A dollar spent on grading is a dollar not spent on cards...

11235813 · January 24, 2008 12:18PM

Has anybody tried to estimate or study how the rise of the card grading industry has affected dealers?

I was talking to a fellow collector recently about the lack of card stores in the Seattle area, where we both live, and he opined that the rise of the grading industry may be driving a lot of small dealers out of business because people are spending money on grading instead of buying cards?

Given that there are both people on this board who spend virtually nothing on grading and people who spend thousands of dollars a year on grading, I thought I'd toss the question out there for people to discuss.

Thoughts?

kingraider75 · January 24, 2008 12:35PM

Well it's still money spent on cards somehow. If they send in their own cards to get graded, then they had to buy them somewhere at sometime. Most old-school dealers did not get into the grading trend. It was more money to front, plus they knew those old 50's cards had some creases! lol

Leiascards · January 24, 2008 12:40PM

The vast majority of the small dealers were long gone before the grading game started. The number one factor in killing the remaining dealers is the price of the modern product.

clydecoolidge · January 24, 2008 12:46PM

<< The vast majority of the small dealers were long gone before the grading game started. The number one factor in killing the remaining dealers is the price of the modern product. >>

I agree. And I'll add the amount of issues in current modern. With more high cost modern than low cost, younger collectors (which is who was responsible in the past for the hobby thriving, can't be a major factor anymore. And card dealers can't make money off of cheap modern issues.

SportsItUpCards · January 24, 2008 12:55PM

I think a card shop can stay opened anywhere, as long as you know what your doing!

I've been to pleanty of card shops in my day, and most of them have closed down. Those were the guys who were nastry to everybody, and didn't really care about the customers, only selling packs, and a few cards here and there.

In order to run a cardshop the right way, you gotta make your customers feel like their special, you gotta interact, and so on, you just can't expect them to come in, buy a few things and leave. People wana have friendly chats, come in sometimes just to hang out. Talking about hanging out, I knew a guy who used to kick people out for hanging around, lol, its not like those people never bought anything, because they did, but he was that nasty.

I have always thought about opening a cardshop, but somebody someday in the future, when I can find a piece of property with a storefront maybe.

Giovanni

bigdcards · January 24, 2008 1:29PM

To the OP I'm not sure how it changes things. From one end you could be right. All the grading money could go to cards. But on the other hand I wouldn't be willing to buy cards online for very much money. I've gotten many cards that had flaws that just weren't visable in the scan. But if I buy a PSA card with a scan, then I'm not getting surprises the vast majority of the time.

11235813 · January 24, 2008 1:46PM

That's one of the perspectives that came up in our debate...

On the one hand, if a collector spends $1000 getting cards graded, that's $1000 that isn't getting spent buying cards....

But on the other hand dealers and store owners may also actually be making more money because of the fact that graded cards usually fetch more than raw cards....

halosfan · January 24, 2008 2:37PM

Do you have any idea on how far 1K will go in a card store to bust modern packs?

I walked into a card store the other day for he first time in 4 years. I went in to buy my son a box of Yu-Gi-Oh cards (nearly $100) .... this was the shop I used to go to when I wanted to open new stuff. While I was there I asked what he had for me. Nearly anything I would crack open was nearly 300+ a box or over 120 a pack.

I'm not sure card grading is the culprit.

You can spend thousands to crack the product ... but how often can you do that as a collector/set builder.

Sure, if you hit the big card you can sell it to off set your next purchase but what fun is that. If I hit the big card, as a collector, I'd rather keep it in my collection as opposed to selling it for funds to crack open something else.

How many of your local shops have anything but game cards for kids and high $$$$ boxes for sports adults?

How many of your local shops have graded cards for sale?

SportsItUpCards · January 24, 2008 2:39PM

<< Do you have any idea on how far 1K will go in a card store to bust modern packs? >>

lol, one box of Exquisite?

Giovanni

rube26105 · January 24, 2008 2:42PM

<How many of your local shops have graded cards for sale>

there sure isnt none around here,wish there was,just raw overpriced junk for the most part

bigdcards · January 24, 2008 2:42PM

The shops closest to me barely sell singles at all. The singles they do have are always priced 2 - 3 grades above the condition of the card and they aren't even graded. Then there are the bid boards which are fun. The modern wax is an amusement. You are paying for the fun of opening packs nothing more. If you buy a ton of wax you will eventually hit something, but the big hit won't cover the amount you spent on all those packs.

metalmike · January 24, 2008 2:47PM

Cincnnnati has 10 card shops, not bad for a small market team. Baseball and Football rule here, Basketball sells ok but Hockey is dormant at best. Flea markets are sweet as you can get a buck per for older Reds in Vg+ 4.5?

