Collectors (PSA) Acquired SGC

[Peter_Spaeth]

SGC has been very open about the fact that their principals and employees can submit their own. People just don't seem to care, as long as those turnaround times are solid.

[pureball22]

So, if my SGC slabs are going to collapse 50% in value due to this merger/avoidance of SGC panic (OMG!!!), aren't my PSA slabs gonna appreciate by 50% (gotta have PSA ONLY!!) and thus the whole thing is much to do about nothing wash?!?!?!? LOL

[bigfish]

Originally Posted by calvindog

Dave doesn’t work in the Peace Corps, he runs a business and has a family. And there have been plenty of times he could have sold SGC but didn’t because he didn’t want to leave SGC customers holding the bag. He felt comfortable this time because SGC will largely remain SGC but with improvements that only Collectors can provide. It’s human nature to presume the worst, and some trepidation is understandable. But I don’t believe the sky is falling, I think SGC will become a better version of itself.

Spot on.

I would like to say that if Dave F was running the Peace Coepa I do think he would de a great job.

[Lorewalker]

Originally Posted by Leon

Read what BODA said in the link provided by Peter in this thread, and get back with me on that.
BODA is so valuable to the hobby I would probably let him on this forum regardless of his anonymity.

[/U]

Your comment was about Dave being in the grading room.

My point was not if it is good to have a guy with Dave's rep owning a grading company but might not be had having someone who has Dave's rep as a grader.

[Lorewalker]

First official announcement...oy...

www.gosgc.com/SGC-Joins-Collectors

https://www.facebook.com/sgcgrading/ From Peter S.

[Johnny630]

Doesn’t Dave grade Cards because he’s one of the best vintage graders out there I mean I thought it was him Scott and Derek that was the best that SGC had or still have the only one that’s gone is Derek I believe

[Peter_Spaeth]

Originally Posted by Lorewalker

First official announcement...oy...

www.gosgc.com/SGC-Joins-Collectors

https://www.facebook.com/sgcgrading/ From Peter S.

Happy talk keep talkin' happy talk.

[clamendo]

It’s actually a positive thing. In case you haven’t noticed the success rate on crossovers these days is very low. Once they discontinue the holder, which they most certainly do to reduce costs and duplication, you’ll have to either spend a lot of money to crossover and get most probably reduced grades or stop upgrading the set. This will save all of us money. The average Joe will figure this out soon. God forbid your holder gets cracked, scratched, damaged. My SGC sets will probably be frozen in time.

All newly sets or partially graded set will go to PSA. I started this migration 10+ years ago. Also, CSG should buy the rights to the old SGC holder, but make it tamper-proof.

I’m really hoping that they will finally allow a mixed grading company registry set, like they do with coins.


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[Johnny630]

Originally Posted by clamendo

It’s actually a positive thing. In case you haven’t noticed the success rate on crossovers these days is very low. Once they discontinue the holder, which they most certainly do to reduce costs and duplication, you’ll have to either spend a lot of money to crossover and get most probably reduced grades or stop upgrading the set. This will save all of us money. The average Joe will figure this out soon. God forbid your holder gets cracked, scratched, damaged. My SGC sets will probably be frozen in time.

All newly sets or partially graded set will go to PSA. I started this migration 10+ years ago. Also, CSG should buy the rights to the old SGC holder, but make it tamper-proof.

I’m really hoping that they will finally allow a mixed grading company registry set, like they do with coins.


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Is PSA going forward not going to Cross at Same Grade as SGC Slabs ? If they’re buying the company aren’t they responsible too?

[Lorewalker]

Originally Posted by Peter_Spaeth

Happy talk keep talkin' happy talk.

He is smiling because he still has his job. Not saying he is lying but nobody should bank on anything he said, imo. Nice attempt at reassurance. If I were grading it I would give it altered stock and evidence of trimming.

I cannot envision a scenario where Collectors runs SGC unchanged. Call me foolish. The two companies only have one thing in common in their business model--they authenticate collectibles. Their approach to business could not be any different so if Collector's management loves the SGC model so much then why not change to be more like them?

