Collecting Sports Cards: Hobby or Investment?



It only makes sense that the highest paid player in sports would have the most expensive sports card. That is to say, on August 22, 2020 a Mike Trout autographed rookie card sold for nearly $4 million dollars at auction. That makes it the most valuable sports card in history, supplanting the 1909 Honus Wagner card that sold for 3.12 million in 2016. The point I am trying to make here is that the sports card market is red hot, so if you are looking for a new hobby, or perhaps a new investment opportunity, collecting cards may be the way to go. It is not only loads of fun, but it can prove to be well worth your time as well.


Gary Vaynerchuk (aka Gary Vee) has become a household name over the past few years as the king of social media. He is a marketing genius who is basically the Tony Robbins for millennials and gen Z-ers (but with a lot more cussing). Vaynerchuk recently posted a video to his eight million followers on Instagram praising the world of sports card collecting. The video shows a clip from April 2019 where Vaynerchuk was talking about the potential value of a 2013 Giannis Antetokounmpo Panini Prizm card, which was selling on eBay at the time for $200. Vaynerchuk points out that that same card is worth $6500 today, just 16 months later. For all of you mathematicians out there, that is a 32.5 percent return on investment. If a stock portfolio manager had a 32.5 percent annual return on his investment, he would do 12 percent better than Warren Buffett does each year. Keep in mind: Buffett is widely considered the greatest investor of all time. So as you can see, the kind of return on investment that some sports cards can potentially have is mind blowing.


Take the $4 million Mike Trout rookie card for example. In 2018 that card was purchased for $400k. At the time I am sure many people thought that it was crazy to pay that much for a sports card, but here we are just two years later and that card has already returned ten times that value.


According to Geoff Wilson on sportscardinvestor.com, there are two major reasons why sports cards are currently so valuable: scarcity is purposely built into the market and a diehard sports culture cannot get enough.


Some of you may question the idea of sports cards as a legitimate investment, claiming that most old cards from the 80’s and 90’s are not worth much today. You are correct. In the past, sports card companies destroyed their own business by not building scarcity into the market. As we know, if you have too much supply, then demand falls off sharply. Nowadays however, card brands and grading companies have made cards much harder to get, and thus made them more valuable as a result.


Moreover, the culture of sports in this country has added fuel to the card collecting fire, so to speak. This is the age of fantasy sports and legal sports betting, and not only that, sports cards today are nothing like sports cards of the bygone era. Today, cards are made with much better quality. As Gary Vee says, “They are this generation’s art.” For those of you unfamiliar with today’s card quality, I implore you to check them out. There are actually cards that hold within them small pieces of jerseys. As I started getting back into the hobby, this is one thing that really blew my mind.

Today’s cards are as valuable and amazing as the players on them. More to the point of why now is the time for the sports card market to explode: if you are into fantasy sports, it only makes sense that you would enjoy collecting cards -- You see a player’s value and you try to acquire them – it’s that simple. And for those of you into sports betting, sports cards provide you a similar financial thrill, but without the immediate downside risk. Nowadays you can go on eBay, and bid hundreds of dollars on a Luka Doncic rookie card that could come down to the final seconds, and then you could turn around and sell it a few months later (or sometimes even a few days later) and potentially make hundreds (if not thousands) in profit. I am not a gambler, but I understand the drive behind it. In other words, collecting cards can be exhilarating, but I believe it is much less risky. That is not to say, however, that there is not potential downside risk of sports cards as an investment (e.g. a player getting injured or the interest falling off), but most of the professionally graded, big name cards have held (or increased) their value over the past decade. The future of sports, especially the NBA, is more exciting now than it has ever been, and likewise the world of sports card collecting is also thrilling. Now is the time to pick up this hobby, if you have not already done so, and you may find in it more “value” so to speak, than just the mere enjoyment of it.


Conclusion:

Collector = Owner


To conclude, no one would deny that investing in the stock market, although risky, is a great way to increase your wealth. The value of investing in sports cards, however, seems to be up for debate. Let us compare these two investment vehicles.


Before investing in a particular stock, one should study the balance sheet of that particular company. In so doing, one can assess the current state of the business, as well as the likelihood of future returns. Likewise, to make card collecting more of an investment than a hobby, one should love sports and study stat sheets and monitor ever-fluctuating card values which correspond closely to player popularity and/or talent. Some stock investors may get lucky, but a good stock picker has a great awareness of the bigger picture. Likewise, some novice card collectors may purchase a pack of cards and pull a valuable rare card, but a true sports card collector knows the real value of what they are collecting. When you buy stock you become an owner of a particular company, and when you collect cards you must also think in terms of ownership.


I began this post by pointing out how it made sense that the highest paid player would have the most expensive card. As a collector, you are like a team owner or a GM seeking out talent to see where future potential (i.e. a future return on investment) lies. Your collection is your team and you are trying to put together a lineup of the most valuable players.

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