TheVon · January 24, 2008 2:55PM

I don't completely agree with the idea that $1,000 spent on grading is a $1,000 not spent on cards. The reason I don't agree is that I think a lot of us will throw some extra cards onto our PSA submission forms for the sole purpose of later selling them to fund the future purchase of more cards. But I do think that a significant portion of the money that goes towards grading does not get spent on the actual cards. That's kind of wishy-washy, I know, but that's what I think.

storm888 · January 24, 2008 3:04PM

Grading-money IS spent "on" cards.

Grading adds value to cards.

11235813 · January 24, 2008 4:16PM

Storm888,

I would respectfully disagree.

Spending money on grading is spending money to get someone's opinion on the condition of a card, not on the purchasing of additional cards. Yes, it is money spent within the card industry, but money that goes to PSA or other grading companies is money that is not going to store owners and dealers.

As to grading adding value to cards, IMO that is a huge and debatable generalization. Whether or not a card increases in value after being graded depends on what was paid for the card and what grade the card receives.

torc · January 24, 2008 5:16PM

E-Bay has killed more Mom and Pop shops than any other single issue.
The $$ not being spent in the card shops are being spent online now. That is where the money is going.
Every time you buy a card on the Bay, is $$ your not spending at the local card shop.
Grading is a weeeeee tiny amount compared to that.

WinPitcher · January 24, 2008 5:32PM

Money spent on grading adds value to cards which in turn could be usd to buy more cards.

Grading per say did not drive any card shops out.

Steve

stevek · January 24, 2008 6:56PM

<< Has anybody tried to estimate or study how the rise of the card grading industry has affected dealers?

I was talking to a fellow collector recently about the lack of card stores in the Seattle area, where we both live, and he opined that the rise of the grading industry may be driving a lot of small dealers out of business because people are spending money on grading instead of buying cards?

Given that there are both people on this board who spend virtually nothing on grading and people who spend thousands of dollars a year on grading, I thought I'd toss the question out there for people to discuss.

Thoughts? >>

Grading is "additional" money spent in the hobby which otherwise wouldn't have been spent - It isn't money being diverted from the hobby. Grading has added value to the hobby.

-

onlyanumber · January 24, 2008 8:44PM

8675309, Ebay is the number one killer of card stores. More selection, better prices. Add in the rise of the internet and you also get more knowledge. You don't have to wait a week or a month to find out about something rare or unique. The information is right there for you on the internet the second something is discovered. The surviving card shops learned to evolve--by adding gaming cards, graded cards, developing an Ebay presence and using Ebay as a price gauge. Card shops that pop out an outdated copy of Beckett and offer no wiggle room don't last long. Knowledge is power. Why go to the shop down the road for the Nolan Ryan rookie in excellent condition, when you can find the same card on Ebay in a better grade for less money?

10 years ago I wasn't into the cards as much as I am now. My interest had waned, solely because of the lack of merchandise and attitude from the local card shop I went to. I got back into cards full force in '99, buying up new product like there was no tomorrow. But that got old real fast. Now I'm into graded cards full force. On any given day, I'm waiting on $1000+ in cards from ebay wins. Less than 10% of that is ungraded. But that 10% will end up in holders in 2-4 months. Even if there was a card shop in my area, I doubt I would frequent it, solely because I got a card shop called ebay I go to on an hourly basis...

Lothar52 · January 24, 2008 9:49PM

you know...all this money on MODERN poo and i just bought this for 60 delivered....you tell me where ya should put your money....

they DONT make them like they used too....why they didnt do a 53 bowman color heritage set is beyond me...

perkdog · January 24, 2008 10:00PM

Nice Ashburn! And I agree with you, Vintage is the way to go..........

cardbender · January 24, 2008 11:03PM

Storm has it right, if grading didn't add value to the cards then dealers and most collectors wouldn't buy into the grading of them. Why would you want to spend $10 having PSA or any grading company telling you your 1974 Nolan Ryan card is legit? Does it matter? Are you paying $10 for the 5 cents of plastic slab that these grading companies entomb your cards with? No. I think we're all paying for the grade assigned to the card and the added value that the given grade may bring a card. Eventually everyone has to sell their cards or give them to their kids. So yes, money is tied up in the grading of these cards that can't be spent on other cards, but in the end it will be money you recoup when you go to sell off. I'm speaking mostly in terms of vintage cards here. I don't follow the modern market at all.

