Fanatics Trading Card Company already worth $10.4 BILLION
ndleo
Posts: 4,136 ✭✭✭✭✭
https://www.yahoo.com/finance/news/fanatics-trading-cards-valued-over-160327617.html
Modern collectors get ready to be squeezed.
Mike
1
Comments
yep
Glad I don't collect Modern now more than ever.
It's the singer not the song - Peter Townshend (1972)
just because they landed the contracts to produce new cards from here on out, dont think they dont have your cards in their sites too. they will be going after anything and everything card related. even vintage. from storage similar to the pwcc vault to grading to selling on their site and undercutting ebay. it really is going to be a new world order. these guys know what they are doing. and obviously have plenty of ammo.
I agree with blurry. I was about to consign my high end 1970's-80's RCs but decided to hold off. I think we are going to see a buying blitz that will make the Buyers Club look like small timers.
Lots of ammo! I look forward to another option.
Are you saying Fanatics is going to the market and buying up high grade vintage slabs?
Kiss me twice.....let's party.
If it occurs true competition will very good in the grading and auction arena's, however I was referring to newly produced product in which they will have a monopoly.
It's the singer not the song - Peter Townshend (1972)
Fanatics got at least $1.75 Billion in new investments from the hedgies and the pro leagues. They don't need that money to print the cards, all of that is outsourced. I'm guessing they will use some of that money to fill in their gaps - auction, storage, grading, etc. But Yes I think Fanatics will start acquiring slabs of the premier cards. I wouldn't be surprised if they acquired one of the grading companies and maybe even some of the large dealers.
To get a $10 B valuation on a retail business, there has to be a lot of projected growth. They have ALL of the modern business now. They are going to extract every dime they can from those cards.
It was hard for me not to sell when values spiked before the vaccine. My HOLD theory assumed if cards ever got commoditized like gold and other alternative investments, the new money coming in would drive quality graded values even higher. I think Fanatics is going bring order to the force and be the market maker for slabs, this is one way to justify a $10 B cap.
fanatics bought csg a while back.
eta: to be politically correct, blackstone investment group which is basically fanatics, bought ccg which owned csg grading services. and for anyone that hadnt done a google search on just who blackstone is, now might be a good time to wire the jaw shut because it will be on the floor once you do.
Yeah, that was before they got Daddy Warbucks cash. Every time I want to submit to CSG, I can't get over those horrible looking holders. It's looks like they copied the "Early 2000s' Shady Grading Company" design.
I would think SGC is an obvious play for them, maybe Beckett but I thought they were already owned by a fund.
I wonder what happens to the existing distribution network for modern? No more D&A?
taken from the wall street journal today…
Fanatics Trading Cards say the new venture will angle to become the one-stop shop for all things in the trading card industry—including primary sales, secondary-marketplace deals, grading of cards and even storage.
$649b.
I'll take "Hold on to your slabs" for $800 Alex.
have you held a csg slab in hand? i was surprised. feels and looks a lot better in hand than pics justify. still needs tweaking, but wasnt as god awful as i thought it would be.
Serious thought - I bet if we pooled the cards we all wanted to sell (with conditions, only top end cards) and sent a list to Fanatics, I bet we could negotiate a better return for the group rather than individually. Maybe have BBCE lead it?
The reason I say that is that is because these big companies need to have deals of a certain size to make it worth their while. In my biz, any issue that worth less than $50K doesn't get looked at, not worth our time. A chance to buy a huge lot at once has value to a buyer of that size.
Just a crazy thought but in my time I have seen this board get very creative with money.
i dont see them wanting to buy bulk psa inventory. at least business wise. i think they will wait til they produce cards and offer grading incentives on wrappers and boxes for csg grading to build the brand. every 30 wrappers equal one free card graded or something to that effect. however they will certainly offer the service to store, vault, and sell anything card related, including psa slabs and sealed wax.
