1571 - Brian Gray, On Liquidity

Foreign. Doctor James Beckett Sports Card Insights. Thanks sponsors Tops Panini Upper Deck Heritage Auctions Hugging the Scott Auctions Mike Stay Sports Cards Burbank sports cards compse.com and Beckett Media. Beckett Grading Beckett Authentication Conversation with Brian Gray. We split it into parts because we got on a roll and I'm recording this before the national so I can enjoy the week after the national without the pressure of having to put out a podcast three times a week, which I've been doing faithfully for a number of years now. So thanks Brian. Thanks listeners. And here it is. We had an hour and a half to two hour line to sell me cards. I'm like, is there any world where you should wait two hours to sell cards? It tells me either I'm paying too much, way too handsome or other people are just very hard to work with. One of the three, you do have a reputation, you have a Persona and that's good. But you also have that big safe behind you too, right? We had two last year, only one this year. I thought that was to keep the hundred dollar bills in. We had 5 million in cash delivered to the show last year. Our goal was to spend 5 million at the National. We spent 3.1 million in cash last year. And you have to remember this is not like $300,000 transactions. We spent 3.1 million with the predominant number of the transactions being between 1,000 and 20,000. Think about how many transactions. That's why you get a line. We have four people comping cards. As fast as we could comp we'd buy. Next up, what we're doing this year is you click on a QR code to schedule a five minute window. With those five minutes we either can come back and they can come back. Because where they put me this year there is no way a line will work. It's right by Starbucks. It will be a disaster. If we have a one and a half hour line. They'll have to move me to a new area of the show. So we'll see what happens on that front. But we are scheduling five minute windows. And so it's either you do it video or you don't or we move on. Because we are going to have literally thousands of people who want to have. Even if it's other FaceTime selling or business opportunities, we have too many people that want FaceTime where it's like you got five minutes. If you're pitching me on something Shark Tank style, go. But you should have a countdown clock. This would be just like Whatnot. Ebay live it's live buying, not live selling. You got five minutes to sell. If you can't make the deal, you have to. I'm in haul after that I hope to come back. Brian, five minutes in Whatnot. Time is an eternity. But that includes us comping the cards. People bring up hundreds of cards. Hundreds of cards should take more than five minutes but at least we can make the headway to see if a deal is going to get done. And if it's not, I can say la vie them and move on to the next one. Because there's way too many cards at this show and we're in a culture now where everyone's like I'll pay 90%, I'll pay 92%, I'll pay 88%, whatever the number is. And remember when you started the magazine, liquidity didn't exist. Liquidity was 50% maybe. And then over time it became like 60, 65 and really desirable stuff might have been 70, but no one even thought about it as a percentage of comps it was just Jordan Rookies are 300, I can safely buy them 150 to 200. I know I can make a hundred dollars. It was a different world. We didn't do percentages and we didn't do all that back then when you had the store. But it's the percentage of what or you're paying 42% of the three year ago comp back when it was better. And that's the problem nowadays no one wants to buy cards that are not freshly comped. If they haven't had a comp in two years, no one wants to touch the card unless they can buy it at a level that is so undervalued because most of the repack guys need those fresher comps they'd rather buy from alter Fanatics weekly than go to a show and buy a card that doesn't have a direct comp because customers complain in repacks and unfortunately 90% of the buying volume at the national people really spending a lot of money. 90% of that volume is repack slash reseller volume. 90% I believe. I believe the actual consumer buying for their collection. I know but that's your competition on the buying end. So are you paid or you just bring your personality into it and your reputation personality you mentioned in your. What you mentioned earlier is how do you do a $30,000 deal? I had a guy went to Fanatics fest with 200k worth of cards he wanted to sell and he went to all the repackers and I mean this in the nicest way. But he said the one takeaway from this show is that the repackers didn't want to buy a lot of really strong, good cards. They wanted to buy Zebra like common commodity cards. And when they wanted to buy his 50 or $80,000 Lionel Messi, they could only pay with a wire on Monday because they didn't have any cash or because they Goldin write a check or because they didn't have any electronic. And and