1545 - Fixing Grading

Welcome Dr. James Beckett, sports Card Insights. I probably wouldn't have done this if BGS had not been acquired late last year by Collectors holdings by psa. I never did have an adversarial position, but I want what's best for the hobby. PSA obviously big part of the hobby in the way cards are transacted and when PSA gets way behind and shuts submissions, you'd think there'd be flow over to SGC and BGS and ctc, but there's a lot of loyalists that are going to just wait for PSA because that's just the way they do it. That's their prerogative. I think they're allowed to complain. If you're going to be only a customer of psa, then you're going to be in the situation of when they have capacity problems they are trying to fix, but they keep getting in more cards than they can put out. Even though they're adding more people, they're adding more space, they're improving their system. So I'm sympathetic to that. But this episode is about fixing, grading, some ideas, stepping back and just giving some commentary that could apply to PSA as well as BGS as well as any other existing or future grading company. It's not that it's broken, it's just that if you need a new feed required, the turnaround times are the bigger issue than the cost. I think the cost is a problem too, but thanks. Sponsors Top Spagnini, Upper Deck Heritage Auctions, Huggins Scott Auctions, Mike Stadium Sports Cards, Burbank sports cards, compse.com and Beckett Media Beckett Grading and Beckett authentications in two years it might be fixed if PSA has invested their $200 million and has multiple locations around the world as well as a whole small army of additional graders. And from what I can tell, BGS has really stepped up and had a really big month last month, so they're on the uptick. Sgc I think, is being positioned as primarily a vintage alternative, very respected, and CGC seems to be merely going along. What would I do to fix grading or fix the grading companies? The grading is a huge part of the hobby's infrastructure and it affects liquidity, it affects confidence. The registry is a big deal, Pop reports are a huge deal. The auction results fanatics promotion in their flagship of having a redemption card that's just been pulled for the 52 tops mammal it's graded but they don't say what the grade is. I presume it's already been graded and it's Their prerogative not to say. But if they don't say what the grade is, to me that might mean it's a one. It still could be a decent card anyway. So how do you even think about grading when you can be in limbo? PSA has effectively a black hole vault. If you sent in cards in the last few months, you could be waiting eight or nine months possibly. And that's frustrating. And I don't know that I can solve the current problem as much as talk about some things I would consider for the next iterations. Because right now, if you participate in a break and you get a good card, you send it in the PSA and you could be getting it at playoff time for football next year. So this really affects the brand new products. And part of what I'm seeing and what I'm suggesting is the needs time for some segmentation of the grading inputs. Basically, I really would like to see TCGS have a separate queue and I'd like to see vintage have a separate queue and I'd like to see the brand new products, especially this year's products, have a separate queue. And frankly, being a sports guy, I would like to give priority to the brand new products because I think that's what's driving the hobby. I'm a vintage guy. So if somebody's got to wait vintage, there's not an imminent need to get it back as much. In fact, I think vintage submitters might be willing to trade lower price for a slower turnaround. The brand new guys, this year's products, in fact, they are having to pay up in many cases. So we get here just grading got too successful and PSA got too successful. It's a situation we'd been here before a number of years ago, right at the beginning of COVID was five years ago was it that PSA shut down, did not accept new submissions because they had a backlog of a million or two. And I remember I went over to the Beckett headquarters and saw the Beckett backlog that was a whole room full of cards. Looked like a million cards to me. So I think it's more the turnaround times it's a problem than the pricing frustration just being stuck in limbo that you don't have the cards. If you did have an offer to sell a raw card at a premium price, anticipating a good grade, you can't do that. It's gone. It's somewhere in the receiving warehouse for psa which is getting hundreds of thousands of cards a day. So you can't say, oh, send me back my card. To me, that's a bigger deal than the upcharges because if upcharges were the only problem in the industry, then PSA would not be so popular because they're the main ones doing the upcharges. Sorry, but that is working okay. It is a big revenue generator and it does pay for this guarantee, which is another thing. I just think different skills are required to a great DCG with the rounded corners, a lot of them coming right out of the pack, a high percentage of gem mint as opposed to vintage or any of the shiny modern stuff. There's just a different kind of training for TCGs as opposed to modern cards as opposed to vintage. I think it's hard to teach somebody how to grade vintage if they've never collected or never handled vintage. That's just my opinion. Maybe the same thing with TCGs. Modern cards seem like everybody's. You just open them. So most of my comments are about speed and giving the customer a little more control or input. I heard talk about somebody needs to start a grading school, a grading academy, and their graduates could then go into the grading companies and hit the ground running. And I'm here to tell you there already is a grading school and it's called PSA training program and BGS training programs where these entry level graders, even if they've got a lot of experience and aptitude, they're still going to go through a training program to make