What would happen if PSA went out of business?

[frankbmd]

Originally Posted by chipperhank44

Yes, prices would drop, but just to SGC & BVG levels. People will always fight over high grade examples. They just fight harder when there's a scoreboard.

Please report any pricing irregularities attributed to the Monster Number scoreboard.

[BeanTown]

"IF" PSA went out then they would sell off their assets or their assets would be sold through a bankruptcy court. Agreed the registry is valuable and because it is set up like a scoreboard for collectors, I do not see that going away anytime soon,no matter who owns it.

As long as there is a scoreboard (registry) I do not see prices dropping. I've been collecting cards since the "Dead Sea" was only sick. I have never submitted a card to be graded. The only time my cards get graded is when they are consigned to an auction house and they send them off.

The last thing any collector wants to do is pay good money to have all their cards graded and then when the time comes to sell them, that grading company might not be the best one to realize the best gain. Just think if people rushed out to use "PRO" 15 years ago.

Sure PSA, SGC,and Beckett are the main ones in our hobby now, but who knows what the future will be. There are some big coin grading companies out there and what if they want to come into the card market! They hire away the best graders and take it to a higher level.

Best way to maximize profits is to have your cards graded by the best company for that issue at that time. So for now I will keep the cards in Mylar sleeves and then in top holders. Last thing I ever want to do is to break cards out of graded holders to cross them over.

[Dpeck100]

Collectors Universe has no debt. Let me say that again. Collectors Universe has no debt.

The title of the thread would be more appropriate if it said what happens if SGC or BGS go out of business.

They have great financial metrics and would easily be able to cut their dividend and whether the storm. With coin grading making up a very large percentage of their revenue you would need to see a sustained down turn in the collectibles market that would devastate the industry for this to happen and if CLCT went under SGC and BGS will have hit the skids long in advance. PSA literally has over 90% market share of the new submission market and if you saw a large retraction in the overall number of cards graded they would be the last one standing.

If in the hypothetical scenario they went under all cards will have collapsed in value and there would be no where to hide.

[BeanTown]

So David what you are implying is that if PSA went out of business we would have bigger issues to worry about! Maybe a good comparison is IF the FDIC had to come in and pay you back money (under 250k) that your bank used because of the economy then we would all have bigger issues to worry about like the US Economy.

Factoid.. FDIC has up to 100 years to pay you back in that unlikely scenario.

Never liked Block Buster video either and with all the late fees on 2 day rentals was a JOKE! They considered it 2 days after 24 hours plus 1 minute. They closed sometimes at peak hours at night so when you returned your video, they could add the fee the next morning!

[PowderedH2O]

Jay, I had that exact experience. I was in the Air Force and HAD to report to work by 11:00 PM for my shift. No excuses. I dropped off several videos one night about 10:30 and when I went back a few days later to rent more was told that I had $8 in late fees. I placed my videos on the counter, and handed them my Blockbuster card and told them I was done. That was 1993, and I never went back.

[AGuinness]

Perhaps the bigger threat to PSA (or any TPG) is a scandal whereby their authentication process is undermined. If some sort of rampant pattern revealed a TPG were intentionally and deliberately grading forgeries, etc., that would be more damaging to the market for cards in their holders than a bankruptcy (but who knows how much more or less likely than a bankruptcy).

[drcy]

Irrelevant to the viability of the company itself, considering the plenitude of altered 'high grade' cards (which according to grading rules should prevent them even grading a poor), the future landscape and valuation for such cards may be different in the future.

Further, when collectors realize how often collectors resumbit and resubit and resumbit again to get different grades on the label for the exact same cards, it may dawn on many that investing in numbers is silly. Many people, including many here, already realize this, but many collectors still invest big bucks in the number on the label and the registry is predicated on the numbers.

I just expect that in the future that the numbers on the holders will be viewed and valuated differently than they are today.

[vintagetoppsguy]

Originally Posted by AGuinness

Perhaps the bigger threat to PSA (or any TPG) is a scandal whereby their authentication process is undermined.

Like grading a t206 Wagner KNOWING it was trimmed?

Originally Posted by Dpeck100

Yes if PSA went out of business the hobby as we know it would be under serious distress and it wouldn't matter which third party grading company holder your card was in they would all be down.

LOL, this hobby thrived just fine w/o TPG grading and if every TPG went out of business tomorrow, the hobby would still be just as alive.

[Cozumeleno]

Originally Posted by AGuinness

Perhaps the bigger threat to PSA (or any TPG) is a scandal whereby their authentication process is undermined. If some sort of rampant pattern revealed a TPG were intentionally and deliberately grading forgeries, etc., that would be more damaging to the market for cards in their holders than a bankruptcy (but who knows how much more or less likely than a bankruptcy).

Completely agree - I'm not a registry person so can't speak to that part of it. But I have to believe that a PSA 5's prices aren't going to significantly drop just because the company stops grading cards. The registry stuff is probably a valid concern if no one would end up picking that up, but hypothetically, I think the values would mostly hold up pretty well.

[Dpeck100]

Originally Posted by BeanTown

So David what you are implying is that if PSA went out of business we would have bigger issues to worry about! Maybe a good comparison is IF the FDIC had to come in and pay you back money (under 250k) that your bank used because of the economy then we would all have bigger issues to worry about like the US Economy.

Factoid.. FDIC has up to 100 years to pay you back in that unlikely scenario.

Never liked Block Buster video either and with all the late fees on 2 day rentals was a JOKE! They considered it 2 days after 24 hours plus 1 minute. They closed sometimes at peak hours at night so when you returned your video, they could add the fee the next morning!

Yes if PSA went out of business the hobby as we know it would be under serious distress and it wouldn't matter which third party grading company holder your card was in they would all be down. At this point it is hard to call the card grading business an oligopoly and in reality it is more like a monopoly. Losing the flagship enterprise doesn't happen without a serious downturn in demand.

If one is to worry about potential price declines from a grading company no longer doing business it is far more likely that the number two or three player would leave the market with the size share they each have. In the case of SGC they are obviously viewed as legitimate and there are some very expensive cards in their holders. I would think they would take a little hit but many are already trading in a second tier position based on price so I wouldn't think it would be catastrophic. I do believe if BGS went out of business that their cards would take a serious hit as many would want to cross them over and once it became clear to more collectors that their chances are quite low of an equal or higher grade the spread would widen further. Let's face it many modern cards have plenty of supply but are differentiated by grade. That would impact them significantly where SGC has many actually rare cards in any condition in their holders so if the market remained somewhat healthy the interest in those cards wouldn't die.