I think another factor in pricing on elite cards is securitization taking out the risk inherent in holding a vastly appreciated card. Collectable offered an IPO of a 1986-87 Fleer basketball wax box, fully funding the offering in minutes at $139,650. Shares were priced at $25 each. The owner of the box retained $44,750 in equity (24%), putting the full value of the box that likely contains at least three Michael Jordan rookie cards at $183,750. New investors who are only in for the price of a bad dinner each can afford to wait and see what the future brings; a single guy holding a vastly appreciated card maybe cannot. Take the pressure off the original owner to sell the item and you reduce supply, hence increase demand on the remainder. Collectors who can afford an elite card then will either have to wait (which none of us are particularly good at; we are all Smeagol-Collectors: "we must have the precious") or chase what is left out there. Some will downgrade and pressure prices on lesser cards, which will ripple across and down the hobby until there is price pressure all across the board. I think this mentality has something to do with why lower grade examples of key cards are rising so fast. A sale like this Mantle sale generates a wave of FOMO across the board and across the chat boards.
In some ways the pressure towards treating cards as investments tracks where collecting life has gone in two respects:
1. Modern collectors are used to this aspect of new card issues. Topps already follows an IPO model for releasing new cards via its online platform and Topps Now programs. You buy a 'share' of the IPO by buying a card or a set without knowing what the total population of the card might be hence how rare it might be. For example (for those who don't know how this works), I signed up for the Topps Now 2020 Dodgers postseason team set: 10 cards plus a bonus card for each round of the playoffs the team made it through (since they won the WS I get 14 cards total; the 14th card shipped last week, finally). A total of 378 fans did so. The 'float' on the base team sets is 378, and there are randomly inserted signed short prints of varying degrees. So collectors of modern cards are already used to a model that mimics a stock IPO and that has price rises and falls much like an IPO.
2. The internet has changed collecting immeasurably for us old farts. I've often said and heard it said that we don't really collect cards, we collect scans of cards. My best cards are buried in a safe deposit box; all I have on hand are the scans. In fact, I haven't seen the actual cards since April because of COVID lockdowns. Is it that far removed from this model of collecting to sell the actual card and keep the scans?
|