THWC 433: Is PSA About to Kill The Hobby?

What is up, everybody? Hobby with Cage episode 433 brought to you by Arena Club Card ladder and by the Philly Show. I got my card ladder hat today. I don't know if you can tell this is a gold hat. I ended up with a few of these. You know, people would pull them looking for the one of one, you know, and I'd say, you know, it's not the 101. It's a great hat. Congratulations. It's serial number to 25. And, you know, you should, you should enjoy that hat. And they're like, oh, how much for it? And so, you know, I would give people money for the gold hat. I left a lot of hats, but as you can see, pretty cool. Check it out. Serial number on there. What is that? 13 out of 25. So there you go. Got a little gold hat on today. The hats will rotate throughout the the fall as it comes. So I got, I got a lot of different color hats. The gold one's fun. I think the, the one that I came away the most with is gold. I mean, we love gold in the hobby. What, we don't love things that one-of-one you for 500, Alex. All right, well, today's episode is not something I thought about more than a half an hour. So we're gonna see how this one goes. It's got a good title. It drew you in. It might have even brought you here just based on the title, but it is not a clickbait title, I promise you. We will actually discuss what's in the title. Title of the episode. Is PSA about to Kill the Hobby? Why? Well, I got a text this morning from someone I respect in the hobby, someone that I like, somebody who, you know, who I am, I'm a fan of, somebody I speak to pretty often. There's other texts coming in. The question was, 15 million cards coming back from PSA, isn't that going to completely kill the low end market? And it got me thinking. And, you know, we texted back and forth and I said, this is a great episode, a great episode. Because the question really is, what is this backlog gonna do? You know, what is the impact? And just as an offshoot, we saw the impact of just kind of the grading demand impact the national in a crazy way. You know, PSA set up with their pricing and basically by Wednesday, they knew they were kind of screwed. By Thursday, the $300 thing was gone. By Friday, the $600 thing was gone. And they basically shut down grading, weren't taking any more stuff in some of the stuff that they had taken in they Goldin get back by the end of the show. So I mean, what does that tell you? It tells you that the demand for grading with PSA is greater than it's ever been. And that's a good thing because that's a very good indicator of the strength of the hobby. If the hobby was not going strong, if the cards were not going strong, people would not want to grade their cards. So I mean, that is a, that's a big indicator, you know, of the strength of the hobby and, and you know, what we have going on. So the question of course, is a broader one. You know, no one's just expecting 15 million cards to be dumped on one specific day. What are those cards and what do they feed? So let's get into that for a second, right, Because I believe that the strength of the hobby is from the different levels of the hobby, right? The high end is crazy. The high end is nuts. There is a PMG Michael Jordan red BGS8 and it is in alt ending in a couple days already over a million dollars. That's a sign of strength of the market, health of the market. The high end, the top end is strong. That is not a rare card. There are 90 of those cards. They seem to be one for sale like every auction. And yet it still now has mustered a seven figure price tag. And it's because of a lot of reasons, inflation. You know, a million dollars isn't what a million dollars was a couple years ago. People are consolidating their cards. You know, Jordan fans whose collection was worth, you know, two or three hundred thousand dollars and would have had to trade their whole collection in for that PMG red a couple years ago now find themselves with scoring king cards that are worth 50, 60, $70,000 according to recent pricing and are able to sell a few cards, consolidate and actually get into a PMG red if you, it is an interesting thing to watch, kind of the appreciation of the markets. But all that to say the high end is healthy. The high end is healthy, I believe, because the levels below it are also healthy. Now that talks, you can talk about the mid end. We talk about those cards that are between 10 and $100,000, those scoring king cards, a card that when I came back into the space was not even $10,000, was a few thousand dollars. Now you pay that for a 4, you know, a PSA 4. And if those cards are all doing well, you know, now you talk about the cards below it. The cards that are 1,000 to $10,000. And that is, I believe, one of the strongest spaces in the hobby. That little, that little range right there, the four figure cards. And I think that the reason why they are as strong as they are is because of repacks, because of the churn, because of people kind of, you know, buying in, trading up and getting into those cards. Because it includes most of your case hits, right? It includes most of your