Sports Collectibles

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Sports Collectibles



6740 10 Mile Rd.
Center Line, MI 48015

February 1992

This plan introduces a collaborative business venture to produce a limited production artwork series featuring members of the Hockey Hall of Fame. The plan features an overview of the history of sports collectibles, a comprehensive product description, and discussions of production, marketing, distribution, personnel, and financing to substantiate the viability of this venture. This business plan has not been disguised in any way; references to locations, people, and products are real, not fictional.

  • statement of purpose
  • history of sports collectibles
  • physical product
  • description of project concept and criteria
  • qualifications
  • production
  • marketing
  • distribution
  • pro forma financial projection


The purpose of this presentation is to review the potential for a project involving the production of a limited production artwork set featuring members of the Hockey Hall of Fame. The project would involve the joint efforts of the Diamond Connection, Inc., Sports Gallery of Art and the Hockey Hall of Fame. The results of this project will provide many benefits to the participants. Significant among these are the following:

Hockey Hall of Fame:

  • Ability for financial gain from royalties generated by the project.
  • Favorable marketing and awareness of the Hall of Fame as a result of advertising and publicity from the project.
  • Education of hockey fans about the Hall of Fame who purchase the product.
  • The potential for added attendance at the Hall of Fame as a result of the project.

The Diamond Connection, Inc. and Sports Gallery of Art:

  • Financial gain from the revenues granted by sales of the product.
  • The opportunity to further validate their position as leaders in the field of Sports Art and collectibles.
  • The benefit of marketing and publicity to a wide spectrum of sports collectors throughout the United States and Canada.

We intend to present the following at this meeting:

  1. Introduce the individuals from the Diamond Connection, Inc. ("DC") and Sports Gallery of Art ("SGA") to the Hockey Hall of Fame.
  2. Review the history and status of the sports collectibles industry.
  3. Review the project concept and comparable projects from other sports.
  4. Review the credentials of DC and SGA to successfully complete the project.
  5. Review the proposed Marketing, Production and Distribution plans.
  6. Review the financial projections.

At the conclusion of our meeting we hope to be able to address the following questions:

Does the Hockey Hall of Fame approve of the concept?

Does the Hall of Fame have an interest in participating in the project?

When can the Hall commit to a decision regarding participation?

What involvement might be required of the NHL, the NHL Players Association and individual members of the Hall of Fame to allow the project to proceed?

What is the next logical step for all involved to commit in order to move forward?


The sports collectibles hobby came into existence in the 1880's with the introduction of artistic portrayals of 19th century baseball players. These portrayals were often on cords included in boxes containing tobacco and caramel products. The cards were meant as an enhancement to the product being sold.

These cards were collected by many individuals over the following 90 years. However, no sophisticated secondary market existed until approximately 1970. By that time, sports cards had been produced to varying degrees for all of the major sports, including hockey. Significant production of hockey cards began in the early 1950's when both Parkhurst and Topps produced trading cards.

Beginning in the early 1970's, significant interest on the part of collectors in old sports cards resulted in the creation of hobby trade shows. The purpose of these events were to gather collecting enthusiasts together to buy, sell, or trade sports cards. All of the participants were true collectors whose primary incomes were derived outside of the hobby. Throughout the decade these trade shows steadily increased in both frequency and size.

By the early 1980's, the sports collecting hobby had grown to significant enough proportions to be no longer regarded as a "kid's hobby". A number of hobbyists were able to participate in the hobby on a full time basis while living off of income from their activities. This decade saw a tremendous growth within the sports collectibles industry as significant numbers of people began collecting.

The present day finds the industry as a legitimate full time business for many individuals. Estimates suggest that as many as $6 billion is spent annually on sports collectibles. The hobby's annual convention now hosts over 100,000 collectors over a four day period every year. An individual T-206 Honus Wagner baseball card (circa 1910) was purchased last year by Wayne Gretzky and Bruce McNeil for over $400,000. In summary, due to the vast number of collectors, the hobby has now become big business.

The collecting public's appetite has also caused the hobby to become increasingly more sophisticated over the last ten years. A major portion of this sophisticated has involved authentic hand signatures by athletes as well as limited production, high quality collectibles.

