Collectors Sue Eli Manning and the Giants for Selling Fake Game-Worn Memorabilia

Last week, the New York Post revealed that Eli Manning and the New York Giants are being sued for allegedly supplying fake "game-worn" sports gear to collectors, who then sold it to unsuspecting fans. Filed with a New Jersey court by memorabilia dealer Eric Inselberg, the lawsuit accuses the football team, its star quarterback, and multiple executives of civil racketeering.

After the news broke, Manning released a statement saying he and the Giants "are going to fight" the claims, a sentiment echoed by team co-owner Jonathan Tisch. While there's no way to know which side will prevail, the suit illuminates an already troubled industry.

The startling size of it all
Figures reported to the FBI estimate that 50% to 90% of the $2 billion autographed memorabilia market is fake. The supply of licensed, unsigned gear is about six times larger, according to SportsMemorabilia, and although guesses vary, it's possible a similar percentage of forgeries exist in the broader industry.

Over the past two decades, federal regulators have seized all types of gear fraudulently passed off as genuine, from football helmets to autographed photos to jerseys.

Other than diamonds, which are very tough to trace, memorabilia might be the industry most difficult to prove authenticity in. Jerseys and helmets represent nearly a third of all sales -- larger than every other type of gear -- and are typically sold at different price points depending on how close they were to an athlete.

Inselberg's court documents break the hierarchy down into four groups: "Game Worn," "Game Issued," "Team Issued," and "Authentic." The top two concern the lawsuit directly:

A. "Game Worn" -- These items were actually used or worn by a player during the game. Items in this category are the most valuable and collectible, particularly if worn during an important event...

B. "Game Issued" -- A game-issued jersey is essentially identical to one actually worn during a game because it was prepared to be ready-to-wear, tailored to fit the specific player, and adorned with … patches or stickers....These items are not as collectible or valuable.

The lawsuit claims that game-issued gear was made to look like it was worn during the game, and sold at a higher markup. One claim detailed how Manning allegedly "on several occasions directed [the Giants' assistant equipment manager] to take non-game-worn helmets and make them appear to have been worn."

This process reputedly consisted of "doctoring" the gear by adding scuffs and markings, and in the case of the jerseys, adding cuts and resewing them.

As you'd probably expect, the markups on game-worn gear was enormous. In 2012, Inselberg says he bought Manning's Super Bowl backup helmet for $11,500. The helmet used in the game sold for $46,000 (though its authenticity is one of the items being disputed by the suit). A 300%-plus premium on game-worn gear over game-issued gear creates a significant incentive to cheat the system, regardless of whether Manning and the Giants are eventually found guilty or not.

What does the data show?
A couple statistics are particularly interesting to this case. 

Source: SportsMemorabilia.com, 2013.

Recall what basic economic theory says: An excessively large supply -- say, as a result of fake memorabilia -- will lead to more sales of a good.

According to that stat above, Eli Manning's memorabilia generates the most sales of any athlete in any sport. He sells more than Michael Jordan, Mickey Mantle, Tom Brady, and even his brother, Peyton Manning.

Sound fishy? Take a look at the other side of the equation before passing any judgment. If fake game-worn Manning jerseys are flooding the market, they should be cheaper than others.

Source: SportsMemorabilia.com.

But that's not what the numbers show.

In fact, a game-worn Eli Manning jersey is more expensive than Peyton's by threefold, and is the fifth most expensive available on the market. In theory, this tells us that Eli's high memorabilia sales may be simply from high demand, not an unusually large supply.

New York is the biggest NFL demographic by TV viewership, and the Giants have won two of the past eight Super Bowls. In other words, the team is popular and in a huge market, so it makes sense why its quarterback's gear is sought after.

The future
These figures poke a hole in any argument that cites Manning's high sales as proof that fakes are being made. But they don't exactly damn Inselberg's lawsuit. At the very least, the fact that Eli's jerseys, helmets, and other equipment account for such a large percentage of a multi-billion dollar market warrants careful consideration by the court.

Image via AJ Guel, Flickr.

It's also worth noting this exposure may hurt the broader industry for memorabilia. It already has a bad rap with some consumers, and more might lose their faith the longer the case lasts. As Forbes pointed out recently, "if all "authentication" really means is the middle man … asking the seller if the stuff is legit, then how much confidence will buyers have?"

With a $1.1 billion, five-year deal signed in 2012, Nike (NKE 0.36%) is now the league's on-field apparel supplier. Maybe it, or one of the various memorabilia authentication agencies will devise a better way to verify if an item truly is game-worn. That'd be the best way to save face, and it might gain some fans' trust back.