We may not always agree on the grade the cards are designated, but it's better than the way it use to be back in the pre-grading days when creased 80/20 centered cards were called NM by many dealers.

As far as how grading affects dealers, take for example Levi at 707. Before he bought into grading he had some of the nicest raw cards in the hobby. He was very high priced on many of them but the quality warranted those high prices. Then he started grading his inventory with PSA. After grading most of his better cards the prices were higher in PSA slabs than they were when these same cards were available for sale raw. So grading added value to his inventory.

stown · January 24, 2008 11:59PM

I completely disagree with the OP.

It's adding value to the card, not taking away.

BTW - Have you called Joe?

bifff257 · January 25, 2008 12:49AM

<< E-Bay has killed more Mom and Pop shops than any other single issue. >>

Leiascards · January 25, 2008 12:50AM

Most mom and pop stores were gone or going before Ebay.

BigDaddyBowman · January 25, 2008 12:54AM

<< 

<< E-Bay has killed more Mom and Pop shops than any other single issue. >>

>>

I also agree.....I keep hearing that Buggles song from the early 80's "Video killed the radio star"

"E-bay killed the Mom and Pop Shop"

storm888 · January 25, 2008 1:54AM

""E-bay killed the Mom and Pop Shop" "

//////////////////////////////////////////////

ONLY seems that way.

On my 2007 trip, I went to scores of collectible stores.
They ALL had at least two things in common:

1. The ALL had some (tiny/huge) EBAY presence.

2. They ALL said they could not profitably stay in the business,
if they did not have an EBAY presence.

EBAY has saved ALOT more stores than it has wiped-out.

The stores that closed would have done so without any pressure
from EBAY.

Real-estate prices (retail rents) changed the entire face of
retailing in America. The internet provides auxiliary income
to offset a portion of the fixed-expenses suffered by B&M
merchants; EBAY rescues those stores --- it does not destroy them.

clydecoolidge · January 25, 2008 2:42AM

<< I completely disagree with the OP.

It's adding value to the card, not taking away.

BTW - Have you called Joe? >>

I think he was stating the opinion that money spent on grading fees are taking away money that would've/could've been spent on cards in the retail marketplace. Not that the value of the card would increase or decrease.

11235813 · January 25, 2008 3:08AM

Exactly....every dollar spent on grading is a dollar not being spent in the retail marketplace. When you consider that the combined annual revenue of all the grading companies is probably well into eight figures (i.e. over $10 million), you cannot deny that money spent on grading (instead of on buying cards) does not have some sort of negative impact on retailers (i.e. card store owners and dealers).

As to the assertion made by several posters that grading ALWAYS increases the value of a card, I would strenuously disagree.

If you've done you homework before submitting and the card receives the grade you expected, then the value of the card will probably increase. But plenty of cards come back with grades lower than what the submitter expected (judging by the griping on this board), in which case the submitter has often lost money on the transaction.

cravetopps · January 25, 2008 3:21AM

<<But plenty of cards come back with grades lower than what the submitter expected (judging by the griping on this board), in which case the submitter has often lost money on the transaction. >>>

How is this a logical statement? The submitter didn't lose money on the grading transaction. They lost it on the original purchase assuming they paid the going rate for a card they assumed would grade "X" and it came back as an "X-1,2 or 3 etc.). Grading it may have actually increased the amount of money the card could fetch if they sold it.

Also, a dollar spent on grading does not necessarily translate into a dollar not spent on buying cards. Again, this is not logical. The consumer may decide to take a dollar away from something else, or the total budget he is allocating to both buying and grading is increasing.

stevek · January 25, 2008 3:28AM

Right - walking into almost all card shops and seeing their absolutely pathetic mix of poor selection and overgraded/overpriced cards isn't very appetizing along with their usual weasel behavior. Yes, ebay has its faults, but it is not surprising that ebay has put a number of card shops out of business.

There are some good card shops out there with a good selection and competitive pricing...but not many.

SportsItUpCards · January 25, 2008 3:34AM

lol, I see guys are doing this in there card shops all around the US, lol

When I go to the Staten Island mall, and go to the card shop there, they still have that same Paul Pierce 1998-99 Topps Chrome rookie in BGS 8.5 for $39.99

I have seen that card there for almost 3 years now! And its not even his Refractor version, just the regular chrome rookie, lol.

Overpriced junk

Giovanni

11235813 · January 25, 2008 3:36AM

Mark,

I was referring specifically to cases where someone buys a raw card with the intent of submitting it for grading and then reselling it for a profit. You are right in that they technically lost money because they made an incorrect assumption of the card's condition, not because it was sent in for grading, but the effect is the same.

