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Posted By: <b>Cobby33</b><p>Unfotunately, there are still plenty of lawyers who care about rankings of their law schools and law schools in general. Like these guys say, it's irrelevant now. It's really irrelevant at any point, but there are a few really insecure tools who find that kind of information important.

You Don't Want to Believe It But It Is a Zero Sum Game
 

Posted By: <b>Mark</b><p>Jeff, that's great spin saying law schools are irrelevant after you try to call someone out for attending a poor school. And then it turns out he attended a Top 8 school. Hilarious. If you weren't such an arrogant spin artist, you'd admit that backfired on you and apologize.

You Don't Want to Believe It But It Is a Zero Sum Game
 

Posted By: <b>Jeff Lichtman</b><p>Mark, I was actually concerned that Peter went to a school in another solar system, not ours. But thanks for taking such an interest in me. It's always gratifying to know that some jealous stranger spent part of his day doing some research on me.<br /><br />

You Don't Want to Believe It But It Is a Zero Sum Game
 

Posted By: <b>peter chao</b><p>Guys,<br /><br />I really enjoy being part of this board. I get nothing but pressure and grief from my clients. Once in a while I get testy responses from people, but it is nothing compared to the pressures of practice. <br /><br />Posting is like a walk in the park during a summer day, it's fun. <img src="/images/happy.gif" height=14 width=14><br /><br />Peter

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Posted By: <b>leon</b><p>Barry- one minor point. I ain't too smart but I knows a tiny bit about business. An auction houses fees they take in are their gross profit. Take out all of their expenses and you are left with net profit..(I won't go into EBITDA)...regards

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Posted By: <b>Mark</b><p>I haven't done any "resarch" on you, Jeff. Rather, I can tell you're arrogant from how you treat others on this forum and that will try to desperately spin an issue even when it's blatantly obviously you're in the wrong.

You Don't Want to Believe It But It Is a Zero Sum Game
 

Posted By: <b>Marc S.</b><p>&lt;&lt;Let's say that a Cobb with Cobb back is bought at auction for $50,000. Look what each party gets out of the deal. The Auctioneer gets their percentage. The Seller gets the net sales price. Basically, that's the same as saying the future value to the Seller is 0. In other words the Seller is willing to surrender any claim of the future value in exchange for the net sales price. &gt;&gt;<br /><br />How is this different than anything else? Isn't this essentially the definition of a sale, whether it is Leon consigning his Four Base Hits to Mastro or if it is my father selling a pound of beef at the supermarket?<br /><br />Isn't a sale, by definition, an exchange of cash or credit today to transfer ownership to someone else?<br /><br />Are you overthinking transactions a wee bit, Peter?

You Don't Want to Believe It But It Is a Zero Sum Game
 

Posted By: <b>Max Weder</b><p>Leon<br /><br />For shame. The fees they take in are revenue. Gross profit is determined by subtracting direct selling expenses. Net profit is determined after deduction of running expenses that aren't directly attributable to the sales.<br /><br />Max<br />Tax lawyer by day, frustrated accountant by night, wishing his GAAP was more complete.

You Don't Want to Believe It But It Is a Zero Sum Game
 

Posted By: <b>leon</b><p>Cost of goods minus selling price = gross profit. No? Their cost of goods is 0....

You Don't Want to Believe It But It Is a Zero Sum Game
 

Posted By: <b>Jeff Lichtman</b><p>Mark, I actually think I'm pretty fair. I don't protect friends unless they deserve it and I try to look at an issue fairly whether or not I have a financial interest. One tip, though: if you're going to criticize someone for a phantom typo that was corrected many minutes before you posted, at least make certain that your own post is even slightly grammatically correct. Otherwise, you may come off as a moron.

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Posted By: <b>Max Weder</b><p>Leon<br /><br />Cost of goods isn't really relevant I guess when it's a commission based revenue. Your shame is thus diminished (mine is increased), and I will retreat to my income tax act, where law always trumps accounting. <br /><br />However, in my defence, in the case of an auction house, the gross profit and the net profit would always be the same. <br /><br />And I suspect some of the auction houses actually do have inventory, or at least the bidding history suggests that <img src="/images/happy.gif" height=14 width=14><br /><br />M

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Posted By: <b>Corey R. Shanus</b><p>Auction houses don't take 40%. 25%-30% I would say is more typical, which roughly represents the spread between wholesale and retail. And for really special items, I would think the spread potentially could be much greater (both due to (i) auction houses being willing to lower their seller's premium to attract great consignments, and (ii) bidding wars being more likely for the really great items), thus creating tremendous economic incentive to auction those items.<br /><br />In regard to who "wins" in an auction format, I don't agree a win-win-win scenario violates any economic theory. Indeed, to go one step further, if it did, then I would think eventually market forces would kill it because unless on average all participants show economic gain, why would they stay in the game?

