Crossover grading
 

IMO it is in the hobby's best interests to have multiple TPGs that are in active competition with each other. There have been multiple threads about alterations going undetected, inconsistent grading, poor customer service, as well as discussion about the entire concept behind "grading" and the information a flip should convey. The more competition among TPGs, the more likely these concerns will be addressed, to the benefit of the hobby.

So it should be of concern to the hobby if a TPG is engaging in unfair practices in order to crush its competition. In my view, the most blatant and effective way to do that is to refuse to cross over a card graded by a competitor regardless if the card is clearly worthy of crossover. I am concerned we are seeing that very thing taking place on a regular basis, and the purpose of this thread is to discuss if others agree and what can be done to prevent it.

A legal obstacle to establishing the existence of such a practice is how does one establish the state of mind of a grader when refusing to cross over? Grading is an opinion, and a TPG in refusing to cross a card over will simply say that in its good faith opinion, the card does not merit being crossed over, either because the card is altered or because its condition does not merit such a grade. Just recently I heard a particularly egregious story. 50 vintage cards graded by company A were sent to company B. None were crossed over, though I am unclear whether the reason was because they were altered or simply not deserving of the same grade. The person who submitted the cards then removed them from their slabs and resubmitted them to company B. All 50 cards came back crossed over at the same or higher grade.

Now this is only a story I heard and I cannot vouch for its accuracy, so I want to be careful not to state that it actually occurred. But whether it did or did not, it would seem to me to give such a company A worried about being crushed out of existence by unfair trading practices a means to fight back. This company A could engage in a pattern of anonymously submitting its slabbed cards to company B, and then if/when the cards come back not crossed over, take evidentiary note of the cards being removed from their slabs and resubmitted. If they come back crossed over, and this pattern is continually repeated, it would seem to me to establish proof that company B is engaging in illegal methods to silence its competition. And if company B is a publicly traded company, the legal consequences could be even more severe.

For me personally, if I was the person running company A and seeing my profitability going down by such actions by company B, I sure would engage counsel and have a serious discussion about what legal methods I could take to protect my company.

There's an easy excuse that TPG's can make for the story above, true or untrue. For a crossover in the slab, the TPG obviously cannot crack open the slab, and therefore there may be some parts of the card they cannot observe very easily. (e.g., thickness of the card on whether it is pressed.) Therefore for these reasons, the TPG may refuse to crossover the cards at a high grade due to this reason (or excuse).

That's a fair point, but inasmuch as some cards do get crossed over (thereby establishing examples for comparison), I would think that with enough submissions one can establish such an explanation by the TPG to be legally incredulous.

If Company A refuses to cross from Company B is it illegal or is it the charging for the phantom service that is the problem? A bias would be extremely difficult to prove. I am skeptical of the 0/50 then 50/50 story.

I am not an antitrust lawyer but I would think it is an unfair trading practice and violates the Sherman Antirust Act. A refusal to crossover expresses the opinion that company A got it wrong. By constantly doing that company B would be besmirching company A's reputation, causing it to lose substantial business and maybe go into bankruptcy. I would think that is actionable.

Suppose B just announces a policy that it will not cross over cards in other holders, period. With some narrow exceptions, which I won't bore you with, refusals to deal (which that would be akin to) even by a monopolist are not antitrust violations. A company generally can deal or not deal with whom it pleases at least insofar as the Sherman Act is concerned. Also, as to your hypothetical, I don't buy the premise that refusing to cross over a card is somehow tantamount to libel. And even if it were, there are some pretty onerous requirements before you can convert a business tort into an antitrust violation.

PS I am only responding to your antitrust point. I would have to think about other possible claims, and who would have standing to bring them.

I get the impression that grading company A will not crossover grading company B's cards because they are trying to run their competition out of business. They want customers to believe that only their grades are valid, and the competition is either overgrading or slipping bad cards through.

TPG's are given submissions to grade cards objectively, based solely on the characteristics of the card. If they are playing politics to drive out their competitors that is outrageous.

All companies want customers to believe their products are the best, and many aggressively promote that idea. That's competition. The rough and tumble of the world of commerce, as some case I can't recall now puts it. Why do I have to help out my competitor?

I don't expect them to help their competition, but collectors spend an awful lot of money to have their cards graded (perhaps you've noticed the dramatic rise in the cost of grading fees). In return for all this money we're sending them, I expect an accurate and unbiased opinion. Sounds to me some of their opinions are extremely biased.

PS there is no chance SGC is going to sue PSA for not crossing SGC cards into PSA holders. Do you think it wants to publicize that people are trying to do that?

To think there would be any actual legal basis is a far stretch and almost impossible to prove, in my opinion. To suggest that "Company B" is doing this to crush "Company A" also seems to be a stretch. First off, there has to be a reason that people are trying to cross cards over to "Company B" slabs. Most likely it would be monetary reasons, ie, cards in "Company B" slabs sell for more than "Company A" slabs. This is my logic, and it could be flawed, but to me it would make more sense for "Company B" to go ahead and slab those cards to be in their own holders if they wanted to crush the competition since they would then have more cards holdered than the other company hence taking up a greater market share. But, they could only do that if the cards were accurately graded in the first place. If they aren't, then that blows the whole premise of this discussion.
Personally, if I'm heading up a TPG, I'm not accepting crossovers in the first place. Why take the risk of cracking a card from a holder and having it damaged. I'm sure there's a terrific process in place, but I'm sure it still happens from time to time.

Fine, but now we're talking about an issue of whether PSA is treating its customer appropriately or taking its money unfairly, not whether there is some antitrust violation.

Tim I've often wondered the same thing, why PSA wouldn't WANT to take SGC cards off the market. I suppose the counterargument could be that by making cross-over difficult they're discouraging people from buying SGC cards in the first place. But either way I don't see SGC suing them and I think there are some serious obstacles to framing an antitrust violation on these facts.