If you pay $100 for a raw card thinking that it'll be a PSA 8 worth $150 after you send it in to be graded and it comes back a PSA 7 worth only $50, you've lost money. Given that this is what a lot of people do (buy raw, get it graded, and hope to flip for a profit), the assertion made by other posters that grading ALWAYS increases the value of a card is simply not true.

You are also right in that a dollar spent on grading does not neccesarily translate into a dollar not spent on buying cards, since there are people out there with unlimited budgets. But I think its safe to say that for 95% of people, collecting is a zero-sum relatively fixed-budget activity, and a dollar spent on one thing is a dollar not being spent on something else.

cravetopps · January 25, 2008 3:50AM

<<If you pay $100 for a raw card thinking that it'll be a PSA 8 worth $150 after you send it in to be graded and it comes back a PSA 7 worth only $50, you've lost money. Given that this is what a lot of people do (buy raw, get it graded, and hope to flip for a profit), the assertion made by other posters that grading ALWAYS increases the value of a card is simply not true. >>

Again, the grading of the card does not typically diminsih it's value. The grading, however, may actually decrease the loss. So, the assetion may still be valid although blanket statments like that rarely are. There is a distinction between what the buyer paid for the card and the value of the card. Grading may increase the value of the card and but still not make the card profitable for the buyer. In other words, the value of the card was not what the buyer paid for it. That is the cost of the card. The value was determined when it was graded.

I do agree that grading does not always increase the value of a card. Typically this is because the grader may see some blemish not easily seen in a scan or with the naked eye. So, some cards with exceptional eye appeal may grade not so well in which case selling the card raw could net a better return. All of us have been "victimized" by this, I'm sure.

mcolney1 · January 25, 2008 4:02AM

I have never sent in cards for grading, but I own some graded cards. A few observations:

Because of ebay I've spent more money on cards in the last 10 years than in the prior 20 years. Why - because I can shop for exactly what I want and find it. I'd have to go to 100 cards shows to find the inventory I can find on ebay in one week. These purchases include raw, sets and graded cards. Also, I don't have to deal with some of the unfriendlier dealers and can set my own price. I've never been a good negotiator.

I live in Seattle and the only card shop I go to is Mr. Brown's Cooperstown in Fremont. He is a nice guy, has a nice shop and seems to cater to young and old. I've picked up a few nice vintage singles, but most of his older product is EX at best and I can find better cards on ebay for the same money including shipping. I think he stays in business by selling/finding/consigning on ebay and selling modern stuff for a reasonable price. I think Gasoline Alley is still open in the University District, but he sells all types of vintage material and he is on ebay. Don't know of any other shops are still open in Seattle.

Lastly, I think I've been spending more money on cards because I've become interested in getting master player sets in PSA. I'm working on a PSA 9 Topps master Walter Payton and Steve Largent collection. I have all the cards raw, but wanted the same cards in a PSA holder for display and protection. So, in my case, I am spending money for cards I already have because they are graded.

11235813 · January 25, 2008 4:03AM

<< There is a distinction between what the buyer paid for the card and the value of the card. >>

Not according to free-market economics!

The value of anything is whatever somebody is willing to pay for it at a given point in time! Now the value of something may change over time as new information becomes available (i.e. what happens when a card is sent in for grading). But at the exact moment you buy a card, its correct value is the price you paid for it.

cravetopps · January 25, 2008 4:10AM

<<<<The value of anything is whatever somebody is willing to pay for it at a given point in time! Now the value of something may change over time as new information becomes available (i.e. what happens when a card is sent in for grading). But at the exact moment you buy a card, its correct value is the price you paid for it. >>>

Again, I respectfully disagree. The value is not set by what you paid for the card. The fair value is what the market is willing to pay for your card, not what you paid for it. You cannot use one price point to determine the fair value of a commodity.

11235813 · January 25, 2008 4:26AM

<< The fair value is what the market is willing to pay for your card >>

That is correct. But at that specific moment in time, you represent the entirety of "the market" for that specific card. There is no other demand at your price point (or else competition would cause the price to increase).

According to the laws of economics, the "market" is the representation of aggregate demand at a specific point in time, which in this case is repesented by you and the price you are willing to pay. Other people may be willing to pay different prices for very similar cards, but you represent the only market demand for that specific card at that specific price at the specific point in time in which you agree to buy it.

storm888 · January 25, 2008 4:59AM

Since I ONLY sell graded cards, I would NOT buy ANY
raw cards if I could not have them graded.