so we're getting this point to where, hey, listen, I'll have the problem this year. I'm not bringing cash like I did last year, the same amount. So we're going to have a problem this year and that we could run out of cash. But I'm also bringing $3 million worth of cards to sell. So I will probably create enough liquidity to keep cash flowing both directions. And worst case, I'll be going around to my friends asking to cash checks for cash because we're going to be able to spend whatever we want to spend. And that's where I think collectors have to understand when they go to these big shows, their local show, there might be a guy paying 85, 90%. I think at the national, it's not nearly as aggressive as other big shows because there's just too many cards. Compare and contrast. Now because we've got the national and you're sharing your experiences from last year and about this year, but you just got back from the Fanatics fest and you're a regular or semi regular at the Dallas card show. Are those half what you're doing at the National? They've got to be lower or they. Way lower, Way lower. In a Dallas car show, we spend up 150. That's lower than I would have thought. And we had shows where it was 2, 300. But the problem you have now is we see the same guys over and over. You can't buy off a dealer table for repacks because everybody pretty much wants comps. And I don't blame them because when you have to pay 90% or 85 or 82 or 92, whatever the number is to get it, I don't blame them for saying I want comps for more for stuff because frankly, there's gotta be some margin in there somewhere with a high overhead of doing these events. So if you want to buy for repacks, unless you're paying 100%, you really can't buy off dealer tables. You can, but only when the guy's not sharp or you Catch a deal. There's opportunity, but it's not widespread. If you walk up to every dealer, they take 90%. But you famously been a guy that zigged when other people were zagging. Are you telling me that when they come up to you, your eyes light up if it's a non comparable card? No severe history. I want stuff too, unless it's for my PC. Okay. Incredible. Jordan cards I know are rare Again, the other day I bought a grail Star wars card that has not comped in the graded in four years. Now, given what Hamill rookies have done, the Luke Skywalker rookie. I know this rookie of an iconic character is massive. It's the highest grade out there and it's a major character. I know this card is worth a time, but there hasn't been a comp in four years. So my eyes did light up there because I was like, okay, this is a no brainer for me because I can extrapolate that I'm paying 50% of where I think this thing would auction if it went to auction. So it doesn't even matter that there's no comps because it's a no brainer. But I got offered a PSA 10 Jordan today, which I would like for my collection. Last comps, 357,000 offer, they got 320,000 green cash. And I'm like, listen, it's 90%. You can probably get 95 in an auction. But you want to take a chance. Do you want green cash right now? And so again, if it's a card I want for my collection, I don't care if it's easily comparable like the Jordan or very hard to comp like the Star wars psa high grade. That's insane. Doesn't matter. But if I buy for repacks, which a lot of my buying is for, we want cards that can comp or we're buying them at a level that is so easy that it's a no brainer to extrapolate what it would call for. But you're playing poker in a sense. I don't know that you're the dealer, but when they show up, it matters. In poker, where you sit at the table, are you the first stop or the last stop? That strategy would be different. This is where collectors have to really think about how they sell their cards. Because so many collectors are going to pack up everything nice they have and bring it to the national. Right, because that's what you think. That's where the money is. What they don't understand is There are so many cards that that show I saw, sports card investor Jeff Wilson was paying 75, 80% last year. Now, at most shows, his guys will pay 90%. But the flood of cards and the number of people. He had a line like I did. He had an hour line to sell to him. Even at his much lower. I was paying 90%, he was paying 75, 80. We both had hour lines. That tells you something. But really there's so many cards that I think you get less money for your cards at the national selling to someone like me than you do at a regional show like Dallas selling to the guys with buying banners. Because the repack guys need a steady flow of cards all year long. So when they need cards in April, shows like the Dallas show, shows like the west coast card show are critical buying shows for them. They need those shows to buy and they need to pay higher for inventory. If they go to the Miami show, they'll pay 90% because they need cards to tide them over. And it's better than paying 100 on an auction house or on ebay. Now, at the national, the amount of cards is