I always support more market choice, so I hope CSG succeeds. I've been tracking sales, there is some buying interest. However I have a small stack of 2016 Optic Derrick Henry RCs that would pull about $250 in a PSA 10, not worth the risk at current PSA sub rates. A CSG 9.5 only gets $100 but I can submit and have it back this season.
That is the math I need to figure out.
if you do please share. thought about it myself but hard to figure out tvm and then what could you had bought had stuff not been in purgatory for 1.5 years or so. even tougher when there is no clear #2. bgs is ehhh. sgc is fast but resale isnt what it should be mixed w talks of a buy out, hga is a joke, csg has the potential but not guaranteed by any means. psa needs to get it in gear as $150, $100, $75 or even $50 just isn't practical nor the graders consistent yet. so until then, just twiddling thumbs here.
It all depends on the kind of year Henry is going to have.
I am glad they are cutting out distributors. middlemen who add no value.
George Brett, Roger Clemens and Tommy Brady.
I hope modern dies without Topps.
And I'm glad I've locked my collecting because all it is these days is cadres of the super rich trying to take our money.
The middlemen add some value to the hobby by stocking older products and allowing buyers to buy products from several manufacturers in one order. The second benefit may be less since Fanatics will own it all, and by the structure of the deal, most likely for the foreseeable future.
I had similar thoughts when Panini got the exclusive FB license. Then the 2016-2017-2018 QB Rookie cards came out and I totally forgot about Topps. Initially the exclusive was good for the football hobby since Panini did a better job with the product and really expanded the retail format.
Then COVID hit and it became huge money grab by everyone in the hobby.
Not sure cutting out the distributors does not also cut out the LCS. If Fanatics even sells to the LCS - I am betting there will be a process to buy-in to be a direct purchaser from Fanatics. That buy-in will likely be more than the distributor mark-up and something many cannot afford.
If Fanatics walks the supply demand tightrope - and doesn't print like it is 1987 - an online only platform will just mean every single box is sold on Ebay (or Fanatics answer to such) at a mark-up. If production is like 1987, Fanatics sports cards arm will not be worth $10.4B for long.
While the distributors are unnecessary - the current situation likely means that Fanatics keeps that piece of the margin. No chance that leads to lower prices or a more fair distribution method. It is like the idea so many have that if players took less money the owners would charge less for tickets.
Nobody knows for sure what Fanatics will do (probably not even Fanatics yet). Do they want retail? If so will they offer exclusives to make retail more appealing (parallel colors like Topps did)? Is retail only Target and Wal-mart? What is Hobby - is Fanatics THE hobby?
The new world will be different - not necessarily worse or better - but hard to know what different looks like. Could be the only way to even be able to get product is to pay an annual fee for the right (like being a Montgomery Club member). Could be as a season ticket holder I get to buy cards since MLB has a strong relationship with Fanatics (I get decent discounts on apparel).
The point is no distributor cut (assuming that is the case) will be good for Fanatics but cannot imagine it making any difference to collectors.
Collectors are just prey these days. Grist for the profit mills.
I find all the what ifs and speculation very interesting. The hobby has been so strange since Covid hit. Who could have imagined a few years ago that PSA would shut down for months on end (except for the very highest price levels) due to demand? Topps out in baseball, Panini out in football and basketball, and pushed out by a clothing company? New grading companies springing up everywhere, (not referring to CSG, but others) a line of lemmings keep giving their cards to them. Here is another wrinkle, at a few of the shows I do 2-3 guys set up a booth with a tent and banner, and they will pre grade your cards for $10 ea. It is called Dallas Card Investors. They put it in a CS1 and put a little label on it similar to a beckett raw review. They have a loupe and measure the cards. At the small 1` days shows they do between 300-500 cards, and the big shows they average 3500. It is laughable to me to have two guys tell me what my card might or might not grade. No one can guarantee a 10. It seems more than anything this hobby preys on stupidity. People just love to make poor decisions with their hobby budget. If Fanatics can make this even more mainstream they will make tons of money. At 1987 Topps print levels for their low end and on their exclusive high end, because education in this hobby seems to only come after making a myriad of poor financial choices.