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Posted By: <b>barrysloate</b><p>Leon- I thought you were right but Max says otherwise. Net profit is after all expenses, gross profit is calculated before expenses are deducted. So what are we missing?<br /><br />Corey- because of the competition I think auction percentages are getting smaller, more like 20-25%. I don't think 30% would be very competitive these days.

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Posted By: <b>Bob C</b><p>In a two-person zero-sum game, the payoff to one player is the negative of that going to the other. Although zero-sum games are not terribly interesting to economists who typically study situations where there are gains to trade, most common parlor games such as poker and chess are zero sum: one player wins, one loses. In an auction where the auctioneer takes a percentage of both buyer and seller proceeds I submit the zero sum theory is negated.<br />That being said, the anticipation of the buyer for future "appreciation" somewhat offsets this.<br />Any statistician's out there? Care to get into the Randon Walk Theory?

You Don't Want to Believe It But It Is a Zero Sum Game
 

Posted By: <b>Jeff O</b><p>...I love it when you spell "defense" with a "c" instead of an "s". It's so endearing. Now do your best Don Cherry impression and use the word "about" while you're doing it. <img src="/images/happy.gif" height=14 width=14><br /><br />Jeff

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Posted By: <b>Kyle</b><p>I was offered 2.5% for one card, but then increased the total number of items to 9 total items. <br /><br />-Kyle

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Posted By: <b>Mark</b><p>Jeff: Yeah, we're all morons compared to you, you are so smart. I must have done research for part of my day to learn you are a lawyer. It can't be because you mentioned the fact in this thread and in 80%+ of your threads. What an arrogant a$$ you are.<br />Mark

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Posted By: <b>Randy Trierweiler</b><p>The only things in this thread I really understand is Dan Bretta's first post, and the last post by Mark. Everything else is fuzzy.

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Posted By: <b>joe</b><p>Huh?<br><br>Ty Cobb, Spikes flying!

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Posted By: <b>Jeff Lichtman</b><p>Mark, don't get me involved in your self-esteem issues. Being a lawyer is not exactly a badge of honor these days -- at least to most normal, well-adjusted people. Keep up that pent-up anger, though, it is amusing to watch.

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Posted By: <b>Ryan Christoff</b><p>Is it just coincidence that at almost exactly the same time Julie stopped posting, Peter started???<br /><br />-Ryan<br /><br />

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Posted By: <b>Bottom of the Ninth</b><p>Interesting theory, Ryan. However I am pretty sure different decoder rings are required to follow their posts. I am proud to say I do not possess either.<br /><br />Greg

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Posted By: <b>leon</b><p>Let's take some of this stuff to personal emails and get back to the subject at hand or er... cards in general....please.....

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Posted By: <b>Mark</b><p>Keep up the arrogance Jeff, it's amusing to watch. Good luck with your future pedigree fights. Remember, if you lose, just insult your opponent more and it will feel like you won.

You Don't Want to Believe It But It Is a Zero Sum Game
 

Posted By: <b>Cat</b><p>Damn, 72 posts, I guess I'll have to start from the beginning.

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Posted By: <b>Jeff Lichtman</b><p>Mark, I didn't insult you. You insulted me. That is usually what happens on the board if I recall -- you come out from under a rock on a thread and insult me, then I bitch slap you down and you disappear again for a while.<br /><br />Weren't you the tool that criticized Wonka for doing a photoshop of Rowan Atkinson's head on a baby and labeling it Jim Crandell? I have a good memory -- you said something like, "Oh, now we can't even post on this board without Wonka doing a photoshop picture of us." Back under the rock, now, ok?