downtowns and your kabooms and, and the cards that when graded a PSA 10 become a thousand dollar 1500, 2000, 2500Card. And these are the cards that change hands. It shows often. They're the cards that are in repacks. They're the cards that are easy for people to buy and put into repacks and just get in the system and stay sticky. And these are the cards that PSA grading are important for. And there is no slowdown of the demand for those cards. And you could see a propping up of the market when PSA closed, right though, those repack companies, you know, the people going to shows, buying and selling cards, they still needed inventory, they still need cards for their repacks, they still need cards to sell at shows. And these liquid cards, these downtowns, these case hits, they are the cards that, you know, they're easy to track, they're easy to price, right. You know, if, if, if this is a foreign thing to you and I understand how it could be, right. A lot of my listeners are people who like vintage baseball cards, people who go to shows to buy cards and keep them. They have collections, they have binders, they have fun stuff. The market itself right now, you know, the hobby has this, it's a large segment of people who buy and sell cards regularly. And the easiest cards to buy and sell are ones that are liquid. They're ones that sell often, they're ones that have sales almost every day, right? Because it makes it easy for them to track the cards. It makes it easy for them to buy those cards and know that the card's not going to go down 20% in the next sale. Because when you see enough sales, you average out the 10 sales this week, you, you know what that card's worth, you know what you can pay for that card because you know what it's going to sell for, you know what the value is going to be in a repack. Those liquid cards, they're made liquid by that PSA slab, right? And those liquid cards, they're just, you know, they're, they're, they're not exactly Rare, but they are sought after and they have some demand. A lot of Michael Jordan's cards fall into that territory because there's a lot of them. You're talking about the late 80s cards, the hoops cards, the nuclear cards. You're talking about the inserts from the 90s, cards that are not rare, cards that have a good PSA population, cards that, that churn, cards that, you know, you, you know what the pricing is on those. And what we've seen since PSA kind of shut the doors a little bit to kind of close their backlog is that those cards, those liquid cards, the, the lower end Jordans, Kobe's, LeBrons, the case hits, they've all sort of been lifted a little bit. And that makes sense, right? It makes sense because those cards are not being spit back out as much by psa. At least that's the thought. Right. If PSA is closed and there's a backlog, then, you know, you're not getting those cards. It's not true. And let's just take that down, you know, a piece by piece. Sure. There's been a price increase. I remember speaking to somebody maybe three or four months ago and they had just sold a card for $10,000 and they were like, listen, what do I do with this money? I had it in a card. I enjoyed having a card. The card appreciated, which meant that my money appreciated. I don't necessarily have a card target that I'm after now because I think the market is a little bit high. I don't want to buy one card with this $10,000 because that gets me a little afraid and I definitely don't want to sit with it in cash. What should I put this $10,000 in that will appreciate with the market over the next few months and or a year? And I told him very easily, go on Fanatics, buy it now. Go on the alt auction, the Fanatics collect auction weekly and basically buy any Michael Jordan PSA 10 that was $150 or less that comes from a major brand, not like a subset, but any, you know, Upper Deck or Skybox or, you know, any, you know, a hoops card. Do the same thing with Kobe, do the same thing with LeBron, because those cards are liquid. They're repack cards. They're cards you can sell at a show. And they're cards that basically everybody looks for. And this person came on and said, you know, I was able to do that. I bought a bunch of cool cards. They have a stack of slabs of Kobe and mostly Jordan like almost, almost all Jordan. And they bought all the skybox, they brought all the hoops, they bought all, you know, 1990 Fleer in PSA 9. And you know, they, they were able to buy one 1990 flir PSA 10 for $450 at the time. Go look up what that is now. In any event, they messaged me a couple weeks ago and they said, holy cow, like, almost everything I bought is doubled. And I, you know, I went on and I said, let me look at the Fanatics. Buy it now and let me look at the auctions and let me look. And I, you know, you're able to sort with filters and stuff if, you know, if you just click a couple buttons. And I said, you know, Michael Jordan PSA 10, $150 or less. Nothing. There's none available. $200 left. Very few available. And at auction they get scooped up. That market has moved, that market has moved up a little bit. And I guess the question is, you