Podcast: Sports Memorabilia an ‘Immense’ Opportunity for Wealth Management Firms

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If you collected baseball cards as a kid and long ago tucked them away in the attic, you might want to do some digging because sports cards and memorabilia have grown into a multi-billion dollar business. 

Howard Epstein

Photo Illustration by Staff; Getty

Last year, several cards alone fetched seven figures, including a 1952 Topps Mickey Mantle and a 2003 LeBron James rookie patch autograph, each of which sold for $5.2 million. Also, a 1979 Wayne Gretzky rookie changed hands for $3.75 million. But the top sale last year belonged to a century old Honus Wagner card, which sold for $6.6 million.

To learn more, listen to this week’s podcast or read the transcript below.

Welcome to Barron’s The Way Forward podcast. I’m Greg Bartalos and today we have an exceptionally special guest—Howard Epstein. He’s a Charlotte, North Carolina-based wealth management advisor and life-long sports memorabilia consultant and expert.

His professional career spans banking, insurance and financial services. And he has promoted sports card and memorabilia shows over three decades. Howard will discuss an opportunity for wealth management firms that he characterizes as “immense, highly significant, and virtually untapped.” He will also explain where the market is, how we got here, and where he thinks it’s headed. Howard, welcome.

Howard: Thank you, Greg. I appreciate the opportunity to be here and speak with your listeners today.

Greg: Excellent. Well, thank you so much for joining. Before we discuss the opportunity, tell us a little more about yourself and describe the state of the sports memorabilia market today. (Editor’s note: this interview occurred just prior to news of Fanatics acquiring Topps for $500 million this month.)

Howard: As you mentioned, I’m a lifelong sports card and memorabilia enthusiast with a passion for the hobby. I have been a collector, a dealer, investor, show promoter, appraiser, and consultant. I had previously run sports card shows in three different decades. I was an inaugural member of the National Card Collectors Association. I was a co-founder and past president of the South Florida Card Collectors Association. And I possess one of the largest collections of price guides, periodicals, and books on collecting sports cards and memorabilia dating back to the 1940s. In my professional career, as you mentioned, it spans banking, insurance, and financial services. I’ve been a finance manager for a large bank. I ran my own insurance agency for 18 years and currently I’m an inside advisor for a wealth management firm and have a Series 7 and 66 license along with my insurance licenses that I maintain and have a spotless U4 record.

As far as the condition of the market right now, obviously since the pandemic started, it’s really started to boom. But really it’s been booming for probably five or 10 years. It’s just that the pandemic really picked up the pace. I wrote about this in my white paper, which we’ll discuss, just prior to the pandemic. As you know, when the pandemic began most professionals were and may still be working from home with extra time on their hands. They were seeing reports of high dollar sales, which you’d mentioned, and found their old collections and began to submit to the grading services.

This overwhelmed the services, and then they ended up shutting down their submissions for collectors and a little prior to that in April of 2020, the ESPN series, “The Last Dance” on Michael Jordan’s last championship aired, which really ignited the hobby even more, especially for high-end Jordan memorabilia. His PSA rookie card, for example, graded a 10 prior to the pandemic was trading around $20,000. During the pandemic it traded as high as about $850,000.

The Michael Jordan 1986 Fleer Rookie Card #57

VALERIE MACON/AFP/ Getty Images

Even today, it has retreated and is still trading in the $200,000 to $300,000 range, 10 times more than pre-pandemic. Everything of Michael Jordan’s has increased—jerseys, sneakers and cards, even a debut full ticket graded a six out of 10 recently sold for $264,000, which is astronomical. Big money has flowed into the hobby, not only in the sales of items, but the new companies that are forming fractional share ownership companies, for example, which I know we’ll cover later. High-net-worth business executives and professional athletes are getting involved in the hobby as well. The pandemic has opened up and increased the speed of the hobby becoming a go-to alternative investment like the art market has been for years. Ebay alone sold more sports cards in the first quarter of 2021 than all of 2020 combined. The hobby is increasing at an increasing rate.

