There is no question that grading sports cards is tremendously popular in today’s market. Record backlogs from the major grading companies show customers are clamoring to submit cards and appear to be happy waiting for months to have their cards examined and returned. Completed eBay sales show a significant premium can be realized on graded vs. raw cards.
Some of my thoughts on grading have been shared in short snippets on Twitter, TikTok, and a handful of podcasts over the years. That has led to, well, an “incomplete” picture of my thoughts on grading. As I’ve reflected over the last few months, I’ve come to realize it’s not grading itself that I don’t like. There is some value to having your cards graded. What I don’t like is the hype! Many collectors appear to be grading sports cards just because everyone else is doing it, and others are paying astronomical multiples that in my opinion are not justified. I worry there will be a large number of newer collectors who find themselves holding the bag when the market corrects.
If you’ve got a few minutes, I will explain in more detail throughout the rest of this post!
Podcast Version of this Post
Let’s take a look at a few of the reasons people grade their cards.
Preservation
Some collectors say they get their cards graded to preserve them. Yes, a slab does a great job of preserving a card, but at what cost? If this is your primary motivation for grading, there are cheaper options which accomplish the same thing. However, if you want to spend more to get a premium graded case, then it will definitely preserve your card.
Fewer eBay Returns
I actually like this argument quite a bit. There seem to be fewer returns on graded cards vs. raw. It is harder for a buyer to claim the the item was “not as described” when they purchased a PSA10 and got the pictured PSA10. For those dealing in high end cards, minimizing this return risk is meaningful. Ideally, eBay would strengthen seller protections which would address these situations of buyer’s remorse and we wouldn’t have to depend on a slab to protect us, but in the mean time this argument kind of makes sense.
Authenticity
A higher level of confidence in the authenticity of a card is a valid benefit of graded cards, especially for vintage. As I continue to work towards completing my vintage sets from the 50s and 60s, I will most likely be considering graded copies of some of the key cards unless I find some raw versions from dealers I know and trust. I do have more confidence in the authenticity of a graded card, however I don’t have 100% confidence. It’s not foolproof, but many newer collectors believe it to be a guarantee.
Over the last few years we’ve seen enough trimmed cards go “unnoticed” via the detective work on the Blowout forums to give me pause. We’ve even seen facsimile autographs graded as authentic. And for the hoards of modern cards being submitted, I’m not so sure that the majority of them need authentication. That seems to be a benefit more suited to the vintage market. There are a few big modern cards that are being faked/reprinted but it isn’t worth the grading premium for most. So while there some value to the authenticity argument, we need to take it with a grain of salt.
Condition Assessment
Some supporters tout the benefits that come from having an “expert” assess the condition of a card. In my opinion, the condition argument is probably the one with the most holes. The experts are humans. We all have good days and bad days which leads to variability in outcomes. The results of graded cards can vary significantly, and there is no shortage of documented cases where cards are off center or have visible wear and were given high grades.
We have also seen many examples of people getting a grade, cracking the case and resubmitting the same card and getting a better result. That doesn’t give me confidence in the expert opinion on condition. Some large submitters have been shown to receive what is almost a statistically impossible number of perfect grades. Furthermore, we have reputable people in the industry who have shared they have been approached by grading companies and were offered a “guaranteed” number of 10s if they submitted a sufficient volume. So it seems you may be able to buy your way into high grades? That also doesn’t give me confidence.
When the grade is one of the biggest drivers of the astronomical selling prices slabbed cards receive, that makes me nervous about the validity of those high selling prices. In my opinion, it should make you nervous too.
Scarcity and Population Counts
People love to talk about a slab’s POP count. There is an argument that scarcity is a key benefit to grading. I disagree. Sure, there are some rare vintage cards where the POP reports give credence to a cards scarcity, but for the vast majority of modern cards, the scarcity argument falls apart.
Some of the most popular modern cards like Luka Doncic and Zion Williamson have thousands of copies receiving perfect grades…..from multiple grading companies. There are thousands more in the backlogged pipelines. If you extrapolate the “gem” rate these cards receive, the potential population of even the highest grades could not be defined as anything close to scarce. Any semblance of scarcity in graded modern cards is purely manufactured. A grading company can easily manipulate the grades given to adjust the POP reports over time.
As the populations of graded cards at all levels continues to grow, the specialness or scarcity argument continues to collapse. There are even more ungraded examples of these cards in collections which are in in just as good of condition. They are the same exact cards, just without the grader’s opinion and fancy case.
Scarcity is weak argument for the majority of modern graded cards.
Resale Value
Well that’s the thing isn’t it?
The number one reason people grade cards is because of the resale value. I’ve heard multiple people say they aren’t confident in these companies, hate waiting months and months for their submissions, and suspect manipulation, but as long as they continue to sell for more money they will continue to grade.
A quick poll from @FloridaCardGuy asked why his followers graded cards.
This is the part I don’t get. I just don’t understand why the market is currently putting such a large premium on graded cards when all of the benefits don’t justify it in an objective way. Do those benefits add some value? Yes, of course, just not to the levels we are currently seeing.
When the infatuation starts to fade, and people realize there is nothing unique about their GEM card, things could get ugly. When the newer entrants continue to learn more about the hobby and realize buying graded cards is not the only way to build a collection, the bubbles start to pop. New grading companies are coming onto the scene which will only further dilute the market.
However, in the mean time, those subbing and flipping graded cards are making a killing. Facts. The capitalist in me says, “Hey, even if the run up is not justified, who am I to argue. Just go along for the ride and take the profits along the way. As long as I’m not the one holding the bad at the end what do I care. That is what business is all about.”
But the collector in me says different. The collector in me says the current prices outweigh the true value added from grading. The educator in me wants to caution the new entrants to the risks of paying prices derived from irrational exuberance.
And this is why, more often than not, I come off as anti-grading.
I’m really not anti-grading, I’m just anti-hype.
Wrapping It Up
If you like to submit or buy graded cards because you like the way they look, great! If you prefer to use your dollars to pay for the more “premium” protection a slab gives you, by all means do it! If buying a graded vintage card gives you the confidence in its authenticity, fantastic. Like I said before, that’s actually why I’ll probably be buying a few graded vintage cards in the coming months.
But if you are in this game for the financial benefits, just be aware that buying grading cards to hold in today’s market is buying a high level of risk.
While I believe in letting the market dictate the market and allowing people to pay what they are willing to pay, I just want to make sure they are doing so with a full understanding of the situation and the risks they are assuming.
Maybe, I’ll be wrong. I mean if the trimming scandal in 2019, the ongoing FBI investigations, the documented examples of people buying their way into top grades, and the record wait times and increasing cost to grade haven’t slowed things down, I don’t know what will.
Actually I do know. Nothing will change as long as people keep submitting and customers continue buying. None of my arguments matter if people are willing to continue buying graded cards at these prices.
It all comes back to the money.
I think there will always be a segment of the market that will prefer graded cards, and that’s great. Slabs do and should have a place in the hobby. But the process is not perfect, and the the current multiple given to graded cards carries significant risk. it’s not all butterflies and rainbows. As long as collector’s understand the full picture, I agree with the perspective of collecting the way you want.
And so, those are my thoughts on grading.
Also, if you haven’t heard, I started a new Podcast called the WaxPackHero Sports Card Minute! It’s available here directly on the site at the Podcast link at the top of the page, or on Apple Podcasts, Spotify, Google Play, and TuneIn! Check it out, let me know what you think, and tell your friends!