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PSA/DNA Lead Authenticator No Longer with Company
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Ironmanfan
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Just announced today...
He left for Beckett and will be heading up their new Beckett Authentication Service!
Wow, kind of surprised. Wonder what that means for JSA and their BGS/JSA dual service.
I saw a episode of PornStars.....Steve Grad came into their shop to authenticate something, like a Star Wars proto-type with a rocket that did shoot by Hasbro, but later were glued.
Then Steve tells Baldy guy to stop by his shop to show more Star Wars stuff to unload on him. A poster with a bunch of cast signatures and then a model ring of something like a spaceship used during filiming of the movie I guess. And also showed tons of Star Wars cards graded and Authenicated DNA autos of star wars cards.
I wonder what the back story to this decision was?? Did Beckett just offer a huge package to get him to leave?
George Brett, Roger Clemens and Tommy Brady.
I've read on other forums posters have stated their opinion that BGS was not long for being a future factor in the grading market. The implication by the various posters being BGS may not be around much longer. This move by this grader may seem to question that belief. After all why leave such a successful, dominant, well respected organization if there was no future at BGS?
I am not sure you have the name of that program correct.
don't these guys have a non-compete clause? Why leave a company with 90% market share for a company with 5% share?
Well, a better salary probably. I wouldn't be surprised if he has signficant bonuses based on growth of the new venture or even partial ownership.
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Put the numbers in perspective here. PSA does about $18M/yr in revenue. BGS maybe $1M. Partial ownership of a $1M company is nothing. A pizza parlor or low end restaurant does that much in revenue. So 25% (for arguments sake) ownership of a $1M company is $250,000 in revenue. Profits of maybe $50,000? It would have to grow by 10X to be worth while.
This sounds to me like someone who thinks they are bigger then the company and the companies success was because of them. Losing him as the head authenticater will have no material affect on PSA/DNA's business. In the short run it might be a good move for him as generally another company has to make a sweet offer to get the talent but leaving the dominate player to go else where generally is never a good move in the long term. In financial services this happens all of the time and a few years later the person is wishing they had just stayed put. Dbtunr there have been many question these market share stats but the reality is they are accurate and it is generally only people with a lot of money tied up in BGS cards. I would imagine that they will get some action for sure and most of it will come from JSA which makes this more interesting from that perspective. It can't be good news for them. In the end it won't matter much and I have to laugh when I read the press release and it says Beckett is the most trusted brand in the business. Yeah okay.
There's more to life than huge packages, guessing they offered more freedom to pursue his TV interests as well. Plus Beckett gets to use the 'As seen on Pawn Stars' in their advertising.
No way Beckett revenue is only 1mil
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It is a private company so no revenue figures are published but a large percentage of their revenue comes from their subscription services. From their authentication business they probably aren't that much higher then he referenced. I think when you break down PSA's card grading segment it is in the range of 12 to 13 million and they do indeed have 90% market share. BGS does have a higher average price point for grading so his estimate is probably a little low using the same as PSA's but the point is still very valid.
PSA's website states 27+MM collectibles. Even if we assume that just cards. Beckett's slab go chronologically, on blowout an September submission was numbered 9441782.
So, they are nearing 9.5MM.
This is not 90% of the market share.
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Looking through my notes from various investor presentations done by CLCT, I will correct myself a little. The CEO said they have 90%-95% of the card market and 70%-75% of the autograph market. I would think the 70%-75% number is more comparable to what this new BGS venture is doing. They have never broken down what % autographs are of the total PSA business from a revenue standpoint. From a unit volume standpoint, autographs are 35% of the PSA business but from a unit value standpoint it is only 12%. So I would guess your $12M-$13M for cards is accurate which leaves $5M-$6M for autographs. That leaves at most $2M for all other companies other than PSA for autographs. I don't know where BGS fits in with all the "other" autograph companies, but if they had half of the other share, that's $1M/yr. If they have 75% of other, it's still only $1.5M. Still on the order of a well run restaurant.
It is possible Beckett had a higher % years ago? PSA does indeed churn through about 1.7M cards and autographs/yr. Do you have an earlier Beckett submission # from a few months back? If you know the exact dates of the two recent submissions and calculate the difference and days, you could extrapolate a yearly total.