Greg: Tell us now about the opportunity detailed in your white paper because you just described the macro landscape very well. And later let’s talk about third-party grading, which you alluded to, because a lot of people may not be familiar with that and it’s exceptionally important to the hobby. But, speak about this opportunity.

Howard: When I wrote my white paper, I was thinking, how could I help these clients at the wealth management firms? And I thought that there are tens of millions of collectors of sports-related memorabilia in the United States. And it was reasonable to assume that there are hundreds of thousands, if not millions, that are wealth management clients. It also stands to reason that the clients who have more disposable income have greater collections that are more valuable than the average collector. It seems unreasonable to overlook this potential revenue stream and obvious customer retention service. What happens generally is when someone that’s a wealth management client, who perhaps may have a nice collection, either passes away or ages out and wants to get rid of their collection, they may not know the avenue to do that best, especially in a death situation. And, people die from hundreds of different things and usually it’s the male who’s the collector in the family.

So the wife in this situation doesn’t necessarily know where to go to liquidate their collections, assuming they want to do that. Most of the wives over the years I’ve spoken to are saying, ‘I can’t wait until I can get rid of this stuff so I can get my room back.’ So there’s a need for somebody like myself doing that at these firms, I think, because it will help these clients liquidate for a higher price than they could get locally. Usually a local person will get 10 or 20 cents on the dollar when they go into either a local shop or contact somebody that’s advertising locally in the paper versus getting as much as possibly 90% going through the auction house that I have many contacts with already. So it’s really a win-win-win situation for the client, the advisor, and the firm itself because the client who gets more money for their collection is obviously happy.

And there’s a citing in the paper that says that 70% of spouses that have a spouse that passes away leaves the firm within one year of the other spouse passing away. So not everyone’s going to have a collection. We understand that. But the people that do, and that we help through the firm, will most likely not leave the firm in those situations. And it’s not just people that have collections. You have clients who inherit collections from people that pass away. And in some cases they don’t know what they’ve got on their hands. So that happens a lot, too. It’s not just people who collect. It’s people that may inherit something as well. And it’s not necessarily a large collection. It may be something, just a few pieces, but it may be very special pieces that they would best find out about through something like this program, which would benefit them. The bottom line is that it’s a win-win-win situation. I know that advisors look for two things primarily with their clients, one to financially look after the well-being of their client and their assets, and two to increase their own assets under management. This program helps the advisor with both of those for clients who may have a need. And so I certainly would welcome any C-suite executive at a wealth management firm to reach out to me, to discuss how I can help with their clients. 

Greg: Is it really about 10 to 20% on the dollar? I’ve even heard of far worse than that. 

Howard Epstein action

Photo Illustration by Staff; Courtesy Kent Smith

Howard: It could be. It really depends on the situation. I had a situation just this morning that I was discussing with an attorney here in town that had a collection that I was looking over. And she had mentioned to me that she had brought some cards over to one of the local shops and the shop owner. They were 1939 Play Ball cards. On the back of those cards, there are two different versions. There’s an all caps version for the player’s name. And another version with just the first initial of the first and last name capitalized. And the owner of the shop said that he thought some of those were fake. And I don’t know that this was a situation where he really didn’t know what he was talking about or if it was something that he was maybe gonna try to buy at one of those 10 or 20 cents on the dollar deals.

So, I can’t say. But this stuff happens weekly. I mean, you hear nationally of these high-dollar sales or this guy a couple of years ago, Uncle Jimmy (James Micioni) who was in the paper. He was 97 years old. He passed away up north. He didn’t have any children. Never married. And he left his collection to his nieces and nephews. They ended up selling it for over $2 million. So those are the things you hear about. It’s the things you don’t hear about that are out there that happen on a weekly basis that we can help clients with who are in this situation. Because it happens a lot. You just don’t hear about it.

Greg: Right. So let’s widen the lens now. I think you’ve described that exceptionally well, the opportunity. Let’s talk a little more about the hobby, which is really a business now. Hobby is almost quaint given the dollars involved. Like the art market, sports cards and memorabilia are definitely seen as more of a viable alternative investment. Given where interest rates are and stock valuations, for people looking to diversify beyond traditional asset classes, where does this fit in the whole investment investment spectrum?