That $10 B valuation isn't just based on how many cards they print. A lot of the valuation is based on the other service revenue Fanatics can capture from the hobby - grading, storage, auction/sales services, pricing, etc. If they ever get the "market" concept figured out that ThePit and Naxcom failed at (and StockX is trying), that would be money printing machine from Fanatics and may actually provide value for collectors looking for an easy way to cash out.
I have so much more to say on this subject but I have a meeting in 2 minutes. It feels like a conflict of interest for a card manufacturer to also offer a grading service.
Successful card BST transactions with cbcnow, brogurt, gstarling, Bravesfan 007, and rajah 424.
I agree. Even at 50 isn't practical for many of us. For example I have over 100 Ken Griffey Junior rookies in various Manufacturers that I would have sent in via bulk service in the past. If they came back a PSA 9 or 10 it was worth it but under the current pricing they would need to grade out as PSA 10's.
Successful card BST transactions with cbcnow, brogurt, gstarling, Bravesfan 007, and rajah 424.
Depending on their grading skill I actually like this idea. I think it's perfect for anyone who has no grading experience and needs a pre grade before sending in for expensive real grading. 20 years ago I would have paid double to anyone who could have provided a similar service before getting denied at the local DMV after waiting 2 hours. Kind of a PRE DMV.
I would be little worried about higher end cards that could be switched.
Successful card BST transactions with cbcnow, brogurt, gstarling, Bravesfan 007, and rajah 424.
ok, what happened? i like the happy matty. something had to happen pretty deep for the doom and gloom claw to appear? not saying youre wrong. youre actually spot on. but its always been here. from dealers ripping off kids, pack searchers, back doored product and so forth. the investors, businessman, sharks & scammers move in to any segment or hobby when they see one iota of an opportunity. and for the most part, theres not a lot of difference between the 4. as with most things in life, its about perspective. we need to get you back to the glass is definitely half full matty. 😉
Couldn't agree more -- I could have 10 guys look at one of my cards and all 10 could say it is going to get graded as a 10 by your choice of grading company -- that don't mean jack as only the grader's opinion matters. Why pay for someone's opinion when it counts for nothing?
I hear ya, bro. Perhaps with the advent of the internet, those elements you mentioned are just more "in our faces" in this age. They do feel ubiquitous now. Flippers. Everything being about investment. Corporations or equity groups creating integrated entities with overt conflicts of interest that everyone just has to swallow. The outbreak/proliferation of Auction Houses and self-styled gurus with no real qualifications either offering their "investment advice" or masquerading as passionate collectors, when they're just really proselytizing for profit to social media lemmings. It feels like if you look out beyond your collection display, what you get is an odious bombardment. Granted, my fault for taking my eyes off my cards and staring occasionally at all that crap. I own that. And I own letting it salt me out. As Lincoln said, people are as happy as they make up their minds to be. So that's all on me. But it is also natural for a card collector to want to consume card-related content— and the ensuing problem is that only a very, very small percentage of that content is purely about collecting, illuminating nuances or rarity of certain card issues, aesthetics, photography, the players, history, etc. The overwhelming majority of the content seems tantamount to someone screaming, "INVEST! INVEST!" in our faces.
Anecdotally, I lost count of how many times in the past year I or someone I know closely has sold a card, often times to a professed collector, only to see it up for a quick buck flip. Of course, anyone can do anything they want with their stuff, but it goes to show these things are now primarily just being passed around like hot potatoes for some profit, not winding up in collections. And from what I hear on the auction circuit, the ones that aren't immediately flipped are just held for pure mercenary investment on a future sale.
