Collecting, Investing, or Gambling?

“Are you Adam?” he asked. “Yes”, I replied – “Are you Ed?” I’ll refer to this person as “Ed” to protect his anonymity. And because I can’t remember his actual name…ok, mostly because I can’t remember his actual name. The year was 1993 and I was meeting Ed in a McDonalds – a nice public place to make the transfer. After we exchanged the verbose greetings two twenty-something-year-old males might make, I pulled a binder from my briefcase (yes, I had an actual briefcase). After examining the binder’s contents, Ed produced an envelope with 15 one hundred dollar bills and counted them out for me. He asked, “Are we good?” Stuffing the envelope into my briefcase, I replied “Yeah, we’re good.”

Treasonous sale of military secrets? Illicit drug deal? Pilfering of my mom’s family recipes? Fortunately for me, this transaction had nothing to do with anything that could get me arrested or, even worse, cut off from my mom’s cooking. The binder contained sixteen plastic sheets with nine pockets in each sheet. And just what was in the pockets? A complete set of 1986-87 Fleer basketball cards. If you’re unfamiliar with the hobby (disease?) of sports card collecting, you may be asking why on God’s green earth would someone pay $1500 for that. Or maybe you’re asking if this hobby is really about collecting, investing, or gambling? Before answering these questions, I believe a brief history lesson is called for.

Tobacco, Not Chewing Gum

The first sports cards were produced in the late 1800s, and their primary purpose was to promote the sale of cigarettes. These early cards featured images of popular athletes and were included in cigarette packs as a way to entice customers. Over time, the cards became more popular than the cigarettes themselves, and a new industry was born.

In the early 1900s, companies such as American Tobacco and Piedmont began producing sports cards on a larger scale. These cards were still primarily used to promote the sale of cigarettes, but they also became popular collectibles. The cards featured images of popular athletes of the time including baseball players and boxers.

The most iconic card from this time (and likely all time) is the Honus Wagner t206 card issued by the American Tobacco Company in their 1909-1911 series. Somewhere between 50 and 60 originals are believed to remain in existence. One of them sold for $7.25 million last year…just a bit more than what I got for my cards in 1993.

Golden Age of Sports Cards

The 1930s and 1940s saw the rise of the “golden age” of sports cards. Companies such as Goudey, Play Ball, and Bowman began producing cards in large quantities, and baseball became the dominant sport featured on these cards. This era saw the introduction of the first baseball card sets, including the 1933 Goudey set, which is highly sought after by collectors even today. Incidentally, this was the first set of cards that was sold with bubble gum.

The 1950s saw the rise of Topps, which quickly became the dominant producer of sports cards. Topps introduced the first set of baseball cards in 1951 and later went on to produce sets for many other sports, including football and basketball. The 1952 Topps set is considered one of the most important in the history of sports cards, featuring the iconic Mickey Mantle rookie card.

The 1960s and ’70s saw the introduction of cards featuring athletes beyond baseball players, as well as cards featuring non-sports themes such as movies and TV shows. I still have some Star Wars cards that were produced by Topps. These came with bubble gum just like their sports card counterparts. By the way, the gum was awful and sometimes stained the cards they were packaged with!

Big Business

In the 1980s, new companies like Fleer, Donruss and Upper Deck entered the baseball card market. The competition for collectors’ money and attention intensified. Topps was no longer the only game in town for collectors. All three companies produced multiple sets per year, including “update” sets that included young up-and-coming players that were “called up” to big league clubs during the season. The pursuit to own “rookie cards” (a players first official baseball card) became extremely popular. It’s still a major driving force even in today’s hobby.

The 1980s also saw the rise of “insert” cards, which were limited edition cards featuring special designs or unique features. These cards became highly sought after by collectors and helped to increase the value of sports cards as a whole.

By the time the 1990s rolled around, the sports card industry was a full throttle money-making endeavor. Multiple companies were producing not only baseball cards, but football, hockey and basketball cards as well. During this time new types of cards were introduced, including holographic and “foil” cards. However, the market eventually became oversaturated, and the value of sports cards declined. Collectors kept on collecting but investors/gamblers likely lost more than a little money.