know, how many of those are sitting at PSA now? And when they all come back at once, is that gonna crush that low end answer? Quite simple. No. Number one, just because they have a 12 to 14 million card backlog does not mean all of those cards are going to be dumped on Halloween or whenever it is that, you know, we're going to set a random target date. October 15th. Boom. All of them come back. No, they're returning cards. They're returning cards now. You know, as they work through that backlog, they're obviously, you know, sending cards out. Cards are still being graded. You know, they paused this so that they could catch up and send the cards back to you. So, so I mean, they're, they're not just gonna dump 15 million cards at once. That would be an interesting thing to see. But I mean, that's not gonna happen. So that's 1, 2. Let's talk about the cards, right? Let's talk about what the cards are. There's gonna be a lot of Pokemon cards that almost have, you know, no real impact on what we're talking about here in the sports card market. So many of them, you know, more than half, I think are, are Pokemon cards, which is, you know, that there's obviously no shortage of demand for. And those cards are coming out now and being, you know, put back into the market at a time where there's going to be even more liquidity in the Pokemon market because in the next couple of months, Pokemon 30th, the 30th anniversary release comes out and People are gonna be buying and selling that like crazy and gonna want to grade that. So it'll be pent up demand for that. That's gonna be an interesting thing to watch as well. But in the sport market, before they closed down the releases and the release calendar is an important thing, right? Before they closed down, Topps Chrome Football was kind of like the rage and now they're getting to this backlog. What do you think is going to get back into the market Now? The Topps Chrome Football cards that people graded, you know, the Jackson Dart rookie cards and you know, the Chrome Autos, the Kaijus and the Tecmo Bowls and you know, these hits and guess what, it's football season and these things are gonna come out and there's gonna be more demand for them. But more important than what's sitting at PSA is just the constant rotation, right? Because since they've closed the value level, we've had Topps Chrome Baseball, we've had Bowman Baseball and now more recently the Topps Chrome Update Basketball Minions cards and one of ones and Zebra Fractures and autographs and all these fun inserts that came out in baseball and basketball and Bowman. And people have all these cards still to grade and they're gonna send them in as soon as they're able to. So is PSA about to kill the hobby? I think that's the furthest thing from the truth. Number one, they're not stupid, right? They're doing this in a way where they're not shutting down, saying we're not taking in or sending anything out and we're going to grade every card we have in house. And on October 14th, boom, we're dropping 15 million cards on the hobby. No, if anything they're, they're closed down now and this backlog is being spit out in a way where they're keeping the flow of cards sort of normal, right? Because they're not taking in more at the same time as they have this backlog. The point was to not take in more so that they could clear the backlog and then start getting cards in and turning them around in a reasonable time. Something that, you know, from a customer service standpoint, people have, you know, grown more accustomed to getting their cards back quicker. I mean, I have a 93 card order that was received by them in April. It's been an assembly forever and we're in August. It's what happens. You know what I mean? It's just when you, when you, when you send it in, you kind of expect, I think mine Was like an end of September return, says it's on pace for its return. And you know, that's just the way that, the, you know, way that the, the, the hobby works. I don't think that there's going to be any impact whatsoever on this. I don't think it's PSA that has, you know, going to have an impact on the lower end or any of the end. As a matter of fact, I see a significant strength in this space. My son came to me yesterday and said, go check this out and he opens up Whatnot. And one of his classmates was on there selling cards. I mean, they were horrible cards. They were not. I mean, we bought something just to kind of support the kid. But that is a real sign of strength, right? You have more kids getting into this and not just getting in, like, you know, hey, let me buy a car getting in. Let me participate in the ecosystem. Let me, you know, create a Whatnot channel and start selling something of my cards back and forth. That's somebody who, he'll make a few bucks, he'll start grading when PSA opens back up and his channel will grow and he'll start selling better cards and more graded cards. That is not the only person in the world that has done that this week. Just, you know, randomly. My son's friend happens. Everybody's son has a friend who's doing this. The space is growing. Fanatics