The facts I am positing my question on are :

1. Company B has a stated policy of crossing over slabbed cards from company A that meet company B's criteria. If we are talking about Company A being SGC and Company B being PSA, unless things have changed, PSA will cross over SGC cards if they meet PSA's criteria.

2. It can be proven that the reason the cards will not be crossed over is some unstated rule that PSA wants to put SGC out of business and in furtherance of that end they will not cross over SGC cards.

3. The reason PSA gives in returning the cards not crossed over is that they do not satisfy PSA's criteria.

4. SGC loses a lot of customers and suffers significant damages.

5. In time PSA becomes the only remaining TPG in the hobby.


Under those facts (which let's assume can be proven), Peter, are you saying SGC has no actionable claim against PSA, and also that this has nothing to do with antitrust law?

It might not be bias:
 

Option 1 - Crossover Submission:
If company "B" has a huge backlog of orders to fill and its worker sees a stack of crossovers from company "A" in his ever filling inbox, he can make his day easier by just checking the "will not cross" box on his worksheet for 50% of them without even taking the time to look. Worker and manager know that they will likely be resubmitted raw at some point in future and they will be paid twice.

Option 2 - Raw Submission:
This worker from company "B" with the overflowing inbox can also check the "N5" box on his worksheet for 15% of raw cards so he can go to lunch earlier, there is no real explanation of N5 to the customer anyway. Worker and manager know that they will likely be resubmitted again at some point in future and they will be paid twice.

In that vein people have long suspected PSA of hammering cards in the hope that some will get resubmitted or reviewed, for more fees.

There are so many issues with the hypothetical it's hard to accept it, the biggest one being that one company's refusal to take another's cards OFF the market (and thus leave them ON the market) somehow put that company out of business. It sounds absurd. SGC's existence depends on PSA legitimizing its product and putting its own brand on it? I mean come on. I can't even think of an analogy it seems so far-fetched. It would be, maybe, like Ford claiming GM has some obligation to endorse its cars, or that GM dealers are obligated to stock Ford parts and service Ford cars. Be that as it may, I don't think the antitrust laws would impose a duty on PSA to cross over its competitor's cards regardless of its intent. As I said, there are some narrow exceptions to the general principle that a monopolist may refuse to deal (term of art) with a competitor but I don't see one applying here.

PS the antitrust laws exist to protect and promote competition. SGC in your hypothetical should be looking to improve its product, not looking to PSA to legitimize it.

Couldn't it also be reasonably argued that because grading is subjective that the alleged "50 cards" may have been borderline when viewed in the SGC holders? I don't care if we are talking Company A, Company B, or Company C to Z.... you submit raw cards 10 different times you may get several different grades.
I just don't see that any of these "facts" are really provable.

Well, in theory, you could have some former employee claim yeah we had a policy against crossovers. But my opinion, at least insofar as we are talking antitrust as Corey has suggested, is, well so what? Why do I have an obligation to the other grading company to cross over their cards to my holders? And how can that company with a straight face claim they need me to do this for their survival? That just sounds for all the world like they do, in fact, have an inferior product.

Now, whether a PSA customer has some legitimate gripe for his cards not being evaluated properly, that's a different question. But the answer to that in my opinion has nothing to do with the antitrust laws.

Crossover
 

I think the person who paid to cross over 50 cards is crazy. Even crazier to crack them open and pay a second time for the same 50 cards . What a joke. The TPG grading co must love these types of customers. Why not just buy the cards that are graded by the TPG that you like. They may have also put a minimum crossover grade on the submission slip that the cards did not match .

John P

I think this thread was inspired by the thread on the post-war board where Buster posts late in the night.
None of the cards have ever been posted, but the three grading companies all have slightly different definitions of what a NM-MT 8 is. The biggest difference is centering: BGS is stricter than PSA who is likely stricter than SGC. One judges "natural" rough cuts while others may accept "sheet cut" cards cut after the factory production.

PSA has done some dumb things on large submissions before, rejecting approximately 100 cards in an order as ?AUTH (aka likely fake) just because the submitter sent them in toploaders that were taped at the top. That guy has a real axe to grind, because they probably charged for that service, despite not providing the guy any useful service. I know it was posted on the CU/PSA message boards, but I think that thread went poof.

My guess is that crossover submissions represent a minuscule portion of PSA total submissions. It seems that the easiest way to address the issue is to raise the fee for such service to a minimum of $100, with the fee increasing as the value of the card increases.That would effectively put an end to crossover business, ending the arb of people trying to buy lower priced SGC cards and, without cracking them out, get them into comparable PSA holders.

One of the things that has guided me well as an attorney is what I call the smell test.

If,

(I) company B is the industry leader and has a publicly stated policy of objectively evaluating all submissions explicitly including submissions of slabbed company A cards;

(II) company B as a matter of internal policy has a policy against crossing over cards in company A's slabs, which policy can be proven;

(III) company B when returning the uncrossed over cards to the submitter states the reason for the refusal to cross over is that the cards are either altered or do not merit the same grade;

(IV) these occurrences occur on a regular basis;

(V) company A's profitability goes down, which decrease can be proven to correlate to company B's internal policy of refusing to objectively evaluate slabbed company A cards in crossover submittals;

Then,

company A has an actionable claim for damages against company B.

And to go further, if company B can be proven to have similar policies with similar results against all the other TPG companies in the market, such that that the end result is company B is left as the only TPG company in the industry,

Then

there are antitrust implications.


Let me worry about whether what I state to be fact can be proven. Assuming they can, I believe the conclusions I have drawn stand a very good chance of being correct if tested.