Modern Madness

Recently the sports card industry has seen a resurgence, driven in part by the rise of online marketplaces (like eBay). These marketplaces have made it much easier to reach potential buyers across the entire globe. Companies such as Panini and Topps have also introduced digital versions of their cards, which can be bought and traded online. Collecting non-physical cards doesn’t exactly seem right to me. But then again, I’ve only recently resigned myself to not owning physical music media.

In addition, the rise of professional card grading has had a big impact on the hobby. Sports card grading began to gain popularity in the 1990s as the sports card market started to experience a surge in interest and value. Professional Sports Authenticator (PSA) was founded in 1991 and became the first sports card grading service to use a standardized grading system. PSA’s system assigned a numerical grade from 1 to 10 based on the overall condition of the card, with 10 being the highest grade possible.

Today, sports card grading is a well-established industry with several reputable grading services available to collectors and dealers. The grading process typically involves evaluating the card’s condition, authenticity, and overall aesthetic appeal, and assigning a grade based on a standardized grading scale. Graded cards are highly sought after by collectors and can command significant premiums over ungraded cards.

The card industry has also seen a rise in very high-end, low print-run cards that include autographs and actual patches of game-worn items. When combined with professional grading, some new cards are selling for hundreds, if not thousands of dollars right out of the pack or box. As a result, some cards are achieving very high value status quickly. For example, a quick check of eBay shows a 2017 Patrick Mahomes autographed rookie card with a bid of $4,150 and rising.

$1500 for Basketball Cards…Really?

As I already mentioned above, the 1980’s saw an explosion in the number of companies that were producing baseball cards. However, this was not the case for basketball cards. In fact, there was a six year period from 1980 to 1986 during which time no major basketball cards were produced. During the same period, the NBA’s popularity was being revitalized primarily by the intense rivalry between the Magic Johnson led LA Lakers and the Larry Bird led Boston Celtics. The arrival of Michael Jordan in 1984 took the league’s popularity to even greater heights. And because of the aforementioned gap in basketball card products, Jordan’s “official” rookie card was included in the 1986-87 Fleer set. Many other top-notch players also had their rookie cards appear in this set: Charles Barkley, Hakeem Olajuwon, and Patrick Ewing to name just a few.

Sport exploding in popularity – check. Lots of popular players and key rookie cards – check. Lack of other basketball card options – check. Perceived scarcity of the print-run – check…sort of. It’s hard to track down actual print runs for card sets. What I can say is that by 1993, all of the factors I mention here resulted in me selling a set of these cards for $1500. Ed’s primary interest was certainly the Jordan rookie card. He really only looked at that card in any detail whatsoever.

Lest you think I took advantage of poor Ed, a complete set of 1986-87 Fleer basketball cards likely fetches 10-15 times what I sold my set for back in ’93. Whether Ed was motivated by collecting, investing, or gambling – I cannot say. What I do know is that the money from this sale came at an opportune time for me. It allowed me to pay my living expenses during my last semester in college. Entering the workforce debt free was a great way to start my career and plan for the future! Thanks Michael Jordan (and friends)!

Collecting, Investing, or Gambling?

My personal history with this hobby traces back to 1980. My Uncle Lee gave me my first few packs of Topps baseball cards. I still feel excited anytime I crack open a new pack of cards. The potential value of cards that might be in any given pack is undeniably part of the appeal. However, I’ve never approached this hobby as a money-making endeavor. The money I’ve made selling cards falls far, far short of what I’ve spent on cards over the years. Even including the Jordan rookie card set.

So ultimately, is this hobby about collecting, investing, or gambling? I suspect some of each. Collecting sports cards is still something I do but I’ve slowed way down over the past five years or so. It’s currently an expensive hobby to take part in. Collecting sports cards feels like a way for me to actively participate in my sports fandom. I miss the days of trading football cards at my friends house. Definitely a nostalgic memory for me of simpler times.

I know there are people who make money buying and selling sports cards. Like any venture that involves transacting an asset, the key is to buy low and sell high. That is an obvious statement but much harder to consistently execute. For anyone who is considering adding this particular asset class to your investment portfolio, do a lot of research first. After all, there are only so many Michael Jordan’s that come along in a lifetime….right?

Written by: A Reed

Reviewed by: B Holman