Howard: The sports cards and memorabilia market has really started to take off, like I said, in the last five or 10 years. And I think a lot of these high-net-worth people are looking at this market and seeing where they can diversify. They’ve been diversifying into the art market for years. There are issues with the art market itself. And I’m not an art expert by any means. But I know that there were some forgeries years ago, things like that. It’s also difficult sometimes to store those items where these are smaller items, especially cards or small items, which you can keep in a safe deposit box and things like that. They are gradable. And so they’re certified as to what they’re graded at. And we can talk about the grading companies soon.

1952 Topps Mickey Mantle card, PSA 8

Courtesy of Memory Lane, Inc.

So there are a lot of advantages to having these and people love sports. I mean, in general, people just love sports. If you go over to someone’s house they may have a painting, maybe you like it, whatever, but usually people are involved with sports. And if you have a 1952 Mickey Mantle card, you can pull it out because it’s been in the news and say, ‘look, here’s what I got.’ I got one of these cards and it’s graded maybe a seven or eight or whatever. And it’s a valuable item. So things are looking up in the market. People are just craving these things. And there’s a scarcity to these things because it’s a finite market.

Greg: There’s a nostalgic element, too. If you buy, let’s say, precious metals, either physical or an ETF, it’s simply the metal (or held in a portfolio), there’s really no strings attached. But with cards, with memorabilia, there could be memories attached. It might remind someone of their childhood, and it’s situated in an era. It’s part of Americana as well. It kind of transcends the investment world in a few ways. I did want to point out something that I found extremely interesting about cards and memorabilia is that although they are an alternative asset, they really trade in many ways like stocks. For current athletes, the prices of their items generally reflect their popularity, their performance and expectations—their future promise. But with vintage, which are older, some people say 1975 before, it’s a different risk/reward.

If you buy an established Hall of Famer, their numbers are in the books. It not might not skyrocket overnight. It certainly won’t. But it’s a little bit of a safer bet. Can you tell me a little about that? And also what led to the junk wax era whereby in the past, traditionally, scarcity was a byproduct. It was really an organic process. No one thought about it in the ‘40s, ‘50s, about preserving them (cards). They just treated them willy-nilly. Hence it’s hard to find them in great condition. And then more recently everyone started to protect them, but they made a lot. And then tell me what happened more recently with manufactured scarcity and where we are today.

Howard: That’s part of the allure of it being an asset class because you can buy 10,000 shares of Facebook, but you don’t really take possession of the shares. Nobody really does that nowadays. And so if somebody comes over and you go, I got 10,000 shares of Facebook, big deal, but you don’t have anything to show me as opposed to, ‘I have a Mickey Mantle jersey from 1964. It’s on the wall over there. And it was signed by him.’ That’s something that’s eye-catching and a conversation piece. So people like the investment part of that and being able to show people. As far as vintage things, you’re right. Back in the ‘30s and ‘40s, and ‘50s, when they produced those things, the kids didn’t take care of them like they do nowadays. A lot of the things were lost actually during the war and the paper drives.

A lot of those things went out. Besides, the mothers threw them out. All that kind of stuff. So that lowered the availability of what’s left. And of course the scarcity on the higher end stuff is very, very scarce. And you can see that in the population reports on these grading companies. Junk wax, what happened in that era is that the card companies—and I’m a guy that thinks 1975 and prior is vintage—what happened in the early eighties, the card market really was heating up in 1981 and so forth. And then in about ‘83ish, mid-’80s, up until the early ‘90s, the card companies just overproduced like crazy. They were just cranking it out. And so therefore there was so much material on the market.

It’s a supply and demand issue. So, the supply was way outnumbering the demand. There was a drop in value, especially in the junk wax era. It’s starting to come back a little bit now because of the people that like to open up and do breaks and things like that. And so some of this stuff is starting to finally get off the shelves, but there is so much of that stuff produced. And so the card companies figured out how to alleviate that or how to avoid doing that by producing a little bit less, but also taking advantage and doing what I call the manufactured rarities or the chase cards. So what they would do is they would insert in the packs that they wanted to sell, obviously their boxes and their cases, they would insert a one of five or one of 10, one of a 100 whatever card.

