Fanatics buys PWCC

[Leon]

Nice summation of a good possibility.

Originally Posted by Rhotchkiss

Based on the article above, it looks like PWCC may have been in trouble financially. Reading between the lines, it looks like PWCC borrowed a bunch of money to lend on cards, the interest rate on that loan went way up while the value of the cards they lent on plummeted. PWCC takes back a ton of cards. PWCC cannot service it’s debt bc the lender does not want to get paid in cards. Now the entire company is at risk bc the assets are pledged as collateral; and perhaps the owners have personal liability too. Fanatics comes in and effectively assumes the position of the lender- they pay off the lender and take all of PWCC’s assets. I am not sure the owners got paid anything- it depends on how desperate they were; maybe they kept a slice of ownership.

Bottom line, I am guessing Fanatics had all the leverage in this deal, meaning they not only got a new platform/business, but they probably got a pretty good deal to boot

Again, I know nothing about this deal other than what is in the article and my (likely poor) intuition

[BeanTown]

Originally Posted by Rhotchkiss

Based on the article above, it looks like PWCC may have been in trouble financially. Reading between the lines, it looks like PWCC borrowed a bunch of money to lend on cards, the interest rate on that loan went way up while the value of the cards they lent on plummeted. PWCC takes back a ton of cards. PWCC cannot service it’s debt bc the lender does not want to get paid in cards. Now the entire company is at risk bc the assets are pledged as collateral; and perhaps the owners have personal liability too. Fanatics comes in and effectively assumes the position of the lender- they pay off the lender and take all of PWCC’s assets. I am not sure the owners got paid anything- it depends on how desperate they were; maybe they kept a slice of ownership.

Bottom line, I am guessing Fanatics had all the leverage in this deal, meaning they not only got a new platform/business, but they probably got a pretty good deal to boot

Again, I know nothing about this deal other than what is in the article and my (likely poor) intuition

Well said Ryan and completely agree

[MikeGarcia]

Originally Posted by parkplace33

I wonder if pwcc (or whatever their new name is) will be allowed back on eBay. Stranger things have happened.

.. Some of us graybeard observers of baseball cards and big money are pretty sure that there were a lot of I's dotted and a lot of T's crossed and a lot of questions asked and answered before this thing occurred . Just call it a hunch.

..Watch that space. And here's some cards , just for the joy that's in it :



..

[Yoda]

I would certainly hope that during their due diligence Fantastics made a thorough audit of the Vault to make sure all was in order, no cards missing, rightful owners, etc. Ryan makes a great point that if PWCC is in a financial jam who knows where they are getting money to service their debt outside of their weekly auctions, which have had lesser quality material than in the past.

And I would think that Fantastics made it part of the sale agreement for a PWCC reduced headcount.

I wonder what size yacht Brent and Betsy are going to buy? Gotta be bigger than some of those Russian oligarchs

[glchen]

Originally Posted by Casey2296

I thought this was an interesting part;

At the height of the card craze, vault members were allowed to take out loans against their vaulted cards, using those cards as collateral.

That helped light the card market on fire as some of those people then took their loan money to buy more.

But when the market plummeted, there were enough of those people who just said, “I’ll keep my money, you keep my cards.”

This is the thing that caught my eye also.

[Johnny630]

Originally Posted by Leon

Nice summation of a good possibility.

Agree I did it Ryan

[BobC]

Originally Posted by Rhotchkiss

Based on the article above, it looks like PWCC may have been in trouble financially. Reading between the lines, it looks like PWCC borrowed a bunch of money to lend on cards, the interest rate on that loan went way up while the value of the cards they lent on plummeted. PWCC takes back a ton of cards. PWCC cannot service it’s debt bc the lender does not want to get paid in cards. Now the entire company is at risk bc the assets are pledged as collateral; and perhaps the owners have personal liability too. Fanatics comes in and effectively assumes the position of the lender- they pay off the lender and take all of PWCC’s assets. I am not sure the owners got paid anything- it depends on how desperate they were; maybe they kept a slice of ownership.

Bottom line, I am guessing Fanatics had all the leverage in this deal, meaning they not only got a new platform/business, but they probably got a pretty good deal to boot

Again, I know nothing about this deal other than what is in the article and my (likely poor) intuition

Makes a lot of sense Ryan, and also may point to an obvious technique/tactic used in business to take advantage of situations. Fanatics ownership/management appear to be quite savvy and up to the task from a business standpoint. After the move was made to strip Topps of their future player licensing agreements to be able to print cards of MLB players a little while back, the IPO Topps was in the process of completing was crushed, and soon after Fanatics swooped in and bought them for what would seem to be a huge discount. Whether the timing of the move by Fanatics to take over those future licensing rights was calculated and intentional, we'll probably never know for certain. But I wouldn't put it past Fanatics to have made that announcement, stripping Topps of future MLB licensing rights when they did on the eve of Topps' IPO, as a way to inflict the most noticeable and public damage to Topps' name and brand, and most significantly, its value. The timing of all those factors seems almost too good for Fanatics ultimate benefit to be simply coincidental.

This PWCC acquisition looks to be maybe a little more of an opportunistic move by Fanatics, rather than one they may have helped create. But again, shows their apparent ability, and desire, to take full advantage of the potential distress of other companies in the hobby industry, and possibly be able to grab them at greatly discounted prices.

As for Fanatics possibly going after a TPG next, I did not know about the relationship of Michael Rubin being a major owner/investor in Fanatics and also in CSG. Thanks for pointing that out Casey. with that kind of mutual ownership/rapport between Fanatics and CSG already existing. can easily see some kind of working arrangement/partnership, so to speak, being set up to mutually benefit the two companies. Sort of like the already existing partnership between CSG and Ebay regarding Ebay's Authenticity Program, and the services provided by CSG for it. Or even the existing partnership that CSG already had with PWCC prior to this acquisition of PWCC by Fanatics. In nothing else, this likely strengthens that pre-existing partnership between CSG and PWCC. And I wouldn't put it past Michael Rubin's involvement with CSG as a possible source of info that Fanatics used that allowed them to better negotiate and step in to acquire PWCC as well. After the fact, when more and more coincidences seem to start turning up, it becomes more likely those weren't all just random coincidences to begin with. LOL

So maybe Fanatics doesn't go after a TPG after all. Seems they don't necessarily need to in order to have a special working relationship with one that they can use to their mutual advantage. And as others have opined, not so sure that Fanatics would need to acquire a Breaker, as they already have their distribution system/network in place. And this acquisition of PWCC just further expanded their own marketing platform as well. The trick for Fanatics and their owners/investors will be to somehow supplant/replace the current Breaker distribution/sales system/network in place for the sale/distribution of sports cards so they can take those profits the Breakers have been realizing for more than a decade now, and put those in their own pockets instead going forward. And it may not be that difficult. Just like Fanatics saw to Topps being cut off from the future licensing to provide images of MLB players/teams, what is to stop Fanatics/Topps from figuring out ways to circumvent and not have to sell to Breakers? Breakers are really nothing more than retailers, and are totally dependent on being able to buy and acquire products they "Break" from wholesalers/manufacturers. I don't believe there are any laws that would force a company like Topps to have to sell their product through Breakers. Quite a few businesses these days directly market to the public, especially with the added ease and pervasiveness of the internet and online marketing and retailing. And Breakers would still be able to acquire products from other card manufacturers, like Panini, so trying to play the illegal monopoly card likely wouldn't work in their favor either. There can be many different ways for Fanatics/Topps to work things going forward. Hopefully what they choose to maximize their profits won't boomerang and work against the hobby itself, sort of how the junk wax era turned out for everyone, and turned many off to the hobby. But look how the hobby survived and came back anyway. These corporate entities may need to learn to temper their profit aspirations and goals at times, so as to not jeopardize the hobby itself, and the desire and passion of collectors/investors who are the sole reason for those profits to begin with. Sort of like the old adage, "Don't cut off your nose to spite your face!"

Will be very interesting to see and follow where this all goes.

[BobC]

Originally Posted by steve B

Some good points, but I don't see them buying a grading company or a breaker as a move that would be seen as anything but a huge conflict.

Owning a manufacturer and a breaker? No, no way they'd feed the handful of "special" cards to the breaker....

Same for having a manufacturer, auction and grader. How could anyone take those grades seriously if it was the same owner?

