Jersey Wilt Chamberlain Wore In A Game Recently Sold For $4.9 Million, Showing The Strength Of The Sports Collectibles Market

NBA legend Wilt Chamberlain holds the record for most points scored in a single game. When a  jersey the legend wore in a game recently sold for $4.9 million he almost cracked the record for the most expensive NBA sports collectible ever sold at auction. The nearly $5 million price put Chamberlain's jersey ranks third on the list. It's an eye-popping amount of money to pay for a sports collectible.  

But this isn't just any jersey worn in a game. Chamberlain's career spanned several decades, and NBA seasons ranged from 60 to 82 games for most of that time. That means literally hundreds — or perhaps thousands — of jerseys Chamberlain wore in games could be floating around. But this jersey is special because Chamberlain wore it during games 2 and 5 of the 1962-63 NBA Finals against the Lakers' hated rivals the Boston Celtics.

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The popularity of sports collectibles has skyrocketed in the past few decades. Sports collectibles have become an industry, and many investors look at them as a viable alternative investment. It may seem counterintuitive, but the reality is sports collectibles have real investment potential. Keep reading to find out why.

What Is An Alternative Investment?

Before explaining why some people use sports collectibles as an alternative investment, it's important to explain what an alternative investment is. An alternative investment is anything other than stocks and bonds. Throughout history, investors have employed many strategies for making alternative investments. Some use them to diversify and protect themselves against stock market volatility, while others have portfolios consisting only of alternative investments. Some common examples of alternative investments include:

• Real estate
• Commodities such as grain, pork bellies or oil
• Precious metals
• Art

Now, sports collectibles like the jersey Chamberlain wore in a game have worked their way up from a side hobby to a legitimate alternative investment. They've become so popular that the industry has several online investment platforms for sports collectibles. Sports collectibles are popular alternative investments because they offer investors upside and diversification potential very similar to that of other, more established alternative investments.

Why Are Alternative Investments So Popular?

 Examples of why alternative investments make sense include:

• Resistance to stock market volatility: The performance of alternative assets such as sports collectibles, real estate, art and gold is not directly connected to that of the stock market. Many alternative investments can yield profits for investors when stocks and other traditional investments are underperforming.
• Hedge against inflation: Because most alternatives are products with a finite amount such as oil or gold, their prices tends to creep upward through time. When you add natural appreciation to inflation, it's easy to see how alternative investments help you maximize the value of your investment dollar and hedge against inflation at the same time.
• Diversification: Many alternative investments perform despite downturns in stock or bond prices, making them great ways to diversify your portfolio. It's not that there is no risk in alternative investments — it's just that the price of sports collectibles, gold or real estate is much less likely to plummet 50% or 60% in a day than a stock. By adding alternative investments to your portfolio, you are making it less likely that a black swan event on Wall Street will wipe you out overnight.

Why Sports Collectibles Are Hot Alternative Investments

Sports collectibles have become hot alternative investments for several different reasons. Many of the kids who grew up watching sports legends like Chamberlain, Michael Jordan and Larry Bird have turned out to be very successful. Buying sports collectibles from their favorite athlete or team is a way for them to buy a piece of their childhood back.

It's almost impossible to put a price on the thrill of being a young Lakers fan watching Chamberlain battle Boston in the finals. The chance for a sports collector to own a jersey that was worn during an NBA finals series that they watched on TV or at the stadium is hard to pass up. The world has millions of Lakers fans.

It only takes a few uber-rich Laker fans bidding on a Chamberlain jersey to drive the price up to $4.9 million. That's what happened here, and it's how things like Babe Ruth's baseball bat or a glove Ty Cobb used in a ball game can fetch six and seven-figure prices. As these items become scarcer because of consolidation by private collectors, the price of the remaining sports collectibles in circulation only goes up.

Mainstream Investors Take Notice

 Whenever items that originally cost between a few pennies such as baseball cards and $100 like jerseys, bats and helmets used in a game appreciate to the point where Sotheby's is auctioning them for millions of dollars, big investors are going to take notice. The sports collectibles industry has progressed to that point, and everyone from individual investors to investment funds, now regards sports collectibles as legitimate alternative investments.

Add that potential source of capital to the amount passionate sports fans with money to burn will pay for collectibles from their favorite player or team, and you end up with a perfect recipe for a surge in value across the entire sector. In inflationary times such as these, heavyweight investors are looking for as many ways as possible to shield their money against inflation's worst effects.

These factors explain why something like a jersey Chamberlain wore in a game can sell for nearly $5 million at auction. This is not a one-off. A game jersey from Kobe Bryant's 2007 MVP campaign sold for $5.8 million, and a Jordan jersey from the 1998 NBA Finals sold for $10.1 million.

Potential Risks With Sports Collectibles

Every alternative investment has risks, and sports collectibles are no different. Perhaps the biggest danger in sports collectibles is not a sharp decline in their value but the prevalence of counterfeit items. Most of the truly high-dollar-earning collectibles have third-party authentication and their provenance verified. But counterfeits are still circulating, and counterfeiters also have begun counterfeiting the third-party authentications and provenance for the item.

Most of the super rare and valuable items will be sold at auction by leading houses such as Sotheby's or Christie's. That could leave individual investors shut out unless they buy individual shares of sports collectibles through investment platforms or individual funds that invest in them. One of the advantages of taking this route is that it's much less likely the item will be counterfeit.

It’s true that fractional ownership arrangements deprive investors of the privilege of displaying the collectible at their house. But that also relieves investors of another major headache with sports collectibles, which is securing them. If you're considering this sector, it's important to distinguish whether you want sports collectibles to buy back a piece of your childhood or secure a piece of your future.   

Sports Collectibles Are Here to Stay

The sports collectibles market may not be every investor's cup of tea, and that's understandable. Still, it's becoming quite clear that a combination of hardcore collectors and investors has created a legitimate investment sector out of sports collectibles. In the minds of many, owning sports collectibles is both a passion and a full-fledged investment strategy.

That doesn't seem like it's about to change. The odds are that as this sector expands, there will be even more platforms with sports collectible-related offerings. If this isn't for you, other alternative investment opportunities are available on many other platforms.