A Familiar Refrain – "What are my cards worth"

If you collect sports cards currently – you’ve heard it.  If used to collect sports cards – you’ve probably thought it, or said it.  Name that phrase.  Well, it typically goes something like this:

Past Collector: oh, so you still collect baseball cards?

Current Collector: I sure do, buy and sell on eBay, trade online, read my most favoritest website FCB each and every day (ok, so I’m exaggerating)

Past Collector: ::leans back in chair, sighs::  you know, I collected those as a kid, still got a big collection, maybe you’d want to take a look at them and see if they are worth anything?

Current Collector: ::immediately mentally calculates person age and what years they would have been between the ages of 6 and 13::  Ummm, yeah maybe we could do that

If you’ve been there, you can complete the story yourself.  The rest of your lunch hour is spent discussing the stash of baseball cards the Past Collector has accumulated, most of which range in date from 1980 to 1995.  None of which include a Rickey Henderson rookie or for that matter any other notable or rare cards.  However, included are such gems as a Paul Assenmacher rookie, a Pete Rose card (isn’t he the hit king!!??) and a card from the early 90s with a Sunny Delight colored background and a guy with a last name of Van something or other…., Poppel, yeah, that’s him.  Got the Chipper Jones from that set?  Oh no man…but I have a killer stash of Jerome Walton…great, Corey Patterson’s predecessor in dissapointment.

The conversation proceeds and at some point you break the news in some fashion similar to this “sorry but most cards from that era are worthless, likely including yours.”  You go on to soften the blow by explaining that they are still fond childhood memories – no one can take those away from you and then proceed to relay the time you saw Paul Assenmacher pitch a scoreless inning in 1992.  (I’m exaggerating again and I do like the old cards even though they are largely worthless).  Regardless, they get the picture that they aren’t sitting on the Fort Knox of sports memorabilia and the eventual question comes, “why?”  When this question is asked of me, many thoughts flood my mind, what follows is hopefully a somewhat logical attempt to explain the economics at work.

You see, in the mid-1980s, the market for vintage cards from the 50s and 60s was really taking off.  Dad’s who still had those collections could really cash in and that spawned a whole new generation of collectors, like myself, who thought “I’m going to enjoy the heck out of this and get rich all at the same time, the stock market is for idiots.”  (Investing $100 in Wal Mart on 1/1/1985..you’d have $5,131 now).  Anyway, as a result of hearing of these big money card stashes (most of which were thrown out by Moms) a generation of collectors was born.  And now we hit economic intersection #1 demand rises, and rises, and rises and rises…and then rises a little bit more.  Companies, being in business to make money spend lots of time reading the market, they see the demand rise, realize they can sell more goods at the same price and start producing more to meet demand and make more money.  And so it begins.

Now, if you believe that markets are efficient, then you believe that they analyze and interpret all publicly available information and adjust prices accordingly.  Thus, the excess supply of 1988 Topps should cause a significant decline (read: a cratering) in the price of those cards.  However, I believe there is another piece that must come before that.  Participants in any given market must have the opportunity to buy/sell/trade their wares with other market participants at an agreed upon price.  Now, flashback to the collecting you did as a kid, if you wanted to obtain a card what were your options?  Cardshop, buy a pack at a retail outlet, trade with a friend with limited inventory or perhaps in rare cases, go to a show.  The only instance where you’d have any say-so in the determination of the value of that card would be with your friend on the playground.  You could then decide what percentage of “book,” you wanted.  In all other cases you were usually going to wind up paying what the seller was asking.  And oh by the way, the card shop owner wasn’t about to mention that he could buy as many cases of 1990 Topps from his distributor as he could fit into his shop…

As a result of these kinds of market circumstances, prices for cards that had literally millions of copies stayed artificially high for quite some time.  Remember the first “rare” serial numbered cards like the early ’90s Elites – they were #’d to 10,000 and you could never pull one and rarely find one.  Probably because you were shopping in and limited to a very small market!

However, in the mid-90s all that began to change…much of it due to Pierre Omidyar who created eBay.  As use of eBay proliferated so did homes with internet connections.  All of a sudden you had a new option for card acquisition and disposition that had exponentially more inventory than you had ever seen before AND you and the buyer set the price via an auction format.  At this point, the efficient markets kicked in as all of these small markets started to move together to form one macr0economy.  If the market had thoughts itself, I imagine some of them might have been like this:

“Wow, every single card shop in the U.S. has 10 1990 Topps Ken Griffey Jrs, a lot more of those than I thought”

“I thought 1987 Topps was rare cause my card shop had just one box…I guess not, some people have multiple cases”

“Why does it matter what Beckett says when these auctions are telling me something totally different?”

And the list goes on.  Because of this very “free” market in eBay, the supply and demand curves began to function efficiently and as a result most of the cards from 1980-1995 were devalued significantly if not totally.  Cards were much more obtainable and MUCH cheaper to obtain.  Think of a car buyer.  At the end of the day that buyer wants a car to get him from point A to point B, realizing that there are millions of other cars just like it doesn’t mean he no longer wants it, it just means he’s going to pay a Ford Taurus not a Maserati price.  People still wanted cards, they just weren’t going to pay the premiums they once did.  It is to be noted that eBay alone was not responsible for all this, the Internet in general was the driver…eBay was just the biggest piece of that.

It’s probably no coincidence that a great many card collectors then left the market in the late ’90s and early ’2000s.  The well documented financial troubles of Pacific, Fleer, Donruss, disappearance of card shops and numerous other changes in the market followed.  As a result, the card market demanded more scarcity, rarity, uniqueness and otherwise which Topps and Upper Deck have tried to provide…and the market, which might be classified as a bit more of a niche market today still exists and flourishes.  More on that for another day though.

For now though when you get that look of disgust from the person whose card collection you’ve “valued.”  Tell them they should have hedged their card investment by investing in eBay, or just show them this if they’d like to double down.