Don't disagree at all Steve, but the TPGs have already been rife with huge biases and conflicts from their virtual start. Look at all the people who have owned/controlled these TPGs over the years, and also been involved in the hobby as collectors themselves to some extent. Want to make a bet on which TPG they would submit their cards to be graded to? LOL Or what about TPG contingent grading fees based on cards values? In supposedly providing a completely unbiased and equal service to ALL submitters, it should take approximately the exact same amount of time and efforts to grade and slab a 1952 Topps Mickey Mantle card as it does for say a common '52 Topps card from the low series. So why the huge difference in grading fees? This is an absolutely inexcusable, direct bias and conflict of interest on the part of the TPGs, yet the hobby community forgives and allows it to happen anyway.

So, before you go saying these acquisitions of related hobby companies would make for unacceptable conflicts of interest, the hobby community for decades now has already shown they don't really care about such conflicts of interest. At least not as long as they can still get the "stuff" they want. Again, another old adage at work, "Stuff trumps everything!?"

[Aquarian Sports Cards]

Originally Posted by BobC

Makes a lot of sense Ryan, and also may point to an obvious technique/tactic used in business to take advantage of situations. Fanatics ownership/management appear to be quite savvy and up to the task from a business standpoint. After the move was made to strip Topps of their future player licensing agreements to be able to print cards of MLB players a little while back, the IPO Topps was in the process of completing was crushed, and soon after Fanatics swooped in and bought them for what would seem to be a huge discount. Whether the timing of the move by Fanatics to take over those future licensing rights was calculated and intentional, we'll probably never know for certain. But I wouldn't put it past Fanatics to have made that announcement, stripping Topps of future MLB licensing rights when they did on the eve of Topps' IPO, as a way to inflict the most noticeable and public damage to Topps' name and brand, and most significantly, its value. The timing of all those factors seems almost too good for Fanatics ultimate benefit to be simply coincidental.

This PWCC acquisition looks to be maybe a little more of an opportunistic move by Fanatics, rather than one they may have helped create. But again, shows their apparent ability, and desire, to take full advantage of the potential distress of other companies in the hobby industry, and possibly be able to grab them at greatly discounted prices.

As for Fanatics possibly going after a TPG next, I did not know about the relationship of Michael Rubin being a major owner/investor in Fanatics and also in CSG. Thanks for pointing that out Casey. with that kind of mutual ownership/rapport between Fanatics and CSG already existing. can easily see some kind of working arrangement/partnership, so to speak, being set up to mutually benefit the two companies. Sort of like the already existing partnership between CSG and Ebay regarding Ebay's Authenticity Program, and the services provided by CSG for it. Or even the existing partnership that CSG already had with PWCC prior to this acquisition of PWCC by Fanatics. In nothing else, this likely strengthens that pre-existing partnership between CSG and PWCC. And I wouldn't put it past Michael Rubin's involvement with CSG as a possible source of info that Fanatics used that allowed them to better negotiate and step in to acquire PWCC as well. After the fact, when more and more coincidences seem to start turning up, it becomes more likely those weren't all just random coincidences to begin with. LOL

So maybe Fanatics doesn't go after a TPG after all. Seems they don't necessarily need to in order to have a special working relationship with one that they can use to their mutual advantage. And as others have opined, not so sure that Fanatics would need to acquire a Breaker, as they already have their distribution system/network in place. And this acquisition of PWCC just further expanded their own marketing platform as well. The trick for Fanatics and their owners/investors will be to somehow supplant/replace the current Breaker distribution/sales system/network in place for the sale/distribution of sports cards so they can take those profits the Breakers have been realizing for more than a decade now, and put those in their own pockets instead going forward. And it may not be that difficult. Just like Fanatics saw to Topps being cut off from the future licensing to provide images of MLB players/teams, what is to stop Fanatics/Topps from figuring out ways to circumvent and not have to sell to Breakers? Breakers are really nothing more than retailers, and are totally dependent on being able to buy and acquire products they "Break" from wholesalers/manufacturers. I don't believe there are any laws that would force a company like Topps to have to sell their product through Breakers. Quite a few businesses these days directly market to the public, especially with the added ease and pervasiveness of the internet and online marketing and retailing. And Breakers would still be able to acquire products from other card manufacturers, like Panini, so trying to play the illegal monopoly card likely wouldn't work in their favor either. There can be many different ways for Fanatics/Topps to work things going forward. Hopefully what they choose to maximize their profits won't boomerang and work against the hobby itself, sort of how the junk wax era turned out for everyone, and turned many off to the hobby. But look how the hobby survived and came back anyway. These corporate entities may need to learn to temper their profit aspirations and goals at times, so as to not jeopardize the hobby itself, and the desire and passion of collectors/investors who are the sole reason for those profits to begin with. Sort of like the old adage, "Don't cut off your nose to spite your face!"

Will be very interesting to see and follow where this all goes.

Was it a Topps IPO? I thought they were selling to someone else. Either way the point remains the same. The Fanatics announcement torpedoed Topps' plans.

[JollyElm]

Originally Posted by FrankWakefield

I lament the demise of Topps. Tradition can be wonderful; you can't buy tradition... Topps had Tradition, and that's now gone.

Wow...what you said led me to a stark realization. The way tobacco cards became a relic of an antiquated, bygone era, Topps cards, too, have now achieved that same obsolescent status. It's over. All that's left for us gum-chewing, card-collecting, perpetual adolescents are the memories of summer days at the corner store, begging our moms to let us rip open one more pack.

[BobC]

Originally Posted by The Detroit Collector

Fanatics is becoming a monopoly in the industry. You can decide yourself whether its good or bad.

They got their cards.
They got their Vault.
They got their auction site.
They need there grading company.

I dont see them "buying" any breakers, breakers are a subcategory of this hobby in my opinion.

Don't disagree. They are more or less looking to take over a substantial portion of the industry and put more of the profits others are making off cards into their own pockets. However, a monopoly is usually considered more applicable in cases where you have control of a horizontal market, such as when the American Tobacco Company (ATC) owned virtually every big/major cigarette or tobacco brand/seller there was. What Fanatics, and the major U.S. sports leagues and players associations that are invested in them, is doing is what is known as a creating more a vertical market. This is where you acquire different businesses/companies involved in all the aspects of a business from the creation/manufacture of a product, all the way through its sale/final distribution to the public. This way you do away with having to deal with "middle men", wholesalers, retailers, and the like, and can potentially pocket at least some of the profit those others used to make off selling/distributing your products. It doesn't necessarily create a monopoly, as there are still (and will be) other card manufacturers, wholesalers, dealers, Breakers, TPGs, and so on. It does potentially provide some advantages to the business that can set up such a complete vertical marketing enterprise though, by way of allowing more flexibility, control, quicker decision making, cross-utilization of duplicated work or functions, taking advantage of economies of scale, better overall planning and projections, and so on.

And also keep in mind when mentioning a potential "monopoly" situation that MLB has the somewhat unique position/status of being exempted from the applicability of the 1890 Sherman Anti-Trust Act, the same law that originally took down the ATC in 1911, via a SCOTUS decision back in 1922. This decision came about as a result of the lawsuit filed by the Federal League against MLB back in 1914, seeking to break MLB's stranglehold on the professional baseball market in the U.S. (And also why I've always felt MLB may have eventually made Kennesaw Mountain Landis its first Commissioner, as a sort bribe/payoff for his efforts in initially squelching this lawsuit as a federal judge himself, and maybe "assisting" through his federal court connections to the eventual favorable ruling by the SCOTUS.) So even if Fanatics, which is partly owned by MLB, were to end up in a more "monopolistic" situation, not sure how this exemption and MLB's ownership would ultimately impact anyone's ability to attack that business situation.

And as an FYI, ever since the exemption was passed just over 100 years ago, occasionally over the years different members of Congress have tried to present legislation to have the exemption removed, but all to no success, so far. The most recent unsuccessful attempt I'm aware of was just a couple of years ago as a matter of fact.

https://www.si.com/mlb/2021/04/14/ml...duced-congress

So, I don't think a potential monopoly issue is anything that Fanatics/Topps/MLB is worried about as being anywhere near the top of their current list of concerns.

[todeen]

This was on the ESPN article. Do you believe sportscards can balloon 10x in ten years? Honestly, where is that level of demand coming from?

"In 2021, the global sports memorabilia market, including trading cards, was valued at just over $26 billion; by 2032, it's expected to eclipse $220 billion. No company has a bigger footprint in that space, or stands to in the coming years, than Fanatics -- valued at $31 billion as recently as December, with a projected revenue of $8 billion in 2023."

https://www.espn.in/espn/story/_/id/...cc-marketplace

[BobC]

Originally Posted by Aquarian Sports Cards

Was it a Topps IPO? I thought they were selling to someone else. Either way the point remains the same. The Fanatics announcement torpedoed Topps' plans.