infinite. If I said I was paying 100% of comps, I could spend $4 billion at the national, and I'm not lying at comps, I could spend 4 to 8 billion. I think if I was paying 100%. So if it's 8 billion at a hundred percent, the number is probably 10 million at 90%. If you were indiscriminate or 20 million at 90%, which means the number is probably 2 million at 85% or 3 million. That's plenty of cards for anybody. So the percentages will be lower at this national than they have been in the past because the number of cards is infinite. Everything is at its highs now. You're not like eyeing on the cheap because everything's down. You're setting records every time you buy any kind of grail card. There's a perception that we're still in a bull market now. Some things are going to turn. Every card doesn't keep going up. Some are going to go up, some are going to go down. It's always been down. There is stuff going down. Yes. Yu-Gi-Oh But we're in a marketplace overall where it's not like you look and say, my homes are so cheap right now, or Brady is so cheap. We are buying goats at levels that are so appealing now. The only time that happens is when the market doesn't understand and the market doesn't understand the rarity of some cards. Or there's information that you're able to glean. Let's say, for example, PSA was going to start rating the second year star Jordan 85, 86. And you believed or knew that and other people didn't. Yes, there's an opportunity to buy those. You pay full comp, it one-of-one matter. But unless you have special information, you're not buying Rails at a level that have any intrinsic like built in equity. You're not buying built in equity in grails. Brian, this is going to release the day after the national. What I'm hearing from you is that if we were talking on that Monday after the national this year, which is going to appear that we are, you're saying that this national is not going to be as good for you because they're even more cards, prices are even higher, there'll be even more people there, more dealers. And so it's not going to be as good for the dealers, but it's going to be great for the collectors that come in there. Unless they want to sell their cards and they're not going to get as much. They're not going to get quite as much because again, the biggest buyers in the market, the guys with the big banners that say paying 90 to 100%, they're so picky, you could sell those cards to a blind monkey and alter any option place and get 92 for 94% because they're the cards that are going up. Yes, the Easy Jordan Autos, LeBron, any good solid grail. The problem is when you've got a Corbin Carroll Dynasty auto number to 10 that goes for $300. Let's see what you get for that this year. I don't think you're getting 80%. I think that's a 70% card at this show. If you want the cash, you'll take 70, 75%. If you don't, you one-of-one sell it. Because no one wants Corbin Carroll. They just don't re packers hate it because he's on the wrong team. No one wants to make the Diamondbacks Cardinals hit. They want to make the big team sick. That's what people chase. So you're going to see some cards slip through the cracks and it just one-of-one be liquid unless you're cheap. But on the other hand, if you walk up to my booth with a green Kaboom of Tom Brady, you're getting a million dollars in green cat. It doesn't matter. You walk up to the luka, you're getting 150 200,000. You walk up to the yogic, you're getting 100,000. So like grail cards, you'll get whatever you want because someone wants it. Anything outside of grails, and grails are relative. Obviously, a Chrome LeBron that goes for 12, 14,000 is still a growl. It's just a different level collector's growl. But cards that don't fit anybody's grill. Topps, Jerry Rice and a PSA 8. That's not a grail iconic car. Yes, but in 8, there's 10,000. Doesn't matter. That card goes for 300. You're going to get 240. You're going to get 80% this year and collect to walk up to me and say, I want two. Seven five. Last comp was 300. And I'm going to say, you only have four minutes and 30 seconds left. Because we're not doing business like that. Because it's not liquid. Every table in this room is selling for exactly 300. How can I pay 275? There's no margin in that. Okay, what if at the national this year, last year, the next year, whatever. Back in the day, in the old days, the dealers, the room would run out of cash. And you told me you're bringing less cash. Is there any possibility that on Wednesday, Thursday of the national, or of a show early in the show, you would get depleted? Would you have to have the bank bring you? That's what happened. So what happened is, how do you deal with that? This is interesting. Again, large quantities of cash, we don't just keep it laying in our safe in our office. We're smarter than that. So normally, we will have a withdrawal from the bank. We one-of-one even carry it. If you see me at the airport in Dallas next week, you're not going to see me on the plane with a bunch