sure that they are up to speed and are trustworthy to be on the line. So I don't see a third party grading school. I'd like to shorten the grading school by having three different groups. A separate grading school for tcg and that's all you grade. You don't cross over to grade sports and then modern sports and then vintage sports and to me, vintage sports much longer apprenticeship. In fact, that's more of an apprenticeship than a training program. Any kind of grading school, whether it's internal or external. The big deal to me is is it authentic and has it been altered? Coming up with a numerical grade is not trivial. If you don't know that it's authentic, you're in deep trouble. That's the biggest mistake. And if you can't detect the alteration and in the defense of the graders, some of the alterations are undetectable. At least currently they're undetectable. If a foreign substance was used, it may not be detectable in 2026. My concern is it may be detectable in 2036, 10 years from now, or 20 years from now, I have some concern about that. But there's a little bit of a back and forth between the cheaters and the grading companies. Grading companies hopefully are catching more and more. In fact, the grading school, it'd be nice to have a card doctor come in and give me a guest lecture at the grading school and say, here's how I do this and here's how you can catch it. Because card doctors, there's a whole spectrum from guys that'll do anything to guys that have a code of ethics that here's what we will do and what we won't do. But they're very aware of what the capabilities are, what you would soak it in, which soaking is usually a no. No, wiping is not necessarily. But I think that'd be fascinating and probably in the training program they're already doing that. I know the BGS graders would compare notes all the time about what they're seeing. Hopefully bgs, SGC and PSA all being under some loose umbrella of collectors holdings, they would help each other on that. So, yeah, I want to make three different lanes. Frankly, the fastest turnaround to me is the modern sports cards. Pokemon, they got to have their own pricing. Each of those categories have their own pricing, their own queue, and they can choose how fast they want it. I'm not going to make a PSA change their price. Their pricing is based on value, but it's also based on speed. So a bunch of them have it based off speed. So you can decide that the surge pricing is a problem right now. Because like with the airlines is that, hey, we got some empty seats, let's lower the price and fill up the seats. Because an empty airline seat is doing nothing for us, even if it's half price. We have the opposite problem. Overbooked. We take a page from the airlines. And if you are stuck in the queue and frustrated, maybe just like the airlines, the BSA or BGS comes back to you and says, hey, we're overbooked, we're over capacity. Would you be willing to go to the end of the line? That sounds bad. In return for vouchers for future grading that would have real financial value, instead of working your way up the queue, it probably would have to be by the whole batch, otherwise you'd have chaos. So if I submit a batch that is not in a hurry and you say, hey, would you take a voucher to go to the end line to get an even slower return, and you may say, you know what? For this stuff, I don't care and for some of the vintage stuff, if it's commons that you're trying to get for your registry set and the cards aren't that valuable and you just want them and they're not going anywhere, you might be willing to make that trade. So my point is I, I want to give the submitter some say in how they want to do it. Usually they want to go faster, but it might be that they could send out a note and say, hey, if you want to go slower, don't hassle us, but we're going to give you one year turnaround. But we're going to give you a voucher for whatever the deal will be against future grading. When we started bccg, which was so panned and still is panned and like it was a terrible idea, it was a very profitable idea. Something that was hatched kind of between me and Ken Golden. Ken golden said, I want to give you lots of business, but they have to be tense. I said, well, we can't do that with BGs. We have standards, we're not going to change our standards. And he said, I just need a Becket 10. So we did two things. One, we're not going to be a three letter thing to make it be confusing. We thought we'd do Beckett Collectors Club grade. And that's bccg. That's four letters that will stand out that it's not going to be a typo from bgs. And so we can give tens if tens are mint or better. And so people have thought the 10 is a 10. No, the 10 means different things for several different companies. But for BCCG it meant mint or better. And most people think that meant if it would have been a BGS9, then it would have been a BCCG10. And yes, that is true because a mint card is, is BGS9. But if it's an 8.5 or an 8.51 or something in between an 8 and 9. And BCCG did not do half grades. So anything that in BGS would have been 8.5 or better, 8.5 would have rounded up to 9. So that really increased the speed with BCCG that we could look at. If it was 8.5 or better for BGS, it could go into BCCG10 Slam and no integrity problems at all. By the definition, how we did that was mint or better. Okay. Now the other reason we were even interested in that is because Ken said, and he was a big time player obviously back in those days as well. He said, I can give you thousands and thousands of cards. That wasn't what was of interest as much as it wasn't a thousand different cards. In many cases it was a thousand cards of each player because that's what was done in those days. And we said now wait a minute. If you give us a thousand cards all in a row of the same player, the same set and then another thousand probably of the other player in that same set, we can, we can really drive the price down. We can pass through the efficiencies of doing that. I'd like to see that done enough about BCCG