My mistake Scott, I misrepresented the deal as an IPO. I had heard that term used in regards to this Topps deal in the past from somewhere, and it sticks in my head. Sorry. LOL

Topps was going to do a merger with Mudrick Capital, which was already a publicly traded company, that would instantly make Topps considered a publicly traded company as well. The reported value assigned to Topps in the merger was something like a value of $10.87 per share of Topps stock, which I believe gave them a supposed market value of somewhere right around $1.3Billion. IIRC, the Fanatics purchase was for about half that amount, maybe $500K, a pretty serious cut in value just a few months after the Mudrick Capital merger fell through, and basically a perceived steal by Fanatics.

[trambo]

Originally Posted by Rhotchkiss

Based on the article above, it looks like PWCC may have been in trouble financially. Reading between the lines, it looks like PWCC borrowed a bunch of money to lend on cards, the interest rate on that loan went way up while the value of the cards they lent on plummeted. PWCC takes back a ton of cards. PWCC cannot service it’s debt bc the lender does not want to get paid in cards. Now the entire company is at risk bc the assets are pledged as collateral; and perhaps the owners have personal liability too. Fanatics comes in and effectively assumes the position of the lender- they pay off the lender and take all of PWCC’s assets. I am not sure the owners got paid anything- it depends on how desperate they were; maybe they kept a slice of ownership.

Bottom line, I am guessing Fanatics had all the leverage in this deal, meaning they not only got a new platform/business, but they probably got a pretty good deal to boot

Again, I know nothing about this deal other than what is in the article and my (likely poor) intuition

Definitely plausible and even likely. I wonder how many of the cards they held as collateral were the new/shiny ones and how many were vintage/pre war. The higher % of new/shiny, the more I'd think you're right, Ryan.

It will be interesting to see where this goes. My PWCC vault is now empty, that's for sure (not that there was ever much in it).

[trambo]

Originally Posted by Aquarian Sports Cards

Was it a Topps IPO? I thought they were selling to someone else. Either way the point remains the same. The Fanatics announcement torpedoed Topps' plans.

It was a proposed IPO. I can't remember if they were putting it in a SPAC or a more traditional IPO but I do remember thinking I'd buy some stock in Topps if it were public again.

Edited to link an article about the SPAC:

https://marketrealist.com/p/what-happened-to-topps-ipo/

[Brian Van Horn]

I may have to admit myself to Smart Alecs' Anonymous because of the following lines:

"Betts wrote that buying PWCC “will give us the opportunity to further build and strengthen on the foundation that exists today and ultimately deliver a lot of value to our fans/collectors.”

The companies didn’t report terms of their deal.

PWCC’s 125 employees will remain with the business, according to Betts, who said “it’s business as usual” for the time being."

https://www.oregonlive.com/business/...-fanatics.html

Thank goodness he saved himself with the following:

"It is critical that we take the time to properly evaluate the business, best practices and compliance,” Betts wrote. “Long-term health is vital for our business and the ecosystem at large, which is why we’re going to thoughtfully integrate the PWCC platform into Fanatics Collectibles.”

In my opinion you should have done more evaluation before you purchased this gelding.

[stlcardsfan]

Originally Posted by Peter_Spaeth

Not to mention the reps and warranties.

I wonder if “shill” and “trim” are defined terms.

[raulus]

Originally Posted by stlcardsfan

I wonder if “shill” and “trim” are defined terms.

We can only speculate…but as long as we’re speculating…

I didn’t write the docs on this one, but I’m guessing they probably stuck to broad concepts like fraud rather than trying to get too specific.

But maybe they used both!

[Exhibitman]

If PWCC was in a debt squeeze I'd guess Fanatics got it for nothing more than the debt. As for which TPG it will buy, I say BGS. Beckett spins off a division and still has its information empire, and BGS has a good following among the shiny crapsters, which is what Fanatics is all about. SGC isn't shiny or crappy enough.

[BeanTown]

Originally Posted by Exhibitman

If PWCC was in a debt squeeze I'd guess Fanatics got it for nothing more than the debt.

Plus, the percentage of the debt they would actually have to pay the debtors would be a fraction of what was actually owed. I’m sure who guaranteed it, along with what role the debtors play going forward with their new business model, has a lot to do with what the percentage of monies owed to them, would be paid. Basically a per case basis.

[BeanTown]

Knew something was happening a while back when you see post like this.

[JustinD]

Originally Posted by Exhibitman

If PWCC was in a debt squeeze I'd guess Fanatics got it for nothing more than the debt. As for which TPG it will buy, I say BGS. Beckett spins off a division and still has its information empire, and BGS has a good following among the shiny crapsters, which is what Fanatics is all about. SGC isn't shiny or crappy enough.

I think you hit it on the head..."troubled asset".

This was a get out plan if I have ever saw one. It's just my thoughts, but buying like this gives me pause on not expecting anything other than "chapter" followed by one of 3 different numbers in a press release concerning Fanatics in a little more than a decade.

I expect a TPG buy also and BGS would not be out of the picture. You can see that already in the history of Topps Vault. They have already sold Beckett slabbed 1/1s, proofs, blank backed and whatever else they could drum up in the past. The new release slabbed 1/1s and proofs would often get listed multiple times just to get a starting bid price. It's an idea that will fizzle quickly.

[BillyCoxDodgers3B]

Originally Posted by steve B

Same for having a manufacturer, auction and grader. How could anyone take those grades seriously if it was the same owner?

Watch it happen at some point. One company is already 2/3 of the way there. Why not complete the trifecta of conflict of interest hypocrisy? Makes me sick.

[Ronnie73]

A while back, I believe around the time of the last National, Fanatics was saying and teasing about a future release or news that would impact or change a whole generation. I sure hope that this PWCC thing is not what they were talking about. I had mentioned in the past what I would like to be the generation changer. Maybe some of you remember it. It was a very long post that dealt with a multi year, multi sport set that had no checklist or card numbers, and print runs of all cards would be secret, and the packs would only be issued in one format, back to the old school of 15 cards per pack, 36 packs per box, with a one dollar per pack price, and no inserts, auto's, serial numbered cards, or parallel's. Just simple cards, and back to building a set based on the card description. Almost as if the original T206's were released today, nobody would know who was in the set over the three years, or the different poses and print runs. The research and the hunt for the cards is the most fun part. Once you complete a set, it's no fun anymore, and most people end up selling what they finished and many also take a loss. Make a set that takes a generation to build, and keep it priced low, so everyone, including the kids can get involved in the same set as the most advanced collectors are building. A set where collectors everywhere are sharing information on the cards they have, including their extra's that other collector's would need. This would also eliminate the "common" card, because nobody would really know what is common, without research. Stop everyone from bypassing 99 percent of the pack, just to get to the section where the inserts and auto's could be, and toss the rest, I hate that. That's a generation changer.

[Peter_Spaeth]

Originally Posted by BillyCoxDodgers3B

Watch it happen at some point. One company is already 2/3 of the way there. Why not complete the trifecta of conflict of interest hypocrisy? Makes me sick.

Third party grading has been riddled with conflicts of interest and favoritism for a long long time, even if it wasn't institutionally inherent. As I like to say, all submitters are equal, some are more equal than others.

[Yoda]

I hate to sound like a merchant of doom, but if DC doesn't get their crap together and raise the debt ceiling by 6/1 then all bets are off. Current asset values, including our beloved cards, will naturally plummet.

"My PSA 8 '52 Topps Mantle has dropped 50% and where the hell is my social security check?"

[bnorth]

Originally Posted by Yoda

I hate to sound like a merchant of doom, but if DC doesn't get their crap together and raise the debt ceiling by 6/1 then all bets are off. Current asset values, including our beloved cards, will naturally plummet.

"My PSA 8 '52 Topps Mantle has dropped 50% and where the hell is my social security check?"

That would be AWESOME. That is when the real money is made and I have been waiting for a big crash for a while.

[jchcollins]

Originally Posted by BeanTown

Knew something was happening a while back when you see post like this.

And - I guess typical. Brentsy has comments turned off on that LinkedIn post.


Sent from my iPad using Tapatalk

[raulus]

Originally Posted by BobC

Or what about TPG contingent grading fees based on cards values? In supposedly providing a completely unbiased and equal service to ALL submitters, it should take approximately the exact same amount of time and efforts to grade and slab a 1952 Topps Mickey Mantle card as it does for say a common '52 Topps card from the low series. So why the huge difference in grading fees? This is an absolutely inexcusable, direct bias and conflict of interest on the part of the TPGs, yet the hobby community forgives and allows it to happen anyway.