[UKCardGuy]

Wow. That's disappointing news. Better get those SGC submissions in while we can.

[Peter_Spaeth]

Originally Posted by Lorewalker

He is smiling because he still has his job. Not saying he is lying but nobody should bank on anything he said, imo. Nice attempt at reassurance. If I were grading it I would give it altered stock and evidence of trimming.

I cannot envision a scenario where Collectors runs SGC unchanged. Call me foolish. The two companies only have one thing in common in their business model--they authenticate collectibles. Their approach to business could not be any different so if Collector's management loves the SGC model so much then why not change to be more like them?

Long term, it wouldn't seem to make sense to acquire a competitor then just run it as a separate division competing with the main division.

[clamendo]

Originally Posted by Johnny630

Is PSA going forward not going to Cross at Same Grade as SGC Slabs ? If they’re buying the company aren’t they responsible too?

They have different standards and they haven’t in the past when they were competitors. The best thing they could do to keep the people happy is have a mixed registry, not that everyone registers their cards today.


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[Rhotchkiss]

Originally Posted by Peter_Spaeth

Long term, it wouldn't seem to make sense to acquire a competitor then just run it as a separate division competing with the main division.

It happens all the time.

Many car manufacturers produce and sell competing brands. Car rental companies own competing brands. Heck, REA just bought Huggins. It makes no sense to buy a company only to shut it down. My gut is there are synergies/efficiencies they can realize operating both companies, reducing expenses and maximizing production and efficiency. It makes a ton of sense to acquire a competitor to run it as a separate division. It makes no sense to pay good money for a small, relatively non-competitor only to kill it/shut it down.

Peter, I respect your legal conclusions much more than your financial opinions!

[trambo]

Originally Posted by Rhotchkiss

While I don’t love this, my gut is it will somehow all work in the end. It usually does. Nothing I can do about it and I will still be collecting cards, so it will be what it be.

I'm not an SGC guy (nor a hater really) but I agree w/this sentiment completely.

[Jeremy102175]

Wow, beautifully done sketch!

[Peter_Spaeth]

Originally Posted by Rhotchkiss

It happens all the time.

Many car manufacturers produce and sell competing brands. Car rental companies own competing brands. Heck, REA just bought Huggins. It makes no sense to buy a company only to shut it down. My gut is there are synergies/efficiencies they can realize operating both companies, reducing expenses and maximizing production and efficiency. It makes a ton of sense to acquire a competitor to run it as a separate division. It makes no sense to pay good money for a small, relatively non-competitor only to kill it/shut it down.

Peter, I respect your legal conclusions much more than your financial opinions!

Ryan lol. I was thinking about merging it and integrating it, not shutting it down. A year from now we can look back and see which course they took.

[Lorewalker]

Originally Posted by Rhotchkiss

It happens all the time.

Many car manufacturers produce and sell competing brands. Car rental companies own competing brands. Heck, REA just bought Huggins. It makes no sense to buy a company only to shut it down. My gut is there are synergies/efficiencies they can realize operating both companies, reducing expenses and maximizing production and efficiency. It makes a ton of sense to acquire a competitor to run it as a separate division. It makes no sense to pay good money for a small, relatively non-competitor only to kill it/shut it down.

Peter, I respect your legal conclusions much more than your financial opinions!

I don't find the comparison of a grading company to a car company, or restaurant chains, to be analogous. The grading companies in particular have very different approaches to business. Also think card grading is not a diverse enough industry that it would make sense to have 2 brands under 1 parent.

[Jeremy102175]

Originally Posted by ValKehl

Is this merger something that the anti-monopoly lawyers are likely to pursue?

I think for the merger to violate anti-trust laws a party would need to prove that the merger would make it impossible to compete in the market. Companies like Beckett and CGC will have a tough time making that case since they probably won't go bankrupt as a result of the merger. Consumers already have limited choices for quality grading companies though so this really sucks for collectors and nobody can do much about it.

[Rhotchkiss]

Originally Posted by Peter_Spaeth

Ryan lol. I was thinking about merging it and integrating it, not shutting it down. A year from now we can look back and see which course they took.