is putting out release after release and getting excitement around each release. The Cooper Flag debut patch redemption has not yet been pulled, but people are talking about it and those cards are being opened like crazy and those cards are going to get graded and when PSA opens up, people are going to want those cards graded, they want to chase those, they're going to buy those cards and that cycle will just continue. So one-of-one to my friend who texted me this morning and asked if 15 million cards coming back from PSA are going to kill the lower end of the hobby, going to kill the hobby itself. My answer is an emphatic no. As a matter of fact, those cards coming back in, they're going to be healthy for the space. You know what I mean? Is it possible that the never ending run on some of these cards, you know, might stop for a minute, There might be a pause possibly, you know, if you're a 1990 FLIR Jordan PSA 10, which was $400 in March, has run to $800 now and you know, all of a sudden a whole bunch more come back in because of the PSA grading. It goes back down to 700. Sure. That might not surprise me, but we always like to take a wider view of this. Right. You know, it went from 300 to 800. A pullback in the near term to 700 as it continues on its way towards a thousand is not the worst thing in the world. You know what I mean? I mean, it's, it's, it's kind of the way things work to me, more than PSA's backlog. The seasonality of things are what I'd be looking out for, you know, as we, as we end summer, head into fall and then into winter. Just the seasons of sport changing, the holidays approaching, you know, people not going to as many shows because the winter weather, you know, you're further from show season. You know, the national and all these other shows have kind of ended and they're done. And people are starting to save money up for, you know, holiday purchases. Vacations, you know, usually see a seasonality dip. You know, November, December, where car prices often take a little bit of, a little bit of a drop. Baseball ends. Basketball hasn't really started up yet. You know, football hasn't. You know, it's not really up to the playoffs Whatnot, you know, we might even be looking at sort of a baseball lockout. And you know, the stories of that, that would be the, the thing on the horizon more so than psa, you know, sending cards back in. That would be the, you know, the thing that, that, that I would keep my Yu-Gi-Oh on. Although I got to tell you, even this year, the way that Topps and Fanatics market their products, I think that that holiday spend that you usually see go away from cards for kids, I think it's gonna go moving more towards cards this year. I started to see it last year when my son was asking for, you know, for boxes of cards to open. But I have a feeling with it being, you know, in the news and mainstream that, you know, whatever the big chase card is then might still be a Cooper flag. Who knows? People are gonna ask for that. Kids are gonna ask for, give me a box of Topps cards. Give me a box of, you know, tops basketball, tops baseball, tops football on their, on their holiday list. Just because it seems to be everywhere, it seems to be mainstream. So maybe we one-of-one have the dip. Who knows? I guess we'll see. But as far as PSA, there is so much demand for PSA, right? 15 million cards. It sounds like a lot. They. They grade so many cards and there is such a demand for it. I. We are only a week into August. But I anticipate August's sales to set a new record. I think the only reason why we didn't set a new record and get to 700 million in trading card sales in July is because we had Fanatics fest and national and that took a lot of what would be online transactions and converted them to in person sales. And I think if we were able to calculate what transactions were done there, we would have easily blown through 700 million. And that took people away from their ebay, their computers, their auctions and you know, and kind of changed it. But I have a feeling that when August is tallied, we're gonna see some a new record. And what that means is there's more demand now than ever before. There's more demand for psa, there's more demand for graded cards, there's more demand for those liquid, you know, items to buy and sell and move around the ecosystem. And, you know, not only do I think that we're going to be able to tolerate those returns, the market will be able to, you know, to, you know, to bring those back in. I, I don't see any reason to think that they're going to, you know, slow down the prices in any regard. There's more and more people keep coming in, more and more people interested in buying these cards. And there's your take. Got my gold hat. I don't know if it's a gold take, but you know, it's out of 25. 13 out of 25. Fun number. There's a fun one for Monday morning, August 10th. Episode 433 brought to you by Arena Club Buy card ladder Use code cage Save yourself a couple bucks and buy the Philly show, which will be here before you know it. Can't wait to see you guys there. Talk to you soon. Take care everybody.