I'm guessing that you are using "Company A" and "Company B" because you don't actually have the proof to substantiate all of these claims and therefore avoiding any claims of libel/slander against you. We know you referring to PSA and SGC so lets get it out there. If there are internal policies at PSA that can be proven and the intent is to malicious or detrimental to SGC, BGS, etc, I'm happy to listen to the discussion. But, as Peter has stated, I doubt that the amount of crossovers sent to PSA is so vast that it is going to make some huge difference in the bottom line at SGC. I think that with the recent issues of the fake T206's being authenticated by SGC and them doing away with their autograph authentication line of business, their bottom line is probably affected more by their own hand than by that of PSA.

From what I understand it is very difficult for even some reviews and crossovers, if centering meets guidelines, the corners and edges and sometimes even minute wrinkles cant be seen in the slab. I had a 3 card review order take 85 days in a 45 day sub and was told reviews and crossovers take the longest when I asked.

Howd you feel if the cracked it, saw damage and said "nope" under close examination. This is why a lower minimum grade is usually used on crossovers. If you want a chance in hell that is

All I can go on is all the years of practice I have had including many antitrust cases some pretty high profile. I would personally value that more than your smell test -- antitrust law can be very technical -- but whatever. If you think you know more about antitrust law than I do, cool. PS in your (V) you have the wrong company's profitability going down (I think anyhow). You might want to fix that. If you truly meant to say B, then you haven't articulated any theory of harm to A, have you? Not that any of that matters really to the question.

Kinder, gentler version of above -- just because big company A does something to hurt small company B, even badly hurt it, it doesn't necessarily implicate the antitrust laws. It might, but there are lots of reasons it might not. It's a very complex subject that even the Supreme Court struggles with at times.

In the example I give, company B has a stated policy of crossing over a card from company A if the card meets company B's criteria. So what point are you making by saying that they did not have to have that policy? I am not talking about that fact pattern. I initiated this thread to discuss what if any legal implications there might be to company B if it can be proven that the real reason it did not do the crossover is not because its specified criteria is not met but only because the card came from company A, and this practice is repeated over and over.

As far as antitrust law is concerned, I am not stating that it is not complicated, nor that I profess to have more expertise or experience in it then you do. Nor am I stating that this is a cut and dry legal matter. My intent is to initiate discussion about a practice that I have heard takes place, and if it does, it reeks to the bone. If company B wants to have a policy of not crossing over company A's cards, great, then say so. But unless they explicitly state that is their policy, I believe they have a duty to objectively evaluate crossover submissions.

While I agree that antitrust law may be complicated, the economic principles on which I understand it to be based I believe are pretty basic. I am familiar with many of the Supreme Court cases on this subject and the struggles the Court has had. So to the extent you are insinuating that if our hobby ends up with company B having a near 100% market share, coupled it being proven the company did not objectively evaluate submissions in accordance with its stated policies, it is very unlikely that company A has any legal recourse or that there are not antitrust implications, I respectfully disagree.

PS. Thank you for pointing out I had the wrong company's profitability going down. I have corrected that.:o

How is antitrust law the source of that duty? There are all sorts of things that might rise to the level of a business tort but aren't an antitrust violation.

From an economic perspective, what's the difference if they make it an explicit policy or not? It seems to me if you concede they could refuse to cross SGC cards without violating the antitrust laws, then by the same token they could say they would cross them but then not do it. Sure. maybe one seems more underhanded or distasteful or sleazy, but so what, the economic effect is the same so the antitrust analysis which concerns itself with economic effect should be the same. Either way, the bottom line is that they don't cross SGC cards. It's not an antitrust issue IMO. Maybe the submitters get screwed because they pay on false pretenses, but that has nothing to do with SGC's potential claim.

One other thing I alluded to earlier. SGC would be insane to want to publicize that PSA wouldn't cross its cards. It makes SGC look bad on multiple levels.

I currently have 36 cards from BGS submitted to PSA for crossover inspection. I put my minimum grade at .5 lower than the current BGS grade. I'll post results when I receive them. BTW, its all the same modern card.

If you have 36 SP Jeters mazel tov.

Corey consider this example. A small pharma company with one drug loses much of its market share when Merck develops a blockbuster drug for the same indication. Small co. goes to Merck and says, I need to license your drug and become an authorized seller to stay in business. Merck says no. Lawful refusal to deal.

Change the facts. Merck says yes, but then breaches the bargain and never delivers the product. Small co. might have a breach of contract claim now, but it still doesn't have an antitrust claim; the economic effect is the same whether the refusal is straightforward or sleazy. Put another way, every wrongful act by a monopolist does not thereby become an antitrust violation.

The signal they are giving the hobby by its refusal to cross over.

If company B explicitly states that they objectively evaluate all crossovers, then its refusal to do a crossover is an expressed opinion the card is either altered or not worthy of the same numerical grade. It this in fact occurs over and over and it creates an impression in the hobby that company A offers an inferior grading service, that can cause company A to lose customers, in the same manner a false advertising campaign can.

If though the impression the hobby gets is the reason company A's cards are never crossed over by company B is because company B as a matter of policy does not consider crossovers, the hobby would not get the same impression that company A offers an inferior grading service, and as a result company A would not lose those customers.

Two responses.

1. One of the points I was making is that company A could very well have a legal claim for damages from company B that is not predicated on antitrust violation.

2. In my fact pattern company B's practices results it having a (near) 100% market share. So let's change your example a bit. Let's say that Merck has a business model in which it always breaches its license agreements with small companies. Merck as a result gains a 100% market share, the result being there are no companies spending R&D dollars to develop new drugs out of a belief they will be eventually put out of business by Merck. Are you saying that does not have antitrust implications?

The market has judged via its’ valuations that PSA has a superior product. If PSA refused to cross SGC’s cards (and there is no blanket policy, some cards do cross)they would not be diminishing their value, the marketplace has already done that. For all the cards that PSA refuses to cross to an equivalent grade they are doing nothing to the card’s value. For the cards they do cross they are increasing their value and indirectly the value of the SGC brand.
However, there is no reason for PSA to worry about SGC. Look at the lines in front of each company’s booths at the National and judge for yourself whether this battle isn’t already over.

