Guarantee the High Watermark
Win incumbent rights by guaranteeing the counterparty their peak earnings, then cut them into the ancillary markets they never monetized.
When Rubin moved on trading-card rights in late 2020-2022, the COVID card bump had inflated league/player earnings and everyone expected it to revert. Rubin's offer: guarantee the league its current high-watermark earnings (e.g. lift a $10M guarantee to $40M/year), AND cut them into the secondary-market, live-commerce and other ancillary revenue streams they had never participated in (those flowed to eBay, Whatnot, distributors). A counterparty bracing for a fall is delighted to lock in the top. Paired with disintermediating the distributor — selling hobby shops, breakers and retailers direct ('any good brand — LVMH, Nike, Adidas — would never sell through a distributor'), so the channel makes more money and consumer prices stay lower.
- Find the counterparty who is bracing for their market to fall, and let them lock in the top.
- Pay above the current high watermark when you believe you can grow the pie they cannot see.
- Cut the incumbent into the ancillary/secondary markets they were never monetizing — it is found money to them.
- Disintermediate the distributor: sell the end-channel direct so margin and consumer price both improve.
Came up with the trading-card idea in November 2020 and within hours was calling league heads. 'I had them at hello' — the leagues thought the business would revert, so a long-dated guarantee above their peak looked like Fanatics being the suckers. Bought Topps January 1, 2022 ($500M).