I was watching a video on sports collecting the other day, and something the vlogger said triggered in me a strong vision of the future of the hobby. I’ll get to that in a bit.
This vlogger was talking about something called graded pop reports: A pop report is the quantity of a given card that’s been graded by a professional card grading service like PSA or BGS, or, even more specifically, the quantity of a given card that’s been given a certain grade. He was saying, look, you might think you’ve got a nice copy of Zion Williamson’s Panini Prizm rookie, but looking at how many have been graded by PSA, about 20,000 other people apparently also thought the same thing, and that number is climbing by the day. So really, your shiny graded rookie card is declining in value as more people get theirs graded, and that even goes for cards of a lot of players who are really playing well, which would otherwise be seeing big jumps in value. And yet nobody ISN’T going to get their Zion rookie cards graded, or their other star rookies: It’s the thing you do!
Grading used to be more of a niche thing, something people did just for more valuable cards. In the last several years, it became something a lot more people started doing to protect their “investments,” even if those cards were just the latest year’s base cards of star players — generally not cards expected to bring home a lot of return on the secondary sales market, even in perfect 10 grades. At $8 or so per “slab” (slang for a graded card), it wasn’t breaking the bank for deeper-pocketed investors, and if one of those players became insanely popular, it was worth it. And as cards became more premium, with autographs and swatches of game-worn jerseys, etc., that expense became even more of a no-brainer for serious investor types.
Basically as long as I’ve been back in the hobby (dating back to September 2020), the professional card grading services have been massively backed up to the point that, unless you’re willing and able to pay hundreds of dollars per card to get a grade, you’ll be waiting months upon months (upon months) to get your submitted cards back from the grading service. And even if you got your submissions in last spring to an alternate grading service, or before your chosen grading service closed submissions to catch up, you likely paid at least double the grading fee you would have paid in, say, 2019, when there weren’t a literal million collectors jamming the submission queues with inexplicable cards like the cheap and plentiful 1990-91 Fleer Michael Jordans (the most-graded Michael Jordan card in recent submissions to PSA, which is currently the most expensive grading service).
But when the pandemic came, every manchild like me with a shoebox full of cardboard dreams started collecting again, and many, many, many of those folks got hip to the new wisdom of “graded cards = more money,” which is what’s landed us where we are, with overburdened grading companies frantically expanding operations and raising prices to try to keep up with/slow down demand. For a few months this spring and summer, PSA was closed* to all new submissions (*except for the people who wanted to pay hundreds of dollars per card, of which there are apparently more than one would expect), so a lot of my fellow sweathogs have been sitting on stacks of shiny modern cards (and apparently a bunch of 1990s basketball cards), waiting for the opportunity to send them in by the boxload. And as grading companies have re-opened their submission mailboxes, those cards have indeed been flying in by the boxload to join the boxloads from several months ago still being checked for quality.
The realization that graded cards are becoming more and more common isn’t a new one. If you’ve paid attention this last year-plus, you’d have known there were more than a million cards in PSA’s backlog alone at several points, meaning at least a million new slabs flooding a market where, if a card has a pop report of more than a couple thousand in a certain grade, it starts to lose value as everyone who WANTS that card GETS it. It’s simple supply/demand, except it’s hard to know exactly at what point supply grows beyond that demand level for any given card or player (or sport or set or even the kind of slab the card is in).
Industry watchers have been wondering how durable this newfound boom of collector interest in sports cards is for a while now. Ultimately, most can agree that the level of interest that has been achieved during the pandemic is not sustainable long-term. I’ve been figuring that people will start to lose interest as the world opens up again post-pandemic (which has happened a little), and as supply issues continue to frustrate would-be collectors looking hopelessly for cards to buy in retail environments (which is also happening a little). But the hobby is still hot, and evidence exhibit No. 1 for that is the number of new grading submissions still continuing to rise and bog down grading companies. Paying for grading is, in the end, a bet that this secondary expense will result in higher return on the graded card on the secondary market. In other words, the fact that people are not only buying cards but also overpaying to grade them shows that consumer confidence in the hobby is still sky-high.
The coming slab boom
And that all brings us to the vision I had. I’ll call it the slab boom, and it has ripples that could very well pull this hobby back down to its pre-pandemic size, or even lower, within the next two years (or, just in time for Fanatics to take over the sports card landscape).
In my vision, I saw an unending sea of disgruntled sweathogs frowning at their eBay seller dashboards, canceling their subscriptions to Market Movers, and moving on from the trading card hobby. Why? What happens when these people get back their boxes of submissions they paid hundreds of dollars to have graded months ago, and all their cards are graded 7s and 8s? Even in this pre-slab-boom world, 7s and 8s (on a scale of 10 points where 10 is a flawless card) are basically garbage. If you get anything lower than an 8 on a modern card, you might as well have not even graded it, based on the return you can expect in the secondary market. An 8 or lower means you wasted your grading fee, unless it’s a very pricey, rare, old, or otherwise condition sensitive card (for instance, an 8 on a 1990s-era foil card from Upper Deck’s SP or the Fleer Metal Universe sets might be a decent result; the equivalent of a 10 when perfect scores are essentially impossible for those flaky-foiled older cards). And most really serious players in this hobby are supremely let down by 9s, let alone 8s.
Also, rumor has it PSA and other graders have started to be a lot more strict in their grading, perhaps recognizing that flooding the world with perfect-grade cards isn’t in their best interest (a little foreshadowing here), so the chances of getting more 9s, 8s, 7s, and so forth are likely rising.