Two significant areas of the hobby have evolved as a result of this demand for increased sophistication. Sports figurines and plates were introduced to the hobby in the mid to late 1980's. These products involve limited production items (usually 500 to 10,000 pieces), many of which are also hand autographed. Sports art, while in existence since the introduction of the first sports card in the 1880's, has now become increasingly popular with upscale hobby collectors. There are now many naturally recognized sports artists who have received national recognition and are highly sought after by hobby collectors. These include, but are not limited to, Christopher Paluso, Ron Lewis, Mike Petronella, Joseph Catalano, Michael Taylor, Richard Perez, Ed LePere and Doug West.

The hobby can expect to continue to grow in the 1990's as it has in previous decades. One of the attributes that we expect in this decade is that collectors will continue to request truly unique collectibles that are both limited and are of high quality. This brief is a cornerstone behind our desire to undertake The Hall of Fame project.


The following describes certain significant attributes regarding the project product.


Individual postcard sized artistic portrayals of all the members of the Hockey Hall of Fame produced on a very high quality stock.

Total Production

10,000 full sets will be produced and the cards in each set will be individually numbered.


The cards will be issued and sold in "series". Each series will consist of between 14 and 20 cards. Typically, a series will include 12 to 14 players and between 2 and 6 "builders" and/or game officials.

Series Frequency

Series will be released every 4 months until all members of the Hall have been depicted. At that time, annual update series will be released for new inductees into the Hall.


Each series will be priced at $5 (U.S.) per player card. Founders and game officials will not be priced. Accordingly, a typical series will cost approximately $75 (U.S.). Various accessories, including protector sheets and educational data about the Hall, etc., will be included at no extra charge.


As part of the base cost of the set, purchasers will be entitled to other accessories as part of the package. For instance, the first series would include a storage box (much like the Perez-Steele example) as well as an informational booklet about the Hockey Hall of Fame.


The project concept is to produce a high quality artwork set depicting members of the Hockey Hall of Fame. The set would be limited to 10,000 full sets. Each artist's rendering would be sized approximately the same as a postcard and be presented artistically in both an action and portrait format on high quality stock paper.

There is historical precedence for such a project. There are Hall of Fame sets in the marketplace showcasing both the Baseball Hall of Fame as well as the Football Hall of Fame. Both sets have been well received by the collecting public as a result of their uniqueness and quality.

The project concept, when successfully introduced, will address all of the benefits to the participating parties that were described in the introduction. In order to be successfully introduced, the following criteria also needs to be considered:

1. Is there a sufficiently sized marketplace to absorb the product?

Hockey is the fastest growing area in today's sports collectible industry. The marketing success of the San Jose Sharks suggests that, perhaps in contrast to the situation a decade ago, hockey interest is being established throughout both Canada and the United States. The season ticket sales in Ottawa, Hamilton and Tampa Bay, prior to the most recent expansion franchise awards by the NFL, further confirms this high level of interest. In our opinion, hockey today takes a back seat only to baseball on an overall basis in the industry. There are many devoted hockey fans presently spending large sums of money for hockey related items. Our Red Wings lithograph project enjoyed rapid absorption with only regionally based marketing.

2. Is the price point of the product likely to be attractive to the potential customer?

As will be described in a later section, our proposed price point is slightly less than the current introductory price for the Perez-Steele baseball products. We feel that this price point will be satisfactory to our target customers. The baseball and football sets have now been fully absorbed by the collecting public. The baseball version was produced by a private company named Perez-Steele, who worked in conjunction with the Baseball Hall of Fame. The set depicts all makes of the Baseball Hall of Fame and was circulated in an issue of 10,000 total sets. The football set was produced by a company named Goal Line Art in conjunction with the Football Hall of Fame. The total issue size of the product amounted to 5,000 sets.

The Perez-Steele product has been so successful that a number of follow-up products have been created in conjunction with the Baseball Hall of Fame.

The football venture was initially released in 1990 and has just recently been fully absorbed into the marketplace.

There are a number of reasons why these projects have been successful. First, the boom within the sports collectibles industry has resulted in a corresponding demand for hand autographs from famous retired athletes. The baseball and football issues have been extremely popular with autograph collectors. This group represents a significant portion of the purchases of this type of product. Another reason for project success has been the set's affiliation with the Hall of Fame for each respective sport. It is our firm opinion that there is a significant "legitimacy" given to the product as a result. Lastly, the projects were carried out by private entrepreneurs who had a solid combination of artistic expertise and hands on knowledge of production and distribution.