Bob: While you might pooh-pooh the notion that it's meaningful, PSA does offer faster turnaround time at the higher grading price points. So the upcharge also delivers faster service. And for a TPG with turnaround measured in multiple months at the lower price points, faster service isn't nothing.

Of course, there's room to debate whether that faster service is really commensurate with the upcharge.

As an added bonus, many of the service level price points cover value ranges, so if you happen to be right on the cusp of bumping into the next highest range, then your grading costs could double, for example, simply by going from $24,999 to $25,001 in value. I guess the good news from my perspective is that I've yet to see PSA attempt to get cute with it by bumping me up if I'm just a little over the limit.

[BobC]

Originally Posted by raulus

Bob: While you might pooh-pooh the notion that it's meaningful, PSA does offer faster turnaround time at the higher grading price points. So the upcharge also delivers faster service. And for a TPG with turnaround measured in multiple months at the lower price points, faster service isn't nothing.

Of course, there's room to debate whether that faster service is really commensurate with the upcharge.

As an added bonus, many of the service level price points cover value ranges, so if you happen to be right on the cusp of bumping into the next highest range, then your grading costs could double, for example, simply by going from $24,999 to $25,001 in value. I guess the good news from my perspective is that I've yet to see PSA attempt to get cute with it by bumping me up if I'm just a little over the limit.

Nic,

Are you kidding me?

How long have you been a CPA now? You know as well as I that the ONLY thing that a CPA license allows you and I to do, that no one else can, is give our OPINION on a company's financial statements and how good they are. Not really much different than a TPG giving their OPINION on the condition of a card they grade. Both CPAs and TPGs are paid to give their honest, UNBIASED, and INDEPENDENT opinions on certain things they are looking at.

And as a CPA, you know we are supposed to be independent of the parties we give our opinions on, in both fact AND appearance. You also know as well as I do that as a CPA, if you go and charge any clients/customers a contingent fee, they will take our CPA license away as that is not allowed, as it may be deemed or viewed as a type of bias, conflict-of-interest, or lack of independence. (Fact AND appearance, remember!?!?!?)

TPGs charge contingent fees based on the value of a card they grade, correct? And I'm not talking about different service levels. In fact, I don't know where (or even how) you got the idea I was making any reference to service or service levels at all. Correct me if I'm wrong, but if I submit a '52 Topps Mantle card to a TPG for grading in what turns out to be say a 5 grade, along with a low series, '52 Topps common card that also ends up grading a similar 5, and ask for the exact same service level for both cards, I'm guessing I'm going to pay a hell of a lot more money in grading fees for my '52 Mantle because they charge more for grading it simply because it has a higher value. And this is even though they are supposedly providing the exact same services, work and effort as they are putting forth to opine on, grade, and slab my '52 Topps common card as they are for my '52 Topps Mantle, right? That is a contingent grading fee.......PERIOD!!! They are charging based solely on the value of the card they are giving nothing more than their opinion on when they are grading it. And in the case of that '52 Mantle card, even a slight change in the grade given can significantly increase (or decrease) the value of that card dramatically, which can also then impact what the TPG can then charge me for grading and giving their opinion on it. So, tell me, and everyone here on the forum, what is there really to stop a TPG grader from maybe bumping up the grade they give a card so that it results in a higher value, that they can then charge you more for grading? And before you even dare to say that no TPG would ever do that, fact AND appearance, remember!!! That contingent fee charge by TPGs is such a blatant, unquestionable conflict-of-interest and bias that it is truly laughable that apparently almost no one in the hobby calls them out for it, and we just blindly continue to let them get away with it and accept all their potentially tainted opinions on virtually every graded card that exists!!!

And if the TPGs have no problem giving their supposedly honest and unbiased opinions when such blatant bias and conflicts-of interest so clearly exist in what they do, it can only make one wonder what other areas of conflict or bias might they also be ignoring. For another example, I seem to remember that David Hall was known to have one of the greatest (if not THE greatest) T206 collections ever assembled. And if memory also serves, wasn't he also a major owner/officer of Collector's Universe for quite a few years, the same corporation that also just happens to own PSA? I'll give you three guesses as to which TPG Hall likely had all his T206 cards graded by, and the first two guesses don't count.

As a fellow CPA, you know as well as I do that if you, or the firm you work for, audits a company to opine on its financial statements, you and the people working on the audit can't also own a piece of the company that is being audited. That is a totally unallowable, biased, conflict-of-interest, and could potentially result in the loss of one's CPA license once again. I know in all my years working in public accounting, at least once every year I had to go through the checklist and let whoever I was working with/for know what stock holdings/business interests I, or my close family members, owned or had, so they could make sure they weren't doing any audit work requiring the giving of an opinion on a business/firm for which there was a conflict-of-interest because I or someone else at the firm owned or was otherwise somehow directly associated with a company we were hired and paid to audit and opine on. Once again, a CPA/CPA firm has to have and maintain a totally independent and unbiased relationship with any company/client they provide their audit/opinion servicers for, in both fact AND appearance. So, what does that say about people like David Hall, Nat Turner, James Beckett, or David Forman, if they ever went and had cards they, or family members, owned, and had them graded by the TPG companies they owned/operated at the same time?

This is what I'm talking about. Not faster services or different service levels.

And your last comment about you personally not seeing PSA ever getting "cute" with you and their valuation/grading process, potentially resulting in you being charged a higher grading fee, doesn't mean the potential still doesn't exist. Independent and unbiased in fact AND appearance, remember that from your own profession. And since TPGs do nothing but give their opinions, similar to what CPAs do, I would hope that one day they start to be held to similar, honorable standards, like CPAs as well. The fact that the hobby community has let TPGs, and the rest of the major players in the hobby industry, get away with this continuing non-independent, biased, and completely filled with conflicts-of-interest crap for decades now, is truly sad, and in my opinion, almost downright criminal on so many levels.

[Peter_Spaeth]

The website of SGC expressly states that the owners and employees may submit cards. So there. No need to speculate about what if’s.

[Peter_Spaeth]

Further to your point, Bob, there is a clear, public interest in having CPAs do their work free from conflict, or even the appearance of conflict. There is no such analogous interest in what third-party graders do. Third-party grading has been riddled with conflicts of interest and the appearance of conflicts of interest from day one in my opinion. And nobody is really up in arms about it. It just goes with the territory. PS if you want to read a great thread about another example of conflict of interest, look at the thread on blow out about Joe Clemons.

[G1911]

Originally Posted by Peter_Spaeth

PS if you want to read a great thread about another example of conflict of interest, look at the thread on blow out about Joe Clemons.

The perfect encapsulation in a single story narrative of what a complete and utter farce the ‘grading’ game is. And yet everyone will continue to participate in it.

[BobC]

Originally Posted by Peter_Spaeth

Further to your point, Bob, there is a clear, public interest in having CPAs do their work free from conflict, or even the appearance of conflict. There is no such analogous interest in what third-party graders do. Third-party grading has been riddled with conflicts of interest and the appearance of conflicts of interest from day one in my opinion. And nobody is really up in arms about it. It just goes with the territory. PS if you want to read a great thread about another example of conflict of interest, look at the thread on blow out about Joe Clemons.

Hmmmm!

I fully understand the need for the strict rules and requirements for CPAs, as we are the ones that audit the companies that are then able to be traded on stock markets. The SEC and other government regulations require it. And the final undeniable truth behind that is one thing, and one thing only..... MONEY! Ours, and basically the entire world's economy, relies upon the major stock markets around the world to allow people/companies to invest and keep the globe's overall economy moving. The independence and lack of conflicts-of-interest and other biases of the CPAs/auditors that continually audit and report on these publicly traded companies is integral to allowing investors around the world to have some semblance of faith and trust in the numbers they receive and see for all these audited companies around the globe, being traded on the world's stock markets. We've all seen how the reported numbers for companies can have a very direct, and almost instantaneous effect on a publicly traded company's perceived value, as represented by their ever-changing stock prices. Those prices, and therefore the underlying values of these publicly traded companies, are based, in great part, on those numbers and figures reviewed, audited, and attested to by independent, outside CPAs/auditors.

