Business Plans for everyone (Graders & Auctions)

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Posted By: rand

i had a quick and interesting comment from a fellow collector... he wasn't going to keep a card i sent him in the SGC holder because he felt down the road SGC would go out of business and PSA would ultimately reign. I took the comment personally and defended SGC, but after the dust settled i started to think about it. There are some signs that are a bit intriguing... Mastro has come out and dropped their consignment rate publicly... this means the competition for quality goods is really tightening up, PSA has started their new bottom line enhancer with the 1/2 grades, SGC is doing $5 non sportscards all year. What is the future for the grading companies...think about PSA's overhead, will their be less cards sent to SGC because of the 1/2 grade addition from the auction houses... will the top auction houses be able to maintain $10M sales every auction...??? What do you all think?

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Posted By: brian

the major auction houses should do more business in the future due to the Ebay feedback policy misstep. Ebay can't possibly survive seller boycotts and/or an exodus.

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Posted By: jay wolt

I think the auction houses will do fine as they don't
need to unearth hidden collections just keep flipping
the same stuff that was in prior auctions.
We as collectors change focus and want a new item and
in doing so sell/auction some of our collection to obtain it.
So many of the desirable cards & memorabilia end up making
thier rounds in ass't auctions.

"We don't own these cards (& collectibles) we just hold them for awhile"

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Posted By: davidcycleback

If SGC continues to grade well, they'll continue to be around. SGC has always been smaller than than PSA. The reason SGC has done well is because they grade well, many would say better than PSA. I bet a majority of PSA collectors consider SGC a reliable grader and would buy an SGC graded card-- even if for crossover. In other words, there is demand for SGC even amongst PSA collectors.

There will be room for SGC as long as they do a good job. Quality grading and service won't go out of style.

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Posted By: Richard S. Simon

Brian - if you read the new ebay policy, it appears to me that your feedback total will NOT be changed.
According to my reading, correct me if I am wrong, your feedback % will be determined by the last 12 months of feedback, but your TOTAL feedback # will still be based on all the feedback you have accumulated.
--

I refuse to engage in a battle of wits with an unarmed opponent.
Unknown author
--
We made a promise. We swore we'd always remember.
No retreat baby, no surrender.
The Boss

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Posted By: T206Collector

But you have to recognize that PSA and SGC may not be around in 5, 10, 15, 50, 100 years from now. The further out you go, the less likely they'll be there. Grading serves immediate and short term goals (ensuring fair sales, etc.) better than long-term prospects of value. For this reason, people who spend a lot of money on good population report cards that are already suspect in 2008 really are not taking a step back and trying to understand the future of their collections beyond the immediate time frame. If you're going to be selling in the near term, it makes sense. But if you are collecting to hold for years or decades or beyond, then what grading means will certainly be different in the future.

I love SGC and hope they'll be around forever. But when my kids inherit my cards in 50+ years (hopefully) it is anybody's guess whether SGC will exist, and even if they do, what an SGC 60 T206 card means in 2008 will almost certainly be different than what it will mean in 2058.



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Posted By: davidcycleback

Another way to look at it is why is the assumption that PSA will be around longer than SGC, and why is it the assumption PSA is more profitable than SGC? Companies from Fannie May to Enron to Ford have shown us that being biggest and most famous doesn't always mean being most profitable, or even being profitable. There might have been a mom and pop hot dog stand next to Enron's headquarters in Houston than not only was more profitable than Enron all along, but is still selling hot dogs at the same spot today.

I have no insight into financials of the companies, but I'd need more information that size and a new .5 grading system to determine the relative health of the companies. I don't know if a new .5 grading system is sign of financial health, financial troubles or neither.

Beyond financials, I firmly believe that the future existence of both companies depends on the accuracy and quality of their grading and authenticating. If one of the two companies company's grading and authentication of cards slips significantly, it will be one most likely to go out of business.

Beyond the issues of the financial pie, I believe the honest hobby will always have room for companies that grade and authenticate well, even if there are seven companies of varying size that grade well. If you follow hobby history, collectors have always welcomed graders and auction houses and authenticators that do a good job. Ten quality and honest auction houses-- great. Seven expert and reliable autograph authenticators to chose from-- great. With two more coming next year-- who would complain about more choice? Five expert and reliable card graders-- great. As far as collectors and auction houses go, I believe they have no problem with multiple quality graders or authenticators existing. It's the bad graders and crooked authenticators they want to see go under.

It's an incorrect assumption that collectors and auction houses and the hobby desire fewer and fewer quality graders and fewer and fewer authenticators. Even the ardent PSA advocate who buys only PSA would say he welcomes competition from other companies, if only because it keeps PSA on its toes.

If SGC went out of business, it would not be due to the wishes of collectors, dealers or auction houses, and it certainly would not be because of destiny.

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Posted By: keyway

I have had some new thoughts on the new half grading by PSA. If many of thier customers send in thier cards to be regraded and don't get a better grade they will be pissed. If all the customers who send in thier cards get a better grade than many of the grades will be false just to keep thier business going. I don't really know what wil l happen from this but it will be interesting to watch. I for one will stick with SGC.

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Posted By: boxingcardman

SGC is doing the cheapo nonsports to attempt to gain a foothold in the market for slabbing those cards, not because it is running out of work. If you follow nonsports you know that prices on quality material have exploded over the last year or two as collectors gravitate to it out of frustration at the cost of baseball cards. It is natural that SGC should try to get all the way into that field and the $5 a shot grading special is a good way to achieve market penetration. Heck, if the cards continue to sell well in SGC slabs I may even avail myself of the service for some of my nonsports cards.

As far as 0% commission on expensive slabbed single card auctions goes, Mastro met the market, which demonstrates that the auction world has a market large enough that one house can't dictate the policies of the rest. I see their move as an effort to cut into the Goodwin/MHCC/ML high grade single card niche. I was talking with a senior Mastro rep about it and his comment in essence was that the 0% makes sense because the cards are easy to sell. The collectors who are into them don't require a great deal more in the way of effort than a couple of images and a description of the card. He said it isn't like trying to sell a collection of memorabilia, which requires much more effort, staff time, research, etc., to get the item out there.

Sic Gorgiamus Allos Subjectatos Nunc

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Posted By: rand

Psa has graded so many cards over the years i do not see how they can keep the submissions at the same level. after the rush of re-grades pass, it would logically seem there should be a downturn in newly submitted material. SGC is not only getting new submissions but also recieving a ton of crossover business, therefore since they are a distant second to psa should still be on the upside for quite some time.