3. Is the quality of the product sufficient to satisfy the standards of a sophisticated sports hobbyist?

We fully intend to have the Hockey Hall of Fame product be superior in quality to both the baseball and football products.

4. Can the majority of potential customers be reached via a comprehensive marketing program?

As will be described in a later section, we feel that a combination of certain marketing releases will be sufficient to reach our potential customers.


In addition to creating a valid concept for this type of project, it is also critical to combine joint venture partners capable of getting the job done. The Hockey Hall of Fame is an important partner in this project because of the legitimacy and marketing benefits that it would be able to contribute.

We believe that The Diamond Connection and Sports Gallery of Art also bring important benefits to the project. These qualifications include:


Doug West

Nationally recognized sports artist with a proven track record.

Dave Sell

Extensive marketing and retail background with international experience.

Dave Schulte

Significant sports collectibles hobby experience.

John Moore

Significant sports collectibles hobby experience. Extensive financial background including familiarity with multi-million dollar financings, sales and lease transactions.

Steve Graus

Significant sports collectibles hobby experience. Related experience in retail, marketing and distribution areas.

Sports Hobby Experience

Sports Gallery of Art and Doug West have been producing sports art for over 10 years.

The principals of The Diamond Connection have been involved in the retail side of the industry for over 5 years.

Similar Project Experience

We have successfully negotiated a project in conjunction with The Detroit Red Wings distributing lithographs of selected Red Wings players. This project has been extremely effective and we have demonstrated proficiency in production, marketing and distribution of this project. We are about to launch a similar project in terms of both concept and execution with the Chicago Black Hawks.

Financial Expertise

We have the capabilities to bring forth from either owners, past project equity investors or bank financing sources, sufficient funds to allow the project to occur. It is an integral part of our proposal that the Hall of Fame not be involved in project investment. At the present time, we only contemplate that the Hall of Fame will derive free income from the gross revenues.

Marketing Expenses

We have a track record indicating our ability to procure publicity via print and video. We would continue to use these methods to create sufficient publicity for the project as well.

In short, we believe that the joint venture relationship, as proposed, will bring all of the required talents and capabilities needed to successfully implement this project.


The original artwork will be created by Doug West. The color separation process and other technical aspects of converting the original artwork to cards will be performed by the Sports Gallery of Art. All media advertising layouts will be created by Sports Gallery of Art. The actual printed production of cards will be subcontracted to an appropriately qualified printing company. Other production aspects of the project, including the production of a Hall of Fame information booklet, leather binder and other storage materials relating to the project will also be subcontracted. The Sports Gallery of Art will responsible for all artistic design of the entire project inclusive of work performed on an in-house, as well as outsourced, basis.


We propose to use both print and broadcast advertising for marketing. This has worked successfully in our previous projects. We would utilize the following

Print Publications

  • The Hockey News
  • Sports Collectors Digest
  • Tuff Stuff
  • Legends Magazine
  • NHL Game Programs

Broadcast Media

  • Hockey Night in Canada
  • Sports Channel USA

This would represent a more comprehensive marketing effort than either the baseball or football project. The timing of the marketing program will be "front loaded" so as to create adequate publicity at the time of project introduction. Adequate initial marketing will create steady market absorption until the product is fully absorbed into the marketplace.


The distribution would only occur from either of two sources:

  1. Hockey Hall of Fame
  2. The Diamond Connection, Inc.

The primary source of distribution will be on a mail order basis. The reason for utilizing this sort of arrangement would be twofold. First, inventory control of the product is much easier with only two outlets. Secondly, there is a market negative to a product such as this by not making it readily available on a retail basis. This feature leads to the perception of its exclusivity and helps to spur demand. The Hall of Fame would be entitled to an additional sales commission for all sets sold at its location.