Similarly, a pre-war (and other) baseball card's value, aside from who the player(s) that is shown on it is, is next most often determined by its condition, and is particularly important and integral to determining the different values of cards of the same player(s) from the same set. Those supposedly honest, independent, and unbiased opinions that TPGs give on those cards they grade are for the most part the sole, or at least likely the most important, factor used by dealers and collectors to determine what someone will sell or pay for a particular card. In other words, the TPG opinions basically comes down to the exact same thing as CPA opinions at the most basic level......MONEY, and how much someone will then pay/sell a particular card (or stock) for. The biggest difference between cards and publicly traded companies, on whom TPGS and CPAS/auditions, respectively, give their opinions, is that companies and their operations and financials are constantly changing, whereas a sports card shouldn't be changing their condition over time, and really should only require a single, one-time TPG opinion. But the basis of both CPA and TPG opinions still directly effects the value of the things they are giving their opinions on. At this most basic level, TPGs are really no different than CPAs, as both of their opinions directly affect the amount of money someone will pay for something. So really, why shouldn't we expect/hope that TPGs at some point start being held to more of the similar standards that CPAs are faced with? The opinions of both directly affect the perceived values of certain things, and as a result, what others will therefore pay for those things. And the integrity and trust of those giving such opinions are needed to keep the people in both those markets confident in their investments. And let's face it, we've talked about this as nauseum for a while now, whether we like it or not, most collectors are or have become more like investors than just collectors anymore. Values of cards over time have gone up so much, especially in the past few years, that even those that never considered themselves as anything other than a true collector can't ignore the dramatic increase in value their collections may have experienced, and have to at least start thinking a little bit more in terms of being an investor, again, whether they like it or not.

For now though, the biggest difference as to why TPGs have probably not been more aggressively held/pushed to more stringent independence and conflict-of-interest/bias rules like CPAs is, once again, likely all due to simply money. Or more specifically in this case, the AMOUNT of money involved. The stock market gets hit by fraudulent and biased, non-independent auditors, companies go bad, investors lose faith and the stock markets tank. People worldwide lose billions/trillions of dollars. Meanwhile, the entirety of the card hobby doesn't have overall value anywhere even in the same universe as that for all the publicly traded stocks in the world. Most all governments don't/won't give a shit about regulating cards and TPGs because first, you're supposedly talking about a hobby. Secondly, you're also not talking about enough potential money/value in all the cards in the hobby to likely disrupt any country's economy if something were to blow the hobby up, like a loss of faith in TPGs and the cards they've graded, due to all their current and prior biased, conflicted, non-independent work finally being found to not be trusted anymore by the hobby community.

We have to face it, that the card industry is becoming more like an investment industry, every single day. As such, shouldn't the parties that are supposed to be independently reviewing and grading the cards, that helps determine their value in the public's eyes, start being held to similar standards and rules as those who give opinions that help establish values in other investment markets, like CPAs do?

And for those that still say cards are not investments or potentially now making up at least an alternative investment industry, please explain how cards can now be held for owners by third parties in vaults like investment advisors hold securities for their clients, how you can buy fractional interests in cards just like you can buy shares of stock in a publicly traded company and own fractional shares of them, how you can then borrow against your cards just like investors can set up margin accounts and borrow against the value of their investments, and so on.

If it looks like duck, swims like a duck, and quacks like a duck......it's a duck! If it is handled like an investment, speculated on like an investment, stored like an investment, borrowed against like an investment, flipped like an investment........................

[steve B]

Originally Posted by BobC

Don't disagree at all Steve, but the TPGs have already been rife with huge biases and conflicts from their virtual start. Look at all the people who have owned/controlled these TPGs over the years, and also been involved in the hobby as collectors themselves to some extent. Want to make a bet on which TPG they would submit their cards to be graded to? LOL Or what about TPG contingent grading fees based on cards values? In supposedly providing a completely unbiased and equal service to ALL submitters, it should take approximately the exact same amount of time and efforts to grade and slab a 1952 Topps Mickey Mantle card as it does for say a common '52 Topps card from the low series. So why the huge difference in grading fees? This is an absolutely inexcusable, direct bias and conflict of interest on the part of the TPGs, yet the hobby community forgives and allows it to happen anyway.

So, before you go saying these acquisitions of related hobby companies would make for unacceptable conflicts of interest, the hobby community for decades now has already shown they don't really care about such conflicts of interest. At least not as long as they can still get the "stuff" they want. Again, another old adage at work, "Stuff trumps everything!?"

It's a bit of a paradox, we want the graders/authenticators to be entirely independent, essentially non-collectors in many ways.
But we also want them to have a lot of in depth knowledge, and non-collectors aren't likely to have that. Many collectors don't, which is part of the reason to have authenticators.(maybe less so for grading)

The difference in fees is common in several hobbies, I think it's based on a few things, like insurance risk while something expensive is in the building, how much value is added by the grading, maybe the cost of the more experienced person doing the grading, stuff like that.


I do wonder just how far things can be pushed along the lines they're headed. I want that answer to be "not much further at all" but realistically I think people will put up with any level of potential or actual crookedness as long a there's money to be made. The grading companies have pretty much proven that already.

[Peter_Spaeth]

Originally Posted by G1911

The perfect encapsulation in a single story narrative of what a complete and utter farce the ‘grading’ game is. And yet everyone will continue to participate in it.

The statistical analysis was devastating, and Clemons' defense that he somehow just had a better eye than anyone else in the world was beyond absurd.

For the unfamiliar, the bottom line is that according to the analysis Clemons, a former Beckett employee, receives an astonishing, unfathomable percentage of the cards Beckett designates "Black Label" (all 4 subs 10) that can only be explained by favoritism.

[jchcollins]

Originally Posted by BobC

In supposedly providing a completely unbiased and equal service to ALL submitters, it should take approximately the exact same amount of time and efforts to grade and slab a 1952 Topps Mickey Mantle card as it does for say a common '52 Topps card from the low series. So why the huge difference in grading fees? This is an absolutely inexcusable, direct bias and conflict of interest on the part of the TPGs, yet the hobby community forgives and allows it to happen anyway.

PSA and the others charge higher fees for higher priced cards for the simple reason that it’s within their economic reality to do so.

If every ‘52 Mantle #311 submitted cost $25 to grade, they would likely be immediately inundated with every marginally ignorant collector flooding their offices with fakes to see what might happen “just in case” it’s real. The fees effectively prevent this on ‘52 Mantles, and a host of other pricey vintage and modern cards - and I don’t blame them in the least for taking that approach.


Sent from my iPad using Tapatalk

[Peter_Spaeth]

The fee structure is a very minor issue in the scheme of troubling things, IMO.

[Ronnie73]

I'm not sure exactly where the TPG and their higher prices became a part of the topic. I guess I have to go back and figure out the post or two that I missed. But I understand why they do it. Mainly because if you can afford to own a high valued card, you should be able to afford a higher grading fee. I'm sure there are other smaller reasons, but money and greed is always going to be the number one reason, and that's fine, because it happen's everywhere.

The premiums on higher priced auctions, such as a card that sells for $25k compared to a card at $1k. The website resources being used are the same. I could see if the higher valued card gets a full page in an auction catalog, but overall, the same thing.

Any boat owners in here? Just another example. If you can use the word Marine in the part description, regardless if the vehicle part is exactly the same, as in quality and material, you will probably pay double or more for the marine version, because you can afford to own a boat.

That's just how life goes.

[raulus]

Originally Posted by BobC

Nic,

Are you kidding me?

How long have you been a CPA now? You know as well as I that the ONLY thing that a CPA license allows you and I to do, that no one else can, is give our OPINION on a company's financial statements and how good they are. Not really much different than a TPG giving their OPINION on the condition of a card they grade. Both CPAs and TPGs are paid to give their honest, UNBIASED, and INDEPENDENT opinions on certain things they are looking at.

And as a CPA, you know we are supposed to be independent of the parties we give our opinions on, in both fact AND appearance. You also know as well as I do that as a CPA, if you go and charge any clients/customers a contingent fee, they will take our CPA license away as that is not allowed, as it may be deemed or viewed as a type of bias, conflict-of-interest, or lack of independence. (Fact AND appearance, remember!?!?!?)