Agree! Time will tell. Right now we are just a bunch of talking heads who really know nothing.

All I am saying is that there is brand recognition with SGC and they have a following. If PSA eliminates them, then they pick up some of that following and they likely lose some of that following. If they keep SGC (mostly) as is, they retain likely 100% of the following and potentially create additional business for either PSA, SGC or both. This should be a 1+1 =3 situation.

Both companies are in the same business. Figure a way to streamline and merge processes, back office, overhead, etc. and increase the profits of both companies; and yes, maybe a little cornering of the market too.

Troy is a genius because he agreed with my earlier statement : "While I don’t love this, my gut is it will somehow all work in the end. It usually does. Nothing I can do about it and I will still be collecting cards, so it will be what it be."

[Peter_Spaeth]

Originally Posted by Jeremy102175

I think for the merger to violate anti-trust laws a party would need to prove that the merger would make it impossible to compete in the market. Companies like Beckett and CGC will have a tough time making that case since they probably won't go bankrupt as a result of the merger. Consumers already have limited choices for quality grading companies though so this really sucks for collectors and nobody can do much about it.

Actually, the standard is that the merger has to threaten to substantially lessen competition or tend to create a monopoly. It doesn't have to make it impossible to compete. Section 7 of the Clayton Act.

[raulus]

Originally Posted by Peter_Spaeth

Actually, the standard is that the merger has to threaten to substantially lessen competition or tend to create a monopoly. It doesn't have to make it impossible to compete. Section 7 of the Clayton Act.

Combined company will have what? 70% of grading by volume? And if we're just looking at baseball, probably closer to 100% of prewar and 90% of postwar vintage?

[Peter_Spaeth]

Originally Posted by raulus

Combined company will have what? 70% of grading by volume? And if we're just looking at baseball, probably closer to 100% of prewar and 90% of postwar vintage?

PSA may already have been a monopoly. And given PSA's already huge market share and SGC's small share, change in market concentration may not be that great as a result of the deal. For a quick test add up the sum of the squares of their market shares before and after. This is called the HHI Index and is one tool used by the government. It's been a while since I've done this so would need to remind myself how to interpret the results. You also have to consider entry barriers not just existing market structure.

[chalupacollects]

Having been bought and merged before more than likely back office procedures will be combined with some superficial public changes. May help avoid any antitrust issues.

A likely synergy would be to put the tux and flip into a PSA slab gaining some cost savings on slab purchases…


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[Snapolit1]

Originally Posted by wolf441

Great, I laughed with a mouthful of coffee and now have to change my shirt, thanks Pete! That last line is an absolute classic.

Was a lot better when the hobby was about older fat con artists, guys with pagers on their waist, wearing big ass gold medallions around their necks, conning 12 year olds at card shows, talking about the Playmate of the Month July 1978. The good old days.

[Tyruscobb]

Competing businesses benefit the consumer. Although there are potentially some positives, this is a net loss for consumers. Those cheering this deal need to take an Econ 101 course.

[jimmer77]

I have 2 subs for SGC queued up and was going to complete the sub and mail out on Saturday, but now with thus news not sure what to do.

I did find it a bit comical that Peter seemed to praise collectors in his video, but in the past all but criticized the "other guys" when promoting SGC...I guess keeping your job will have that affect.

AB InBev, is similar in nature. They purchased Miller Coors a few years ago and both still exist aa separate companies albeit with caveats.

[calvindog]

Originally Posted by jimmer77

I did find it a bit comical that Peter seemed to praise collectors in his video, but in the past all but criticized the "other guys" when promoting SGC...I guess keeping your job will have that affect.

It's business, it's competition, they're trying to win. And I have no doubt that Peter & Co. will work as hard as possible to continue to outperform PSA in terms of quality of grading, turnaround times, etc. If I bought a grading company today, the very first person I would want to hire would be Peter -- and I don't know who would be second. In my eyes, he's the overall top person in the grading business today.

