The Investment Profile of the Modern Baseball Card

In my first column on baseball cards in February, we noted that the baseball card industry has fallen from $1.5 billion in 1992 down to its present level around $200 million, due to a combination of three things:

  1. Declining values for cards on the secondary market due to vast oversupply.
  2. Rising pack prices for the few new issues with non-zero values.
  3. The 1994 baseball strike from which the industry has never fully recovered.

But we also established that, despite the widespread devaluation on the secondary market of baseball cards from the 1980s and early 1990s, the values of the key rookie cards (RCs) of baseball's biggest stars have, in fact, increased in value over the past 20 years -- and sometimes, considerably so -- once you factor professionally graded, Gem Mint condition cards graded by Beckett Grading Services (BGS) and Professional Sports Authenticator (PSA), a division of Collectors Universe (NASDAQ: CLCT  ) .

While the latter fact is interesting in its own right, perhaps far more intriguing is what it says about the potential value of more recent baseball card issues.

Because, in the past 20 years, the investment profile of newer baseball card issues has improved dramatically, and for at least seven good reasons:

  1. Graded cards and multiple expansion
  2. Smaller print runs yielding upside leverage
  3. Short-printed RCs, limited print serialized parallels, and autographed prospect and rookie cards
  4. An enhanced baseball prospecting game
  5. Enhanced liquidity due to the presence of eBay and graded cards, as well as the presence of new online trading sites like COMC.com
  6. A half-generation of current untapped potential demand
  7. Fantasy sports, sports betting, and untapped re-demand

Graded cards and multiple expansion
As with the older cards from the 1980s and early 1990s that were discussed last time, professionally graded cards of more recent issues in Gem Mint condition (BGS 9.5 or PSA 10) carry premiums over ungraded cards. Below is a table with current ungraded and graded BGS 9.5 values of some of the key Bowman Chrome RC or Prospect autographed cards from 2001-2011, along with their adjusted multiples (which, as we discussed in the previous article, represents the graded value premium over an ungraded value, adjusted for the cost of getting a card graded, which is assumed to be $10).

Key Bowman Chrome Prospect/RC Autos: 2001-2011

Card

#

Ungraded

BV

BGS 9.5

Adj. Multiple

2001 Bowman Chrome Albert Pujols Auto RC

340

$4,000

$8,500

2.1x

2002 Bowman Chrome Joe Mauer Auto RC

391

$200

$400

1.9x

2002 Bowman Chrome David Wright Auto RC

385

$100

$250

2.3x

2003 Bowman Chrome Hanley Ramirez Auto RC

334

$60

$250

3.6x

2004 Bowman Chrome Felix Hernandez Auto RC

345

$120

$250

1.9x

2005 Bowman Chrome Justin Verlander Auto RC

331

$150

$250

1.6x

2005 Bowman Chrome Matt Kemp Auto RC

349

$150

$300

1.9x

2005 Bowman Chrome Draft Ryan Braun Auto RC

168

$150

$300

1.9x

2006 Bowman Chrome Prospects Justin Upton Auto

BC223

$120

$200

1.5x

2006 Bowman Chrome Draft Draft Picks Evan Longoria Auto

66

$120

$250

1.9x

2006 Bowman Chrome Draft Draft Picks Clayton Kershaw Auto

84

$120

$200

1.5x

2007 Bowman Chrome Prospects Tim Lincecum Auto

BC238

$150

$200

1.3x

2008 Bowman Chrome Draft Prospects Michael Stanton Auto

BDPP115

$200

$250

1.2x

2008 Bowman Chrome Draft Prospects Buster Posey Auto

BDPP128

$200

$250

1.2x

2009 Bowman Chrome Draft Prospects Mike Trout Auto

BDPP89

$500

$600

1.2x

2010 Bowman Chrome Stephen Strasburg Auto RC

205B

$150

$350

2.2x

2011 Bowman Chrome Prospects Bryce Harper Auto

BCP111B

$400

$500

1.2x

Source: Beckett.com, with permission

You'll notice that, while the BGS 9.5-to-ungraded BV multiples are much smaller for these issues compared to the multiples for the cards from 1982 to 1994, the multiples do appear to expand over time within this sample, as well. While the multiples for cards from 2007-2010 are generally in 1.2x to 1.5x range, the multiples for the cards from 2001-2006 are generally in the 1.5x to 2.3x range.

The 2010 Bowman Chrome Stephen Strasburg Auto RC appears to be an outlier with a 2.2x multiple, though one possible explanation may be that its ungraded value recently dropped, while the graded BGS 9.5 value hasn't and may be due for a drop. The 2003 Bowman Chrome Hanley Ramirez Auto RC may be a similar story.

