If you are a 90’s kid, there is a high possibility that you have indulged in trading sports cards, and most likely WWE cards, where we’d all try to hold onto the likes of Scott Steiner, Hulk Hogan, The Big Show, Kane, and others. Back then who would have thought that 3 decades later it would turn into a multi-million dollar industry? In the 80s and 90s, a lot of the purchases were fueled by FOMO (it existed back then too) and we wanted to be a part of the trading cards scene in high school, regardless of how we felt about the athlete in terms of their future, and whether they’d ever be greats, right? Well, that’s where being a visionary would have changed our lives.
Errrrr, we didn’t mean those trump cards haha!
Welcome to the evolved world of Alternate Investments – Sports Cards Collectibles. Yes, that’s an asset class that maybe CNBC won’t cover rigorously 😛
Generally, when one thinks about investing it is one of the generic instruments, i.e. equity, derivatives, ETFs, or fixed income instruments such as bonds, and fixed deposits. However, a sophisticated or seasonal investor looks for avenues that have less ‘traffic’, and those which are a little difficult for general investors and small players to enter – alternative investments.
Alternative investments (or alts) are investments made in asset classes other than stocks, bonds, and cash. There is a robust list to pick and choose alts from including such as private equity (PE), cryptocurrencies, real estate, venture capital, etc. Among the list of alternative investments is the category of collectibles – wines, art pieces, coins, antiques, and lastly sports cards.
Now, keep in mind that you cannot access alternative investments via stock exchanges, but through hedge funds, or wealth management firms, or exclusive websites catering to such instruments.
Unlike my previous article, where I erroneously mentioned the reason for the article towards the end, I’m going to be upfront about it this time – to give you an idea about this recent phenomenon, and why these trading cards are so valuable, and how they are valued.
The Journey to the center of the Market –
Collectible cards can exist for different sports such as basketball, baseball, football (the American version), hockey, etc. These cards have been in existence for over 100 years, but it is in the last 6-7 years when they have gained traction, especially thanks to the concept of ‘group-breaking’.
A group-break is where a bunch of people split the cost of the box or case of cards, and reserve a right to receive the cards at the end of the break. These breaks are typically unboxing videos that are streamed live on YouTube, thereby generating further excitement for the collectors who reserved a spot, and other viewers as well. In simple terms, it is when collectors have purchased a ‘share’ in the box or case of cards.
Watching these group-breaks has had a ripple effect on the 80s and 90s generation, due to nostalgia, and as a result, dig into their possessions to revisit the past. Furthermore, the docuseries co-produced by ESPN and Netflix – The Last Dance, based on the career of Michael Jordan, also sparked feelings of nostalgia and renewed the love for memorabilia.
But, since the global lockdown in 2020, most of the major sporting leagues across the globe did not see any live matches between March and July, which meant that sports fanatics only had one of the following choices to stay connected –
Another reason for the recent spike in interest is also be due to the sale of several high-priced cards in the last decade, such as Mike Trout for nearly $4mn, or Honus Wagner for approximately $3.2mn, or Mickey Mantle for a little under $3mn among others.
Take my money!
Now, I’m hoping this has piqued your interest since I will dive into how Indians can be a part of this wave.
Unfortunately, there aren’t any marketplaces in India via which we can purchase these cards, however, there are other companies situated in this United States, through which we can place our orders, and the same can be shipped to our homes – Comc, StockX, eBay amongst others are the marketplaces which are ready to ship to India, for a shipping fee, of course.
For a novice investor, one needs to be well equipped with what drives the value of these cards, and more importantly, what the other investors are looking into. For the latter, there are chat rooms where you can get firsthand information on the market, such as Discord, or BlowoutForums, or perhaps even some groups on Facebook. Although when it comes to valuations, then one must study the driving factors same as we do for other investment tools, whether it is stocks, bonds, or derivative instruments. It is time-consuming undoubtedly, but fruitful in the end, especially since it is an unsaturated market and worth approximately $6 billion, and only bound to grow further given the traction it has received over the years. In this Covid infested time, everyone has been running to the stock markets, or even cryptocurrencies to earn that extra buck, so why not indulge in an untapped market, especially if you’re a sports enthusiast?
Currently, as prospective investors, we are limited to purchasing the entire card, cards, or boxes. In the United States, they are fortunate enough to enjoy fractional ownership of the same memorabilia cards and have a lot of marketplaces to visit, such as Collectables, Mythic Markets, Rally, etc among others. Just to give you an understanding of how it works – these companies purchase memorabilia from other collectors, transfer it to a company, and float its shares similar to an IPO for stocks.
What’s also worth noting is how fintech companies are leveraging blockchain technology to allow individual investors as well accredited ones to enter the alternative investment markets, which were earlier only accessible for the uber-rich and those who had FU money like Bobby Axelrod in Billions.
Naturally, after reading this, you will probably think this was pointless since Indians are yet to be a viable market for such investments. The larger picture of the articles was meant to illustrate that alternative investments are a real opportunistic market for the risk-takers out there. An estimated $10 trillion is locked up in the collectibles market, most of which belong to the 1% of the population, but with the advent of fintech companies, these investments are going to be made available to the larger market in the near future.
Sports cards are just one of the collectibles available among any others like vintage cars, arts, wines, etc.
So take a break, have a KitKat, and read a little more about the collectible markets, but remember – Alternative investments are subject to market risks, so read all scheme-related documents carefully. Also, do your own research before you get into any asset class.
Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy of any agency, organization, employer, or any company. Fintuned Co. LLP shall not be held responsible in any manner whatsover, for any decision/action taken by readers on the basis of the content mentioned in the article. Readers are requested to exercise their best judgement before taking any decision/action. Fintuned Co. LLP shall also not be held responsible for any copyright infringement committed by the author in the process of writing and/or publishing this article and in the event any such offence is found, cooperate with necessary authorities to take remedial action
Thank you Yuva members for organising such a fun and informative lecture. We enjoyed it a lot. Meeting and learning from Mihir Sir was really an amazing experience. And this is not only our feeling but all the students enjoyed his lecture very much and look forward to many such events.
Don't Disappoint your Coffee! Give it a good companion
Subscribe to stay updated! We promise we are too lazy to spam!