of cash. In the old days, I'd carry a briefcase with a bunch of cash. Those days are over because now there's robberies and all kinds of horrible things happening. You're not going to see one card on me or $1 on me besides what's in my wallet, which will be about 300 bucks. So if you want to rob me, you got 300 bucks. But in the old days, we wheel around $1 million. That's over. So now Brinks armored truck delivers it to the show. At the end of the show, Brink's armored truck picks up the cash and delivers it back, and it comes straight from the Fed. So our bank doesn't even Touch the money. The Federal Reserve sends the money, brings, picks it up from the Fed, brings it straight to us. They'll pick it up from the Chicago Fed, pick it up there, bring it straight to us. Then after the show, they'll take it straight back to the Fed to credit to the account of the bank. It's too risky now. Guys are getting robbed for five grand worth of Pokemon cards outside a local show in Ohio. That's not okay. We're in a different world now. We're targets. Charlie DiPietro store in San Antonio has been robbed five times in the last two years. You can put bars all over. It doesn't matter. They keep robbing these stores because he's got incredible stuff. They're going to rob the stores that have the bars on the windows and the walls. Rob is they know there's something worth robbing in there. But okay, now, but that's the thing. They're going to run out of cash. So to your point, I have to call my bank if that happens on Thursday and say, listen, the Fed only requires a week. What do I have to do to get cash today? Can we buy the cash from a bank? Can we get some from the Fed? If we have to pay a fee to expedite it, we'll pay it. If I Goldin get cash, then I'd go to every major dealer I knew who was a seller, the big wax sellers for the huge piles, and I'd say, listen, I need to cash checks. If you'll cash a check for me, then I'll give you a gift. I need a favor and cash is worth a premium to me there. I'd give someone a five grand card as a favor if they cash half a million for me at the show if I needed it. Your million dollars worth of cash you're having delivered by Brinks or there. Surely you're losing a percentage in fees. Not bad. It's only a thousand bucks to have it delivery to the show. And I never take cash home. I spend it all. Usually if I bring a million, I'll spend every penny of it. 200 bucks. 500 bucks. I'll bring them 5,000 bucks. If I'm lucky, I'll spend every penny. But it may cost me a thousand to have it delivered because it's literally picking up Chicago Fed and driving straight to the show. So it may cost me a thousand, but a thousand on a millions.1% small cost. Because I know when I go to that show with a million, unless I was sick and ill, there's no way I don't walk out of there making 300,000. I'm going to make 150 to 200,000 of that show just buying, just bidding the million, never mind selling anything or cards. I buy and sell just what I take home. I pay a million, I'm going to make 150 to 200 just by accident. That's just how it is when you're buying it to flip to repackers. All the deals are preset. You know what you have it sold for. You're literally buying the asset and the minute you're getting it, it's sold. We put it in a box in the safe under a certain breaker's name that we're selling it to. Okay. I shouldn't say, are you interested in having a job or something? Because this kind of is what you're doing. But you were in the saddle with Leaf for a long time. Are you missing having more of a corporate presence or are you doing some consulting? I can support two trading card companies of size, not Leaf, one about the same size as Leaf and one much, much bigger. I stream five days a week on Whatnot. The minute we finish this and going straight to Whatnot to stream for four hours. My shows there are very popular. People love to come hang out and talk cards and buy breaks, whatever it is, options. And then the biggest undertaking I've ever taken will be the second half of this year. I'm doing something so much bigger than what I did at Leaf. And we had leaf exit at 125 million. We're starting something, doing something profound that's impossible. Just like at Leaf, we made unlicensed cards. And people told me, you can't make money on license. Every company goes out of business. We did. We started with a million, we cashed out for 125, did pretty good. What I'm going to do next is a part of the industry that people say it's impossible to compete or do well. And I will guarantee that I one-of-one And by one-of-one it means take market share, be successful where no one else can be successful because it's been proven everyone's a Fleer And I just want to prove I can do it. And I've got the secret sauce this time. That is the best thing I've ever done. Obviously I can't share. Serve no one-of-one before it's time. But this will be my greatest achievement in the hobby. And when they say Brian Gray, they may not say Leaf anymore. They may say Blake.