What will Collectors Holdings do with SGC?
 

What will Collectors do with SGC?

If you vote "Other" feel free to list what else you think might happen.

Despite Ryan's skepticism about my economic credentials LOL, I voted option 4.

I will go with a combination of these two.

Invests in SGC and enhances it with new/better features – e.g. better registry.

Treats the situation as a monopoly and jacks up prices for SGC, and lengthens turnaround time.

I voted "other." That Dave will buy a house on the ocean and pay for dinner when I see him.

What are the chances PSA opens a branch in the current SGC offices? Prewar or vintage cards shipped there for grading under PSA label. A lot of east coast collectors might move to Florida to be graders who aren’t interested in living in California.

A good point. More than one choice could happen. If they enhance SGC with a better registry or other improvements, perhaps a (small) price increase could be warranted.

But it would be very sad if they just adopt the worst aspects of PSA, by making SGC processing times ridiculously long and jack up the prices.

PSA wil find a way to combine the registries and help increase demand for SGC graded cards.

This isn't happening unfortunately

https://www.hobbynewsdaily.com/post/...ors-buying-sgc

I voted choice #4. Not sure where we would go for a black apron in that case. Some cards just look way better that way.

Could also be a combo deal over time. Unplanned, but perhaps triggered by all of the knock-on effects, including some of the trepidations expressed in this thread about the future of the business.

Maybe #1 to start. Then after a year or two, switch to #3. Then another year or two down the road, #4 becomes an inevitability.

Yep. On one hand, accepting already graded SGC cards would release any depression of those values, but on the other, it would disincentivize crossing over.

I went with the 4th choice too. Not buying a word of what Peter said in the video. Nat ran Joe Orlando out of Collectors very fast and it was not long after that the Steve Sloan found himself in a new position at the company and then out of the company.

I went with what i want to happen. Option 1. Wishful thinking.

Voted for 4. I think Peter will be gone within a year either finding a new role in Collectors Universe or outside.
I think the message he sent out is to avoid panic and uproar.

I am very very interested to see SGC’s grading numbers for April and May.

Very true. We may see several of these scenarios play out over time. I was thinking where would be after 2 to 5 years. But a lot of things can change in that period of time, and if we look out at a further timeline, there is much more uncertainty.

I hope, I'm wrong but I think they'll run SGC separately for a while. Next they'll find ways to add features for SGC (probably small ones). Then they'll start to raise prices

At some point we'll get something like this:

... "since we bought SGC we've been investing in new feature to benefit our customers. We feel the time is right to raise our prices so that we can continue to offer collectors the best service possible."

I dont think a 78% market share company should be able to buy a 7% player. Hope it gets rejected.

At a glance it would seem to entrench PSA's monopoly position, and/or threaten to substantially lessen competition by taking away the one competitor who arguably could constrain PSA's pricing. These are the basic principles that inform the Merger Guidelines. No clue how the government would view it though, if they have a view at all. May not care. I guess if I were defending it I'd say the entry barriers to starting a grading service aren't that high, so PSA is also constrained by potential competition. Also deal may be under filing thresholds under Hart Scott Rodino Act making review unlikely.

I wonder to what extent it makes a difference that this is a weird backwater part of the economy. We're not talking about groceries or internet service. This is a service that a tiny minority of Americans will ever use or even come into contact with, and it's definitely an optional service. Extra so for people who are part of our world, yet are loud and proud antigraders, like Jingram.

Well you saw how much the government cared about rampant card doctoring, although maybe not a fair analogy. But yeah, doesn't seem like something that would be of great concern. Also deal may be under filing thresholds which makes review unlikely. Private parties can also sue of course.

and I just sent SGC my largest grading order ever. Sigh....

I selected "Other" because PSA will find a way to really screw things up that hasn't been thought of yet.

In the end, does anything really change when you consider the apathetic attitude that is taken with regard to TPGs inability to be consistent in assessing pieces of cardboard?

I am wondering the sentiment about SGC at the Philly Show. Will be interesting.

What's the saying? Buy the fear, sell the hype? Something like that.