From personal experience, I can tell you most cards that exist in the world are 8s or lower, and most people don’t have the know-how to pre-inspect their cards to a high enough degree of certainty to guarantee their submissions won’t come back laden with 8s and lower. I know I don’t! I own a Luka Doncic rookie I bought in an SGC 8 slab, and looking at it, I only see one slight imperfection on a corner. I have no idea why it’s an 8 and not a 9, or even an 8.5. But I bought it in that 8 slab for a pretty low, 8-ish price. And unfortunately, as more people get those cards graded, that somewhat low price I paid might actually wind up being a bit of a ripoff in the end. But I’m a collector first, and that Luka card is on my shelf for the long-term, because I’m a big fan of his. It’s sentimental, I know.
So those people with boxes of 7s and 8s, desperate and determined to get SOME return on their grading investment, start to list those cards for sale en masse. At first, those cards just sit in their online inventories. Soon, they check the prices of recent sales and notice their prices are high. Panic sets in. To try to get things moving, they look at the last guy’s price for their 8 and undercut it by a buck or two. They look at the last guy’s price for their 7 and undercut it by five or six bucks. And then someone else undercuts them. They’re all in unload mode: They’re not thinking in terms of “wait and see if things improve,” it’s “get the money now or never.” And for these cards, they might be right.
Of course, the plan for these folks was ALWAYS to unload the cards as soon as they came back from grading; they just had visions of perfect 10s and thousands of dollars in eBay sales dancing in their heads, not a bunch of mid-grades for $20 or $30 a pop. But they’ll also be taking the same tack with most of their 9s and 10s, particularly the more basic cards like those base Zion Prizm rookies I mentioned earlier, because again: They poured hundreds if not thousands of dollars into grading fees at some point in the last eight or 10 months. They’re going to undercut if that’s what it takes to minimize their losses.
And the undercut is what will put cash in their hands the fastest, so most will take it, particularly as listings at sites like eBay and COMC swell with everyone’s newly received slabs. Everyone in the world who wants a given star’s card in a PSA holder will soon be able to get one as long as they’re not picky about the grade. And for certain cards like that Prizm Zion rookie, there’s a decent chance everyone who wants a 10 will be able to get it for a decent price, too.
Here’s where the story could fork one way or another. A more optimistic person might say: Seeing how saturated the market is with graded cards, perhaps people will decide the value proposition isn’t there anymore, quit submitting in such high volume, and turn their focus back toward ungraded cards until there’s some sort of equilibrium. And to that I say: Probably not. I think it’s much more likely that a bunch of the jamokes submitting those 1990 Fleer Jordans to PSA this last year will be so downhearted about their poor return on investment that they’ll say “nuts to this” and quit entirely. Maybe they’ll try NFTs.
A more stubborn proportion might fine-tune their submission strategy somewhat, but at least for the time being, grading is the standard for those trying to make money in the hobby. As long as there are thousands of 9s and 10s of everyone’s favorite players available, even if the prices aren’t as high as they once were, they’ll still be significantly higher than the prices that ungraded versions of those cards will command. Because why would you buy ungraded when you can get a bargain on a graded version?
To that end, I also think it’s pretty likely that, as secondary market prices for newly plentiful slabbed cards slowly crater over the coming six to eight months, the market prices for the ungraded versions of those cards ALSO crater, and even more precipitously. We’re seeing it a little already. For instance, Ja Morant is one of the most popular basketball players on the planet, and there are several of his rookie cards I could have delivered to my doorstep for about $5 including shipping … if I didn’t have them already. Same with Zion. Panini increased its production runs on its more popular sets pretty sharply in the last couple of years, so there’s supply glut coming and going with a lot of these more recent cards, whether ungraded or graded. And why would anyone spend more than rock-bottom dollar for an ungraded card, knowing it’ll take several times that amount of money just to get the card graded and HOPE that a 10 is the result, the pop report isn’t too high, and that they might be able to get some semblance of return on their investment?
Plus, if enough of those discouraged jamokes with their boxes full of 7s and 8s and their stacks of 1990s basketball slabs decide to quit the hobby, that’s fewer people clamoring for all these cards, slabbed or not. That pushes the demand side of that supply/demand curve down just as the supply is ballooning. Even people who are really bad at economics can tell you what happens to the price of a commodity where that’s the case. There are more sets and more cards being produced now than at any point since around the turn of the century. Is it any wonder I’ve turned my attention mainly to older cards?
So that’s how I see the slab boom playing out. The supply of graded cards will grow beyond sustainability, sellers will start taking losses just to recoup some of their outlays, those same sellers will quickly sour on this money-making scheme and exit collecting stage left, and fewer people will be left in the hobby to purchase graded and ungraded cards.
In a way, I’m excited to see how this all unfolds. After all, I’m not an investor. Despite having some desire to grade a few of my cards, I’ve never sent any to be graded. If I stick with this hobby until after all the get-rich-or-bust types move on to greener pastures, I’ll be set up nicely to continue collecting in relative peace for several years until the next boom. At that point I might even be well-positioned to actually cash in a little.
Chris Sewall of the popular Baseball Card Collector Investor Dealer YouTube channel talked a little on a video released today about how this slab boom is having a definite negative effect on the prices of cards that were, several months ago, worth hundreds or even thousands of dollars, and now can be had for, in some cases, less than the cost of grading. The segment starts at 10:17 of the video below, in case my embed doesn’t automatically start you there.