Smaller print runs and upside leverage
Print runs have fallen dramatically over the past 20 years, when print runs were thought to be in the millions.

According to Dave Jamieson in Mint Condition: How Baseball Cards Became an American Obsession, there were over a million 1989 Upper Deck Ken Griffey Jr. RCs printed, and yet the card still carries an ungraded book value of $40 today, along with a graded BGS 9.5 Gem Mint book value of $300 (6.0x adj. multiple) and BGS 10 Pristine book value of $1,400 (28.0x adj. multiple). In comparison, the 1993 Stadium Club Murphy Derek Jeter RC was a relative short print -- according to Beckett.com, the card had a print run of 128,000, and has enough demand for the card to carry a $100 ungraded book value and graded BGS 9.5 value of $350 (3.2x adj. multiple).

But, in stark contrast, the key new issues feature far smaller print numbers: Unless my math is wrong, or Topps is lying about their odds on their wrappers, the print run on the 2012 Bowman Chrome Draft Baseball cards was less than 15,000, and closer to 11,000, excluding refractors (*see math at the end of the article).

Think about it: If over a million 1989 Upper Deck Ken Griffey Jr. RCs can have a book value of $40, and 128,000 1993 Stadium Club Murphy Derek Jeter RCs can carry an ungraded book value of $100, what does that say about the potential value of future stars in the 2012 Bowman Chrome Draft cards with total print numbers about one-tenth that of the 1993 Stadium Club Murphy set?

Short-printed RCs, limited print serialized parallels, and autographed prospect and rookie cards
Manufacturers nowadays have enhanced the value of the classic rookie card through a variety of methods, whether it be short-printed RCs, limited print serialized parallels, autographed prospect and rookie cards, or some combination of the above.

Year in and year out, the key rookie cards in hockey are the Young Guns cards in the regular Upper Deck sets. These cards are deliberately short printed, and included as inserts to the tune of about one in every four packs. And, because virtually every rookie in the Upper Deck set is in the Young Guns set, trying to obtain a certain key rookie card of a certain player by opening packs is an extraordinarily difficult (futile for most) task, leading to relatively extraordinary valuations for non-autographed base cards.

Upper Deck Hockey Young Guns: Key RCs 2005-2011

Card

#

Ungraded

BV

BGS 9.5

Adj. Multiple

2005-06 Upper Deck Sidney Crosby YG RC

201

$300

$450

1.5x

2005-06 Upper Deck Alexander Ovechkin YG RC

443

$100

$150

1.4x

2006-07 Upper Deck Evgeni Malkin YG RC

486

$100

$150

1.4x

2007-08 Upper Deck Jonathan Toews YG RC

462

$70

$125

1.6x

2007-08 Upper Deck Patrick Kane YG RC

210

$50

$80

1.3x

2007-08 Upper Deck Carey Price YG RC

227

$50

$100

1.7x

2008-09 Upper Deck Steven Stamkos YG RC

245

$80

$150

1.7x

2010-11 Upper Deck Tyler Seguin YG RC

456

$100

$120

1.1x

2010-11 Upper Deck Taylor Hall YG RC

219

$60

$120

1.7x

2011-12 Upper Deck Ryan Nugent-Hopkins YG RC

24

$100

$125

1.2x

Source: Beckett.com, with permission

A more common approach is the use of limited print, serialized parallels, which both create a hierarchy of cards for any given player, and also carry premium valuations over the base cards. For example, the 2010 Bowman Chrome 18U USA Baseball Bryce Harper -- Harper's first Bowman Chrome card, which is generally any player's key non-autographed card -- carries an ungraded book value of $50; meanwhile, the refractor numbered to 777 carries a book value of $100, while the blue refractor #'d/150 is valued at $250, and the gold refractor #'d/50 books for $800, or a whopping 16x the value of the base card. Further up the hierarchy are orange refractors #'d/25, red refractors #'d/5, and a 1/1 SuperFractor -- each worth progressively more, and all too rare for Beckett to price.

And where a common card in the 2012 Bowman Chrome Draft Draft Picks set carries a book value of $0.60, a gold refractor #'d/50 of the same player carries a book value of $15. Consequently, every baseball prospect of some minimal merit to be included in these sets has a card worth collecting on some level.