And it would be labeled as such and in some cases it would be signed. So, some of these cards have skyrocketed in value. And that’s some of what you see on this $4 million, $5 million stuff. It’s a one of one or a Tom Brady, for example. He’s the GOAT in football. And so they’ve got his rookie card as one of a 100. And if it’s graded right, and if it’s a signed card and the signature’s also graded on, some of them have gone for $4 million or $5 million. So it’s just very expensive, the new stuff, in my opinion, a manufactured rarity versus the older stuff that was produced in probably great numbers in some cases, but so much of it was thrown out by the mothers or the paper drives during the war that there’s just this scarcity of what’s out there.

Greg: You also talk a lot about memorabilia beyond cards. And I think that’s something that’s a lot less understood. There’s a lot less knowledge, but it certainly seems to be a burgeoning, growing area. Tell us some of the differences or pros and cons of sports cards compared to game-used items, et cetera, on a high level.

Howard: Well, that’s true. Sports cards are not only baseball, football, basketball, hockey, but it’s golf. It’s soccer. There’s everything out there nowadays. And the memorabilia itself is either the jerseys, the balls or bats or helmets or gloves or spikes, shoes, sneakers, whatever. Some of them are game used. They’re authenticated. There are companies that authenticate these things. And most of these are one of one type situations. Recently they got a Steph Curry, his jersey that he wore in the game that he broke the three-point shooting mark. Something like that is fairly valuable. Nowadays, the new stuff, they authenticate right away. They have markings on things like when Barry Bonds broke the home run record, they had balls that were numbered.

And they specifically gave those balls out to the pitchers when he came to bat. So they knew the right stuff, as far as that was the item that was hit for the home run and so forth and so on. So these items of memorabilia are getting more expensive. And I think rightfully so. Some of the jerseys out there of Hall of Famers, especially deceased Hall of Famers, as we’ve talked about Greg. You know, a Hall of Famer, even though their career is over, their life may not be over. So I’ll give you an example. Just to throw out one name, O.J. Simpson. Okay. So obviously everyone knows what he did. And, and the thing from 25, almost 27 years ago, he’s been retired for a long time, but he’s still alive.

1951 Bownman Willie Mays

Courtesy of Heritage Auctions

So somebody like Hank Aaron, who recently passed away, never had any things like that go on in his life. He’s in the record books. He was a great hero. So any of his items, any jerseys, bats, signed balls, have increased in price since his passing and the only one that’s left out there, that’s really in that era or time frame is Willie Mays. Willie is, in my opinion, one of the best ball players that ever lived. He’s about 91 years old. Now, I’m not sure how much he’s gonna live. He obviously is in I think failing health, but hopefully he’ll stick around a while. But when he passes, his stuff will increase as well. So if you’re looking for an investment, the type of thing is to look for obviously the (Babe) Ruths, the (Lou) Gehrigs, the people that passed away many years ago. If you can get anything of theirs, obviously it’s very expensive and very desirable. 

Greg: I used to think Hank Aaron was the greatest of all time. I think right now I’d probably put either Ruth or Mays in my book and then Aaron number three. But those three are in my estimation perhaps the best of all time. You could debate that endlessly. 

Howard: Aaron was one of my favorite ball players of all time, but I’m not sure he was the best.

Greg: Let’s talk about the all-important third-party grading companies, such as PSA, which might be the gold standard in terms of fetching the highest prices. Briefly tell listeners how it works in terms of people sending in a card, what happens, they get it mailed back. It takes some time, et cetera, but discuss the importance of that and the population count. 

Howard: There are four major companies that grade cards now. You mentioned PSA. They’re probably the most popular one. They stand for Professional Sports Authenticators. They started in 1991. The other grading services are BGS, which stands for Beckett Grading Services. They started in 1999.  SGC, Sportscard Guaranty Corporation, started in 1998 and the recent entry is CSG, Certified Sports Guaranty. They’re fairly new to card grading, although they’ve been grading coins and comics for quite some time. So you would submit a card or a group of cards to one of these authenticators, and they would charge a fee for their service. And they would grade the card, usually on a scale one to 10. Some have half scales and things like that. Some grade differently like CSG grades on surface and things like that. So the grades are obviously based on the clarity of the card, the corners, is it centered correctly or not?