[Rhotchkiss]

Interesting video at post 137 (I am sorry but I do not know how to just post the video, maybe someone smarter can do that). I don’t know who this guy is or who his “sources” are, but it’s an interesting take.

https://www.blowoutforums.com/showth...1581626&page=6

[Peter_Spaeth]

Originally Posted by Rhotchkiss

Interesting video at post 137 (I am sorry but I do not know how to just post the video, maybe someone smarter can do that). I don’t know who this guy is or who his “sources” are, but it’s an interesting take.

https://www.blowoutforums.com/showth...1581626&page=6

https://www.youtube.com/watch?v=uqsNaWftwe8&t=5s

Ryan on something like that the You Tube at the bottom will bring up the video on their site.

[Mozzie22]

Originally Posted by Peter_Spaeth

The hobby has not been about collectors for a long time. Investors, influencers, big businesses, breakers, you tubers, card doctors, pumpers, guys with t shirts ill-defined jobs and multiple devices calling each other bro', whatever.

This may be the most accurate statement in the history of this forum.

[Rhotchkiss]

Thanks Peter! It’s a good video. I am glad it’s now more accessible.

[Jstottlemire1]

Originally Posted by trambo

I'm not an SGC guy (nor a hater really) but I agree w/this sentiment completely.

Yes 💯 agree.

[The Nasty Nati]

I’m surprised PSA never considered making a black slab add on option since a big selling point for SGC was the great look of their black “tux” slab.

All PSA had to do was make their current slab available in also a black color instead of clear and maybe make it cost an extra $2-5. Easy extra revenue.

[Casey2296]

Originally Posted by The Nasty Nati

I’m surprised PSA never considered making a black slab add on option since a big selling point for SGC was the great look of their black “tux” slab.

All PSA had to do was make their current slab available in also a black color instead of clear and maybe make it cost an extra $2-5. Easy extra revenue.

CSG missed the boat on that one too, a black apron is so much more aesthetically pleasing for pre-war cards that they never would have had to buy them, they would have just put them out of business offering a black apron.

[jethrod3]

I'm disappointed. Just very disappointed. But I just decided that if I win the lottery, it would be fun to create a new grading company! Come on, Powerball numbers!

[painthistorian]

Lets see...SGC used to have a contact telephone, maybe now they will implement a new one for contact, have not submitted since they dropped that

[Flintboy]

Has Nat Turner said or has anyone asked him what the long term plans are with the purchase? He’s always seemed pretty open on social media sites and if I remember correctly is a member here.

[cgjackson222]

I'm not saying beer is analagous to card grading, but I'm hoping that this is sort of like InBev or one of the big guys buying a craft brewery and not changing the recipes (diluting them with corn or rice instead of barley, etc.)

If it is true that Collectors tried to buy SGC multiple times in the past, but failed, I wonder what, if anything, changed this time?

Was it just more money? Was it that Peter sees the writing on the wall and that card grading (like beer) may have topped out and selling in the future would not be as profitable?

Or could it be that SGC got better terms? For instance, a guarantee that SGC could continue on without much interference, or that it would even get an infusion in cash to make improvements? This is probably just wishful thinking on my behalf, but everyone can dream.

[gunboat82]

Originally Posted by cgjackson222

I'm not saying beer is analagous to card grading, but I'm hoping that this is sort of like InBev or one of the big guys buying a craft brewery and not changing the recipes (diluting them with corn or rice instead of barley, etc.)

I saw your AB InBev analogy and had a fleeting twinge of optimism. But then I remembered that they stopped making Bourbon County Coffee Stout in 12-oz. bottles, and the price per ounce nearly doubled.

[bk400]

The terms of Collectors' purchase would tell us a lot, but unlikely that much will be disclosed publicly given that both the buyer and the target are private companies with private shareholders.

I would think that PSA is really "buying" SGC's loyal customer base. It wouldn't surprise me if PSA saw data in their due diligence that suggests that SGC devotees are unlikely to submit to PSA as a general matter.

