Thursday, February 08, 2001
Market analysis, of another kind - trading cards
LOOKING AHEAD by Wally Dobelis
NASDAQ investors, don't worry, your prices will come back. One upturn, and the traders will rush in, looking for bargains, lack of economic value and earnings notwithstanding.
This is what I'm learning from the speculator, excuse me, collector market in trading cards. A friend asked me: "Want to see a $500 baseball card?" It was a special one, produced by the card maker Upper Deck, with a chip of the baseball bat Michael Jordan used while in minors. Yes, the basketball immortal.
This is big business, Upper Deck trading cards have 34,000 listings on Yahoo! Auctions. Topps, the original Bazooka Joe chewing gum maker (from a factory in Brooklyn, started in 1938), has annual revenues of $374 million. It owns Bowman, the earliest modern card company. Fleer, the privately owned Double Bubble gum company started trading cards in 1923 (120 baseball players; so rare that no one knows all the players in this W515 set, Derek Jeeter is the company spokesman) and has never looked back. They now have card contracts with MLB(aseball), NBA, NFL and WNBA.
But the biggest gorilla is Beckett.com, a monthly price guide publisher, with seven magazines for 900,000 readers, covering baseball, football, basketball, hockey, sports collectibles, motorsports, and the latest, Pokemon (300,000 copies). Published by Dr. James Beckett, a statistics professor, it also has a card grading service, an on-line price guide, card auctions and a book publishing house (its annual baseball price guide lists 450,000 items).
The price magazines do not go back to the days of the great Pittsburgh shortstop Honus Wagner, who hated nicotine and in 1909 forbade the card maker of the day to insert his picture in packs of cigarettes (about 50 cards survive, and a mint copy sold for $1.1 million on eBay). Beckett monthly price lists for baseball and football cards start with 1948 Bowman, Leaf and Topps issues, later joined by Fleer (in 1961), Donruss, Upper Deck (1990), Pinnacle, Studio, Stadium Club (1992), Score, Select, Ultra (1993),Finest, Flair, Pacific, Leaf, Pinnacle, Sportflics (1994), Collector's Choice SE, Emotion (1995), Zenith (1996), Sp, Sports Illustrated, SPX, UD3 (1997), Crown Royale, E-X2001, Paramount (1998), and so it goes on.
One would certainly question the rarity and desirability of such masses of cards, but the sports fandom, infused with the thought of making a profit in a market-based environment on non-value items, has no limits. However, the makers have to be inventive, as in the case of Upper Deck and Michael Jordan, who sells whatever he touches (his name should be Magic). After his last game, the floor of the gym was torn up and sawn in small pieces, each included with packs of trading cards sold to the faithful. Everybody made money, and Utah got a new floor .
Old stadiums are valuable, and not only as real estate. On January 6 an auction of Three Rivers Stadium of Pittsburgh fetched over $1 million: home plate was $3,100, bases $1,550, turf pieces $200, stadium seats $875.
Not all souvenirs succeed. Card maker Pacific, sliced up a bat formerly owned by Manny Ramirez the Cleveland outfielder, for added value. When fans found illegal cork particles in the chips inserted in the trading cards, Ramirez claimed that the bat was not his, and Pacific may have lost both the fans' money and faith, depending on whom they believe. Interesting ethics vs. bux problem. Why are Nazi swords valued?
Trading card speculation is fed by stories of speculator successes. Tiger Woods routinely won tounaments in 1999, and his cards climbed to $ 490 range. But, just like equity shares, in the face of some losses they dropped to $427.50. This drop, since the golfer’s card is part of the pit-40 Market Index (the Dow-Jones of trading cards), depressed the entire market. Sounds like stock market analysis? It is meant to be, except that the intrinsic value of a baseball, football etc. card is even less than that of Amazon.com. selling at $16 in January 2001. This action, in a way , shows that there is a floor of the credulousness of the American speculator, er, investor, working on the Greater Fool theory.
Is there a present value of future earnings theory that governs the sports investors? There certainly is. If the athlete is expected to surpass others in earnings, his fan interest increases and therefore the cigarette card value should rise. And vice versa. Tiger Woods beware, the fans have downgraded you by 10.9 percent. Your endorsement fees will curtail. Better save your money. Similarly, an Alex Rodriguez also lost by going to the Rangers, his cards would have really surged if he had accepted the Big Apple job.
More anon, as I learn. This has more market fundamentals than the Beanie Baby rave.
