Crossover grading

[steve B]

Originally Posted by Peter_Spaeth

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.

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.

[Peter_Spaeth]

Originally Posted by steve B

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.

[steve B]

Originally Posted by Peter_Spaeth

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.

[steve B]

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.

[barrysloate]

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.

[BobC]

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.

[benjulmag]

Originally Posted by BobC

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.

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.

[benjulmag]

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.

[Dpeck100]

Originally Posted by barrysloate

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.

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.

[Peter_Spaeth]

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.