But the real key card for most baseball players is his first Bowman Chrome autographed card, which is generally a Bowman Chrome Prospects auto, or Bowman Chrome Draft Picks auto. These cards themselves are relatively short-printed, with print runs generally in the 1,000-2,000 range. And, like the non-autos, these cards also have limited print, serialized parallels which generally warrant large premiums over the base cards.

The table below shows some of the key Bowman Chrome autos, along with the values of their respective blue refractors #'d/150 and gold refractors #'d/50. The gold refractor #'d/50 autos first appeared in 2002, while the blue #'d/150 refractor auto first appeared in 2005. Once again, the orange refractors #'d/25, red refractors #'d/5, and 1/1 SuperFractors are too rare for Beckett to price.

Key Bowman Chrome Prospect/RC Autos: Gold Refractors #'d/50 vs. Base

Card

#

Base

Blue

#/150

Gold

#/50

Gold-Base

Multiple

2002 Bowman Chrome Joe Mauer Auto RC

391

$200

--

$3,000

15.0x

2002 Bowman Chrome David Wright Auto RC

385

$100

--

$1,500

15.0x

2003 Bowman Chrome Hanley Ramirez Auto RC

334

$60

--

$400

6.7x

2004 Bowman Chrome Felix Hernandez Auto RC

345

$120

--

$800

6.7x

2005 Bowman Chrome Justin Verlander Auto RC

331

$150

$400

$1,000

6.7x

2005 Bowman Chrome Matt Kemp Auto RC

349

$150

$400

$1,500

10.0x

2005 Bowman Chrome Draft Ryan Braun Auto RC

168

$150

$500

$1,400

9.3x

2006 Bowman Chrome Prospects Justin Upton Auto

BC223

$120

$250

$600

5.0x

2006 Bowman Chrome Draft Draft Picks Evan Longoria Auto

66

$120

$250

$800

6.7x

2006 Bowman Chrome Draft Draft Picks Clayton Kershaw Auto

84

$120

$300

$700

5.8x

2007 Bowman Chrome Prospects Tim Lincecum Auto

BC238

$150

$400

$1,200

8.0x

2008 Bowman Chrome Draft Prospects Michael Stanton Auto

BDPP115

$200

$500

$1,000

5.0x

2008 Bowman Chrome Draft Prospects Buster Posey Auto

BDPP128

$200

$400

$1,000

5.0x

2009 Bowman Chrome Draft Prospects Mike Trout Auto

BDPP89

$500

$1,000

$2,000

4.0x

2010 Bowman Chrome Stephen Strasburg Auto RC

205B

$150

$350

$700

4.7x

2011 Bowman Chrome Prospects Bryce Harper Auto

BCP111B

$400

$900

$2,200

5.5x

Note: Ungraded book values

Source: Beckett.com, with permission

Interestingly, as is the case with graded cards, the value of the gold refractors #'d/50 appear to benefit from multiple expansion over the base cards over time as well.

Click here to read part 2.

*Based on two Rookie Autograph Superfractors in the set -- Bryce Harper and Yu Darvish; and 1,251,400 packs of Hobby with two chrome cards per pack, and 75,816 packs of Jumbo with six chrome cards per pack, for a total of just under 3 million chrome cards before backing out autos, inserts, and printing plates. With 220 combined RCs and Draft Pick cards in the set, I get a print run around 13,000 including refractors, or closer to ~11,300 chrome base cards excluding refractors.


Read/Post Comments (12) | Recommend This Article (23)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 05, 2013, at 10:58 AM, dbtuner wrote:

    Nice article. Nice follow up to your first article. Still curious as to why you push BGS when they are a distant second to PSA?

    Regardless, I will have to study this article. I am sure there is money to be made here. Thanks.

  • Report this Comment On April 05, 2013, at 5:15 PM, Cardbuyer wrote:

    The problem is that no one uses Beckett Value on a real level, Ebay Sales is what everyone relies on as a Griffey 1989 Upper Deck Rookie books for $40 but sells for 10-20 ungraded and depends on condition.

  • Report this Comment On April 06, 2013, at 1:44 PM, Michaeljperry wrote:

    I missed your 1st article on the older baseball cards. How can I get the article?

  • Report this Comment On April 06, 2013, at 5:13 PM, dbtuner wrote:

    his article is linked in the first sentence of this article. You can also go to news for CLCT and find it there.

    PSA's cardfacts web page uses auction results from Ebay and other auctions to get their prices. Like I have been saying, PSA is a clear #1 and BGS is a distant #2

  • Report this Comment On April 06, 2013, at 5:50 PM, XMFRelentless wrote:

    "Still curious as to why you push BGS when they are a distant second to PSA?"

