Sports cards have come back in a big way over the past few years! Seemingly everyone who collected as a kid is dusting off their childhood collections and furiously searching eBay sold listings to see if they have anything they can retire on.
And…they’re also discovering a new world of investing for profit. When I was a kid, I did like that some of my cards were worth $20, but I mostly collected because I thought the cards were cool. I wasn’t planning my retirement.
Sports cards are a good investment, if treated as only an investment and ROI is your single goal. Many activities in the hobby are purely for entertainment (such as breaks and ripping boxes), but if you focus only on profit, it’s certainly possible to make consistent money.
Do a Lot of People Make Good Profit Investing in Sports Cards?
The people in the hobby make up three groups:
- Purely Collectors – these people chase players/sets, regardless of value. They love the chase, and don’t care about selling the cards. They’re in it for the “love of the game.”
- Hybrid Collectors/Investors – I’d say the majority of collectors fall in this group. They want to have fun, chase certain players, and rip boxes, but they’ll also try to find players to flip and cards to grade.
- Purely Investors – These are the people who view cards as a more fun version of the stock market. They buy boxes to hold. They only purchase cards that are either short-term flips, or players that will carry value for the long-term.
I fall squarely in camp #2. There are certain areas of the hobby that I do well at (flipping boxes, buying & selling singles, grading raw cards), but that’s offset by how much I love ripping boxes.
You could say that I try to make enough money to continue fueling my hobby, and collect some nice PC cards along the way. I don’t PC (personally collect) anyone that won’t have long-term value (Laker greats, especially Kobe), so even my PC is a long-term investment.
=> You can read about how I Invest in Sports Cards on a Budget
While there are plenty of people who make a good profit investing in sports cards, they are still the minority in the hobby. It requires knowledge, patience, and willpower (like not buying into tons of breaks and buying boxes to rip).
So how do you do it? Let’s talk about how cards can be a good investment…and how it can’t be!
Why Sports Cards are a Good Investment
Here’s why there is money to be made:
Big Money Coming Into the Space
Now more than ever, investors with big money are putting their cash into the sports card market. People who might traditionally turn to real estate or stocks have also chosen Jordan rookies and Kobe autos to diversify portfolios.
While a $4.3 million sale like this is out of reach for most of us:
It’s still a great sign for everyone involved in the hobby when a massive sale makes news headlines.
Here’s a recent quote from Investors.com:
“Pokemon cards, sports memorabilia, NFTs and Funko (FNKO) figurines are becoming alternative investments like fine art or vintage wines. Now venture capitalists and even giants like Disney (DIS) and Visa (V) are getting into the collectibles market.“
Fanatics Taking Over Licenses for NFL, NBA, and MLB
Fanatics, valued at $27 billion, has purchased the exclusive licensing rights to produce NFL, NBA, and MLB. “Licensing” can get very complicated, but the simple of it is that they can produce cards sanctioned for all three of those sports.
For example, here’s an unlicensed card produced by Panini:
Without the licensing, the jerseys can’t show any indication of what team they play for, and the card won’t say that he plays for the “Nationals,” just “Washington.”
Unlicensed cards are much less sought after. Brands that are unlicensed also have more trouble getting autographs or memorabilia for cards, although Leaf does a pretty good job.
Fanatics is a huge company with a massive distribution network and direct-to-consumer model already in place. They have the money to market the industry as a whole, and they’re dedicated to seeing it grow.
Fanatics CEO Michael Rubin has said:
“Realistically this is like a financial asset that young people are really getting into, it’s like an alternative investment class, and it’s really something that could be so much bigger, so I look and say, could we grow this industry 10 times, 20 times, 30 times, and I thought yes.”
The card industry has never had anyone market it as a whole, but there’s also never been one company to dominate the three major sports like this.
History of Growth for Sports Cards
The final reason why I believe sports cards are a good investment:
(PWCC 100 refers to their index of cards)
In other words, even before the market went nutso the past couple of years, it was already significantly outpacing the S&P 500.
And I’m guessing we’ll continue to see growth with Fanatics at the helm.
Why Sports Cards are NOT a Good Investment
You can probably guess that I’m a subscriber to sports cards being a good investment…but I will concede that there can be a few drawbacks. Let’s talk about them.
No Real World Value
Cards are not useful in and of themselves…unless you want to light a stack of commons on fire for warmth.
It’s not like real estate, where you can live in a house, or silver that’s used in electronics.
However, there are lots of investments with no “real world value” that are common today. Owning stock in Apple doesn’t really have a practical use, and neither does having a few Bitcoin, yet those are heavily invested in.
In fact, I’d argue that sports cards carry more value to the owner as something cool to look at, to show off, and to simply be nostalgic about. There are sets to collect. That carries value, while having a bitcoin means nothing other than it’s monetary value. You could say the same thing about a dollar bill, but being backed by the government and being the standard form of currency make the argument moot.
Sports Card Investments Can Be Volatile
Virtually all investments are volatile, but cards *can* be more unpredictable. Take Andrew Luck abruptly retiring from football. He went from a sought after player, to someone with little value because he retired before winning an MVP or a championship. He’ll be forgotten instead of being an all-time great.
Or think about someone that suffers a catastrophic injury and is never a star again (Derrick Rose). Their value tanks.
However, this of course happens with other investments, such as companies that go under quickly (Enron).
Can Be Dependent on Print Runs
If next year, every card manufacturers decided to triple production (probably impossible to do supply constraints), much of the market would likely tank.
There would still be value in the rarest cards, but at those print runs and the current level of demand, very little would maintain value. I doubt this will happen… but it also wouldn’t be the first time.
Very Few Players Carry Long-Term Value
If you go back even 15 years, how many of those players are hobby relevant today?
Even all-time greats like Tim Duncan and Shaq don’t carry anywhere near the values that you’d think people of their stature would garner.
A player like Moses Malone is all but forgotten.
So what chance do all-stars like Jaylen Brown, Domantas Sabonis, and Khris Middleton have of being relevant in 20 years? Pretty much zilch, and they’re better than 95% of NBA players.
If you’re looking to collect for long-term investing, you’re severely limited in which players are worth anything.
You’re looking at Jordan, Kobe, Tom Brady, Trout, Ken Griffey Jr…and of course many of the vintage hall of fame players because condition and print runs make them hard to find.
It also helps if you buy the right products—see the list of Best Baseball Card Packs to Buy.