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Posted By: <b>leon</b><p>Please take this off line. <br />.... breast regards

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Posted By: <b>peter chao</b><p>That's a good question. How is what the auction houses do different than retailers. Have you noticed that auction houses take a much larger percentage than most retailers. I really think they do it with smoke and mirrors.<br /><br />It starts with the catalog, almost every item is said to be rare or rarely seen and then it progresses from there. They sell the sizzle (future value) of an item. And to be cynical about it, they get you ready to mortgage the house to obtain that must have item.<br /><br />Then they initiate a competitive process where only one person can win the rare item.<br /><br />It's smoke and mirrors, I tell you. <img src="/images/happy.gif" height=14 width=14><br /><br />My opinion is that REA does it best. They also limit their auctions to once a year to give you an even deeper feeling of exclusivity.<br /><br />Peter

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Posted By: <b>barrysloate</b><p>Peter- why do you keep saying the auction houses take such a big cut? The auction business is very competitive, and each house has to stay even with the others.<br /><br />In the retail business you can ask whatever you want. It's your item an you can mark it up 1000% if you choose.

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Posted By: <b>Dave F</b><p>My guess..and only a guess...is no matter what the auctions houses as a whole have taking quite a hit with the rising of ebay in the last several years. I'm sure Barry could chime in on that better than myself though. I don't think the houses would be getting percentage wise what they would in the days before ebay.

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Posted By: <b>barrysloate</b><p>Yes Dave- the percentage I ask has to be competitive with what others are getting, if not even a little better. And the major change with ebay is it allows everybody to sell their own cards. The business doesn't get any easier; hence, a smaller share for the auction house.

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Posted By: <b>Al C.risafulli</b><p>"Have you noticed that auction houses take a much larger percentage than most retailers. "<br /><br />Says who? In what business?<br /><br />A retailer often bases its profit margin on dollar value. Maybe they make 2-3 points on a television, but 40-50 points on a remote control. They constantly squeeze their manufacturers and distributors for lower prices and better packaging. Manufacturers are required to submit planograms to tell the stores how to merchandise properly. They also have to produce signage and displays for the retailers. In many cases, they have to provide product training. They often have to pay money to advertise in the retailer's circulars. And on top of that, they need to provide market development funds to help the retailer defray the cost of marketing. They have to have co-op programs and volume rebates so that the retailer gets additional discounts and funding when the retailer sells a higher volume. All this costs money, and it's paid for by the manufacturer - which helps the retailer's bottom line beyond the margins they sell on the individual product. <br /><br />The manufacturers take hits on their margins constantly. And then the retailer fixes a price, and any consumer who wishes to purchase the item needs to buy it at that price.<br /><br />Furthermore, the retailer is dealing with products where there are multiple alternatives to buy. Want to buy a battery for your cellphone? Take your pick from 10 different aftermarket brands and 100 different styles and colors. Don't like the price at Circuit City? Walk down the street and buy it at Wal-Mart, Staples, Office Depot, Target, Best Buy, Radio Shack, Fred's Camera Shop, or any other store that sells the same item.<br /><br />In the auction business, the auctioneer produces a catalog and (often) a website, and is solely responsible for presenting the item in the way that's designed to generate the most bids. They're responsible for going out and finding the potential buyers who are likely to pay the most for the item. They're even responsible for finding the material to auction. And since their reward is a percentage of the closing price, they are rewarded solely based on how good a job they do. The auctioneer takes a commission from the buyer and the seller, but doesn't ask the seller to chip in to cover marketing costs, or do training, or make signs and posters - once the item is in the auctioneer's possession, it becomes their responsibility entirely. And if they do a bad job, they're likely to lose the opportunity for all future business with the consignor. <br /><br />Furthermore, with many items in an auction, the buyer doesn't have the choice to walk down the street and buy the same item - or a cheap knockoff - from another store. It's not like you can bring in a coupon for 10% off a Wagner, and then if you don't like the service, bring it down the street to a competitor who honors all coupons. The auctioneer usually doesn't have shelves and distribution centers stocked with identical items and multiple manufacturers from which to source them, either. And the seller of the card has a completely different scenario as well - they're not trying to sell their Goudey set in every possible distribution channel - they have just one, and they're choosing the channel that they think will get them the best price.<br /><br />The only similarity between the two transactions is that the buyer ultimately has to pay for the item they're buying. Comparing a retail transaction of a commodity to an auction transaction of a collectible isn't even akin to comparing apples to oranges, because there are too many similarities between apples and oranges. It's more like comparing apples to hammers.<br /><br />-Al<br /><br />EDITED to rant a little further.