for now. But that was the impetus when BCG was set up. You, you had to have at least 100 copies of the same card or something like that. We just, we weren't doing one offs there. And so I'd like to see the companies in fixing the grading give some kind of incentive for people to submit their cards in, in groups if they've got a hundred of same. It doesn't have to be a cheaper price, but it could be. That goes the front line. That's very profitable grading and it's faster grading and so you could, you could get that in and out faster. Graders can, can really pick up speed when it's, they're just doing the same card. You're already very, very familiar with the centering and the typical problems of that card. So, so fixing grading, I would have multiplicity discounts that would be, that would probably not be discounts in price as much as give you an edge in the queue. I've mentioned this before, but I think loyalty points, you know, if you're a loyal submitter to PSA or BGS or sgc and that's evidenced in your collection. It's evidenced in your registry participation and in your submissions. If you're submitting a lot. I want the bigger customers, the loyal and best and most profitable customers to get to get a good deal. I don't want them, the ones them to be the ones that are sitting in the back of the line patiently waiting if they're a good customer. I think loyalty points could do that. Again, they're not worth money, but you can get some perks and the perk could be to get some edge in the queue. That won't be popular for the smaller submitters, but the smaller submitters could bundle or they can go to these group submitters. I think that's already happening. I would give loyalty points for some pre screening if you have a great card ID or a scan that you provide that's of sufficient quality, that would be good. On the other hand, I'd want to crush your loyalty points. If you submit bad cards, bad faith behavior of any kind, misidentifying cards or you're trying to game the system in some way, they're you could lose loyalty points. I mentioned registry collectors. That's one of the main things that PSA did that goes in the sports card hall of fame of great ideas. Getting the registry out and fully accepted, that was pretty brilliant. I think I appeal is going to be part of grading going forward and it's either going to be done by these third party people or companies. So I think grading companies are going to have to cover that end. On the other hand, if you're submitting your own card, you could submit your own graders notes with the card as you're putting it in and just saying, you know, this is technically going to be downgraded because of that pinhole, but it looks gorgeous, perfectly centered and so I think the submitter could do some of the work. And like I said, loyalty points. My thought that I appeal should be more formally incorporated in the grading process is probably a non starter right now because the grading companies are so far behind. But eventually that's going to be part of the training because it's meaningful, it doesn't override the technical grade. It explains the card within the grade within the slab. The market is already making that adjustment and the grading companies should participate in that. So I don't think we're turning grading upside down. We're providing new approaches that would give the graders some assistance in cutting through this backlog. However, fixing grading may not be just the grading companies getting better, but already you have pre graders, pre screeners and I think there's a real opportunity for somebody like Joe Davis instead of pre screening your card and saying these are the ones to send to BGS or PSA or SGC or CGC and these are the ones not to send in. What's to stop them or anybody else from saying, you know what, we're going to just slip this in a top loader or a card saver or a semi rigid and we're going to put some Tampa proof tape on it and we're just going to give you our own kind of rock hard review. We think this is probably going to be an 8. We think this is probably going to be a 9. It's not binding, it's just our opinion. But would you rather have that or send it off to PSA and wait at least six months for a current card or have Joe Davis or any of these other local card shops that have a lot of history with being bulk submitters. Again, when you take it around to sell it, at least you have it in your possession and it's an anticipated grade. These bulk submitters, the Joe Davis is the world and I think he's great, but he's not the only great one. And I think there's a business opportunity if they're charging several dollars to figure out whether it's going to go to grading or not. It's not that much more to just say it's just put this in a holder and we're just going to give you a label that says we didn't fully grade it, but looks like it's probably a nine. That would be helpful. And that's, like I say, better than paying a bunch of money to PSA to wait six or eight months or any card company. Otherwise you're participating in a break, the cards are opened and you think, oh, I got this great card, but I need to send in for grading. And if you send it for grading, unless you really do the upcharge, if it's a really big card, that's one thing. Fixing grading, it's sort of not my problem in that I'm not in the chain of command, but I care about the hobby. And I figured out when I go in the dollar box, what is the common denominator of cards in the dollar box? They're not worth grading. I've never found a card in the dollar box that I sent in for grading because that's the definition of the dollar box. Anything that's good enough to get graded goes to grading. And so if it's a little bit better card, it's either off condition or it's the base version of something. And so grading is part of my ecosystem in the sense that it just stalls out the whole system. So everything in the hobby has gotten faster and basically grading needs to do that too. So those are my suggestions. Enjoy the ho. Grading isn't everything, but it's a big deal.