Is it possible that PSA does this through proxies every so often to gauge how much business Beckett has?
not sure where beckett co or more precisely the grading division is headquartered, but non-competes usually cant succeed state lines.
even by chance a national clause was added, it would be very difficult to enforce in many states.
and even then, it wouldnt be too hard for bvg to set up a small shell in canada for him to "operate from" to supersede.
noncompetes are basically just a scare tatic or used to drain funds, attorney-fees wise to thwart employees from creating a competing enterprise.
if the part from psa was not amicable, considering his title, id think theyd go w the "employee/trade secrets" and try an injunction that way.
but again, the canadian shell play works.
and like always, the lawyers would be the only winners.
They do have an international grading location (can't remember what country) as well.
A quick calculation for the last 140,000 items, implies BGS grades 1505.7 cards per day, which is equal to 549581 cards per year.
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awesome intel. So it looks like between PSA and BGS it is a 3:1 ratio. Interesting and I am glad to know a more true number. This assumes the BGS serial numbers are truly linear with no gaps for any reason. We also can't assume PSA and BGS have the entire market either. So PSA has maybe 60% of the market? Again, thank you for the awesome intel.
Current listings with PSA on EBAY are 628,842 and 143,504 for BGS. This puts PSA at 81.45% of all cards listed with either PSA or BGS in the title. This also allows for the fact that years ago BGS was much stiffer competition. It also is probably inflated on the BGS side as many include PSA in their title.
I went to the 2013 National and there isn't any way that BGS is grading 4 out of every 10 cards submitted. You could walk right up to their booth and get service. The PSA booth was packed and there was a line. The SGC table had two men twiddling their thumbs. I didn't attend this years National but pictures don't lie. The PSA booth had long lines constantly. They were posting pics on their Twitter page throughout the show.
BGS has their place and clearly many modern collectors like them and one could argue on newer cards they are very competitive with PSA. One could also argue when it comes to important cards perhaps the market share statistics are blown out of proportion to some degree from companies like 4SC sending in cheap commons for set collectors. That said revenue is revenue. Realized prices of cards are clearly showing significant favoritism to PSA in most cases.
I believe Beckett is still owned by a private equity firm. Those guys don't just hire someone like Grad to keep the status quo. I'm sure that they have plans to leverage his skill/rep into something interesting.
As for a small vs big company job, the one thing I know for sure is that working for a large company will not get you rich. Only a select few of the top make good money, the rest are looking at 2% year raises. If Grad did get some equity in the new business (most PE firms do give incentives like that), he could make a lot more money than at PSA.
ndleo - CLCT is relatively a small company with a market cap under $200M. If Grad wanted a piece of the pie, he could have gotten it there. CLCT is also the perfect company for private equity to take over; generates a ton of cash and high barriers to entry.
Dpeck - it is possible that the serial number BGS uses has gaps. I'm a database guy and I know there are many reasons why there would be gaps. From a process standpoint there are many reasons for a gap. The truth is probably somewhere between 60% and 90%.
if you dont have your health, you dont have anything.
CLCT is a public company, Beckett is private. There are limits to what CLCT can offer. If CLCT offered Grad 25% of new business, the other shareholders would complain. I'm sure CLCT tried to counter but Grad must have felt the Beckett offer was stronger.
A $200M company is a large company in our hobby, I think the only two bigger are Topps and Panini. When Beckett was bought in 2005, the price was estimated at $20M. I don't think the value of Beckett is much higher than that due to the decline in the published price guide and the grading business has been flat. I respect Grad for taking a chance and trying his own thing.
CLCT offers stuff like that to their executives in the form of stock options based on goals for the company in revenue, growth, and profits. It is far easier in a public company to give incentives. $200M may be large for this industry, but it is a mere spec to PE companies.
either way he is gone
Is it confirmed that this was his doing? Sometimes companies wish to sever ties with key employees obviously.
If you include BVG, the total goes up to 175,599.
What about BCCG?
Based on the press announcement from Beckett, it looks like this was a planned move on Beckett's part. I think Beckett wanted to capitalize on the Pawn Stars connection with Grad since it says that Beckett will be referenced during the show. I also see that Brian Sobrero joined Grad at Beckett as well, wasn't he on the rotating list of experts featured on the PSA homepage?
Now PSA may have decided to move on from Grad as well, maybe this was one of those "mutual" divorces - it's not you, it's me?
I wonder if someone from Dallas is calling a place in Indiana?