Even Fanatics has stated their goal is to "100x" the whole hobby. I remember years ago, whether it was talking about 70s sets or player collecting, collectors would be on various boards discussing certain cards that were tough and what the reasons were, always OC, PD, etc. We could read and learn about new cards. I don't know, it's not easy to explain, but somehow showing off a 1975 Claudell Washington that wasn't marred by PD or learning what an M101-6 Ruth or Dice Game Mantle are seems very different than someone showing off a card just because of its sheer value or "investment potential."
The one thing that has changed that I find positive is the willingness from an increasing amount of collectors to pay a premium for eye appeal, to in effect "Buy The Card, Not The Holder." There will always be sticker queens out there, I encountered one recently in a negotiation, who try to talk down a pretty card in favor of the "investment value in the higher grade" given by some rushed grader. I'll never like, get, or agree with those guys. But that used to be the only thing that stuck in my craw. Now the craw is overstuffed, LOL.
@DM23HOF
all completely valid and logical points. gonna marinate on it for the afternoon and attempt to figure out a way to pry more optimism out. slowly but surely at least…its an uphill battle for sure bc youve hit the nail directly on the head. especially on the social media spiel. fanatics and flippers too. plus youve already used the lincoln line. 😉
Matty, Thank you for the well articulated, intelligent,informative, honest and truthful post I have read on here in quite some time. You nailed it .
Matty,
That was a very eloquent way to put a real face on how many long time collectors feel.
I think the pain we feel is the change being forced upon us. For a long time the sleepy hobby just incrementally moved along. I remember we used to have discussions about where the new collectors were coming from to grow the hobby. Looks like the growth was right in front of us with all of the new money coming in from people in our age range.
In my wildest dreams, I never thought my little collection would amount to anything. I do miss ripping a ton of boxes, but I still find interesting deals.
Hobby? It is no longer a hobby for those dealing in graded cards. It is a business or an investment. US old guys who collect and know what a triple- folder is are dying off. It is a new world for the young. Best of luck.
BTW, being "valued at $10.4B" does not mean they're worth $10.4B.
I completely understand, about 2 years ago when I could no longer grab a box of cards from the local Walmart or Target was the beginning of the end for me.
With that being said I think it's not just the card market, it's the world in general that has become like that. For instance I can no longer go to the ABC store and grab a bottle of Buffalo Trace or Woodford Double Oaked without having to get there at 10AM on a Tuesday when they open.
Successful card BST transactions with cbcnow, brogurt, gstarling, Bravesfan 007, and rajah 424.
This
Matty - I don’t know you but hate to hear someone losing enjoyment of the hobby.
The investors will flush out when cards cool off and move onto the next hot thing. Collectibles are cyclical - the 80s boom and then bust made for a cool down. This hot period will be followed by a cool down as well. It is not fun to want to buy some boxes because I am excited the Bears drafted Justin Fields and not being able to open unless I want to pay price gouges. However my focus is 1950s through 70s baseball HOFers so the new stuff is annoying to me but not key to my hobby enjoyment.
As for content - there is stuff out there by collectors for collectors, they just are not at the top of the you-tube counts and searches. Recommend following a few you find you enjoy and just going into your subscriptions to avoid the annoying content.
As for selling to collectors who flip - I rarely sell anything (except dupes to my brother if we can’t find a trade) so never run into that. But I have bought from this and other message boards and have traded only one card away that I bought for my collection (a 1969 Banks PSA 8 because I bought a nicer PSA 8.5 for my Banks run). Traded that card and some cash for a ‘62 Brooks Robinson. Every other card I have purchased from any board and the collector friends I have made I still have. People I have bought from in the past send me emails when they are selling something they think I would appreciate and I get a lot of cards that way. Find people who you know that collect what you do and seek them out first when you have something for sale.
There are a lot of great people in the hobby - unfortunately there are a lot of snakes too. The trimming and shilling scandals really bother me - and it angers me more that there are no repercussions (not from the law who probably has more important things to worry about but from people in the hobby). With the internet we can all find out who the crooks are and get rid of them by simply no longer buying from them. Unfortunately most don’t care and even when they are presented with the facts will buy from anyone if they appear to have what they have been looking for.