If company A does not have an inferior grading service, why are people seeking to cross its cards into company B's holders in droves, such that company B's refusal to do so is capable of badly hurting company A?

And so therefore company B has a free rein to say anything it wants or through its deceptive trade practices give false impressions about company A's product?

Nonresponsive. I never said there could not be a business tort here though I'm skeptical without some overt defamation. But you said there was an economic/antitrust difference between just refusing to cross and saying you would but not doing it, and you articulated that difference as the latter suggested A had an inferior product, so I am responding to that. If A is claiming it's hurt because B won't rebrand its product as B's product, what does that tell you about A's assessment of its own product, or the market's?

A should be critically examining itself and asking why people are trying switch its cards to B's holders, not making it painfully obvious that it has an inferior product by suing B.

I think B would welcome such a suit actually -- what great publicity to have high profile dealers/collectors explain why they wanted to get their cards out of A's holders and into B's.

Again, we are going to have to agree to disagree. If such a suit were brought and it should come out that B has an unstated company policy that it does not crossover from A, but that the explanation it is to give to the submitter is that the card possess defects B knows it does not possess, I'm not sure I share your view that such a suit would be beneficial to B. Such a suit could give A a forum to submit voluminous forensic evidence of grading errors by B, which could be an eye opener for a number of potential dealers/collectors. In the world we are in high-grade vintage cards routinely sell for five and six figures. Some potentially seven figures. And I suspect that a number of the purchasers would find it material if they were to learn that the cardboard within the slab is in fact not what the flip represents, and that if revealed would be worth a small fraction of what it sold for.

Edited to add that the antitrust implications I am trying to draw out pertain to a situation where B essentially has 100% market share. Are you saying that such a market concentration does not have antitrust implications?

But Corey, why would A want to publicize in a complaint then trial that so many people were trying to switch so many cards out of its holders? That just strikes me as incredibly counterproductive, even in the fantasy world that there is some viable legal claim here.

Peter,
Very funny - all the same serial number, too!!!

Actually just some Tiger Woods rookies. My experience with crossing from both BGS and SGC has been more than reasonable. From a marketing standpoint, I like a version of the car analogy. Think of a Lincoln driver going into a GM dealership and driving out in a Malibu. The driver has paid and downgraded, but is now in a GM product. The dealership is happy; never thought of not accepting the crossover. Maybe it isn’t a perfect comp, but I like it!

Peter, if within the hobby it is generally believed that B's cards sell for more than comparably graded A cards, and the reason has nothing to do with grading quality but instead B's set registry, A could rationally take the view that there is no improvement it could make to its product that could increase its market share. And therefore the most prudent business strategy would be to expose the great percentage of high-grade B vintage cards that in fact are altered, along with the blatant misrepresentations B is making by telling submitters how accurate its grading is and the ethical standards under which it operates. Maybe in the end such a suit would bring no benefit to A. But the upside of bringing it to me seems to outweigh the downside.

How would altered cards be relevant to the suit you are proposing? Your suit concerns already-graded A cards and B's treatment of them, not B's grading practices in general. By the way even if somehow relevant, what admissible evidence is A going to provide to show that B slabs a high percentage of altered cards?

The suit would focus on A cards that B did not cross over and show those cards to possess the attributes of B cards that do have the desired crossover grade. The purpose would be to persuade the trier of fact that the real reason they did not cross over was not because of some objective assessment by B that they did not meet B's criteria, but instead due to an unstated policy of not crossing over. It would seem to me that by showing voluminous numbers of altered B cards that did have the desired crossover grade, B grading practices would come into view.

How would you propose to show those and prove they were altered, consistent with the rules of evidence, Daubert, etc. It might be quite difficult as a practical matter to establish an adequate foundation for expert testimony.

I have played the cross over game both in the holder and out of the holder. I do tend to think you have a better shot out of the holder but that is where all of the risk is. Whether it is position bias or not being able to see the card it is impossible to know. There is absolutely no case here that can be brought against grading companies and I am quite surprised it is even being discussed in a serious matter as if one would ever have a legit chance of moving forward with any level of success.

Under no circumstances can anyone prove the motives of a grading company when it comes to analyzing cards in other companies holders. PSA has such a dominate position that they couldn't care less what SGC does. They have no need to beat them further into submission. The market has.

This notion that all grades are equal in third party holders is laughable. I have seen numerous examples where cards can go up or down from company to company. I have had BGS 9's turn into PSA 10's and BGS 9's turn into PSA 7's. Even worse BGS 9'5's turn into PSA 8's.

Years ago I tried crossing over several BGS 8.5's and a BGS 9 1982 Wrestling All Stars Series A Andre The Giant. No luck. Cracked them out along with several others and had a BGS 8 go to a PSA 6, two 8.5's go to 8's, a BGS 9 that went to a PSA 7 the first time and then an 8, and another BGS 9 go to a PSA 8. This example is why a PSA 9 will out sell a BGS 9.5 for this card.

The registry is not the only driving force that differentiates prices. Those with large SGC and BGS positions tell themselves this to make themselves feel better but the collective market is smarter than this and has created quite the divide in prices. No grading company is perfect but in my view on the margin PSA is definitely the toughest. I have submitted to all three by the way.

The only SGC 98 1982 Wrestling All Stars Series A Hulk Hogan was a PSA 9 that had been subbed time and time again raw and for review at PSA with no luck of landing the first PSA 10. It was cracked and sent to SGC to get the Gem Mint grade. When it sold it went for just over $100 more than the PSA 9. Why? Because it is a PSA 9 sitting in an SGC 98 case. Examples like this destroy your case.

