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Investing In Sports Cards: A Brief Case Study

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Investing In Sports Cards: A Brief Case Study

When you were a kid, it was quite likely that you collected some sports cards. Maybe you even loved them. But did you ever think about investing in sports cards? Today, we’re going to talk about investing in high-end sports cards. 

I know what you’re thinking: unless you have the T206 Honus Wagner, or the ‘52 Topps Mickey Mantle, odds are that the old shoebox full of sports cards in your attic is probably worth jack squat. 

And in one sense, you’d be right. Sorry to say it, but, your Don Mattingly or Ken Griffey Junior rookie cards aren’t worth much. 

But thankfully, there’s still hope for you. Investing in sports cards can be a very profitable venture if you know what to look for. Let’s look at how that can be.

The Mike Trout Phenomenon

Before digging in I’m sure you’re thinking: sports cards? Really? Are you still 12 years old? And didn’t you just say that modern-day sports cards aren’t worth anything?

And in response to that, I present you with this: the Mike Trout 2009 Bowman Draft Chrome – Autographed card.

It’s worth keeping in mind that when it comes to investing in any collectibles, from investing in art to investing in comic books, different pieces can have wildly different values. 

This Mike Trout baseball card sold on May 21 for $900,000. It was the highest price for a modern baseball card ever. Trout is the best young player in baseball right now. By a lot. An absolute stud boasting a career .304 batting average and 76 Wins Above Replacement (WAR). That’s already Hall of Fame-caliber and he’s in the prime of his career.

Heck, just watching him hit a golf ball is amazing. I mean, look at this guy - he hits nukes off the tee!

But $900K for one single card? Yes, it’s happening.  And as shocking as it may sound, prices for rare, high-end sports-cards are going even higher. Here’s the Lebron James 2003 Upper Deck Exquisite rookie patch autograph:

There are 23 of these cards in existence. And in June, this one card just sold at auction for $1.845 million. Million. This shattered the single highest price achieved for a modern-day sports card. 

So, the point is this. Huge money is now pouring into high-end Sportscards.  But what drives the prices of sports cards? How do you know which to look for? Let’s answer that now.

How to Identify Value in Sports Cards

When it comes to sports cards, two things matter: 

  • Scarcity 
  • Condition 

The harder it is to get, and the better condition it’s in, the more value it’ll be worth. To properly assign value, cards get “graded” – which is done by a professional third party. The two most popular grading services are Professional Sports Card Authenticators (PSA) and Beckett Grading Services (BGS). 

They assign a card a value between 1 and 10. Of course, one of the two conditions is not enough to have identified a major sports card jackpot. Both need to be present.

In my current collection from when I was a kid, I have a 1999 Mike Piazza baseball card I’m very fond of. It’s in perfect condition. Like a prehistoric insect in amber. Could not be better.

There’s only one problem: everyone else has this card too. And probably in decent shape. But even in decent shape, there are so many of these cards around that no collector will care. At least not enough to want to pay me real money for it.

On the flip side, when I was younger I came across an extremely rare Babe Ruth baseball card. Sweet! There was only one problem: it was literally in tatters. It was ripped to shreds. Nobody would want this except maybe as confetti for a party.

So, to identify a real find in the world of sports collectibles, the object needs to be both rare and in great condition. Let’s take a particular Michael Jordan card that I am quite fond of as an example.

The Ultimate Michael Jordan Sports Card Investment?

Thanks to the ESPN documentary series The Last Dance, highly graded Michael Jordan cards are red hot. The most popular Jordan Rookie is the 1986 Fleer. It’s like the IBM (NYSE: IBM) of Jordan rookies.  

Safe, stable, and consistent – year after year.  But then, something remarkable happened. Thanks to the ESPN documentary series, Jordan’s Gem 10 rated card (which is a perfect grade) increased from $51,000 to $96,000. It nearly doubled in one month.

And here’s the thing. When it comes to a player like Jordan, a rising tide lifts all boats. What’s good for one Jordan card is also good for other Jordan cards. Knowing that Jordan’s most popular Rookie card nearly doubled, I’m here to tell you you’ll soon see similar moves for other Jordan rookies.

Especially the more unknown ones. 

Right now, there is one Michael Jordan rookie card that I believe is hugely undervalued. This card could gain 2X-5X in value, very easily. Why? Because right now: 

  • It’s relatively unknown
  • It's scarce
  • It's very hard to find in good condition

In the world of basketball cards, that’s the triple-double. As odd as it may sound, you could have one of these Jordan rookies sitting in your junior high trapper keeper right now. 

Judging from the money we’re seeing pouring into Lebron and Trout cards, prices can rapidly go up very, very fast. 

The Jordan Rookie #1: 1985 Merchante Campeonato 

I admit this doesn’t look like much at all. But I love this card as an investment for a number of reasons. 

First, this card was issued before Jordan played a single game for the Chicago Bulls. It’s based on his time playing with the U.S. Men’s Olympic team just before his rookie year in the NBA. This makes it his first-ever basketball card ever.

Second, nobody in North America ever encountered this card. It was only offered in Spain – and used to promote dairy products

And remember, it wasn’t like Michael Jordan was the greatest player alive back then. He was just another player on the Olympic team. Who would’ve known to hang onto this card?

Nobody! 

The point is, the odds of this card surviving have made it tremendously scarce. Case in point, 0nly 77 of these Jordan Merchant Rookies have ever been graded by PSA. 

And, this story gets even more intriguing. Come to find out, the Spanish dairy company who made these cards produced two different versions of this card. One has a Red Back and one has a Blue back. 

For whatever reason, the blue back version is much, much harder to find. Of the 77 graded examples, only five blue backs have a higher grade than PSA seven. Add it all up, and in the next 1-2 years, I could easily see a high-grade BLUE back being a $25,000 to $30,000 card. 

The Bottom Line on Investing in Sports Cards

So here’s the thing – to make a killing investing in sports cards, you need to be extremely lucky. If you happen to find the right card in your old collection or in your grandmother’s attic, you score many thousands of dollars overnight.

But luck is not a strategy. If you are serious about investing in sports cards as an asset, or a similar alternative asset, this can be a good way to diversify your portfolio. But this asset class should only be a small portion of your portfolio.

At the end of the day, most of your portfolio should be made up of stocks for long term growth, bonds for diversity and wealth protection, and some cash reserves. Other assets like gold, crypto, art, or rare baseball cards can make up a sliver of the rest.

Asset allocation and diversification are, after all, going to be the largest factors in how well your overall portfolio does. When it comes to making money, this should be the biggest consideration. 

Of course, there’s another element at play here.  Investing in sports cards can be great fun. And that’s worth quite a bit of value, too.

Bryan Bottarelli graduated with a business degree from the Indiana University Kelley School of Business, and his first job out of college was trading stock options on the floor of the Chicago Board Options Exchange. Now he shares his secrets in his free e-letter, Trade of the Day.

 

 

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