If SGC is seen as a reputable grader now, why should those cards already graded be looked upon as substandard? What really changes about the card? Nothing. I don't think they should be considered substandard. The card is still the card. We all know we can find over/under-graded cards in both slabs, old and new. SGC would not be going away because of a default in their grading or some kind of a scandal. So, should SGC cards be looked at differently? I think not. I will still continue to buy the card and not the grade. If that card happens to be in a SGC holder, I'm OK with that. Seems like it might be a little premature to panic. Who knows what the future folds. It will be interesting to see.

I don't know either obviously, but my concern is that eventually, after tons of cards are crossed over as will be inevitable once the holder is discontinued, people will assume an SGC card either would not cross at the grade or would not cross at all. So people wanting to sell will be forced to try to cross, and to suffer devaluation if they don't or can't.

I freaked out when I first saw the news too, but have had a chance to think it throug
 

I've thought, read and talked a lot about it. Here are my current opinions:

1) I think Collectors primary motivation here was defensive. To take away the opportunity from Fanatics to buy SGC which would have almost doubled their market share to 17% and growing. SGC I think was growing fast, with Fanatics $ behind them could have done some damage to PSA's 78%. PSA is already owns 78% of the market, I don't see that additonal 7% as a big deal to them on its own.
2) So they own it, now what. If they fold SGC, they lose $$ (the money they just invested) and market share (there are many loyal SGC customers who would not submit to PSA). If they invest in it and grow it, they have an incredible opportunity to make more $$ and grow total market share. In fact I think it will be considerably easier for them keeping both companies running independently, to grow SGC business than PSA business! It makes A LOT of business sense to run both companies and is counter intuitive from a business perspective to find SGC.
3) I don't see them changing crossover standards either - if they started accepting SGC grades = PSA grades, it dilutes the value of the PSA cards/brand.
4) I could see a consolidation of SG & A to run the company leaner. I could also see some pricing changes.
5) I could see PSA set registry technology shared to bring back an SGC set registry - creating greater competition between the 2 companies! Which serves to benefit the parent company.

The more I think about it, the more keeping the companies operating and competing independently makes a lot of business sense!

I am still uncomfortable and as a collector and dealer am fearful of some of the "what ifs", but logic tells me the fear is really just that fear (of change). Time of course will tell. I'll be hoping for the best.

I agree with Howard there likely was a defensive motivation as part of the equation. That said, I think you're (1) underestimating the huge revenues they would make from crossover if they eventually discontinue the brand and (2) overestimating any loss of market share. There's noplace else to go, people who want slabbed cards for the most part are going to submit to PSA in my opinion if there is no SGC per se. And I think there likely are efficiencies to be gained by folding in the SGC brand vs. inefficiencies in propping up two brands one of which is small. That said, I have no idea.

Bingo!

Peter, the huge revenues are a one-time event. I suppose if they make enough to reimburse what they paid for SGC, then it’s a wash. But that seems dumb to pay good money for a company hoping you recoup your purchase price from crossover fees as you kill the company.

Inversely, SGC has intrinsic value and income stream. You can earn a return from operating it now, and likely increase that return (and PSA profits) by combining efficiencies.

Buying SGC for one-time cross-over revenue is short term gain for long term pain, or maybe break even. Running SGC, which is growing, and maximizing efficiencies is a short term gain and long term gain.

And, I do believe PSA will lose some market share if they shut down SGC. Those collectors, and many in prewar/vintage are collectors (vs investors) don’t care so much about the flip and will move the CGC. Hake’s has some prewar item, including to Baltimore News Cards, that look real nice in CGC flips.

Time will prove one of us right and the other wrong. My guess is the brand is terminated by mid to late 2025. We'll probably have clues one way or the other before then.

Attachment 612935

Look, I'm not sure if it has any bearing, but I did find this, and it might prove to be somewhat pertinent...

Nostradamus Quatrain:
"The younger lion, shall embrace the elder,
On the field of combat, in a duel for gold;
Through armor of plastic, and numbers festooned,
Two big cats together, but one to die a cruel death...(the rest is written in the margins of his almanac, and it's only a loose translation) and I further prophesize that there shall be a joint registry or something, so that's cool. 2024 is going to be off-the-hook, my future homies!!!!"