NASDAQ investors, don't worry, your prices will come back. One upturn, and the traders will rush in, looking for bargains, lack of economic value and earnings notwithstanding.
This is what I'm learning from the speculator, excuse me, collector market in trading cards. A friend asked me: "Want to see a $500 baseball card?" It was a special one, produced by the card maker Upper Deck, with a chip of the baseball bat Michael Jordan used while in minors. Yes, the basketball immortal.
This is big business, Upper Deck trading cards have 34,000 listings on Yahoo! Auctions. Topps, the original Bazooka Joe chewing gum maker (from a factory in Brooklyn, started in 1938), has annual revenues of $374 million. It owns Bowman, the earliest modern card company. Fleer, the privately owned Double Bubble gum company started trading cards in 1923 (120 baseball players; so rare that no one knows all the players in this W515 set, Derek Jeeter is the company spokesman) and has never looked back. They now have card contracts with MLB(aseball), NBA, NFL and WNBA.
But the biggest gorilla is Beckett.com, a monthly price guide publisher, with seven magazines for 900,000 readers, covering baseball, football, basketball, hockey, sports collectibles, motorsports, and the latest, Pokemon (300,000 copies). Published by Dr. James Beckett, a statistics professor, it also has a card grading service, an on-line price guide, card auctions and a book publishing house (its annual baseball price guide lists 450,000 items).
The price magazines do not go back to the days of the great Pittsburgh shortstop Honus Wagner, who hated nicotine and in 1909 forbade the card maker of the day to insert his picture in packs of cigarettes (about 50 cards survive, and a mint copy sold for $1.1 million on eBay). Beckett monthly price lists for baseball and football cards start with 1948 Bowman, Leaf and Topps issues, later joined by Fleer (in 1961), Donruss, Upper Deck (1990), Pinnacle, Studio, Stadium Club (1992), Score, Select, Ultra (1993),Finest, Flair, Pacific, Leaf, Pinnacle, Sportflics (1994), Collector's Choice SE, Emotion (1995), Zenith (1996), Sp, Sports Illustrated, SPX, UD3 (1997), Crown Royale, E-X2001, Paramount (1998), and so it goes on.
One would certainly question the rarity and desirability of such masses of cards, but the sports fandom, infused with the thought of making a profit in a market-based environment on non-value items, has no limits. However, the makers have to be inventive, as in the case of Upper Deck and Michael Jordan, who sells whatever he touches (his name should be Magic). After his last game, the floor of the gym was torn up and sawn in small pieces, each included with packs of trading cards sold to the faithful. Everybody made money, and Utah got a new floor .
Old stadiums are valuable, and not only as real estate. On January 6 an auction of Three Rivers Stadium of Pittsburgh fetched over $1 million: home plate was $3,100, bases $1,550, turf pieces $200, stadium seats $875.
Not all souvenirs succeed. Card maker Pacific, sliced up a bat formerly owned by Manny Ramirez the Cleveland outfielder, for added value. When fans found illegal cork particles in the chips inserted in the trading cards, Ramirez claimed that the bat was not his, and Pacific may have lost both the fans' money and faith, depending on whom they believe. Interesting ethics vs. bux problem. Why are Nazi swords valued?
Trading card speculation is fed by stories of speculator successes. Tiger Woods routinely won tounaments in 1999, and his cards climbed to $ 490 range. But, just like equity shares, in the face of some losses they dropped to $427.50. This drop, since the golfer’s card is part of the pit-40 Market Index (the Dow-Jones of trading cards), depressed the entire market. Sounds like stock market analysis? It is meant to be, except that the intrinsic value of a baseball, football etc. card is even less than that of Amazon.com. selling at $16 in January 2001. This action, in a way , shows that there is a floor of the credulousness of the American speculator, er, investor, working on the Greater Fool theory.
Is there a present value of future earnings theory that governs the sports investors? There certainly is. If the athlete is expected to surpass others in earnings, his fan interest increases and therefore the cigarette card value should rise. And vice versa. Tiger Woods beware, the fans have downgraded you by 10.9 percent. Your endorsement fees will curtail. Better save your money. Similarly, an Alex Rodriguez also lost by going to the Rangers, his cards would have really surged if he had accepted the Big Apple job.
More anon, as I learn. This has more market fundamentals than the Beanie Baby rave.
# posted by Wally Dobelis @ 12:41 PM 
