McCarthy predicts NHL will be worth the wait

Dave McCarthy is in his fifth year as the NHL’s director of entertainment products and perhaps the happiest person with his “card job” is his son – Shane, 8 – a collector just like his dad.

A Maryland native, McCarthy is a Baltimore Orioles and Washington Redskins fan with Cal Ripken Jr., filling the role of his childhood hero. His favorite team on the ice is the Philadelphia Flyers, he hesitantly admits, followed closely by the New Jersey Devils.
McCarthy was an avid collector as a child. In fact, McCarthy used to collect Baltimore Orioles team sets – and even made ink marks in the small box of the Topps team checklist cards.

“My son and I have collected a fairly extensive collection of Martin Brodeur cards because we admire his athletic abilities and his success. Plus, he’s a goalie – and goalies are cool; they get to wear cool equipment and have unique masks,” McCarthy said. “We also collect just for the pleasure of seeing our heroes come to life on a trading card.”

SCD: Has being a collector helped you with this job?
DM: For sure. It gives me the understanding of making sure the products that we put into the market satisfy the basic motivation of collectors.

SCD: Where is the hockey market at today?
DM: The hockey market today, considering the circumstances, definitely took a step backwards this year. But I know that all of the work that we are doing, addressing the game itself, has tremendous potential, especially with the TV deal. I think hockey, in some ways, is one of the best-kept secrets and with a talent pool in the pipeline waiting to spring onto the scene, starting with Sidney Crosby, it’s better than it’s ever been in probably the history of the game.
There are young kids who have talent, skill, personal appeal and you can pronounce their names. I think these young players will really engage our fans and though we’ve taken a step back this year, I believe the future is very bright because of the things that we’re doing and have done behind the scenes to make sure that when we do re-launch the sport, the game will be exciting and people will know who our athletes are, and hopefully our fans will be engaged and excited to buy products that celebrate their favorite players and teams.

SCD: How large of a backwards step did the NHL take with the lockout?
DM: Severe. However, we feel we also have taken the necessary steps while we’ve been away from the game. We feel we have a plan in place, that in three years, we’ll re-establish the business to current levels before the lockout, and then, in the fourth, fifth and sixth years, we’ll begin to see single-digit growth. We believe our business is recoverable.

SCD: What’s your gut feeling – will there be an NHL season this fall, and will it start on time?
DM: I’m always optimistic. For me, the glass is always half full. So, yes.

SCD: Let’s talk about the Hawaii Trade Conference, held earlier this year in Waikiki. You were there representing the NHL, and you were the only league addressing attendees during the always-important Meet the Industry portion of the event. Why did you feel that was important?
DM: It’s important for us to be engaged in the industry, to be with the decision makers, those who can impact our business, to make sure that we have some share of mind with them. During the Meet the Industry, we were able to present the hockey story, if you will. It was, and still is, important for us to continue to be visible, continue to interact with the decision makers.
“I was sitting at the conference in Hawaii one day and I can tell you that, the interest in our business, from every participant in the industry – from manufacturer to distributor to hobby store owner – was all positive. That was a very satisfying experience, as was the whole Hawaii Trade Conference. I feel the leaders in the industry know that despite the fact we weren’t playing this year, there is potential in hockey¬† and they want to be a part of it.

SCD: Did you anticipate negative feedback and comments in Hawaii because, due to the lockout, many people are losing business, losing income?
DM: Very few people in Hawaii were negative toward the NHL. For the most part, the people in Hawaii understood that, in order for this sport to survive on a long-term basis, we needed to do what we did this season.

SCD: When hockey returns in the fall, what do you envision from a card perspective? Do you envision as many releases as there once were?
DM: No. Our plan suggests that there will be a responsible allocation of products to meet the current and anticipated future demand. What that means is, each product will have a reason for being produced. For instance, is this product designed for the entry-level consumer who just wants to collect some cards and find out about the players, including statistics, and start to build a collection.
We’ll also look at releases to see if it’s possible to build team sets. We’ll also have products for those who like to speculate and get the big hits per pack. Products will all have a reason for being. Products will be channeled into the appropriate distribution channels, recognizing the importance of having cards in both traditional retail outlets and hobby shops. Products will be released, timed appropriately so that they mirror our season.
We don’t need products in July and August; we need some down time to allow collectors to catch up and backfill their collections with cards that they didn’t get during the regular season. This also will help the secondary market, help it do its part in the business. So, beginning in September, through the Stanley Cup Finals in June, we will have an appropriate and responsible allocation of products that will, in some ways, be significantly fewer than what we had in the past.

