Last June, I wrote an article about Sports Cards being the NEXT BIG FLIP in the collectibles market. I don’t like to say “I told you so, but I told you so.” Not to sound too smug but it’s been a wild ride since last June. We’ve seen Michael Jordan PSA 10 Rookie Cards go from $12,000 a card to over $700,000 at auction last month. This seemingly overnight rise in prices is not unique to sports cards. Pokémon cards have seen an incredible rise as well. Today, we will explore some of the factors leading to this perfect storm and meteoric rise in values.
I’m not poking fun at people who are benefiting from this tsunami of profits, but rather taking an in-depth look at how we arrived here. I don’t blame anyone who is taking advantage of this market. Over the last year, we’ve had record-high unemployment and people everywhere turning up the hustle to survive. This and many other factors have pushed the market further than I’d ever imagined. There’s so much needed to fall in line at just the right time to make all of this occur too and was so much fun to research.
Rewind to April 2019
Gary Vaynerchuk can take some of the blame or credit (however you view it) for starting all of this. His first tweet on sports cards investing back in April of 2019 triggered interest in the market and caused a buying frenzy to begin in late 2019. He told followers to “Buy cards, Buy TONS of them, and BUY THEM NOW!” and it worked so well.
I’ve been studying the sports card market quietly since August and intensely for the last 4 weeks. [email protected] excited to enjoy it. Vintage classics graded are wonderful long term.
The wild ride will be bowman baseball speculation and prizm base rookies psa10 if young talent
— Gary Vaynerchuk (@garyvee) April 21, 2019
Along Came 2020
Over the past year, we have witnessed the true power of the secondary market and what it can do to almost any item they chose to boost. They flipped swimming pools from Walmart, trampolines, treadmills, weights, appliances, bicycles, Cheetos, Dunkaroos, Oreos, hair clippers, hand sanitizers, cameras, and much more. They focused their efforts and targeted items people would need in a global pandemic where millions of people were locked down. Whenever they said “cop” this, an entire army of resellers would “Release the Kraken” and shelves would clear everywhere.
I first noticed this when I attempted to buy my kid’s bikes last spring as the quarantine started. There were zero bikes. I traveled to sporting goods stores, Walmarts, Targets, and everywhere else across the DFW Metroplex and found zero. One Dick’s Sporting Goods Employee told me “Yeah if you aren’t here when the truck arrives you aren’t getting anything. It’s crazy. I don’t even have time to put the bikes together before they’re all gone.” You could only find people reselling them on Mercari, eBay, or Craigslist at a substantial mark-up.
What does this all have to do with sports cards? With the ability to set demand for any marketplace and Sports Cards already on the rise, they threw rocket fuel on a bonfire. Resellers used the same tactics on pools and Oreos for reselling cards, and it worked. Sports cards are starting to fly off shelves everywhere and retail packs you would typically pay only $15-$60 are all gone and $50 – $200 on eBay. Of course, the secondary market is an animal and is always profit-hungry and looking for a new fix. Enter Pokémon cards.
Pokémon Cards and Logan Paul
To quote The Notorious B.I.G. “It was all a dream, I used to read Word Up! Magazine. Salt-n-Pepa and Heavy D up in the limousine.” Recently, big movements in the collectibles industry normally begin with some influencer pushing a product. Sports cards had Gary Vaynerchuk, Pokémon have Logan Paul to thank. No matter what you think of Paul, he is a marketing genius and can make something popular with a single YouTube video or podcast.
In September 2020, Logan Paul surprised everyone when he revealed he purchased a 1st Edition Base Set Booster Box of Pokémon cards for $216k. He quickly capitalized on his investment and sold each booster pack for $11k and gave buyers a promotional shout-out live. The live broadcast had over 300k viewers and was trending #1 on YouTube. This immediately caused an explosion in prices EVERYWHERE! Then the rapper Logic bought a Charizard for $226k in October of 2020. Que FULL ON PANDEMONIUM!
At this point in 2020, Pokémon and sports cards are flying off shelves everywhere, values are skyrocketing, and resellers are evolving tactics from not only boxes but single cards. Now targeting characters/players to push or think are going to explode. With everyone buying cards, how do we establish value? What separates one card from another?
Graded Cards Overload
Grading services are at a premium as card companies produce more cards to meet demand and people start buying older cards to add to their inventories. You need something to set your card above others and the easiest way to achieve this is through grading. Grading companies love this book because they have cards stacked to the ceiling and can set prices at whatever level they want. PSA has raised their prices over 200% in the last year and grading turnaround times are over nine months in some cases. If you put a card in for grading and were pregnant, you might see the baby before the damn card.
This poses so many risks for collectors too. First, what if you invest in a card and pay $100 to have it graded, it takes you four months to get your card back and the already volatile marketplace collapses. This isn’t normal volatility either. Players’ card values are exploding based on single-game performances coupled with higher grading prices and you’re taking a larger risk than you should. Second, Grading typically raises the value of cards. However, if every card is getting graded and the cost to grade is rising it will eventually be negligible to value especially if it’s not graded a PSA 10. You can see this with recent sales of PSA 8 and 9 grades falling slowly towards the value of raw, ungraded cards.
Card Companies Don’t Care About You
First, I’d like to say Pokémon is not guilty of this crime, but I can’t say the same for Panini and other guilty parties. Card companies are the worst. Research the wax pack era and you’ll see all the criminal things the industry did, and it’s starting to feel the same now. Panini has kept aggressively raising prices since last year, releasing cards on Dutch Auction Formats instead of just setting a price. They are just as guilty as resellers for raising the price floor, but if people keep paying those prices can you blame them?
This is why I say they don’t care about the average collector. They continue to raise prices limiting the collecting pool and selling to a target customer they’ve never had before. Overnight prices for hobby boxes are raising 200,300, or 400%. In some cases even more than that. Also, if you get a redemption card you can wait up to 10 YEARS to have it autographed and sent back to you.
How Everything Ties Together
I stated earlier it takes a TON of things to fall right in place, at the right time to cause such a shift in the marketplace. You have people buying out stock to make extra money during COVID-19 and quarantine, coupled with influencers actively pushing the market, card companies, and grading companies raising prices and you have the PERFECT STORM of value.
Now with investment companies offering shares of individual cards and the rise of the NFT market the ceiling for values seems unlimited. However, as a collector, if you see values rising now a collapse COULD happen so be aware of how much you are investing in the market. Manage your funds appropriately.