Raw cards are for fun........ Graded cards are for money.

11235813 · January 25, 2008 5:18AM

<< Raw cards are for fun........ Graded cards are for money. >>

And that probably explain why you and I disagree on just about everything. You're in the hobby to make a profit....I'm in the hobby to enjoy looking at my cards.

WinPitcher · January 25, 2008 5:47AM

But at the exact moment you buy a card, its correct value is the price you paid for it.

Nope, just like you told those that claimed every card graded goes up in value you too can't generalize.

Steve

storm888 · January 25, 2008 5:54AM

"You're in the hobby to make a profit....I'm in the hobby to enjoy looking at my cards. "

////////////////////////////////////////////////////

Without sellers seeking a profit, there would be no hobby and very few cards to look at.

Third-Party grading saved the card hobby.

WinPitcher · January 25, 2008 6:03AM

As a person who actually had a card store (from 1983 to 1990) I can tell you that 2 things basically made me want to get out.

1........RENT, and other dead expenses.

2.....The proliferation of product.

When I first started we had 3 companies basically. Now one could say that the more product would favor the seller as he would have more items to sell. The fallacy to that is that for every winner you had 5 losers that you wound up being stuck with. Those mistakes add up. What say you? Buy just the winners? Did not work that way, to buy from someone (anyone) you buy everything or nothing at all.

Also for every great vintage deal I was able to do I had prolly 10 deals from people trying to sell me current stuff for book. Stuff that I had myself.

IMO, grading cards added value and those guys that were able to stick it out during those lean years could be sitting on a gold mine. For every10 PSA 71980's Ryan's they get all they need is to get 1 PSA10. Plus as I said they have whatever vintage they were able to purchase from walk ins and cards they paid 100.00 could become 300.00 with time and being in a holder.

Just a few comments from someone that actually did it.

Steve

11235813 · January 25, 2008 6:04AM

WinPitcher,

What I meant to say is:

"But at the exact moment you buy a specific card, the market value of that specific card is the price you paid for it", which is true according to the laws of economics.

"Correct" was not the best word I could have used to express what I was trying to say.

stown · January 25, 2008 6:04AM

You keep bringing up economics but use an incorrect philosophy.

The value created is on the buy, not the sell.

For example:

One buys a raw card for $100 and PSA values are 6 $75, 7 $200, 8 $400.

If the card grades a 6, then you overpaid on speculation.

WinPitcher · January 25, 2008 6:12AM

Yes for that specific card I agree, so? What about the other million examples? surely they all do not trade at the same price, unless they are etopps. Rarely does 1 card make a market.

Steve

WinPitcher · January 25, 2008 6:13AM

Storm this thread like 1000 b4 it has gone off on 10 different tangents.

Steve

11235813 · January 25, 2008 6:14AM

<< Without sellers seeking a profit, there would be no hobby >>

That's strange...I seem to remember the hobby existing just fine before there were even price guides. Without sellers seeking a profit the secondary market might not be quite as well developed, but the primary market (i.e. card companies selling new product each year) would still be just fine.

<< Third-Party grading saved the card hobby. >>

Would you care to provide any evidence to back up your assertion? Third-party grading may have saved the card BUSINESS, but the HOBBY was doing just fine before third-party grading came into existence in the late 90's/early 00's. How would you explain the fact that thousands of people like me collected cards quite happily before PSA even came into existence?

cravetopps · January 25, 2008 6:15AM

<<"But at the exact moment you buy a specific card, the market value of that specific card is the price you paid for it", which is true according to the laws of economics. >>>

Vodoo economics? The value is NOT based on what ONE person pays for the card. It's based on the fair market value which is what the MARKET is willing to pay for the card, assuming there is a market. As Stown correctly states, if you overpaid for the card, the market will correct your mistake. There is no "temporary" FMV based on one person's mistake.

This is hopeless.

11235813 · January 25, 2008 6:16AM

Steve,

My point is that the collective market is in reality make up of thousands of individual markets for specific items.

stown · January 25, 2008 6:31AM

<< <<"But at the exact moment you buy a specific card, the market value of that specific card is the price you paid for it", which is true according to the laws of economics. >>>

Vodoo economics? The value is NOT based on what ONE person pays for the card. It's based on the fair market value which is what the MARKET is willing to pay for the card, assuming there is a market. As Stown correctly states, if you overpaid for the card, the market will correct your mistake. There is no "temporary" FMV based on one person's mistake.

This is hopeless. >>

He's using highschool economics, so it really is a waste of time...

A dollar spent on grading is a dollar not spent on cards...

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