Are there any print marks on it and things like that. And you get back the grade and it’s graded from a one to 10, let’s say, and it’s in a sealed case, which is very hard to break, although you can break them out. And then you have a whatever card, graded an eight, let’s say. And if it’s an older, vintage card, especially if it’s a superstar, that’s a pretty good card and there are prices that are listed in PSA, for example,which has a pop report, which is a population report. How many ones twos, threes, fours, fives etc. they’ve graded. And they also have a pricing guide to go by. Although a lot of the guides don’t go up to 10, they go up to eight or nine, depending on the year and sport.

But there are some out there that are obviously tens and obviously those grades are very high. I’ve often described to people that it’s almost like on a Richter scale. It’s a factor of 10 every time it goes up from eight to nine to 10, and it just goes parabolic up to 10. It’s just an unbelievable rise. So a lot of the companies were inundated over the pandemic because people were submitting so many cards. They just got inundated with millions of cards. They had to shut down the submissions and hire a bunch of people to start grading their cards. They’re catching up, but they’re still not caught up yet. There’re still submissions that they don’t take—lower end submissions. They’ve opened it up for some of the higher end submissions. And so they’re still hiring people in grading. There’s been a lot of activity in the market. Obviously, PSA, their parent company Collector’s Universe, was bought out (in December 2020) and went private by Nat Turner. He became the CEO displacing Joe Orlando, who was there for many years. So, there’s been a lot of activity in the market. A lot of fractional ownership companies have come up as well. 

Greg: I wanted to amplify a little more on the grading and the impact it has had on the hobby. One important aspect of getting cards graded is it made the dollar amounts higher for those in excellent condition. And for people selling on eBay, where there’s a lot of activity as well as other online auctions, it removed trust from the equation (because buyer and seller were now dealing with a quantifiable grade instead of a seller’s opinion of the condition), which was a good thing in this case, because there is a world of a difference in terms of value often between say a seven and a 10. But many people wouldn’t per se pick that up on a computer monitor. And then some people might just say, oh, it’s mint, it’s near mint when really it’s very good to excellent. So that created a lot of friction, if you will.

And once the grading companies put hard, tangible numbers onto this, it added a load of liquidity to the market and a load of visibility. And it really instilled a tremendous amount of confidence. At the same time, though, PSA graders, or any grader really, they’re not perfect, right? You can see something. Maybe that’s a nine and it’s a little more off centered than it should be for a nine. So, sometimes people can be very savvy and detect little inefficiencies and take advantage of them. And there’s a saying, ‘buy the card, not the grade.’ And some people do that, but the number is still paramount. The impact again of the grading companies has been really vast and just added so much to the hobby. 

Howard: It really has, Greg. And I mentioned that in my paper as well, that when the grading card companies started to come in in the early nineties, it really gave a lot of credence to the whole hobby. And it did solidify people being able to buy cards and feel comfortable about the grade. And it was authentic versus maybe a fake or something like that. So you’re absolutely correct about that. And there is subjectivity in the grading. You can look at two eights and you can see maybe one’s a little bit better than the other one. So there is some subjectivity to it. Some people have bought lower ended graded cards and broken them out and resubmitted. And sometimes they have to resubmit them several times, but they may eventually get another grade higher, which obviously would be a significant dollar amount depending upon the card.

Greg: Right. And although it’s generally advisable to buy higher graded cards when you can, there are times when, just like with stocks, they could be overvalued and undervalued. A PSA three might be a great deal depending on who it is. And a PSA 10 may be vastly overpriced. So you really have to know how to navigate and be careful not to get ripped off.

