House of Cards: Buying and Selling an American Pastime

eBay and the internet in general revolutionized the way trading card business was done. Before it was dealer/customer relationship, where trying to trade anything at a shop meant your trade-in was valued at about 60% to the dealer's 100%. With the internet, that's no longer the case.

This was the situation for my dad and myself, as I helped him supplement his income with a small collection of cards. We dealt with the dealer/customer business model for a long time because my dad was so adept at selecting the unknown players who would be future stars. The only time he was in the dealer role was the occasional $20 table at a local card show.When I finally convinced my dad to get an AOL trial, the way we did business changed completely. Suddenly there was no way to distinguish a dealer from a hobbyist. eBay made it easy to set up shop with no overhead and get access to anything and anyone. We also increased the amount of business we did immensely, as the opportunity was always there. Geography and schedules were no longer a factor.

When I moved out of my parents' house and got out the business in general, I realized sports cards were a false market with no actual demand. Just a bunch of people selling pieces of cardboard and foil with no actual value back and forth to each other in hopes of coming out in the black. Very limited print releases (down to 1 of 1's) meant card companies could print less and sell it for more. A $10 insert card (according to Beckett) resided in the "dollar box" on my dad's table at card shows, because it was one of a thousand inserts just like it.

Reminiscing

The only remnant of sports card collectability since our internet presence was the occasional card in a glass case with a "NOT FOR SALE" or ludricrously overpriced sticker on it, residing proudly and upright in the back of the glass case housing the especially desirable cards in my dad's collection. This was a card close to my dad's heart, albeit due to its monetary growth potential, that only he could see the value of. Sometimes the card would be worth five bucks in a sea of hundred dollar inserts. Customers would interrogate my dad about its presence and label, and I could feel my dad holding back an ear-to-ear grin as he calmly retorted "Just wait."

When my dad started putting $10 cards from one of the many, many forgettable insert sets in the dollar bin, I realized you didn't have anything unless you had what was hot or what was going to be hot.

The impetus of money did not completely hinder my passion for sports cards. Due to my limited income as a pre-pubescent teen, I was forced to seek the diamonds in the rough. The card of obvious great value that some dealer must have inadvertently stuffed in the dollar box. I would act as a scout for my dad, finding cards out of my price range but on my dad's hit list. Yes, in this operation, he was the brains and I was the brawn, all eighty pounds of me.

A particularly proud discovery happened most unexpectedly. I was walking to Bettendorf High School to register for the freshman year, (walking those three miles was something I would get to endure for the next four years) dripping with sweat and hoping none of my much cooler peers would see me and hassle me. On the way home I noticed a garage sale sign with a passing reference to sports cards, and decided I would take a bit of a detour. When I arrived, sweaty as ever, I wrapped my moist fingers around the first pile of un-keepered cards I could find and began flipping through them, expecting something akin to 1990 Donruss commons. I was shocked to find not only a 1994 Bowman's Best Kirby Puckett Refractor, but a 1994 SP Alex Rodriguez rookie card with minimal chipping (only sports card aficionados will appreciate that) (it was only $15 at the time but ready to explode) amongst about $500 in various cards stuffed in a 500-count cardboard box. My voice quavered as I asked the garage owner how much we wanted for the whole shebang. My heart dropped into my stomach when he said "$15", and a split second later I was racing home to get the money.

Though finding prospects before anyone else had heard of them and getting a twenty-fold ROI on their rookie cards was great fun, I miss the days of obsessing over the 1991 Topps set and its amazing photography. I remember trying to get a Rickey Henderson for ages, eventually trading way too much for it, and then getting one in my next pack. Almost brings a tear to my eye.

When I was introduced to Beckett was what probably ruined collecting for me. Beckett had a hand in not only bringing recognition to the industry, but inevitably bringing it down. The monthly periodical was the gold standard in pricing. Woe to the dealer with a Tuff Stuff rolled up in his hands. The name itself was worthy of mocking.

And yet no card, barring ones guaranteed to go up in price, would ever sell for the supposed market value, as determined by Beckett's network of "card sharks", who hung out at shows and watched exchanges of cards for cash, tripled that price and then relayed it back to Beckett. I have no idea who was paying these exorbitant prices, but I wasn't seeing anything like it.