TPGs charge contingent fees based on the value of a card they grade, correct? And I'm not talking about different service levels. In fact, I don't know where (or even how) you got the idea I was making any reference to service or service levels at all. Correct me if I'm wrong, but if I submit a '52 Topps Mantle card to a TPG for grading in what turns out to be say a 5 grade, along with a low series, '52 Topps common card that also ends up grading a similar 5, and ask for the exact same service level for both cards, I'm guessing I'm going to pay a hell of a lot more money in grading fees for my '52 Mantle because they charge more for grading it simply because it has a higher value. And this is even though they are supposedly providing the exact same services, work and effort as they are putting forth to opine on, grade, and slab my '52 Topps common card as they are for my '52 Topps Mantle, right? That is a contingent grading fee.......PERIOD!!! They are charging based solely on the value of the card they are giving nothing more than their opinion on when they are grading it. And in the case of that '52 Mantle card, even a slight change in the grade given can significantly increase (or decrease) the value of that card dramatically, which can also then impact what the TPG can then charge me for grading and giving their opinion on it. So, tell me, and everyone here on the forum, what is there really to stop a TPG grader from maybe bumping up the grade they give a card so that it results in a higher value, that they can then charge you more for grading? And before you even dare to say that no TPG would ever do that, fact AND appearance, remember!!! That contingent fee charge by TPGs is such a blatant, unquestionable conflict-of-interest and bias that it is truly laughable that apparently almost no one in the hobby calls them out for it, and we just blindly continue to let them get away with it and accept all their potentially tainted opinions on virtually every graded card that exists!!!

And if the TPGs have no problem giving their supposedly honest and unbiased opinions when such blatant bias and conflicts-of interest so clearly exist in what they do, it can only make one wonder what other areas of conflict or bias might they also be ignoring. For another example, I seem to remember that David Hall was known to have one of the greatest (if not THE greatest) T206 collections ever assembled. And if memory also serves, wasn't he also a major owner/officer of Collector's Universe for quite a few years, the same corporation that also just happens to own PSA? I'll give you three guesses as to which TPG Hall likely had all his T206 cards graded by, and the first two guesses don't count.

As a fellow CPA, you know as well as I do that if you, or the firm you work for, audits a company to opine on its financial statements, you and the people working on the audit can't also own a piece of the company that is being audited. That is a totally unallowable, biased, conflict-of-interest, and could potentially result in the loss of one's CPA license once again. I know in all my years working in public accounting, at least once every year I had to go through the checklist and let whoever I was working with/for know what stock holdings/business interests I, or my close family members, owned or had, so they could make sure they weren't doing any audit work requiring the giving of an opinion on a business/firm for which there was a conflict-of-interest because I or someone else at the firm owned or was otherwise somehow directly associated with a company we were hired and paid to audit and opine on. Once again, a CPA/CPA firm has to have and maintain a totally independent and unbiased relationship with any company/client they provide their audit/opinion servicers for, in both fact AND appearance. So, what does that say about people like David Hall, Nat Turner, James Beckett, or David Forman, if they ever went and had cards they, or family members, owned, and had them graded by the TPG companies they owned/operated at the same time?

This is what I'm talking about. Not faster services or different service levels.

And your last comment about you personally not seeing PSA ever getting "cute" with you and their valuation/grading process, potentially resulting in you being charged a higher grading fee, doesn't mean the potential still doesn't exist. Independent and unbiased in fact AND appearance, remember that from your own profession. And since TPGs do nothing but give their opinions, similar to what CPAs do, I would hope that one day they start to be held to similar, honorable standards, like CPAs as well. The fact that the hobby community has let TPGs, and the rest of the major players in the hobby industry, get away with this continuing non-independent, biased, and completely filled with conflicts-of-interest crap for decades now, is truly sad, and in my opinion, almost downright criminal on so many levels.

Hi Bob:

A few observations:

1) No, I'm not kidding. Yes, as a Northern Italian, I'm full of sarcasm, always looking for a quick joke, and you should rarely take me seriously. Life is too short not to have some fun and find every opportunity to laugh, including frequently laughing at ourselves. I highly recommend it.

But no, I'm not kidding here.

2) I don't dispute that the grading process is rife with the potential for manipulation, self dealing, and other hijinks and chicanery. However, while you seem convinced that TPG fees are contingent fees, I'm not entirely convinced of that fact. Since contingent fees for graders seem to be a favorite hobby horse of yours that you delight in riding hard and putting away wet, it seems like it's worth poking at a bit more.

3) There's no need to cast aspersions at my professional abilities. If you want to disagree with me, then go for it. But implying that I am a poor CPA is unnecessary and unwelcome. So while I appreciate that we share the same profession, I really don't need you to question my capabilities as a fellow professional. Hopefully my desire to hash out the details here doesn't drive you to impugn my credentials and malign me in continued similar fashion.

4) Based on your expansive exposition above, I'm not convinced that you are familiar with the various service levels and current fee schedule for grading, at least not for PSA. I've never submitted to another TPG, so I can't speak to other graders. Based on my interpretation of your comments, since you don't seem to be familiar with even the concept of a service level, or with the various levels of service offered by PSA, allow me to share a link to the current fee schedule, which outlines those levels of service, the turnaround times, the estimated value limits, and pricing for each service level: https://www.psacard.com/pricing

The process works thusly: if I decide to submit an item to PSA, I first get to estimate the value of my item (valuing it based on the value once it is graded), and then I submit the item at that service level. For example, if I estimate that my item is worth $1,000 based on what I estimate it will grade at (let's say I have an estimated grade of PSA 5), then I submit at the "regular" service level, which currently costs $75. Since I estimate my item is worth more than $499, I cannot submit at a lower service level, such as the "bulk" level, which would only cost $19 per card. Allow me to observe that this is not a contingent fee schedule, at least not yet. In a moment, we'll dig into the details around potential variations, and perhaps there will be an opportunity to get there. Certainly if the fee schedule was: "The fee is X% of what it's worth", or alternatively, "We only get paid if we deliver XXX grade", then that would clearly be a contingent fee schedule. A quick perusal of the current fee schedule demonstrates to even the most casual observer that this is not the case here.

5) Allow me to get on my virtual soap box for a moment and expound on precisely what constitutes a contingent fee. A contingent fee exists in a situation where the service provider only gets paid for a certain outcome. Or where the fee rises and falls based on the outcomes delivered.

In this case, let's say that my valuation was based on my item grading at a PSA 5. If it only grades at a PSA 4, does PSA make less? Hell no. What about if it grades at PSA 3, 2, 1, or A? Still no change to the fees that PSA charges. If it were a truly contingent fee, then PSA would make less if my item grades lower. With many contingent fees, if the desired outcome is not achieved, then the service provider makes nothing. Certainly the lawyers among us will tell you that if they take on a case based on a contingent fee and then lose the case, then they make nothing. Not the case here.

I will grant you that in certain limited circumstances, PSA will not charge for their services. I've experienced this when my item did not meet a certain minimum size requirement. While this might minimally seem to meet the definition of a contingent fee, it seems to be a stretch to me, particularly because it's not something that occurs very often.

[Note to any haters that the minimum size finding was not because I was doctoring my cards. Either I pulled them from the pack cut this size from the factory, or I bought them raw from others, and PSA didn't like them.]

6) Let's examine the opposite case. Let's say that my item grades at PSA 6 instead of my original estimated PSA 5. (Side note: Like that would ever happen). Does PSA make more? Probably not in this case, since the next highest value level doesn't kick in until my item hits a value of $1,500. And even then, as I noted earlier, if it's close, perhaps valued at $1,600 or $1,700, then I've never seen them get cute with me and attempt to bump me up to the higher price.

It is true in this example that if my item were to be grade wildly higher than my original estimate, then I would experience an upcharge. So if my original estimate of a PSA 5 actually turned out to be a PSA 7 or 8, then I might be in a spot where I would end up with an upcharge as I bump up above the $1,500 limit at the "regular" service level, which would currently put me up at the "express" level of $150 for my card. Naturally, most of us would be wildly ecstatic if our item that we expected to grade at PSA 5 comes back at PSA 8.

7) I think there's room to argue here about this somewhat unlikely scenario and whether that constitutes a contingent fee. I grant you that this very specific and narrow fact pattern could seem like it's a contingent fee, simply because the fee to the service provider rises as the value of the item rises. However, I would submit that this outcome is not common, particularly these days where most grades from PSA seem to be coming in lower than expected. I also hasten to observe that the fee does not rise 1:1 as the value of the item rises. Typically in a contingent fee scenario, fees rise commensurate with the increase in added value. In this case, the value of my item could rise at least 50% to $1,500 with no change to the fee schedule. And arguably I could probably get away with it rising even more before PSA attempted to upcharge me. So while the value of my item has risen in a pretty dramatic fashion, as much as 50% (and possibly more), the fee to PSA is unchanged. Still doesn't sound like a contingent fee to me.

