Episode 105 PSA Grading Suspension

Welcome back to Sports Cards and a Cup of Joe. This is your host, Joe Davis, and it is great to be back with you today, but not great to be back for the reason, you know, I always love sharing with each of you who join us, whether you're watching on the Got Baseball Cards channel or you're listening on the podcast channel. But the news I have to share today is not really exciting for anyone, and that is that PSA earlier today announced that they are shutting down all services below regular service. So no more bulk submissions for many months. No more value bulk value plus value max. All those levels are gone for now. They're suspended because PSA has fallen so far behind. They said that their backlog is approaching 10 million cards and they just cannot keep up. And I feared this was coming. I believe it was either my last episode or the one before that where I was talking about the announcement about the new turnaround times and the incredible slowdown in turnaround times. But I can live with turnaround times more than I can live with no ability to submit cards to them at the lower levels. So our team is furiously entering cards right now for submissions that we have just received from many submitters like you, as well as our own inventory that we were needing to get sent out anyway. So we have this very short period. PSA announced that this will go into effect on Tuesday at 3pm Pacific Time or 6pm Eastern. So if you submit directly, you better get busy. You've got a lot of entry to do possibly. And we've committed to working around the clock if needed to get all of our submissions sent out that are currently in house. We typically turn everything around in 48 hours anyway, but not the news we wanted to hear. And I'm trying to. As I shared on a previous episode, I'm trying to find the silver lining in this. I'm trying to see what positive can come out of this news today. Trying to find something good in this. And the good thing for our company is that we work with sgc, BGS and CGC as well. So we still have three other options for those who want to submit with us on entry level submissions, we continue to offer our screening services which are applicable whether you're grading now or you're grading later. And what I've realized is that that demand may go up a lot for that service because many of you will be preparing ahead of time for when PSA reopens. Or you might be using a different service. But. But we literally had a submitter in the shop just yesterday who said he was about to bring us 3,000 cards to screen. And so that's going to be a little bit of work for us, but we look forward to seeing those. But they did also PSA did share that they're also having to slow down regular service, estimated turnaround times. And the big question, I know many of you are probably already thinking, well, when is this going to stop? When are they going to get caught up? And they're not targeting so much being caught up as they are making it more manageable. Again, they said that they have up to 10 million cards pending the way based upon what's on the way to them and what's sitting in house right now. And they want to get that number down to at least about half that. So running the numbers, that's at least a few months of work for them based upon their typical output. So the one thing I see as a positive in this is that they have a large number of team members who now can be reallocated from checking in new shipments to helping process outgoing shipments. And so if you have cards sitting there, as many of you do, probably most of you do, I personally have thousands out there. Hopefully that estimated seven to eight month turnaround time that they had announced for value bulk submissions will hopefully speed up a little bit because more team members will be reallocated to other areas to working on that backlog. So let's hope that happens. But I want to look at this beyond the news. That's the news of the day. That's what social media is blowing up about right now. As you see this, there's going to be anger, there's going to be frustration, there's going to be irritation. I've already heard it. It was hard for me to even sit down to film this from texts I was getting and discussing this with clients in the store and so forth, because I understand it's frustrating. I've already heard the comments like, hey, they shut down five years ago in March of 2021. How have they not figured it out five years later? I know that's what some of you are thinking and I don't know, I don't have an answer for that other than even they have not been able to gauge the incredible demand for their services. So let's look at big picture. What does this say about the sports card industry and the trading card industry? Because as you know, if you've watched any of my content, the biggest percentage of their submissions right now are not sports cards. The biggest percentage are tcg, led by Pokemon and then one piece. Those are the biggest volume of submissions right now for psa. So in hindsight, I wish there was a TCG lane and a sports card lane that still existed. They had that in the past. In fact, it's kind of laughable now to go back. There was a time when you could submit TCG more affordably than you could sports to psa. That wasn't that long ago because they were trying to grow that business. They were trying to grow the tcg. Well, they've grown it and now it is kind of out of control in terms of the volume. So as a primarily, as someone who primarily submits sports cards, I wish there were two lanes now. And no offense to those of you who love to submit tcg, but if they had two lanes going, probably they'd still be having to shut down the TCG lane and the sports cards would be slow, but probably still being maintained. But right now they're all merged together. You can send in submissions and you can have some Pokemon, some One Piece, some Superman cards, some Marvel cards, some Ohtani cards, some judge cards, all in the same submission. So they're all in there together. So I was discussing this with someone earlier. How does this impact existing slabs in the marketplace? Because for the next estimating three to four months, you cannot send new submissions to PSA unless you're willing to pony up about triple what you were paying. So therefore, what is going to happen with the demand for slabs? Because there's going to be this huge gap in submissions going out. So I think my guess is that if submissions were a stock, they probably are having a good day. Excuse me, if slabs were a stock, literally, they're probably having a good day because the demand for existing slabs will probably go up, because for the next three to four months is the estimate, you're not going to be able to get more back, more submitted to PSA to get them back in the future. So another way to look at it is they recently had announced that bulk submissions were now going to be taking seven to eight months, roughly when you factor in weekends, et cetera. So now you're looking at, you're adding another three months. So, so instead of submitting