SCD: How many products do you envision being cut?
DM: We’re working through that now, but it will be a noticeable change.

SCD: Estimate how many is a noticeable change?
DM: All I can really say at this point is, it will be a noticeable change.

SCD: Will all of the licensors be back when the game resumes?
DM: In Hawaii, all of our licensors expressed interest in coming back. At the same time, some new companies threw their hat into the mix, wanting to obtain a hockey license.

SCD: Despite the lockout, there still was significant demand for hockey products. Does that surprise you? 
DM: No. Not at all. Our fans are very loyal; they really have a passion for the sport. Hockey collecting really is a big part of their recreational time and I knew that, if we had new products available to them, although there was a limited supply of new releases, they would be interested in them. That didn’t surprise me.

SCD: Did the Fleer announcement that it was terminating its sports card products surprise you?
DM: Every business has a life cycle, not just sports cards. Take, for instance, retailers. How many retailers, at one time or another, were thriving and meeting the demand of the market, and yet now are out of business? Businesses need to re-invent themselves and can have multiple lives. If they can’t do that, then there will be a likely attrition. In this case, it clearly was too much supply and, unfortunately, not enough demand.

SCD: Let’s say, for instance, Upper Deck approaches you and asks to produce an ultra high-end product, similar to its Exquisite line in basketball. Could you see a similar product for hockey?
DM: Absolutely. We have hardcore collectors who are capable of that level of spending and provided the product had a reason for being and we were ensured that there was true value in each and every pack, then we would support something like that. I don’t think something like that would be a mainstay of our business, but it’ll be a nice compliment to our stable of products that begin at 99 cents and go up to $100 and higher. If there’s interest in a release at $500, for something that hadn’t been seen before, we certainly would support a release like that.

SCD: Has anyone approached you about producing a $500 pack?
DM: No, not as of yet.

SCD: What’s your impression of the Ultimate Collection?
DM: That’s just part of the business, part of the allure of the business in some ways. What is in that pack? That’s what people want to know. I think the creativity of the licensees in making sure that there is value in the packs has allowed the premium brands to have the success that they’ve had.

SCD: On the other end of the spectrum, the 99-cent packs. Do you see companies continuing to produce a low-end product, or will such products ultimately go the way of the dying retail outlets that you just mentioned?
DM: I don’t think so. Once again, our commitment to this business is that we will have a portfolio of products that meet the needs of all existing, and potential, customers. I think there is a market for $1 packs. I also think there is a market for 400-card sets, to appease the team and set builders. And, I think there is a market for high-level products. For us, the entry-level products always will be a part of the mix.

SCD: What is the NHL doing to drum up new collectors?
DM: A couple of things. First, we’re the only league to have a dedication section on its Web site dedicated to the sport, powered by Beckett. Second, every opportunity that we have to engage our consumers at the grass-roots level, we’re doing it. If there’s a crowd that’s interested in the sport, we’re going to make sure this hobby, this industry, is present. This includes the NHL All-Star Game and the NHL Draft.
“The biggest opportunity that has yet to be accomplished for card exposure is ensuring that each of our arenas has an offering of card products that are appropriate for their consumers for each of their 41 home games. We have 20 million come through our arenas each year, so we want to make sure they have exposure to the card industry. That’s one thing that we have yet to accomplish that is clearly on our radar screen. We want fans who go to our arenas to watch a game live that they have the opportunity to purchase packs.

SCD: What do you say to the mom-and-pop card shop that took a big hit financially due to the hockey lockout?
DM: Just as I said in Hawaii, if your business was impacted, we offer a sincere apology. That said, we recognize for the long-term viability of this business that there needed to be some radical changes made. Hopefully, you will understand that the interruption was necessary for the long-term health of the sport. And during this down time, we’ve taken this time to listen to the collectors comments about over supply of products and we are reacting to that. We ensure that the products that will be presented to you, to offer to your customers, will each have a reason for being and you won’t be tripping over each other and allow you adequate shelf life to sell the products before the next product comes out and, consequently, improve your cash flow over time.

SCD: Any final comments?
DM: The biggest message I can say is, we do understand the impact that the work stoppage has had on the industry. We will rebuild. We thank the licensees who continued to make products, the retailers and store owners who incurred the risk of putting their cash on the line. The future is very bright for the NHL and we’re very optimistic for the long-term stability and growth of the industry.

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