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Posted By: <b>peter chao</b><p>All you have said is true. But the retailers do not focus on rarity and future value. They are not asking you to speculate. They are saying that an item such as a battery has a certain degree of usefulness and they want to be compensated for providing that battery to you. What they offer is a lot more concrete than an auction house.<br /><br />Peter

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Posted By: <b>Max Weder</b><p>Ditto on Al's comments. Margins for retailers are squeezed by competitive economic forces, just as commissions charged by auction houses are. Anti-trust laws prevent collusion by sellers and auction houses.<br /><br />Peter, I'm not sure where you get your basis for your statement, but seller's commissions charged seem to have dropped markedly in recent years for auction houses, as the supply of vintage items becomes more difficult to obtain. I have even heard of a negative commission for a premium item.<br /><br />In order to maintain profit margins, the auction houses have increased the buyer's premium. As a bidder in an auction, you will only factor in the latter in deciding what you bid. If you don't like the price, don't bid on it. How is that smoke and mirrors?<br /><br />Max<br /><br />

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Posted By: <b>barrysloate</b><p>Al- you used the example of a retailer who sells a product such as a television. I am referring to a retailer of baseball cards, who has nothing more to do than rent a table at a show, act obnoxious, and charge too much. <img src="/images/happy.gif" height=14 width=14>

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Posted By: <b>leon</b><p>Not to speak for Peter C (I don't think I could if I wanted to) but I think he is talking about the puffery in the descriptions. I agree with him on that point but don't blame the auction houses either. Everything can't be rare or it wouldn't be...uh ..er...rare....

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Posted By: <b>barrysloate</b><p>Peter- a battery is not something that you really can auction. It has a fixed price give or take a few cents. Could you see a bidding war with snipes set for a package of six AAA's? It wouldn't happen.<br /><br />Auctions are effective for items that are rare and in demand. Then people will compete for them.

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Posted By: <b>Marc S.</b><p>One thing strikes me in some threads like this:<br /><br />People here like to complain about the prices of what they collect.<br /><br />Auctions have high buyer's fees and through the "smoke and mirrors" and focus on rarity, prices go much higher than they otherwise would, so there are no deals to be had in auctions.<br /><br />Shows are equally non-productive as dealers seem to have either shiny, new crap, or they have vintage cards at such a premium price that it is more a museum than a dealer, since no one would buy at the prices listed.<br /><br />Ebay is equally problematic because everyone snipes and prices go way too high if more than one person has a high snipe for a card they want.<br /><br />So I question where people get all their cards -- or if all of us, as collectors, simply like to bitch and moan about the prices we pay for what we collect, since obviously none of us are getting any deals anymore.

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Posted By: <b>peter chao</b><p>I haven't stopped buying. The sad part is that as your tastes get more sophisticated, the items get more expensive. So I'm in the category of bitch and moaning about prices. <img src="/images/happy.gif" height=14 width=14><br /><br />Peter

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Posted By: <b>Cobby33</b><p>When all is said and done, you're out about 10% with eBay/Paypal/etc., and this doesn't count the time listing, shipping, etc. <br /><br />With auction houses taking 10-15% from the final sale, I say go for it (on bigger ticket items). Let them deal with the listing, PR, shipping, etc. and they can gladly have my 10-15%. They also get a "different" audience than eBay and you don't have to deal with all of the stupid questions that come over eBay and chasing NPB's. On cards &lt; $2-3,000, I'll do them myself on eBay.

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Posted By: <b>John H.</b><p>Peter C., <br /><br />No one is asking anyone to speculate on anything. Where do you get that idea??? Items go up for auction, many of them almost unbelievable in their rarity and many others are items that I, and I'm sure others, didn't even know existed. People can bid for speculative purposes if they so choose but I would think that, for the most part, it's collectors that are bidding on items of all types and values.<br /><br />John

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Posted By: <b>Jason L</b><p>I buy cards that I like<br />I buy cards that I think I need or should own<br />I often spend more than is prudent<br />I like to buy cards<br />The cards I like to buy are eventually owned by me<br />I am a winner!<br />

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Posted By: <b>peter chao</b><p>The auction houses love you. <img src="/images/happy.gif" height=14 width=14><br /><br />Peter

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Posted By: <b>Joe Pelaez</b><p>Main Entry: 2hobby<br />Function: noun<br />Inflected Form(s): plural hobbies<br />Etymology: short for hobbyhorse<br />: a pursuit outside one's regular occupation engaged in especially for relaxation <br />- hob·by·ist/-be-ist/ noun<br /><br />Pronunciation Key<br /><br />More Information: Audio<br /><br /><img src="/images/wink.gif" height=14 width=14>