on June 2, which is the cutoff date, you've got to hold those cards for, let's say, three more months, and then it takes eight months to get back. So from today's date, you're now looking at 11 to 12 months. So if you have cards in hand and you don't get them submitted by June 2nd, you're basically looking at an estimate of 11 to 12 months to get those cards back. So I don't know what is going to happen with the industry. I don't know how this is going to have a trickle down effect to other areas of the industry. I know one concern, I was speaking with a major, major player in the industry about this and the concern is how does this impact new products? Because one of the driving forces to new product sales is the ability to buy a box, rip that box, pull out the big hits, get those cards graded and hopefully grade them affordably. Meaning if you had cards valued up to $500, we've been offering that service as low as $25 in quantity. So now if you're not going to use any of the other companies, you're going to be sitting on those pulls for a long time. So sadly that's probably going to deincentivize some buyers who want to be able to rip and grade right away with psa. They're not going to be able to do that for a while. Now what I think we will probably see back, based upon what I saw in 2021 when this happened, is you will see an increase in submissions to the other leading companies. The other leading companies that we represent are sgc, BGS and cgc. Of course, two of those three are owned by the same parent company in Collectors Holdings. So we will see. Since you won't be able to submit to PSA on the entry level, do sgc, BGS and cgc, do they see their volume grow exponentially? Likely so. And if not exponentially, still a huge surge in grading for all of them. So if I'm running any of those three companies right now, I'm probably dealing with a mix of emotions. On one hand I'm probably ecstatic, like hey, my biggest competitor just paused taking entry level submissions for maybe three to four months. Just think about all the submissions we're going to get in. On the other hand, I'm saying, oh my goodness, my biggest competitor just paused submissions. How are we going to handle the volume that we're going to get over the next few months? So it's a mixed bag of probably excitement and panic. So I am a big believer in offering options and letting clients letting collectors determine what services we can offer to help them. Some in the industry have chosen to go only with psa and I understand there are plenty of reasons for that. I have always been the believer. Let's give our clients options. And so for us we are still going to be able to offer grading with three highly, highly respected companies and continue to offer grading, not only submissions with them, but continue to offer our screening services. And we're also working on something else. I can't let the cat out of the bag yet, but we're working on something else that I'll be sharing about very soon. Another way in which we're going to be able to serve clients in the graded card industry. So lots and lots of things happening. This is a huge news and I wish I could give a more positive spin, but I can tell you this again is indicative of just how red hot our industry is, that the largest grading company has to turn away millions of dollars of profit over many months. And that's a ballpark, but it's a pretty good estimate because if you think about they were taking in, I think recently they've been averaging about 2 million cards per month. And so they're committed to probably being having operations for those lower levels suspended for three or four months. You can do the math. At whatever profit margin you want to assume they operate on per card, multiply that by a couple of million cards. Since the value bulk submissions are the largest, far and away the largest percentage of their submissions. But PSA is trying to do the right thing in the sense of saying, we cannot handle this volume, we cannot get caught up, we're falling further and further behind. Therefore, the right thing to do to try to catch up what is already there, or at least to make significant progress on it, is to pause and say, we're going to work on this backlog, we're going to make progress on that and then we will reopen when that number is more manageable. Now, back in 2021, if I recall, I think the backlog got up to about 13 million. And obviously they had much. Had a much smaller staff to process back then, because we had submissions back then that took up to 18 months to get back. Right now they're quoting seven to eight months on existing in house value bulk submissions. But again, it's been much worse for us. It's like, here we go again. We've been there, done that, we've seen it, we've got the T shirt. But sadly for submitters, it's a tough day because I know you love to send those cards, we love to receive those cards, and many of you love to use psa. They are your company of choice. And we're going to continue to offer three other great options. And again, more news on that front coming. But again, just know that we're here to serve you. We're here to help you. We're here to assist you. We expect to see a lot of submissions for screening coming in, even if we're going to have to hold those for you for quite a while before they can be submitted. But go to our website, check out the options@gotbaseballcards.com and if you have other questions, you can always send us emails to got baseballcardsmail.com and if you're local, come by and if you need help with any of your orders. But again, our team's working around the clock to get every last card out that's sitting here in house right now. And we're continuing to take submissions from all the other companies. And as to see, we will have to wait and see what the rest of the fallout is, positive or negative. I'm trying, I'm trying my best to be positive in this. We love working with psa, we love handling submissions on their behalf and we'll continue to on regular service and higher and my hope is that they can. Their roughly up to four month estimate turns into a lot shorter window than that, but time will tell. We will see. But again, it's great to be a part of an industry where there is so much demand for services that we offer that sadly they've had to be paused for a little while. That just shows how much demand there is for graded cards. So if you're sitting on a bunch of PSA slabs, you're probably sitting on something that just went up in value because it's going to be harder and harder to get them for a little while. So thanks so much for joining us for this episode and I will try to find something more encouraging for the next one. But I wanted to get this news out to you to help educate and inform all of you and help you think about other options that are out there. So remember most of all today, most important thing I could share with you is that Jesus loves you. And remember that I think each of you are awesome too and I appreciate each and every one of you. Thanks so much. Over I am your child in me but I need you.