There are numerous comments over the years about SGC being more lenient on centering than PSA. BGS having the four sub graded scoring system where a 9 corner subgrade with three 9.5's has no chance to cross over in or out of the holder to PSA. Once again there is wayyyy too many examples that show that third party grading isn't perfect and that one companies grade may be different than another.

One of the primary reasons that many cards sell for a big spread is dealers in so many cases will pay a one grade discount on SGC graded cards. Why? Because the market has built the expectation that they are over graded vs. PSA. Is this true? In some cases yes and in other cases no but enough times that the risk reward analysis points to not paying an equal value.

If cards were graded by computers and we could prove that there was virtually no variance in grading and then they didn't cross over perhaps you might be on to something but with all of these scenarios I have laid out there is absolutely without question no case here.

I respectfully disagree with this view. To be clear, I am not saying that if A were to go after B in this instance, A could satisfy its burden of proof. But I can think of a way A could go about trying to do so that if successful could shift the burden of proof to B to establish that it did not have improper motives in its refusal to cross over.

Suppose A were to take 10,000 good candidates of A-slabbed cards for crossover, and only 8 cross over. A then takes the 9,992 that did not cross over out of the slab and submit them raw. 8,895 come back crossed over, and 4,583 of those at higher grades. I believe that if A was to submit such evidence, B would then have the burden to come up with a explanation to explain this. A far-fetched fact pattern, perhaps. But the story I recounted about the 50 out of 50 non-crossed cards being crossed over when resubmitted raw was told to me by a source I regard as credible. And I have heard other stories, though not as egregious. So while perhaps A has an uphill climb, for me at least I do not regard it as insurmountable.

My ire at this situation arises because B says that it objectively evaluates all crossover submissions, and that submitting it raw will make no difference. And when they refuse the crossover, they might tell you something untrue about your card. If B wants to have a blanket policy of refusing to cross over A's cards, then go ahead and announce it. That would be perfectly lawful and I would have no cause to complain. But don't go about saying you are doing one thing, when in reality you are doing something else.

I just gave you numerous examples of cards going down in grade from BGS to PSA out of the holder.

In your argument they should have crossed over but because they were in another third party grading companies holder they didn't. Instead they were over graded by BGS.

One of the main arguments against grading is consistency. This is a an argument within firms and so if at times the same company isn't consistent how on earth can you prove a standard? You can't.

If you are considering trying this case give your money to a good charity or something because otherwise all you are doing is lighting it on fire.

Here is a crossover submission that I did recently. For this crossover, I put the minimum grade as ANY. That is, as long as PSA deemed the card Authentic, I wanted it holdered in a PSA holder. (This was for the new PSA Jumbo holders.) None of the cards were cracked out, and all went to PSA in their holders.

(1) 1921 Pathe Freres Phonograph Co. Babe Ruth

Went from SGC Authentic to PSA Authentic

(2) 1935 Wheaties-Series 1 Hand Cut Lou Gehrig

Went from SGC 35/2.5 to PSA 2

(3) 1936 R311 New York Yankees Glossy

Went from SGC 40/3 to PSA 3

(4) 1936 R311 American League All-Stars Glossy

Went from SGC 40/3 to PSA 3


(5) 1920 W529-8 i.f.s. panel


Went from BGS (Beckett) Authentic to PSA Authentic

(6) 1927 Sporting News Supplements M101-7 Babe Ruth Ad Back-Red

Went from BGS (Beckett) Authentic to PSA Authentic

(7) 1927 Sporting News Supplements M101-7 Babe Ruth

Went from BGS (Beckett) 4 to PSA 2.5

(8) 1934 R310 Butterfinger Babe Ruth

Went from BGS (Beckett) 5 to PSA 1.5

(9) 1934 R310 Butterfinger Lou Gehrig

Went from BGS (Beckett) 5 to PSA 3


(10) 1934 Goudey Premiums R309-1 American League All-Stars

Went from BGS (Beckett) 5 to PSA 5

(11) 1928 W565 Uncut Sheet / Gehrig

Went for BGS (Beckett) 3 to PSA 2

So sure, I wanted some cards to have gotten better grades in their PSA holders. However, I could still understand why they got the grades they got, so I'm fine with that.

Was #8 due to a pinhole that Beckett missed?

Small tear on the edge. It's a pretty fragile paper stock.

David, I have no plans to try this case. I have no horse in this race other than my concern about the hobby and my desire to initiate discussion about things I see going on that I don't think are kosher.

This issue is merely a subset of a myriad of other issues discussed on this Board. As someone who goes back to the 1960's and sees what it going on with blatantly altered cards receiving grades, ridiculous price differentials between half grades for differences that exist only because some 30-year old grader with little hobby experience says exists, and even if it does is based on some totally subjective determination of grading, I feel the need to speak out and try to stimulate provocative discussion that could be an impetus for change.

I respect the views of all people who in a civil manner disagree with what I say, and in a number of instances upon further reflection I have shifted my views. That is what I like about this Board. But I have real concerns much of what we are seeing is a house of cards (pun intended) ready to fall, and I think it is constructive to raise awareness of these issues.

I guess the question you have to ask is, why are people willing to pay those price differentials for an arbitrary half grade difference? In some cases I think the answer is almost circular -- because the market says they're worth more. Sort of like in the old days, cards were worth what Beckett said they were worth, despite its claim that it was merely reflecting prices not determining them. Purely from a collecting standpoint, I'm not sure.

And adding to the element of arbitrariness are all the crackouts, bumps, etc. etc. So many cards go through different grades before landing in their current holder.

Plus, and I couldn't prove it, or it would cost me a lot to do so, but I have a strong suspicion all submitters are not equal -- or some are more equal than others. (I've always been tempted to buy say 250 random 10s from a certain seller and resubmit them myself and post the results.)