Howard: Well, that’s a very good point. I did some data things on PSA over the weekend. And I’ve got some numbers here I can go through with you just about vintage versus modern cards. For example, a 1986 Fleer Michael Jordan rookie card is currently in the $200,000 to $300,000 range and has about 321 10s. And this is PSA graded 10s out of almost 23,000 submissions, which is a 1.4% total of 10s out of the cards submitted to PSA. And if you look at, for example, the 1969 Topps Lew Alcindor rookie card, who is now known as Kareem Abdul-Jabbar, on the PSA pop report there are two 10s out of a little over 4,000 submissions for a 0.05% of 10s on PSA. My recollection is that one card as a 10 sold for about half a million back in, I think, 2017. And I believe the last sale was around $350,000 a couple of years ago, if my memory serves me right. But the data was not on the PSA website when I last checked. And it usually is. I don’t know why they took that off. But an example I always give is the 1951 Bowman Mantle card and the Mays card, both of which are their true rookie cards. And they’re both high-number cards in the 1951 Bowman series.

Greg: And as an aside, high-number just means it was a little scarcer, right? Fewer were made.

Howard: What happened is the card companies produced a series. Let’s say they maybe did five series (annually) back then. I don’t know how many there were, but what happened is the grocery store at the corner would not order another case if they still had boxes on the shelves back in say, August. So, the series that came out last was probably August, September, and they wouldn’t get the order because the candy store on the corner would still have boxes left and they didn’t want to have them out there during football season because baseball season would be over. So, they didn’t order as many. So, they didn’t produce as many on the later series in most cases. And that stopped in 1973, but prior to that, they always had these series.

So, yes, a high number series would generally be more expensive. There’s a 1957 Topps baseball middle series that’s a little bit more rare, but other than that usually the last series in a set is more valuable. So in 1951 the Bowmans made the last series and had Mantle and Mays. They were rookies that year. That’s their true rookie card in 1951. And in Mantle’s case there’s only one PSA 10 out of 2,425 submissions for 0.04% rate. And in Mays’ case, there are zero 10s out of a little over 2,000 submissions. If you flip over to 1952 and go to Topps, a lot of people love the ‘52 Mantle Topps as his rookie Topps card. But it’s not really his true rookie card, but people think it is in ‘52. And that’s a high number card also in the ‘52 high number Topps cards, as we mentioned or I know we talked about this before.

I don’t know if I mentioned this, but Sy Berger, who ran Topps in 1959, decided he needed some warehouse space. And he took all his ‘52 Topps high number cases that he hadn’t been able to sell, put them on a barge and dumped them in the Atlantic Ocean. So that’s why the ‘52 Topps high numbers are a very rare series and Mantle happens to be the first card in the high number series in 1952. But it also happens to be a double print in that series whereas Jackie Robinson is not. So there are twice as many Mantles as there are Jackie Robinsons out there, but Mantle, of course, is highly praised. 

And there happen to be three PSA 10 Mantles in 1952 out of 1,810 submissions for a 0.06% rate. It’s believed these three 10s came from a Paris, Tennessee find that “Mr. Mint,” Al Rosen, found in the 1980s. He found an unopened case or a partial unopened case in Tennessee back in the eighties. [Editor’s note: Rosen obtained the Mantle cards in Quincy, Mass. Paris, Tenn. is where he made a separate spectacular find of 1950s cards.) And most of the unopened wax packs from 1952 and the very high grade ‘52 Topps high numbers cards came from that one case that was found by him. So, there’s, for example, the 1952 Topps Willie Mays card, which is a semi-high number, not a high number, only has one PSA 10 out of 2,581 submissions. So they’re very rare, especially that high a grade. Almost even a common card back then in a high grade could be $400 or $500 easily.

Greg: Before we touch on fractional shares, in the present day, could you briefly talk about unopened wax? I think it’s astonishing the percentage gains that were to be had by simply not opening the cards in the box and leaving them in the packs. Because if you think about it, the vast majority of people would rip them open and throw away the wrappers, et cetera. So there’s a really, really lucrative market for unopened packs, even going back to the early seventies. I think some of that might go for $10,000 more depending on the set and sport. Can you add any color to that?