Bring on the correction!! Would love to have twice or more the buying power I have today with the same $. The hobby will be smaller again someday and it will be fun buying in the way down. If I stays like this forever then my collection is worth more than I ever dreamed and I can live with that.
the comments were made days ago that cutting out distributors would also kill off LCS. to be candid and a bit selfish, all the LCS that I grew up within my area are already dead. by 15-20 years or so. I understand the nostalgia and i remember the feeling I used to get visiting the LCS, but honestly, for most of us, those times are already gone. they are gone in the same way many small businesses have died in the last 20 years as big boxes moved in and took over. Malls are also feeling the crunch now.
I have thought long and hard about LCS and for the most part, they really arent necessary anymore, at least for me. I understand that probably is a very unpopular opinion, but honestly, with the internet, FB, Forums and the resurgence of card shows, LCS are just not as important to me as they once were.
honestly, the whole fanatics conversation is a bit moot to me as I am almost 100% a singles collector.
George Brett, Roger Clemens and Tommy Brady.
That is based on what the latest round of investors paid for shares in the company. Let me do a completely speculative breakdown. Topps was going public at a $1.3B valuation and that is basically for the baseball license only. FB and BKB are still probably less in annual revenue but if a FB or BKB card company went public, I would guess they would be worth at least $1B each. That put the three card licenses at a $3.3 B valuation. Fanatics is a great marketing company and could probably sell more product through their platforms, but the hobby already has robust distribution. So even if Fanatics takes over the distribution business as well and cuts out the middlemen, I would only expect a small bump in value. I'm guessing 25% based on what I think a distributor needs for margin to cover the bills and make a profit. That puts the estimated value at around $4 B,
To get to $10.4 B, they will need to have significant service revenue from grading, storage, and sales. I don't think the card market can double from here just from card sales. That is where the secret sauce lies. Fanatics must have presented a plan to the hedge funds that has some big ideas. I wish I could get that Powerpoint presentation.
Agree Mike - the valuation makes little sense to me. Did the same type of math as you did and only get half way there. Figure in their license fees paid out are significantly higher than Topps and Panini I just don’t see it. I would value basketball as more than baseball in today’s environment. Figure efficiencies of one company and get to $5B or so. If the players unions can keep individual deals away from other companies add on the value of Leaf and Panini’s baseball product - probably $500MM. Can get to $5B to $6B but that comes with a lot of uncertainty.
The real way to get the dollars is getting the price paid to the biggies like Blowout and Dave and Adams. They often sell boxes at double retail price. The real money is not in the distributor fees but the mark-ups by the final sellers. To get this, they would have to auction off new product directly to collectors or charge significant membership fees to buy cards first. Think the pushback on that is going to be huge if that is their plan.
They do not own CGC yet (though there is some common ownership), while they do have a strong online presence, they do not yet run an auction house with a lot of eyes (vault services only work if that is where investors want to sell their cards). If they start their own grading company - do not see it as relevant - if Topps or Panini had their own grading company I cannot imagine everyone moving to them over PSA. If they grade harshly what would that say about the quality if the product they are producing? If they grade easily then the 10s are worthless.
Fanatics has to be very smart in how they manage this. I cannot imagine a presentation where I would have been hurrying to buy in at that valuation (not that they would care about the few shares someone like me could buy had 200 shares of Mudrick). Obviously they have a plan or they would not have raised money at that level - but $350MM from new and EXISTING investors is only 3% of the value of the company (at $10.4B). If existing investors are the majority of that, they may be trying to use that as a valuation argument when they really go after funding. I bet if they were trying to raise say half the value ($5B) - the valuation would come in much less.
So I read on another board that Fanatics cards will always be available from Fanatics. Basically if they made a rookie 5 years ago you want you could always get it…just will cost you the going rate. To insure the players see the profits of their rookies.
Fanatics all ready has their LCS replacements with their stores. Local card shops will be done.