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Lawsuit Mulled as Result of MLB Amazon Crackdown

Major League sports have been trying to limit sales of licensed goods online and on marketplaces like Amazon since the spring, and a crackdown on marketplace sellers escalated in early November. Some merchants and manufacturers who are being negatively impacted are speaking to at least two law firms about a possible lawsuit.

EcommerceBytes 411 published special reports last month on MLB’s new aggressive approach to ecommerce in which it has begun preventing licensed manufacturers from supplying all but the largest retailers.

In early November, sellers began reporting that MLB-licensed products were disappearing from Amazon’s catalog in what appeared to be an escalation of the crackdown with devastating consequences. Some but not all sellers impacted were also been suspended, including one seller who said they received an intellectual property rights violation for selling Bicycle World Series of Poker playing cards – a very different “world series” than the one just played between the Chicago Cubs and the Cleveland Indians.

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While an MLB spokesperson told EB 411 last month it was concerned with the problem of counterfeit merchandise for the sake of sports fans, the biggest beneficiary of the new moves aside from itself appears to be its preferred ecommerce partner – Fanatics.

The Oct. 31st 411 article along with a Sports Business Daily article from last month provide some insight into the power Fanatics has been gaining not only with Major League Baseball, but with other major leagues as well. It’s not just sewing up the retail side of licensed merchandise – it seems it is getting into manufacturing as well.

In an article in March about the NFL extending its deal with Fanatics, Sports Business Daily reported that the NFL had also taken an equity stake in Fanatics, according to their sources.

The audacious scope of Fanatics’ activities and attempts to control competition (with MLB’s blessings) are enough to take one’s breath away, which may explain why lawyers are now sniffing around. One source speculated lawyers might consider leveling charges of restraint of trade against the MLB, but since we have not yet spoken to the lawyers, we don’t know firsthand the scope of their investigation and whether they may be considering probing other sports leagues as well.

Fanatics CEO Doug Mack was previously the head of One Kings Lane. Along with ecommerce firms Rue La La and ShopRunner, Fanatics is owned by Kynetic, which has received substantial VC funding and is expected to go public.

Sports Business Daily wrote, “As it has amassed licensing and venue retail rights in an unprecedented fashion, Fanatics’ end game has been the subject of intense industry-wide speculation. Sources said that as Fanatics aims toward a likely IPO in ’18, it is targeting additional major sports licensing rights deals.”

Contributing freelance journalist Kenneth Corbin wrote in the Oct. 24th issue of 411, “Among other factors, under the new policy the MLB will evaluate whether an online seller applying to be an official retailer nets at least a quarter of its total revenue from sales at brick-and-mortar stores and – crucially – whether the seller recorded at least $2 million in sales of league merchandise in the previous year.” That excludes mom-and-pop retailers and many if not most online and marketplace sellers.

It’s not clear exactly what prompted Amazon to allegedly remove third-party merchant MLB merchandise from its marketplace in early November, but some merchants believed it was the MLB’s “enforcer,” a company called OpSec Security. (Amazon did not respond to EcommerceBytes initial inquiry.)

One retailer with whom we spoke noted that the recent Cubs victory in the World Series should have netted merchants like him a healthy boost in online sales – one retailer told the Chicago Tribune it was like “Christmas in November” in a November 3rd article, “World Series championship Cubs merchandise is flying off the shelves.”

Instead, online merchants on Amazon are sitting on the sidelines with unsellable inventory thanks to the untimely crackdown.

Note: a version of this article appeared in the November 7th issue of EcommerceBytes 411. Make sure you aren’t missing out on important ecommerce news stories like this one – subscribe to 411 today. Subscribe via debit or credit card, or subscribe via PayPal.

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Ina Steiner

Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. Send news tips to ina@ecommercebytes.com.


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