Howard: Correct. You’re absolutely right. The cards that are still in the boxes, that haven’t been opened, are very valuable. In most cases the junk wax era, that’s kind of an offshoot, but basically you’re right. In the seventies, sixties, or whatever, if you’ve got cards back that far, and that are unopened, people are clamoring for these things. There are what are called breaks, which you can see on the internet. They do breaks and they do it live on the internet. I saw one. I think it was from The National (the biggest ongoing sports card show held annually since 1980 and which hosted 100,000 attendees in 2021) last year, which I was at. They filmed it. They opened up a 1969 Topps basketball unopened package. I think it had 10 cards in it.

And there was a giveaway thing as well. There are 11 spots to buy. So, 11 people purchased the various spots and they’d open it, live on camera, and the first card would come out and it would be somebody. And that would be whoever bought that spot. That’s how they do these things. But yes, the unopened wax is just really a very, very hot item now. And especially the newer stuff, too, because these manufactured rarities are in some of these packs. And so people are clamoring for these things. I bought, just as an aside, a 1977 box back in 1977 with a buddy of mine. And it was like, I don’t know, nine bucks or something like that. And I kept it. I just left it.

And then about 15 years later, I was at a show with him and I said, I’ll bring this, you know, I’ll sell it. I said, I’ll sell it for 500 bucks and I didn’t care if I sold it. And a couple times this one kid came by the table and he offered me 300 bucks. And then he came back, offered me $400. And I turned him down every time and my buddy looked at me like I was crazy,  because he knew what I paid for it. I was with him. And I ended up selling it for 500 bucks. But that box today is worth about $3,000.

Greg: That’s pretty wild. And some people, unfortunately, will try to open packs, the wax ones usually, and remove the valuable cards and carefully reseal them. There is, I forget the company, but there’s one that’s best known for authenticating that the wax has never been opened. Do you know who that is?

Howard: I think it’s Baseball Card Exchange.

Greg: Right. Exactly. So that’s a little pitfall, but there are certain packs like cellophane and the rack packs, which are like a longer plastic one, which are  presumably much harder to tamper with. 

Howard: Correct. That’s right. 

Greg: Well, great. Now let’s go to the present day. Fractional shares. Tell me about companies like Collectable and what they’re like compared to what we were talking about, the traditional version of just simply holding the card in your hand.

Howard: So the fractional share companies, as you know, Collectable.com is one of them. There’s Rally. There’s Alts. There’s Dibs. There’s Otis. There’s probably some others I don’t even know about. There’s one for the art market as well. There’s  Masterworks.io for art market fractional shares as well. So, I think that’s a fairly new company as well. I don’t know that much about them. But these fractional share companies attain a high-end piece of memorabilia and they sell fractional shares like stock shares. So they’ll, for example, get a piece of memorabilia, maybe that’s valued at $1.2 million, and they’ll sell $500,000 or $600,000 worth of shares at a certain price, maybe like $10 or something. And sometimes they limit the number of shares the client can buy to 10 or 20 or whatever, and they usually sell out pretty quickly. And they don’t sell the entire piece. They sell, usually, up to maybe 50%, maybe a little bit less. 

And the person that consigns the item to the company retains usually 51 or so percent of the item. And they decide on what they think they’ll sell the shares for. And so if it’s a $1.2 million item, for example, and they’ll sell $500,000 and then the people that are buying shares assume that someone’s gonna come in and pay a higher price than what that item is valued for. And so if somebody comes in from the outside and does a private sale, and says. I like that item, I want to pay $1.5 million, for example. And then they put information out to the shareholders and they vote on that as to whether they should take that offer or not. And depending upon what the offer is, sometimes they’ll sell it, sometimes they won’t. So there’s been a lot of these things popping up lately.

The people that buy the shares, it’s like buying shares of stock. You don’t own the item and you’re never gonna get to keep the item and hang it on your wall or show it to your friends. But you’re participating in, and hopefully selecting, something that may increase in value over time. And some of them have done very, very well. So, it’s just another angle of the market and it’s just exploding and expanding. The market itself is going in all directions. And that’s why I think it’s here for the long term. We mentioned before, in a previous conversation, about how long this has been around and the collecting market has been around for over a hundred years. But it really started taking off in the late fifties, sixties and seventies. And I mentioned this in my paper going back on the history of the market. And I covered the grading companies as being a big influence as to why the market’s increased. 