Moreover, I suspect that the vast majority of cases where there is an upcharge are not due to the item grading higher than expected. Rather, it is merely the result of the submitter attempting to squeak by at a lower service level. Let's go back to my example of my item being worth $1,000 if it grades at PSA 5. Let's say that I decide to get cute and submit it at the "bulk" level for $19, which has a declared value limit of $499. Maybe I'm just cheap. Or maybe I'm paranoid that my item won't really grade at PSA 5. So I push it a little. When it comes back and it's really a PSA 5, and PSA upcharges me, does that make it a contingent fee? I would argue that I'm merely paying the fee that I should have paid all along, but I tried to get away with paying less, and they caught me.

8) To reiterate, I agree with many/most/virtually all of the comments that highlight how the grading process is inherently flawed, subjective, and inevitably leads to disparate outcomes that drive us completely bananas as participants in this hobby. I'm just not convinced that contingent fees are quite the boogeyman that you assert.

9) If you want to disagree, then that's cool too. We can agree to disagree. That's part of the fun in an online chat board where we are free to express our opinions and debate the merits of any given viewpoint. But if I may be so aggressive as to beg your indulgence: please attempt to be a little more collegial in your disagreement. Even just a little would be peachy.

[bnorth]

Originally Posted by Peter_Spaeth

The statistical analysis was devastating, and Clemons' defense that he somehow just had a better eye than anyone else in the world was beyond absurd.

For the unfamiliar, the bottom line is that according to the analysis Clemons, a former Beckett employee, receives an astonishing, unfathomable percentage of the cards Beckett designates "Black Label" (all 4 subs 10) that can only be explained by favoritism.

Whet ever happened to Mr Clemons with all the "proof" they had against him?

[Peter_Spaeth]

Originally Posted by bnorth

Whet ever happened to Mr Clemons with all the "proof" they had against him?

Nothing. To be clear, he wasn't altering cards, just getting preferential treatment, according to the claims.

[Yoda]

If Fantastics could say come up with $25 billion perhaps they could buy out the MLB club owners and have the whole package. Consider the fresh material they could auction, thinking of a 1 of a kind game used Mike Trout jock strap (perhaps not that fresh).

Just kidding, of course, but nothing about our hobby surprises me anymore. The different directions and tangents taken worry me and cards seem to be very secondary to the desire to squeeze out every possible $ out of once was a hobby.

[Johnny630]

What would the World be like if Fanatics and Collectors Merged and Became a Publicly Traded Company WOZWER GO TO WAR MRS AGNES HOLY COW....Hey it Could Happen :-)

[G1911]

Originally Posted by bnorth

Whet ever happened to Mr Clemons with all the "proof" they had against him?

I'd leave to hear a fact-based reasonable argument that the evidence is "proof" and not proof.

I don't know what anyone would expect to have happen. I don't believe he did anything illegal, he just got gift grades from opinion sellers that were his buddies and former coworkers. It exposes the farce of this game, but I don't think he committed fraud and obviously Beckett doesn't give a shit so what would we expect to happen that didn't?

[Exhibitman]

Originally Posted by Peter_Spaeth

The statistical analysis was devastating, and Clemons' defense that he somehow just had a better eye than anyone else in the world was beyond absurd.

For the unfamiliar, the bottom line is that according to the analysis Clemons, a former Beckett employee, receives an astonishing, unfathomable percentage of the cards Beckett designates "Black Label" (all 4 subs 10) that can only be explained by favoritism.

Or he hacked the system and changed the grades. Worked for Ferris Bueller's attendance record.

I don't see a problem with graders being collectors. It isn't like they are going to pocket the cards for their PCs. The problem is if the graders receive preferential treatment on their own subs.

The basic problem is our assumption that grading is a blind process performed by the pure at heart in monks' cells. It isn't. Never has been, especially at the National or any other on-site venue. I've had collectors and graders bring me in to look at boxing cards right in front of grading booths at the National. No anonymity there.

[BobC]

Originally Posted by raulus

Hi Bob:

A few observations:

1) No, I'm not kidding. Yes, as a Northern Italian, I'm full of sarcasm, always looking for a quick joke, and you should rarely take me seriously. Life is too short not to have some fun and find every opportunity to laugh, including frequently laughing at ourselves. I highly recommend it.

But no, I'm not kidding here.

2) I don't dispute that the grading process is rife with the potential for manipulation, self dealing, and other hijinks and chicanery. However, while you seem convinced that TPG fees are contingent fees, I'm not entirely convinced of that fact. Since contingent fees for graders seem to be a favorite hobby horse of yours that you delight in riding hard and putting away wet, it seems like it's worth poking at a bit more.

3) There's no need to cast aspersions at my professional abilities. If you want to disagree with me, then go for it. But implying that I am a poor CPA is unnecessary and unwelcome. So while I appreciate that we share the same profession, I really don't need you to question my capabilities as a fellow professional. Hopefully my desire to hash out the details here doesn't drive you to impugn my credentials and malign me in continued similar fashion.

4) Based on your expansive exposition above, I'm not convinced that you are familiar with the various service levels and current fee schedule for grading, at least not for PSA. I've never submitted to another TPG, so I can't speak to other graders. Based on my interpretation of your comments, since you don't seem to be familiar with even the concept of a service level, or with the various levels of service offered by PSA, allow me to share a link to the current fee schedule, which outlines those levels of service, the turnaround times, the estimated value limits, and pricing for each service level: https://www.psacard.com/pricing

The process works thusly: if I decide to submit an item to PSA, I first get to estimate the value of my item (valuing it based on the value once it is graded), and then I submit the item at that service level. For example, if I estimate that my item is worth $1,000 based on what I estimate it will grade at (let's say I have an estimated grade of PSA 5), then I submit at the "regular" service level, which currently costs $75. Since I estimate my item is worth more than $499, I cannot submit at a lower service level, such as the "bulk" level, which would only cost $19 per card. Allow me to observe that this is not a contingent fee schedule, at least not yet. In a moment, we'll dig into the details around potential variations, and perhaps there will be an opportunity to get there. Certainly if the fee schedule was: "The fee is X% of what it's worth", or alternatively, "We only get paid if we deliver XXX grade", then that would clearly be a contingent fee schedule. A quick perusal of the current fee schedule demonstrates to even the most casual observer that this is not the case here.

5) Allow me to get on my virtual soap box for a moment and expound on precisely what constitutes a contingent fee. A contingent fee exists in a situation where the service provider only gets paid for a certain outcome. Or where the fee rises and falls based on the outcomes delivered.

In this case, let's say that my valuation was based on my item grading at a PSA 5. If it only grades at a PSA 4, does PSA make less? Hell no. What about if it grades at PSA 3, 2, 1, or A? Still no change to the fees that PSA charges. If it were a truly contingent fee, then PSA would make less if my item grades lower. With many contingent fees, if the desired outcome is not achieved, then the service provider makes nothing. Certainly the lawyers among us will tell you that if they take on a case based on a contingent fee and then lose the case, then they make nothing. Not the case here.

I will grant you that in certain limited circumstances, PSA will not charge for their services. I've experienced this when my item did not meet a certain minimum size requirement. While this might minimally seem to meet the definition of a contingent fee, it seems to be a stretch to me, particularly because it's not something that occurs very often.

[Note to any haters that the minimum size finding was not because I was doctoring my cards. Either I pulled them from the pack cut this size from the factory, or I bought them raw from others, and PSA didn't like them.]

6) Let's examine the opposite case. Let's say that my item grades at PSA 6 instead of my original estimated PSA 5. (Side note: Like that would ever happen). Does PSA make more? Probably not in this case, since the next highest value level doesn't kick in until my item hits a value of $1,500. And even then, as I noted earlier, if it's close, perhaps valued at $1,600 or $1,700, then I've never seen them get cute with me and attempt to bump me up to the higher price.

It is true in this example that if my item were to be grade wildly higher than my original estimate, then I would experience an upcharge. So if my original estimate of a PSA 5 actually turned out to be a PSA 7 or 8, then I might be in a spot where I would end up with an upcharge as I bump up above the $1,500 limit at the "regular" service level, which would currently put me up at the "express" level of $150 for my card. Naturally, most of us would be wildly ecstatic if our item that we expected to grade at PSA 5 comes back at PSA 8.