Note: A 15% rate was used because it is comparable to returns from other industry projects. Additionally, any debt or equity sources used for the project would evaluate the project in a similar manner as venture capital projects.
Total Revenues65,000600,0001,400,0001,900,0002,000,0001,935,0001,400,000600,000100,00010,000,000
Production Costs100,000200,000600,000700,000800,000800,000600,000200,00004,000,000
Marketing Costs100,000250,000100,000100,00050,0000000600,000
Legal and Financial40,00015,00015,75016,53817,36418,23319,14420,10121,870184,000
Hall of Fame Royalties6,50060,000140,000190,000200,000193,400140,00060,00010,0001,000,000
Other Royalties6,50060,000140,000190,000200,000193,500140,00060,00010,0001,000,000
Personnel Costs30,00031,50033,07534,72936,46538,28840,20342,21343,427330,000
Contingency and General12,00023,25035,78840,82743,36840,91230,95711,0051,094239,200
Total Expenses:
Net Cash Flow(235,000)(45,000)329,875622,119646,725644,186422,995199,6456,2562,591,800
Cash Flows to Participants:
Hockey Hall of Fame6,50060,000140,000190,000200,000193,500140,00060,00010,0001,000,000
Other Royalty Sources6,50060,000140,000190,000200,000193,400140,00060,00010,0001,000,000
Diamond Connection/Sports Gallery of Art:
Gross Cash Flow(235,000)(45,000)329,875622,119646,725644,186422,995199,6456,2562,591,800
Tax Effected (30%)82,25015,750(115,456)(217,742)(226,354)(225,465)(148,048)(69,876)(2,189)(907,130)
Net Cash Flow(152,750)(29,250)214,419404,377420,371418,721274,947129,7694,0661,684,670
Net Present Value of Project to DC/SGA: at 15% rate 867,339

Footnotes to Pro Forma

Line Item Assumptions:


Detailed compilation of sales can be found under the table subheading Revenue Calculations.

Production Costs

Detailed compilation of production costs can be found under the table subheading Production Calculations.

It is assumed that each card will cost $2 to produce. The production costs include the following:

  • Printing
  • Shipping
  • Artwork Production
  • Layout and Design
  • Accessory Products mentioned in this presentation
Marketing Costs

Include estimated costs for all media advertising, promotional costs and travel expenses associated with execution of the project.

Legal and Financial

Include estimated costs for the formation of legal entities, execution of royalty agreements and filing of required financial statements and tax returns.

Hall of Fame Royalties

Are assumed to be 10% of gross sales.

Other Royalties

Are assumed to be 10% of gross sales. This line item could potentially include The National Hockey League and/or the NHL Alumni Players Association.

Personnel Costs

Assumed to be the cost of one full time administrator/clerk with some fringes.


Related to general liability and property insurance requirements of the project.

Contingency and General

Is calculated as 5% of Production, Marketing, Legal and Financial costs. This line item would offset any budget overruns in any other expense lines.

Other Assumptions:

All financial data in this pro forma are stated in U.S. dollars.

There will be approximately 200 player members of the Hall by 1995.

The three annual series will depict about 40 players per year.

The project will take about 5 years to complete the portrayal of all Hall members.

The project will be initiated in the fall of 1992 with the first series.

All subscribers to the project will be offered subsequent series at four month intervals commencing with the purchase of the first series.

The absorption estimates for purchase of the initial series are as follows:

19921,000 sets (333 per month)
19934,000 sets (333 per month)
19944,000 sets (333 per month)
19951,000 sets (333 per month)

Any sales and/or use taxes will be assumed by the purchaser.

Production of series will be accomplished in increments of 50,000 cards at a time in order to efficiently balance production and holding costs.

Any inflation affected line assumptions in the pro forma assume inflation at a 5% rate per annum.

Revenue Calculations

1992 Issuances:
Cards per Year134040404027200
# of sets1,0001,0001,0001,0001,0001,0001,000
Price per Card$5$5$5$5$5$5$5
1993 Issuances:
Cards per Year204040404020200
# of sets4,0004,0004,0004,0004,0004,0004,000
Price per Card$5$5$5$5$5$5$5
1994 Issuances:
Cards per Year204040404020200
# of sets4,0004,0004,0004,0004,0004,0004,000
Price per Card$5$5$5$5$5$5$5
1995 Issuances:
Cards per Year204040404020200
# of sets1,0001,0001,0001,0001,0001,0001,000
Price per Card$5$5$5$5$5$5$5
Total Revenues

Production Calculations

1992 issuance cards13,00040,00040,00040,00040,00027,000000200,000
1993 issuance cards080,000160,000160,000160,000160,00080,00000800,000
1994 issuance cards0080,000160,000160,000160,000160,00080,0000800,000
1995 issuance cards00020,00040,00040,00040,00040,00020,000200,000
Total Sales13,000120,000280,000380,000400,000387,000280,000120,00020,0002,000,000
Total Production50,000100,000300,000350,000400,000400,000300,000100,00002,000,000
Production Cost per2.
Total Production Costs100,000200,000600,000700,000800,000800,000600,000200,00004,000,000