There may be some bias on PSA's part but proving it using cross over data will be impossible. I understand your concern but when the discussion moves to anti trust lawsuits is where it goes from productive to something other than that.

I think what you are missing is that many cards that are submitted to third party grading firms change grades on a second or third trip so this same argument can be used to defend against your thesis.

In 2011 I got a real eye opener when it came to grading. There was a mid 50's Topps card that was a PSA 8 in a Rick Probstein auction that went for $40 something dollars. A month or two later the same exact card showed back up in a Rick Probstein auction and was now a PSA 10 and went for $4,000+. I was honestly outraged. How could this happen? I emailed Joe Orlando with my concern thinking he would be shocked too and really want to know and he wrote back asking if I would like to talk about it. We spoke the next day and he smartened me up real quick and explained that there were lots of players in the market that buy what they think are under graded cards and send them in for review, crack and resub, and also that the graders aren't perfect and are only human and that one may see something another doesn't or value it differently when rendering a grade. It became very clear to me then that third party grading isn't a perfect science.

A lot of cards that are in PSA 10 holders were once in a PSA 9 holder. Two of the cards I have spent the most on were bumped from a 9 to a 10. Once more showing that within the same company they have graders that might not agree on the grade. If they can't agree within a company, on how earth can one determine what the exact grade of the cross over should be? Just because SGC says it is X doesn't mean it is X in the eyes of another grader.

One of these cards was submitted and received a PSA 9. It was cracked and once more received a PSA 9. The consignor auctioned it off through PWCC and won their card back via the snipe shill bid that I discuss on other forums as the preferred method of shilling. It was then sent back to PSA for review and was finally awarded the 10 and then I paid the person nearly five times as much for it. When things like this happen you can argue against third party grading as a whole but proving in court in any capacity that PSA has set out to damage it's competition by not crossing over cards all of the time at equal grades is impossible.

The market share differences are so large that they legitimately do not see either SGC or BGS as a real threat. There is no doubt that the spread in prices has caused PSA to gain more submissions but this is a kind of like a chicken or the egg argument. Which came first? The reality is the market share divergence started in the mid 2000's and saw BGS lose 30%+ of the market to PSA. The battle was won over ten years ago so the market we see today is just a reflection of that. There are more collectors who want a PSA graded card and so lots of cards that have been graded prior attempt to get moved to PSA.

I think a better question to ask is why are these people trying to cross over cards? The answer in most cases is money. In my case early on it was uniformity but at this point it would honestly be about the economics of it. If there were more examples of cards being cracked out and submitted raw and receiving either equal or higher grades you would see an increase in the demand for SGC graded cards but this isn't happening. If it was this would perhaps validate some of your concerns but there just isn't the evidence.

A comment just in the past hour showed a cross over submission. A few equal grades but mostly lower. Had the submitter asked for straight cross overs many would have been returned in card savers and PSA would have kept his money but instead he was realistic and they came back in holders.

I agree to some extent (regarding the guide 'setting' prices as much as, or more so than, 'reflecting' prices). But if you consider it more in terms of 'cycle time', the Beckett may well have reflected changes, but over a longer cycle than today's shorter cycle 'guides' like a VCP. At some point those cards would not 'move' at Beckett 'guide' prices and in theory the Beckett prices would be adjusted. Personally, I always marveled (suspiciously so) at how many monthly price changes had an up indicator and so few had a down one.

Now consider even further the shorter cycle times. The shorter the cycle, the more the 'card' becomes a 'commodity', which may be even worse than considering it an 'asset'. :eek:

And as an aside, does PWCC attempt to see the future or create the future? :confused:

With the thousands of cards listed, IMO Beckett could not possibly have had sufficient data in those pre-internet days to assess what cards were selling for at hundreds of venues if not more across the nation. The reality was, most dealers just quoted the Beckett price except maybe for super hot current players, and typically if you bought enough or were a regular customer you could get a discount from that.

Agreed. And most buyers used it to determine what to pay. A self-fulfilling cycle. Not a guide as much as a sales catalog, with the salesmen being the individual dealers.

I'd have to look as some old Becketts, but I think they used to list the dealers they got pricing from. Pretty much all the biggest from whatever year it was, plus supposedly a few others who would report sales. (who ever had that much time? )

One show I was at the talk among some dealers when they didn't think anyone was listening was about how they had expected the initial prices in Beckett to be higher, and held off on selling the cards until the prices came out.

I definitely ran into that with new issues. I mean you could always get the just-released Shaq rookie or whatever it was that year if you threw a crazy number at someone, but quite often they would tell you they were waiting to see what "the Beckett" said. The same guys who were always telling you that some wax product or other was "drying up." I imagine shows everywhere in the early to mid 90s were pretty much the same, but there were some real prizes among the Boston area show guys.

In the mid 80's when I lived in CT I went to a local flea market a lot. One guy always had new stuff, small time dealer, and kinda pushy. My stock answer for him on stuff I didn't want was "nah, I already have some". One day were talking in general, and I mentioned I might get up early someday soon to sell some of my extra stuff. He motioned me around to the back of the van, handed me a couple boxes of new product (Probably something interesting but junk like the mini cards) and said "those are for you, don't sell here next weekend" I tried to pass, but he got a bit insistent...

One of the few "bad" things broke college me did was occasionally mention to him that I was going to set up next week. Not often, maybe 5 times over the summer.

This came across the news today. I thought it was an interesting parallell to the question of one grading company not crossing other companies stuff as policy.

https://www.msn.com/en-us/sports/nfl...lt0?li=BBnb7Kz

Short story, Romo sets up fantasy FB event, NFL supposedly tells players they'll be in trouble for attending as it's gambling.

Next year, he gets EA sports as a sponsor, supposedly NFL pressures EA to withdraw.