7) I think there's room to argue here about this somewhat unlikely scenario and whether that constitutes a contingent fee. I grant you that this very specific and narrow fact pattern could seem like it's a contingent fee, simply because the fee to the service provider rises as the value of the item rises. However, I would submit that this outcome is not common, particularly these days where most grades from PSA seem to be coming in lower than expected. I also hasten to observe that the fee does not rise 1:1 as the value of the item rises. Typically in a contingent fee scenario, fees rise commensurate with the increase in added value. In this case, the value of my item could rise at least 50% to $1,500 with no change to the fee schedule. And arguably I could probably get away with it rising even more before PSA attempted to upcharge me. So while the value of my item has risen in a pretty dramatic fashion, as much as 50% (and possibly more), the fee to PSA is unchanged. Still doesn't sound like a contingent fee to me.

Moreover, I suspect that the vast majority of cases where there is an upcharge are not due to the item grading higher than expected. Rather, it is merely the result of the submitter attempting to squeak by at a lower service level. Let's go back to my example of my item being worth $1,000 if it grades at PSA 5. Let's say that I decide to get cute and submit it at the "bulk" level for $19, which has a declared value limit of $499. Maybe I'm just cheap. Or maybe I'm paranoid that my item won't really grade at PSA 5. So I push it a little. When it comes back and it's really a PSA 5, and PSA upcharges me, does that make it a contingent fee? I would argue that I'm merely paying the fee that I should have paid all along, but I tried to get away with paying less, and they caught me.

8) To reiterate, I agree with many/most/virtually all of the comments that highlight how the grading process is inherently flawed, subjective, and inevitably leads to disparate outcomes that drive us completely bananas as participants in this hobby. I'm just not convinced that contingent fees are quite the boogeyman that you assert.

9) If you want to disagree, then that's cool too. We can agree to disagree. That's part of the fun in an online chat board where we are free to express our opinions and debate the merits of any given viewpoint. But if I may be so aggressive as to beg your indulgence: please attempt to be a little more collegial in your disagreement. Even just a little would be peachy.

Nic,

First off, I was not trying to put you or your abilities as a CPA down. My apologies, but my intention was for a lot of those comments to be taken more as good natured jabbing at/with you. It is often impossible to truly project intentions and meanings using just printed words. But trust me, the jabbing comments were made in friendliness and with a bit of humor intended, not with any negative or critical connotations whatsoever.

Having said that though, I still don't understand your pushing the subject about the different service levels and such being somehow behind the point(s) I was trying to make. In trying to keep this response as short as possible, I'm just going to address the main, relevant point of this whole issue. And to that point, here is what you said as to "contingent fees", and to which I agree.

[B]5) Allow me to get on my virtual soap box for a moment and expound on precisely what constitutes a contingent fee. A contingent fee exists in a situation where the service provider only gets paid for a certain outcome. Or where the fee rises and falls based on the outcomes delivered.[/B

Now take that last line of yours, where you definitively state a contingent fee would exist in the instance where a fee rises or falls based on the outcomes delivered. So, having said and (hopefully) agreeing on that:

1) Do TPGs have fee rates at least partially based upon the perceived value of a card being graded, with such values determined by and in the TPG's sole discretion, yes or no?

2) Do the grades assigned by TPGs to a card they're grading generally have a direct correlation and impact to the value of that card (higher grade = higher value), yes or no?

3) If the answer to these first two questions is yes, then doesn't that also mean that if a TPG gives a higher (or lower) grade to a card, that normally means it will also have a higher (or lower) value, which also means the TPG can end up potentially charging you a higher (or lower) fee for grading that card based on their fee schedule, yes or no?

If yes again, remember - [B]Or where the fee rises and falls based on the outcomes delivered.[/B. Assuming you have honestly answered that the correct answer to all three of my questions is yes, then you have just definitively proven that TPGs do in fact charge a type of contingent fees, just not ones based on a straight/given percentage. And none of this has absolutely anything at all to do with whatever service levels were chosen for the card(s) being graded.

Also doesn't mean a TPG may end up charging such a contingent fee for every card they grade, like in the case where they grade a card of so little value that even if given a "10" grade, that card's value wouldn't rise enough to cause it to be subject to an upcharge based on their fee schedule. But whether they can do it for every card they grade or not, the fact is they still basically can end up charging someone a contingent fee based solely on their own opinion and discretion. Fact AND appearance!!!

And before you even try to say that no TPG would ever intentionally grade a card higher than it really should be, just to be able to charge more for grading it, how do you know that has never in fact happened, or that it never will or could? The correct answer is, you don't. And with no existing independent review or any outside oversight of TPGs to ensure they are being honest, independent, consistently accurate, and totally unbiased in the grading opinions they are giving, you never will either. Fact AND appearance!!!

Just because a pickpocket doesn't steal from every single person they pass on the street, or do so every day of the week, it doesn't mean they still aren't a pickpocket and thief.

[Peter_Spaeth]

Far more likely IHO they would grade a card too low in the hope the unhappy submitter resubmits it and pays another grading fee. Or, if they grade a card too high, it's likely as a favor to someone, not to squeeze out a few more dollars in fees. With due respect Bob, sure it's possible, but I would bet in the real world it isn't much of an issue.

[Eric72]

Fanatics buys PWCC, so (of course) let's argue about TPGs.

[raulus]

Originally Posted by BobC

Nic,

First off, I was not trying to put you or your abilities as a CPA down. My apologies, but my intention was for a lot of those comments to be taken more as good natured jabbing at/with you. It is often impossible to truly project intentions and meanings using just printed words. But trust me, the jabbing comments were made in friendliness and with a bit of humor intended, not with any negative or critical connotations whatsoever.

Apology accepted. It's now obvious that I was taking you far too seriously, and I apologize for that. I promise I'll focus on looking for your friendly humor, so as to not misinterpret it going forward.

Originally Posted by BobC

1) Do TPGs have fee rates at least partially based upon the perceived value of a card being graded, with such values determined by and in the TPG's sole discretion, yes or no?

This statement is only partly true, and I would argue that your framing of the question is a bit skewed to try to get to a desired result.

As I noted, the process starts with the submitter first estimating the value, and submitting the item at the appropriate service level based on that estimated value formulated by the submitter. As I also noted, my experience is that PSA tends to be flexible/compassionate in their approach, rather than being aggressive to hit me with upcharges. I've read similar comments from others around here, so I'm inclined to believe that it's not just me.

As I also outlined in my earlier example, only a very significant and dramatic increase in value above my estimated value would lead to a rise in TPG fees. So my conclusion is that the correlation between the grade and the TPG fees is weak. Yes, there is a correlation. But my conclusion is that it's not particularly strong.

The exception, of course, is in situations where the item is right on the cusp of moving up to the next higher fee level, and a small increase in grade would move the item up to the higher fee level. I concede that's a possibility.

Originally Posted by BobC

2) Do the grades assigned by TPGs to a card they're grading generally have a direct correlation and impact to the value of that card (higher grade = higher value), yes or no?

Yes, although as I noted as well, higher than expected grades are unusual in my experience. And postings from others around here support that conclusion. As I also noted, a small increase in the grade is often not enough to move the needle on their fees. In most cases, only a large increase would get there, often 2-3 grades higher than expected. I'm sure you'll raise a 311 Mantle as your counterpoint, but there's only so many 311 Mantles out there, and the valuation there in many ways is so far outside of the norm that it doesn't make for good examples.

And my experience is that increases in grades in the scale of 2-3 grades above the original estimate are very rare. I suspect it's happened before, and could happen again, but I would argue that such a situation is very exceptional. But just because it happens in rare cases doesn't mean that we should let it keep us up at night.

Originally Posted by BobC

3) If the answer to these first two questions is yes, then doesn't that also mean that if a TPG gives a higher (or lower) grade to a card, that normally means it will also have a higher (or lower) value, which also means the TPG can end up potentially charging you a higher (or lower) fee for grading that card based on their fee schedule, yes or no?

You bring up an important element here - if grades are lower than expected, do fees decline? The answer is no. This element cuts against the argument that the fees are contingent.

Maybe to sum up a little - I think the other inherent flaws in the grading process deserve a lot more attention than this issue. I would argue that the potential for self dealing and special treatment of friends and family is a much bigger deal. Plus the very nature of the process being incredibly subjective that allows for a significant amount of grader discretion.

I totally get that contingent fees gives you the willies, and cause you to question whether the grader can really be objective. That's cool too. I'm just not seeing that as the biggest issue in play here. A small issue, maybe. But given the enormity of the other issues in play, this one seems relatively minor to me.

As you noted in your earlier post, this might be as much an issue as lacking independence in appearance. I certainly see the potential for that. But based on personal experience and most theoretical fact patterns, I'm just not seeing it play out as an actual bias to assign higher grades to generate higher fees. If anything, PSA's recent penchant for grading 1-2 grades low these days actually works against this argument.