It’s a strange thing how recessions work, and you can tune into CNN to see just how strange it is. The necessities of life are increasing in price at an alarming rate and broken banks are giving out multi-million dollar bonuses. Food, the most essential of the bunch, has increased in price and further increases are predicted reports the Boston Globe.
With such sharp inflation, a drastic drop in demand for non-essential luxury products should be expected, right? For the most part this is the case with luxuries like premium brews taking a rather large hit. Gambling oriented trips to Vegas are also down, as the average American prefers to hold onto his or her earnings.
One would assume Baseball Trading Cards would also fall into this category. No one needs baseball cards, and there’s no justifiable reason to spend money on cards rather than food. Unfortunately, this is not the case as Topps and Upper Deck have both reported a complete sell-out of their flagship product, Series 1 Baseball, along with many other 2008/2009 products.
This is still quite the accomplishment, even operating under the assumption that both Topps and Upper Deck downsized their print-run of Series 1 Baseball to deal with the current economic climate. Both Topps and Upper Deck produced a superior product this year, probably their best product in a few years, but this isn’t the reason why packs are flying off the shelves. In Toronto, not exactly a baseball-mecca, both major hobby shops have reported an unpredicted increase in sales. What’s driving these sales?
It’s the economy stupid!
Earlier, I mentioned that Vegas’ revenue had dropped during the recession but conversely almost all state lotteries are reporting an increase in sales. It may seem paradoxical, but people without money are spending more money on the infinitely small shot at winning the jackpot.
The ease at which someone can sell a sports card has essentially turned a hobby into a business. The business of sports cards has now been transformed into, you guessed it, the lottery. This is a lottery that minimizes losses, while providing a shot at the golden ticket, or jackpot.
The odds of winning the baseball card lottery? The jackpot, a die-cut auto of Babe Ruth or Walter Johnson, will come in somewhere around 1 in 150,000 per pack. Winning the local Canadian lottery, Lotto 6/49, will run you somewhere in the neighborhood of 1 in 14-Million.
While your die-cut autograph may only fetch a few thousand compared to the lottery’s million dollar pay-out, your losses are negated by the endless possibilities of cards you could potentially pull. Whether it’s an autograph, game used memorabilia, a sketch card or a short printed card; You’re looking at taking the two to five dollars you spent on a pack of cards and turning it into 10, 50, or 100 bucks on eBay. When you lose the lottery, you get a piece of paper or maybe a free ticket.
Unfortunately for these sports cards gamblers, the mid-price-range secondary market is suffering from the same recession. The high end is still alive and well, but when there was once 10 people bidding on a $5000 card, there are now only 3 — thus lowering the payout on a 1 in 200,000 sports card. It’s still a nice pay-out for someone having trouble paying rent, though. The dream of striking it rich through a pack of cards isn’t completely dead.
The lasting long term effects will be noticeable, and however detrimental they are in the short term they’ll be equally as profitable in the long term. Even though fewer sports cards were printed, more of the sports cards will appear on the secondary market. This will increase the perceived amount of cards on the market, and thus lower their fair-market value in an auction format like eBay. Combine this with fewer collectors willing to spend money on the secondary market, and you’re going to get Autographs going for their .99 cent minimum.
In the long term, collectors will enjoy 2009′s set as not only a beautiful set, but also a valuable set. With fewer hobbyists and more sports-cards-gamblers purchasing the cards, they will not remain in pristine condition. Many of the “worthless” base-cards will just be thrown away or stuffed into a shoe-box. Combine this with a shorter print run, and you have the potential for added value ten years from now — if, of course, the sports card industry is still alive. Unfortunately, in this recession people do not want money 10 years from now — they want it now.
In closing, I cannot help but recommend purchasing the incredibly cheap secondary-market cards off eBay. There aren’t as many of them out there as it appears, and they’ll maintain value.
As for those people snapping up sports cards in the misguided hopes of pulling a card worth thousands; Enjoy the hobby and try to remember that a $5000 card is only worth what someone is willing to pay.
