Some Random Baseball Card Business Musings
 

It's a slow night, but I've had a lot of ideas kicking around in my head, so I thought tonight I could finally write them out, and see what other people thought.

1) A physical baseball card ETF. Everyone tries to figure out how card values are fluctuating, where they're moving, etc.....what would be really cool would be to get 100 cards or maybe 200 cards together and form the Baseball Card ETF. It would be a price-tracking gauge for the industry. How would it work?

a) Each person or persons would supply a card or card(s) to be added to the ETF. The ETF would then be composed of these cards as selected by the committe to find a sample of 100 or 500 or somewhere in between of cards that are representative of the overall market. This would include vintage (T206 Wagner), modern (Some Trout or Jeter card) and everything in between. It would be the benchmark and be a representative aggregate pricing metric for the industry.

b) How would the ETF be assembled? Well, each person that submits a card that is chosen would then have their price indexed versus last sales, as well as other members of the ETF (let's say 50%) assessing what they believe is fair market value for the card, and taking the average and having the card supplier agree to that as the fair price.

c) This pricing would transfer into ownership of the ETF -- let's say the 100 cards are valued at $100, and the card you supplied was worth $5, then you'd own 5% of the ETF. Let's say there's 100 shares, you'd own 5 shares. They would be voting shares, and they'd be able to be used to select the management committee.

d) Here's where it gets interesting -- in order to get those shares, you give up ownership of the individual card, and in turn own shares in the ETF. You're diversifying your risk, but you're also getting access to 99 other cards you may not have, but would love to be part of your collection.

Well, you might say, this really sucks, because why would you go from owning 1 awesome card to owning shares and not really owning any cards at all? Well, 2 things. First, if the value of the ETF goes up, you can sell your shares to an outside investor who wants in on the ETF, and you may profit more than you would have otherwise and maybe go buy your card again if you'd like. and 2.......

2) The ETF would then be housed near a baseball field or sports stadium somewhere with a ton of foot traffic -- think Fenway or Wrigley or Lambeau -- and it would be displayed as a museum piece, where people could come in before or after a game, and pay $10 or $5 to go to the National Sports Card Museum. I've looked online, and there's not really a good museum for baseball cards out there, aside from the Halls of Fame. So, as an ETF share owner, you'd own part of the physical ETF, but you'd also own your share of the sports card museum, which hopefully would be profitable in its own way, and would actually DISPLAY all these awesome cards we have locked away in our safe deposit boxes.


So, to recap: You have the good card or 2, it gets selected, it gets priced, and if you agree with the price, you get that % of the ETF. ETF then gets displayed at a museum, of which you own a certain % of that via the ETF. People get to see the cool cards, and everyone profits (if it's run efficiently).

I just felt like I needed to share this.

Interesting Scott, and I have thought about stuff like this in the past. I think the downside (and limitations on this) is really psychological. For most collectors, owning their little thing -- whatever it is -- really is the essence of a collection. It's mine, I can look at it at 2 am in my pajamas, I can sell off pieces on a whim, I can show it to friends on occasion. All about 100% controlling it. This kind if arrangement really means giving up control of that thing you cherish.

I have been part of a few horse racing partnerships. Fun for a while, but eventually you realize that you have no control over anything and are merely along for the ride. The thrill eventually wears off because you actually don't own anything. Same thing with timeshare real estate.

Agreed -- which is why I think a share in the ownership of the museum is crucial, because it's like a dividend payment if its run properly -- or is that how timeshares work as well? i've never bought into one of those -- but I think putting up a non-cash asset to get thrown cash divs is kind of intriguing.......there's a million reasons why it wouldn't work, but wonder often if there's 100 people or so that think it could. Who knows? It just shocks me there's no national baseball card museum --- and short of having $20 mln or so to start a biz that may fail, I don't have a better idea to get it off the ground.

Agree. Sort of amazing there is no National Baseball Card Museum. Certainly would attract more or as much interest as scads of other museums around the country.

In different ways this kind of thing has been done a already. There were Etopps which were mostly virtual and I also remember a company (maybe CardTarget) that was selling percentages of cards. (high value ones at that)

The other variation of course is form something similar to a real estate REIT where people invest a minimum of X thousand and you go out and buy a dozen or so great cards at the top end of the market and hold it collectively as an asset. Won't be kicking off any cash dividend though like other investment vehicles.

Not to be snarky, but here's an idea. You mention "ETF" a thousand times, but never once say what that is. Not everyone here works in the finance world. Give a little background.

Exchange Traded Fund which doesn't really fit the OP's idea, his is more of Limited Partnership, with each partner owing a piece of the pie, based on ownership % value of buy in(cards in this case).