How the game changes the collision of baseball cards with NFTs, SPACs

On a recent family ski trip to California, my kids and I walked into an old baseball card store in the city of Sonora, a former gold mining town in the foothills of the Sierra Nevada.

As a former rabid letter collector, I was enlightened when I saw the BJ letter and collector’s poster on the city’s main drag. With the baseball season about to begin, I bought each of my kids, ages 5 and 8, a pack of Topps 2021 cards.

Before calling me, the owner, Bill Wiley, apologized for informing me that each package cost $ 5.50. This exceeds 100% of the pre-pandemic level. During the blockades, he said, the popularity of sports cards had increased and small dealers like BJ had to pay the maximum dollar to dealers to get inventory. It didn’t matter if we were talking about individual packages or the rarest collection.

“This is the busiest since I can remember,” said Wiley, who opened the store with her son in 1992, in a phone interview this week. “I closed for nine weeks and when I reopened, there was an incredible demand for sports cards.”

Those $ 5.50 packages I bought from my kids in February would now cost $ 7, according to Wiley, who said he paid $ 148 for a box of 24 packages to make $ 20 profit. At the other end of the market, a 1952 Topps Mickey Mantle rookie card sold for a record $ 5.2 million in January. A month later came the most expensive basketball card transaction in history: a novelty chrome was bought from Dallas Mavericks star guard Luka Doncic for $ 4.6 million. And in April he bought a rookie Tom Brady card at an auction for $ 2.25 million, a football record.

Wiley, 68, said current shoppers are very different from what they were during the heyday of industry in the 1990s, when collectors came in and spent hours looking at boxes of random letters.

“A lot of these people are new to the hobby and see it as a way to maybe play a little bit,” he said.

The unforeseen resurgence of the sports card industry that is experiencing sellers like Wiley is clashing head on with two other booming trends that have caught investors ’attention: non-expendable tokens (NFTs) and special purpose acquisition companies (SPAC).

On Tuesday, Topps said it would go public through a SPAC, meaning it would be acquired by a blank check company listed on the stock exchange. In the announcement, the 83-year-old sports card and chewing gum company promoted the popularity of physical collectibles and their expansion into NFT, or digital items living in blockchain technology.

Former Disney CEO Michael Eisner, who bought Topps 14 years ago, told CNBC’s “Squawk Box” that the digital business, mostly apps, is growing rapidly and that the blockchain will be a big part of the future. However, he said physical cards continue to drive much of the current business.

“Cardboard cards are still very popular; we appeal to children,” Eisner said. “Digital cards are very popular: we appeal to teenagers and young adults. And with blockchain, we believe we will attract everyone.”

Topps revenue in 2020 rose 23% to $ 567 million, and the company expects 22% sales growth this year, followed by 12% growth in 2022. Over the next year , physical products and confectionery (Bazooka Gum and Ring Pops) will continue to manufacture about 90% of revenue. In addition to its flagship baseball cards, the company sells cards for the UEFA Champions League, National Hockey League, World Wrestling Entertainment and Star Wars.

Eisner said the company had settled for the SPAC transaction based on the trajectory of the existing business and that “the blockchain explosion came after we made that decision.”

By explosion, it refers to products like NBA Top Shot, manufactured by league partner Dapper Labs. Consumers pay up to hundreds of thousands of dollars for a featured video of a LeBron James mess or a blocked shot by Zion Williamson. Clips are purchased as NFT, which have unique blockchain codes that certify their authenticity.

For card dealers like Ron Gustafson, owner of MVP Sports Cards & Collectibles in Sebastian, Florida, the timing of Topps ’plan to reach the public market is fascinating. From his 1,000-square-foot store in a mall near the coast, Gustafson has witnessed first-hand the remarkable resurgence of a business that in recent decades has tended more toward traditional trade management.

Gustafson, who has three daughters, opened his store in 2017 as a passion project and acted alongside the tax business he had owned since 2008. He said when the pandemic hit things were very slow at first in due to unemployment and the economy. The resurgence began around the time the NBA began its season in the Orlando bubble in July, he said.

“That really helped bring back the sports fans,” Gustafson said. “The card market skyrocketed completely. Maybe there were people at home and more people had more time on hand.”

Even with store occupancy limits and dating visits, Gustafson said he recently recovered his initial $ 250,000 he spent on the business and is now making a profit. While Topps controls most of the baseball card market, the most popular products now are soccer cards and the most expensive are basketball, he said. Panini America owns the licenses for these leagues.

Gustafson said his most interesting date of the year came on a Saturday in March, after receiving a call from someone asking if there were any Pini Prizm football letterboxes in his store, which sells for $ 1,500. Gustafson said yes, and the man told him he would be there in half an hour.

When he arrived, the man asked Gustafson if he had any rookie cards for Alex Bregman, a Houston Astros base player. Gustafson said no and asked why he was looking.

“He said, ‘Because I’m Alex Bregman,'” Gustafson said. “Sure, he took the last three Prizm boxes off the shelf and let us take a picture.”

Bregman was in Florida for spring training. The Astros played about 90 miles south of Sebastian in West Palm Beach, but played a game against the New York Mets in the nearby city of Port St. Louis. Lucie. Gustafson said he originally planned to attend the game that day and would let his store manager run the store.

“If I had gone to the match, I would have missed Alex Bregman,” Gustafson said. Instead, he met Bregman and made a $ 4,500 sale.

Gustafson said he is still unsure about where the digital market is headed. Panini has a blockchain product with online card auctions, though it has a “niche popularity,” he said. The physical card with a handwritten autograph is still what excites collectors, he said, and so does buying and owning boxes of packages that increase in value as that year’s rookies become stars. .

Still, there are many ways the blockchain can make even the traditional card market more efficient and reliable, Gustafson said. For example, there is no good way to value old and rare cards. Sellers are still looking on eBay to see the price of the last transaction. Others send cards by mail and pay for them to be classified by special authenticators. These processes are tedious and imperfect.

“People are warming up to the digital side of things because of what digital currency is doing from an investment standpoint,” Gustafson said, adding that he has invested a bit in bitcoin and ethereum cryptocurrencies. “Collectors still want something physical in return.”

I WILL SEE: The rise of NFTs and why people collect moments and assets differently