    Well for starters, I'm not actually "pushing" BGS; it just happens that Beckett has the best available data for this type of analysis. Moreover, while PSA is clearly dominant in pre-1981 issues, I believe BGS is actually the clear leader in more modern issues, which will be more relevant moving forward.

    You might check population reports, or run an eBay search on 2012 Bowman Chrome BGS vs. 2012 Bowman Chrome PSA, for example.

    "The problem is that no one uses Beckett Value on a real level, Ebay Sales is what everyone relies on as a Griffey 1989 Upper Deck Rookie books for $40 but sells for 10-20 ungraded and depends on condition."

    While people don't pay book value, people do use Beckett pricing to the extent that Beckett pricing reflect actual trades, and to the extent that actual trades are generally made at some discount to Beckett book values. And while there are instances where we will use street values going forward, it is not practical to rely on street values in order to make this type of analysis, particularly when some of the cards being discussed don't trade often enough in order for street values to be reliable.

    For example, let's say a 2006 Bowman Chrome Draft Evan Longoria Gold Refractor Auto BGS 9.5/10 sells for $1k on eBay, and it is the only recorded sale that you can find on eBay. Does that mean that all 2006 Bowman Chrome Draft Evan Longoria Gold Refractor Autos graded BGS 9.5/10 are worth $1k? And if you had one, would you rely on this one sale to sell yours in a straight auction with no reserve and $0.99 starting price?

    Of course not. Because the sale could be an anomaly, or there might not be enough demand to generate a $1k sale price within the time frame of the auction.

    Consequently, for analytical purposes, I believe it is most practical to use Beckett pricing.

    -- Jeff

  • Report this Comment On April 08, 2013, at 4:50 PM, dbtuner wrote:

    "Moreover, while PSA is clearly dominant in pre-1981 issues, I believe BGS is actually the clear leader in more modern issues, which will be more relevant moving forward."

    So I just checked Ebay and PSA has 10X the BGS listings for 1981 and forward. I don't know where you are getting your data for market share and it makes the rest of the data look suspect.

  • Report this Comment On April 08, 2013, at 5:12 PM, XMFRelentless wrote:

    "So I just checked Ebay and PSA has 10X the BGS listings for 1981 and forward. I don't know where you are getting your data for market share and it makes the rest of the data look suspect."

    Did you run a search on any issue from the last five years or so? Like 2012 Bowman Chrome or 2012 Finest, for example? Or 2008 through 2011?

  • Report this Comment On April 08, 2013, at 5:48 PM, XMFRelentless wrote:

    Also, if you're really that upset about BGS data being used, I should point out that you can replicate the tables used yourself using PSA pricing.

  • Report this Comment On April 09, 2013, at 11:11 AM, dbtuner wrote:

    "Did you run a search on any issue from the last five years or so? Like 2012 Bowman Chrome or 2012 Finest, for example? Or 2008 through 2011?"

    So now you are saying that BGS is only dominant in years 2008 and forward?

    The numbers of cards for those years is a small fraction of the numbers of cards prior to that. BGS does have a small lead in that period with the small sample size given.

  • Report this Comment On April 09, 2013, at 12:22 PM, XMFRelentless wrote:

    "So now you are saying that BGS is only dominant in years 2008 and forward?"

    Or 2007? 2006? 2005? or 2004? And the disparity becomes more pronounced once you add the term "auto" to the searches.

    You've already stated you own shares of CLCT. I don't have the problem of having a stake in either company.

    And fortunately, the CLCT shareholder test is not one that needs to be passed.

  • Report this Comment On July 08, 2013, at 9:15 AM, drivebycomment wrote:

    Thanks for shutting that guy up Jeff, I noticed there were nothing but crickets after you revealed his investment. Which frankly is moronic to waste one's time seeding internet comments as though this is somehow going to singlehandedly affect shareprice. The guy was annoying before that was revealed, but that just took it to a whole new level.

    Having said that, those in the hobby generally accept it as common knowledge that Beckett's grading service has passed PSA. I wouldn't expect this to be true with cards so old as 1981, but with cards graded in the 2000s Beckett is the leader. Beckett isn't likely to be the leader with older cards because their grading service wasn't around and there are much fewer ungraded cards available.

    Anyways thanks again for shutting that guy up, his obsession with that part of your article was just a distraction from the overall message and points being made.

  • Report this Comment On June 11, 2014, at 1:13 PM, dbtuner wrote:

    A follow up, PSA claims 90%+ market share. Beckett is possibly a distant #3 now. Sorry.

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