David- that grading isn't a perfect science is of course true. But what concerns me is the ridiculous rise in price for an extra half grade or full grade when the grade we are buying is so subjective. How can you even know you are getting what you pay for? Part of this is that cards sent in for review can only get a higher grade, but never a lower one. That make no sense because if a card is misgraded, it can be either slightly overgraded or slightly undergraded. But resubmissions carry no risk because the grade will never be lowered.

We would never be having this discussion if an 8 was worth $80, a 9 was worth $90, and a 10 worth $100. Then nobody would bother resubmitting. But in the real world that $80 card might be $900 in a 9, and $10,000 as a 10. That's something that very few collectors understand. In the latter scenario, I want grading to be an exact science to justify the inflated price, and it can never be that way.

I found the back and forth between the several attorneys regarding potential anti-trust issues and relevancy to be interesting in regards to supposed activities and actions by and between TPG companies A and B. While I'm a CPA/accountant and not an attorney, I like to think I have a rudimentary grasp of some aspects of the law as I have to deal with federal, state and local tax laws on an ongoing basis. Having said that, I think I'd have to lean toward the side where I can't really see the anti-trust relevancy due to the issue of crossovers. Seems like a bit of a stretch.

However, I had a slightly different thought and take on this I'd like to run up the flagpole. Since one of the supposed issues that can cause perceived value differences for grading between the various TPGs has to do with the existence of a Set Registry maintained by one of the TPG companies, do any of you think any other TPGs could make a case that their graded cards should also be included and listed as part of that Set Registry?

Right now, the one TPG that has its own Set Registry only allows and includes cards graded by themselves, and doesn't include or recognize cards graded by any other TPGs. And since this Set Registry has been established and maintained for quite some time now, it is considered by many as the sole, main registry in existence, and can and does have a demonstrated impact and effect on the comparative value of similarly graded cards between the different TPGs. And then because of the perceived negative impact on the value of graded cards from TPGs that are not included in the Set Registry, could it be argued that this puts those other TPGs at a decided disadvantage from a business standpoint and will ultimately work to put them out of business versus the TPG with the Set Registry? And then along that same reasoning, could it not also be argued that anyone trying to establish a new, competing TPG would similarly be at a great disadvantage and deterred from successfully competing with the TPG that has and operates the Set Registry because their graded cards are not included in that registry also?

I know a simple argument to counter that would be for these other TPGs to set up their own Set Registries, but then how does an already existing or new start-up TPG ever hope to compete with an already established and accepted Set Registry by another TPG? They likely can't and won't. So could this be construed as a type of restraint of trade or competition then that other cards graded by different TPGs don't get included or considered in the one TPG's Set Registry? I know this may be a stretch, but when I think back to how the courts have dealt with businesses like the electric and gas companies who had their own lines and pipes to all the houses in their markets, and weren't they eventually forced to allow other competing companies to send and sell electricity and gas over or through those lines and pipes owned by them so as to create and promote competition and not prohibitively hinder new companies from entering their markets?

And if you think about it, there would/could be some positive effects on the industry as well. One that comes to mind would be the need for the TPGs to try and get their grading criteria to be more consistent amongst themselves then if everyone was to be represented in a single Set Registry. It would also likely give new or existing non-Registry TPGs a bump in the perceived value of their graded cards to be more on a par with those of the TPG that originally established the Set Registry. This would potentially foster more business for the other or new TPGs and eliminate the need to try and seek crossovers of their graded cards to the TPG that currently maintains the Set Registry. The other and new TPGs would then be competing for business on a more level playing field with costs, customer service, turnaround times, grading accuracy and so on becoming even greater factors in determining who you give your grading business to rather than "with this TPG I can be on the Set Registry, with anyone else I can't" mentality. Wondering if anyone had a thought on this.

There seems to be a misperception about my antitrust point. I never said (or if what I said could be interpreted as such, that was not my intent) that a company merely engaging in something sneaky (in this instance refusing the crossover not based on the whether the card satisfies the company's criteria but simply because it comes from a competitor) creates antitrust exposure. The scenario I was outlining is when that company has an extremely disproportionate market share. And it is that extremely disproportionate market share coupled with alleged unfair business practices that could create the antitrust exposure.

So going back to my companies A and B. Maybe it is the case as some of the posts said that B has no need to worry about A. But if in the end B becomes the only TPG left in the industry, it is that domination of the market that could create antitrust exposure.

Bob,

I think you are raising a great point. If we ever get to the point that a TPG so dominates the market, which domination is believed to be caused by its set registry (and in one of my posts where I discussed what A could do to improve its market share and I suggested probably not much due to the dominance of B's registry), and the courts get involved, a remedy along the lines of what you are suggesting would seem to merit serious consideration.

The set registry as an "essential facility"? That would be the applicable doctrine. Like real estate multi-lists, or football stadiums? I'll have to think about that one, it's an interesting point.

For background, in one sentence, there is an exception to the "refusal to deal" line of authority that says when a monopolist controls a "facility" and sharing it is "essential" to the existence of any competition, the monopolist may have to grant access. The doctrine originated, I recall, in a case involving a firm that controlled the only railroad bridge, I forget where now. It's also been applied, again from memory, to advertising in a town's dominant newspaper, real estate multi-listing services, and a football stadium. That said, it's usually construed pretty narrowly.

It's also not the only differentiation. SGC has had a set registry for a very long time, and through their own fault have let it become useless because the new flips are not integrated into the old set registry, as far as this board knows.
If it was critical for the success of SGC, they wouldn't have modified their flips to be incompatible with their existing service.

In the case with Beckett, their backlogs are much longer than PSA for bulk services. Someone on blowout got their bulk (nonguaranteed) submission back 16 MONTHS after submitting it, and the average in the last few months received them back after 12-13 months. They're more slammed than PSA is, or their throughput is just much smaller. Edit: forgot to mention that BGS charges UP FRONT, while PSA charges when completed.