As such, if the deal is announced and SGC customers flee en masse to PSA, PSA probably wouldn't care so much. But if they hate PSA and flee to CGC or Beckett, PSA would look like a muppet.

So, I wouldn't be surprised if there are conditions in the deal that link the price that the SGC shareholders ultimately receive to the financial performance of the SGC unit over a certain time period -- maybe 1 year.

If this is the case, I wouldn't be surprised if you saw over-grading at SGC during this 1-year period.

[Schlesinj]

I would think Collectors is going to go public. Gaining more market share, revenues/employees/locations in a similar market. Yes they will have some redundancy in certain spots, but the added value is easier multiplied under their platform in certain areas (as communicated).

I do think added locations and skilled employees really matters here. I am sure some of us are in the current business world finding new eager employees committed to learn is much harder these days specifically with a unique skill set of reviewing cards. Our by far biggest turnover is 20-25 year olds. Is it a combination of new mindset about your job, COVID, work from home etc.

I know with my business we are constantly looking to acquire a small business to add to our platform. It usually is a winner for both sides.

Back to this topic I will wait to pass judgment, but these guys are all smart I have to think they will use the metrics and make smart decisions to enhance the platform and hopefully satisfy the end user.

[brunswickreeves]

It would be great is PSA set up additional operations capacity at SGC HQ in FL to cut down 4 days of round trip travel time for those submitting to PSA from the East Coast. This would improve UX and also take some burden off the CA operation.

I also wonder what the electricity cost is to run grading slab machines in FL vs CA. If significantly less expensive in FL, with PSAs crushing volume, they could save a lot of money by operating in FL with SGCs existing infrastructure.

[Republicaninmass]

Originally Posted by Johnny630

Is PSA going forward not going to Cross at Same Grade as SGC Slabs ? If they’re buying the company aren’t they responsible too?

It would be ridiculous. Not a chance they will crossover. Maybe offer a discount.


Psa MAY slab....the sgc slab. You heard it here first

[Johnny630]

Originally Posted by Republicaninmass

It would be ridiculous. Not a chance they will crossover. Maybe offer a discount.


Psa MAY slab....the sgc slab. You heard it here first

So if Number 4 on the poll happens (Dissolves SGC by absorbing it into PSA and stops making SGC slabs.) people with SGC slabs are gonna be SOL Pissed.

[Republicaninmass]

Yes, they can opt for psa to slab....the slab!




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[Svabinsky78]

Personally speaking, even if PSA offered a cross and guaranteed the grade, I would not waste my money to cross over. SGC has been and still is a reputable company. I guess some folks may see SGC slabbed cards as less desirable, but that does not bother me.

[steve B]

I don't really see anything good coming from this.

The only way I see it working long term is a situation similar to packs, where PSA sends all the vintage and things they don't grade to SGC for the number. And SGC sends modern to PSA for a number. Then back for slabbing.
That seems like too much handling, but it seems to work for packs.

I've seen an acquisition go bad from the customer side. Used to use CVS, but they were not great and very arrogant. Went to Target which was much better.
They got turned into CVS, and went from nice and helpful to *you arrogant in under a month. No change in the staff either.

The claim that PSA will bring "technical expertise" to make SGC better is a joke.

[Zan]

Originally Posted by steve B

I don't really see anything good coming from this.

The only way I see it working long term is a situation similar to packs, where PSA sends all the vintage and things they don't grade to SGC for the number. And SGC sends modern to PSA for a number. Then back for slabbing.
That seems like too much handling, but it seems to work for packs.

I've seen an acquisition go bad from the customer side. Used to use CVS, but they were not great and very arrogant. Went to Target which was much better.
They got turned into CVS, and went from nice and helpful to *you arrogant in under a month. No change in the staff either.

The claim that PSA will bring "technical expertise" to make SGC better is a joke.

Why? Turner is a tech guy, and SGC has historically always been behind in tech. Seems like an easy application.

[jjbond]

I would assume that PSA looked at SGC's #s, and felt that they were on track to take a larger % of the market. Financially, it would make sense then to buy out SGC and close them down, if the cost of doing so was less than the market share loss they were projecting.