and logistics ace Check Out My Cards (COMC) to handle a lot of the grunt work.

Upper Deck debuted ePack on January 28, 2016. The model bypasses the traditional distributor and hobby store channels. The money you spend on ePack goes directly to Upper Deck. This has ruffled the feathers of several dealers and distributors who believe ePack could hurt traditional brick and mortar card sales.

In reality, ePack and specifically Connor McDavid probably saved Upper Deck.

The first product sold on Upper Deck ePack, 2015-16 Series 1, featured Young Gun rookie cards of the highly touted #1 pick McDavid. Sales exploded, as did the price of McDavid’s cards. His Young Gun card has recently soared into the $300-$500 range.

The McDavid Young Guns cards were not that difficult to pull or obtain during most of 2016. At one point this writer had 5 on the ePack site. One collector had over 100. Over 600 have sold on COMC. 1,100 have been graded by PSA. 4,800 have been graded by BGS. Imagine how many have traded hands on eBay.

Upper Deck can seemingly sell anything they want on ePack with great success. The company sold over 1,000 packs of NHL Grandeur Coins for $100 each in less than a week.

Products like Fusion ($0.79 per pack) and Compendium ($0.99 per pack) feature no autograph or memorabilia cards but are top sellers.

Upper Deck rivals, Topps & Panini, have developed smart phone apps where they sell digital only cards. Topps has spent millions on the project. Neither Panini nor Topps have tied those apps to the physical card world.

Anyone could pull a real Connor McDavid Young Gun from a pack purchased on ePack. The ability to get real cards is something Topps or Panini doesn’t even offer on their mobile apps.

Praise for the Topps Now instant card service is even more bizarre. Topps Now isn’t as interesting or innovative as the defunct eTopps idea from a decade prior. Upper Deck ePack takes eTopps to a whole new level. The possibilities appear endless.

Could the platform replace human group breakers with an automated system?

Perhaps, a dealer could open a card store and access all the inventory through ePack. Instead of glass cases and cardboard boxes, the decor would be flat screen TV’s and leather couches.

We should take what Upper Deck tells a U.S. Tax Court with a grain of salt. Claims the business is being hurt by competitors and trolls is overstated. The company moved to larger headquarters in May. A strong 2016-17 NHL rookie class further propelled card sales on ePack.

Privately, the company is stunned Topps or Panini hasn’t mimicked the ePack concept. It’s the most innovative idea the industry has seen in years.

 

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