Inc.
A simple plastic case can turn a trading card into a trusted investment. Independent grading is giving buyers confidence in authenticity and condition, helping drive a collectibles market now worth an estimated $50 billion.
How Independent Grading Helps Fuel the $50 Billion Card Collectible Industry
Author: Jeff Haden
A book collector friend handed me a signed, slipcased, limited edition copy, numbered 3 of 50, of Stephen King’s 1987 novel The Tommyknockers.
“What do you think?” he said, clearly excited.
“It’s fake,” I said, handing it back. “Don’t buy it.”
“How can you tell?” he said. “You know Stephen King’s signature that well?”
“I don’t,” I said. “But I do know the binding is wrong. The headbands are wrong. The hardcover construction is wrong. The stamping is wrong. None of it is right.”
He narrowed his eyes. “How do you know all that?”
“Easy,” I said. “I was working on the production line the day we ran the real thing.”
And that, in a nutshell, is the the core issue with collectibles. Is an item authentic? Has it been altered? Most importantly, since the three most important factors in a collectible’s value are condition, condition, and condition, how can the average person feel comfortable about an item’s objective condition, and therefore its worth?
We can all argue about whether a collectible — say, a Mickey Mantle rookie card — will increase or decrease in value. The same is true for investing in stocks.
The difference is that I know the shares of Nvidia common stock I buy have the same inherent value as the Nvidia common stock you buy. Condition is irrelevant. Again, we can argue about worth… but we don’t have to worry about condition, or authenticity.
That’s where grading comes in.
“I started collecting cards in the 80s,” says Andy Broome, Vice President of CGC Cards, a third-party grading, authentication, and encapsulation service that grades approximately 40,000 cards every month. “Mail order auctions, mail order catalogs… that was always the argument: this dealer’s “near mint” is not that dealer’s “near mint.” That’s why we exist. We’re an unbiased third party, with no stake on either side, that ensures a level playing field.”
Third-party grading is a key lever on the card market’s flywheel, since graded cards help foster a more “regulated” and therefore healthier marketplace. I feel comfortable buying your 2024 Topps Now Shohei Ohtani card off eBay when it’s slabbed (encapsulated in a protective, tamper-proof plastic holder) and graded a CGC 9. If I someday decide to sell it on eBay, the buyer will also feel comfortable.
We may disagree on the card’s value, but potential disagreements about condition or authenticity are off the table — all of which makes a graded card a lot like a share of publicly-traded stock. Value will always be subjective, but “condition” arguments are off the table.
Greater confidence in condition and authenticity helps create a more robust marketplace; a more robust marketplace attracts more buyers and sellers; more buyers and sellers sparks more requests for grading. That flywheel has resulted in a boom in card collecting, both in terms of participants and card values.
Take a few of the cards CGC is currently displaying at Fanatics Fest NYC at the Javits Center this weekend. One is an iconic Topps Mickey Mantle rookie card with a CGC grade of 8. High grade copies are extremely rare, which is why a different 8 sold for over $1.8 million last month. Another is a signed CGC 10 Wayne Gretzky rookie card. A 7 sold for over $20,000 earlier this year; this one is a 10.
And then there’s Keith Olbermann’s restored Honus Wagner T206, a card that is arguably the holy grail of of sports collectibles. (I have no idea what Olbermann’s card is worth, but a T206 sold in 2022 for $7.25 million.)
“In the collectibles world, the market has historically had ups and downs,” Brooome says. “Over the last decade, though, it’s become mainstream. Plus, cards have become an asset class. If you’re an investor, you can buy a Picasso, or you can buy a (Mickey) Mantle or (Honus) Wagner. Or if you’re like most people, you can buy cards you enjoy collecting… and that might hope hope will someday increase in value.”
Fortunately, CGC was prepared for the explosion of growth. While grading isn’t a candidate for automation — or for rapid scaling, since newly-hired graders need six months or more to come up to speed just in the ultra-modern (2020s) category — consistent investments in authentication and encapsulation efficiency helped CGC handle rapidly increasing volume.
“CGC is the oldest, longest running grading and authentication company in the world,” Broome says. “We have a lot of expertise in operations, and we’re always scaling. When things really exploded in the last few months, we were ready.”
Which brings us back to Stephen King. King’s new books still hit bestseller lists. Will they be read by future generations? Maybe, but more probably not. (Very few people read Louis L’Amour westerns anymore; the fact you’ve likely never heard of him proves my point.)
Yet some of the most valuable cards involve players no one saw play. You may feel an emotional connection to a Michael Jordan card; if you were a fan, the card takes you back to your past.
No one alive today has an emotional connection to Honus Wagner.
That in itself is a sign that card collecting has become mainstream. There are two places you can see a Honus Wagner card in person: one is at the Baseball Hall of Fame, and the other is at Fanatics Fest.
“The Wagner card, the Mantle card, the Gretzy card,” Broome says, “as a collector, they may not be your ‘market.’ But plenty of people want to see them in person. If you appreciate art, you may want to see the Mona Lisa in person. For cards, if you want to see the best of what’s out there… this is it.”
Objectively.
Credits: TCA, LLC.