Barry I don't disagree with how you feel about this. I honestly thought prior to that 2011 conversation with Joe that it was a perfect science. I was naive. That said I have had to rationalize the short falls of it in favor of the benefits.

I don't know if you or others have read my comments on CU over the past nine years but I attribute most of the spread in prices for the cards that sit at the top of the grade spectrum and especially those deemed important to be ego driven. I drafted a thread titled Conspicuous Consumption as it relates to sports cards and the entire thesis is predicted on bragging rights and the benefits associated with owning marquee items. To me card grading just mirrors how humans think and there are many that love the idea of saying that they have the best. They have the only one to grade this high or perhaps a card that literally can't be found and they have a copy. There is a hunter and gatherer element in collectors and so many of these same people have that in them but being able to say you have one of only three PSA 10's of the 1952 Topps Mickey Mantle has amazing real life benefits. You could walk into a cocktail party in Manhattan with the whose who and they might have all the money in the world but unless one of these three people are willing to sell they can't have one. The ultimate.

I have only been participating online since 2010 and the entire time there has always been a segment of collectors that have a hard time with the spreads in value. I think in many ways that is rational but because of human nature I think they will always be there in some capacity. That said it is a fair argument that for this to be the case you need it to be a perfect science and while I understand that viewpoint I think because the market for collectibles is so big at this point and so many people just accept it for what it is that this won't change.

PSA defiantly has benefited immensely from the registry. That said both SGC and BGS have one. They just are much smaller. One can argue all day that PSA has a distinct advantage because of it but collectors did it not PSA. There are over 147,000 sets registered to individuals who own PSA graded collectibles. You can go on numerous message boards and read SGC is better, no BGS is king. While the data certainly warrants suggesting PSA has a near monopoly, there are still two active market participants that are busy. Because it is a free market collectors could just as easily get frustrated with PSA and try and move their cards over to SGC or BGS for that matter. They have chosen not to.

I would be infuriated if other third party graded cards altered the PSA set registry. It will never happen but if it did it would ruin it. In the examples above I had six BGS graded cards go down in grade out of the holder. Why on earth would they be treated equally and given the same credit towards a set? They shouldn't be and PSA has absolutely no incentive to even consider this. If for some reason regulators got involved and tried to force them that would be awful for the market and while I would argue there is very little if any chance that would happen it would be a risk as people would lose a lot of interest.

Having thought about it for a bit, I think it's very unlikely a court would hold that the PSA Set Registry is anything close to an essential facility to which competitors must be granted access. SGC and BGS have a long history of competing with PSA without their cards being eligible. Moreover, I think the evidence would show there are huge numbers of PSA cards that never get registered, it's just one aspect of PSA's success. Until I see anything to the contrary, I would hold that that success, even if it has resulted in a dominant market share, is the result of a superior product and business acumen (Supreme Court language), not monopolistic conduct. It's perfectly lawful to BE a monopolist. If other grading services are now less able to compete, that's not PSA's fault.

I'm not even sure PSA is a monopolist. What are the barriers to entry, a factor that must be considered in any analysis of whether a firm can exercise monopoly power? We aren't talking manufacturing automobiles or airplanes, we're talking a building, some employees, some cheap plastic slabs and a sealing machine. If someone wants to compete in this space, it wouldn't take a prohibitive amount of capital. Baker and Rocchi did it with GAI, they just didn't do it right.

No rational court would ever force PSA to include other grading company cards in its’ registry. If they did someone could start a new grading company, grade easier, and completely destroy PSA’s registry. Oh wait, doesn’t that company exist already?
Barry, I would bet that very few registry set participants pay a big premium for a half grade improvement thinking they are getting a noticeably better card. They are simply trying to improve their ranking on the registry. The registry is the engine that runs this all, amazingly enough the actual cards in a lot of cases are secondary.
This thread is kind of like the billable hours equivalent of “The Pill Versus the Springhill Mine Disaster” by Richard Brautigan.....so many billable hours lost.

They certainly aren't using predatory pricing. PSA has gradually raised their prices. Even with the recent price increase volume is up. If they were charging too much submission volumes would fall and they haven't. Quite frankly if per card pricing was what it was just a few years ago their backlog wouldn't be 700,000 it might be 1,200,000. I have a stack of cards I would love to sub but you need to get to 100 to get to $8 a card. Most of the cards I collect aren't super expensive so the break even point per card has been elevated significantly and so you have to make decisions based on those economics.

I do think there is a point where they could choke off lots of demand so there is a balancing act with prices that is healthy. The secondary market resale value is what drives a lot of submissions and if people are always losing they will pull back or quit all together.

I routinely see people selling low grade modern wrestling cards that never had a chance to be a winner to begin with and with a lower grade have very little value even after grading. If prices move up too much these type submissions dry up quickly. PSA needs these and so keeping prices low enough to entice submissions is paramount and high enough to limit demand. Not easy.

Predatory pricing is actually charging UNDER cost in an effort to drive out competitors. If you meant that it wasn't clear to me, sorry.

Very aware of what predatory pricing is.

One of the things that those trying to become a monopoly do to kill competition.

LOL. I am not losing many really, I multitask pretty well.:eek:

Right I misunderstood you because your next sentence was about whether they were charging too much.

Just was agreeing with you and showing an example that enhanced your argument.

Thanks David for a well thought out reply.

And Jay, you're certainly correct that it's all about the ranking in the registry. For someone like myself, who was always interested in baseball history, collecting numbers to move up a registry seemed absoluely meaningless. But othes of course feel differently.

Jay, the next time I have a legal matter and need to decide whether to retain counsel and incur legal fees, I will be certain to consult with you first.:rolleyes:

Corey, however I can help. You know I am there for you.

billable hours lost?
 

That could be said for so many of our threads nowadays.