And that should've been my first clue that we were doomed. When my dad started putting $10 cards from one of the many, many forgettable insert sets in the dollar bin, I realized you didn't have anything unless you had what was hot or what was going to be hot.

Which leads to the question—

Who the hell is this card worth $10 to?

It all starts with the flawed economics of the sports card industry. A card begins its life pressed at the magic baseball card factory. Cardboard is the standard stock, but companies have added various embellishments to entice collectors. It started with gold foil, and went in all directions from there: autographs, acetate, die-cutting, refractors, diffractors, swatches of game-used jerseys and equipment, and anything that could reasonably be attached to the standard cardboard, which would come in myriad thicknesses during the great glut of the late 1990's, early 2000's.

While these technologies seem impressive and expensive, the average "blinged out" card has a manufacturing cost of maybe 50 cents. I really feel that I'm being generous with that estimate, and I understand that much of the cost is incurred via licensing of MLB-copyrighted materials. But besides autographs and game-used equipment, most of these technologies have marginal costs. Yet a card that cost fifty cents to produce and maybe double that to license could sell for hundreds of dollars. And by simply limiting production runs, companies can sell cards for more, going so far as to press 1 of 1's, a card with no other likeness in the world. But if the company releases several sets with the same limited production runs, and other companies do the same, are they really that limited? Couldn't I just draw a baseball player on an index card and call that a 1 of 1? (I actually used to do that; that's how much I loved sports cards.)

What the card companies had was a license to print money. I dont mean to imply that they were selling these rare cards individually themselves, however the demand for these cards would drive up prices and/or sales of the cases of packs they sold. This is obvious supply and demand, but the question still lingers: who the hell is this card worth $10 to? Who the hell is this 1 of 1 worth $500 to?

It was my assumption in my head where sports card economics make sense, that there existed an end user, one who was in it for the collecting. The end user had a favorite player or team, and there existed a variety of cards for end users of varying disposable income. There was a collector who sought out the Alex Rodriguez $10 green felt insert card, just as there was a collector who sought out the $500 Alex Rodriguez game-used jersey with autograph insert card.

These were the people that made these $500 cards worth $500, right? To a dealer, a $500 card is a piece of decorative cardboard that he might get $500 for. It has no value outside of the potential for monetization. If not for the end user, these dealers are merely trading back and forth decorative cardboard with an arbitrarily set price of $500. As it all began to sink in, I realized the end user was not a mitigating factor in this false industry. Sports cards were like shares of stock without any market capitalization to back them up. They existed as their own market cap, and their intrinsic value was next to nil. Who knows if they even make a cool sound in bike spokes any longer?

There can be seen a marked difference in the way cards prior to 1980 are treated versus cards produced after. It was evident in Beckett, where commons would not only list for multiple dollars, but were individually listed according to condition. Damaged cards since 1980 use a mathematical formula to determine their value, which is as follows: Price for a mint condition version times zero. Once the collective awareness was raised that sports cards were a potentially profitable, yet still untapped market, card companies began to unleash their own doom.

Epilogue

One can't blame them. The hobby never gained such mainstream attraction as when it achieved the ultimate market glut, and the companies, as an obligation to its shareholders and employees, must grow or die. I am told that the companies eventually ate each other, to the point where only two are left standing, Topps and Upper Deck. This pleases me, as they've always been the two companies who've carried the industry: Topps for realizing the importance of the rookie card, the only unique sports cards left, and Upper Deck for setting a quality and design standard only they could match. I hope they survive the fallout and become a special part in some kid's life like they did mine.

My dad also tells me they no longer have card shows in Bettendorf or anywhere near it. While the internet may have saved our business and made it profitable, it also managed to completely wipe out the fun aspect of it: digging through dollar boxes, carefully eyeing the sons of other card dealers, going from table to table attempting to trade a cardboard box full of semi-valuable cards that no one wanted, breathing in the silent animosity as two friends bartered hundred dollar deals over entire shows only to finally pull the trigger as everyone was packing up.

Inspired by the article, Requiem for a Rookie Card