If I were PSA and having just acquired SGC - I would :

Introduce a Brand New Slab as the Brand New Standard thus forcing both camps to send in EVERYTHING they got for Regrade/Reholder

That's if I were PSA

I predict SGC will lose market share in the future.
.

Leon, totally agree. March is a wash (the SGC news came out too late to impact) but let's see what the SGC grading numbers are for April, May, and June.

But barring layoffs, turnaround times will improve!

Agree….this year SGC has their own Booth at the National….next year wonder what over-under percentage odds would be with Collectors PSA as one setup. Will be interesting and fun to watch.

Well said and well reasoned Howard. I pretty much agree with all of this.

I think you're overvaluing the value of the crossover revenue component. First, it's a one time shot. Collectors makes more crossover money by keeping both brands alive and allowing submitters to continue to cross cards back and forth. Second, simply taking on more crossovers comes at an opportunity cost. There are always tradeoffs. Their overall bandwidth is still limited by headcounts, and the tradeoff to offer crossover specials is to not offer other specials that they otherwise would have. And hiring enough extra people just to expand their capacity for long enough to handle the crossover wave only to no longer need them when it's over probably isn't worth the effort and added expense.

I think you're right, barring significant investments from Collectors at least.

I think CGC is well positioned to capitalize on the opportunity too, if so. Both strategically and geographically. While they're not exactly neighbors, both CGC and SGC being in Florida will surely result in at least a few disgruntled SGC graders changing teams. And once word starts to spread about SGC graders now grading vintage cards at CGC, it's only a matter of time until the market follows them as well.

A Likely possibility - short term.
 

The potential market share that SGC will lose short term is more about the fear and discomfort many are feeling right now. If in fact, they show over the coming months that SGC is running independently/business as usual, I believe they will get it back and with a few of the right moves (bringing back an SGC registry at the top of the list) have a huge opportunity to gain market share.

Problem with CGC is they currently get little price respect in the marketplace (speaking specifically in vintage cards 1970's and earlier). Walk a show floor and see how many CGC cards you see offered next to the cases filled with SGC and PSA cards. I know even with no SGC, I wouldn't currently send a vintage card to CGC.

From what little I know, the defensive strategy seems like it could be a big part of the equation.

For some reason, this tie-up keeps bringing to my mind the merger between Alaska Airlines and Virgin America. In large part, that was also defensive to keep the east coast regional competition from getting a big foothold out west.

There's certainly room to argue that this situation is different, and the end result will be different too. But after that merger, while the Virgin America brand continued for a year or two, they were eventually swallowed up into the larger Alaska brand.

Then again, we're all just guessing. And I'll definitely vote for the answer that Nat probably still doesn't entirely know where this train is going.

One idea might be to keep SGC as the grader for all prewar and vintage - 1948 to 1960 - and PSA for everything else. A new registry would have to reflect this division but at least SGC could continue, even on a lesser basis, and PSA would enjoy 2 streams of income.

buy the card...
 

raw

I can't imagine they would go to all that trouble. The registry isn't broke, it continues to be a major driver of PSA. Why on earth would they dilute it and revamp it to keep a small niche brand going? Respectfully I think some of you guys think SGC is a much more important part of the hobby than it is. 2 streams of income begs the question.

If SGC disappears, and PSA refuses grade your cards (or continues to put NM-MT cards into 5 holders), and if half the grading team from SGC moved over to CGC, would you still refuse to send them cards?

For me personally, there's a good reason that SGC gets a significant chunk of my grading business. If they were to close up shop, I would be looking for other options besides PSA.

Also, I just hate the way PSA grades cards. They care way too much about corners and far too little about centering.

I suspect Howard's objections are less about the quality of the service provided, and more about the current market's relative reticence to pay top dollar for cards in a CGC holder.

Other. The question is vague as to time. In the short to middle term, I suspect not much will happen. Long term, more.

I would differ with that general statement. The market for vintage baseball is very different than the market for vintage boxing, F1 or nonsport. I've had good results selling CGC boxing cards, for example.

I expect CGC ends up being the big winner if/when Collectors starts messing with SGC (unless it’s a good messing, like registry and cleaning up pop reports).