Greg: I think that’s a really important point, the long history of the hobby, because there are people who might be skeptical and say, is this another beanie babies flash in a pan? What is this? And again, to your point, this has a very, very long history and it’s really come into its own lately in terms of dollar amounts and as well as data. There’s just been an explosion of data in terms of how they can examine the market and add transparency, liquidity, et cetera.

Howard: Exactly. The superstars playing in the fifties and sixties—the Aarons and Mays—they only had four uniforms, four jerseys each year to play with. They had two home and two away, so they had two gray and two white uniforms. And they would be listed on the tail of the shirt set one and the year of 1964, for example. And so you only had four jerseys that you could have bought and that player for that particular year. And if you can buy something like a superstar of that caliber, like a Mays, Mantle, Aaron, (Joe) DiMaggio, (Ted) Williams, and of course, Ruth and Gehrig and those older players, if you can buy a uniform, it’s almost no matter what you pay, you’re gonna make money. I mean, I think they’re vastly undervalued in my opinion.

Greg: And is that mainly for who you’re talking about, like the tier one stars, or even like, I don’t know, a Hall of Famer like Lou Brock or Luke Appling? Would that hold for all? Or is it mainly the top tier? 

Howard: No. I think you have obviously tier one, tier two, things like that. At tier one, I would also throw in like a (Roberto) Clemente or Jackie Robinson obviously. But then you’ve got a tier two, maybe like a Frank Robinson, Brooks Robinson, Carl Yastrzemski, that type. And I think they’ll hold their value and they’re not gonna cost as much on those players as the tier one players would, but almost no matter what you pay, you’re not gonna get hurt. Obviously, if you can buy a year that’s a significant year in that player’s history or if it was a signed item as well, it helps. Or if it’s tagged to, well, during that year, he hit his 500th home run or whatever. And they can go back and there are companies that authenticate from a photo standpoint and try to get a photo match of the player’s uniform or bat or whatever, to that particular game. They do a lot of that nowadays with the newer players.

Greg: Right. I guess that proving provenance and whatnot is a lot easier nowadays with cameras everywhere and everything being documented and filmed, et cetera. 

Howard: Correct.

Greg: So, unfortunately I’m looking at the clock and we’re kind of close to running out of time. But before we go, help listeners figure out how to approach this. I mean, everyone has a different shopping budget, right? There’s literally millions of options in terms of cards, memorabilia. You’ve pointed the way directionally, and quite specifically, but in terms of budget—and let’s make a distinction between the collector and the investor—what’s the mind frame, the game plan, so to speak, that they should embrace?

Howard: I think if they’re a collector, I would always say, buy what you like or what you love. If you want it, buy it to keep it and you’re not thinking about making a profit. So, if you have a special team or a player, you want to buy something of theirs. Obviously, the more money you spend, the better item you may be able to get. As far as investors go, I would always advocate buying the most expensive item you can afford, and then the highest grade possible. If it’s a card, you want to go for the higher grade, obviously a 10 is great. You know, nines are very good, so are eights, especially in vintage material. As far as memorabilia goes, if it’s a signed ball or bat or even uniform, obviously buy the best you can possibly buy and hopefully it’ll increase in value. There are a lot of balls out there. Balls are signed by many players in the tens of thousands. So some of them are not as good signatures. The signature itself may not be as crisp as others, but the uniforms and the memorabilia, things like that, there’s just a limited supply of those things out there on the market. 

Greg: Great. By the time you hear this podcast, or perhaps soon after, we’re gonna have a transcript on Baron’s Advisor, and we’re going to have a link to Howard’s white paper where you can read everything about it. It’s quite detailed and interesting. But in the interim, how could people reach you, Howard, if they want to get in touch?

All right. Excellent. Well, thank you very much. My guest has been Howard Epstein. Thank you so much for joining us and thank you for listening. I’m Greg Bartalos. You’ve been listening to The Way Forward. Please subscribe and check out all our podcasts at barrons.com/podcasts.

For more information, write to greg.bartalos@barrons.com