Basketball Cards are the Latest Speculative Craze… Can it Last?

They sold for less than $1,500 a pop nine months ago. Now they change hands on eBay for over $7,000 each.

I’m talking about the LeBron James Topps Chrome PSA 10 rookie card, and its meteoric rise over the past nine months is emblematic of the speculative craze that has taken over the basketball card industry.

Gary Vaynerchuk – the famous internet marketer – has “invested” over a million dollars in cards. Others with similarly deep pockets, as well as countless middle-class individuals lured by the potential riches, have followed Vaynerchuk in sinking massive sums into basketball cards.

Over the past 90 days, 5,828 single basketball cards have sold for over $1,000 each on eBay:

Many cards sell for five or six figures each.

The reality is that the intrinsic value of any card is almost zero. We’re talking about cardboard with pictures of athletes on them, after all.

But from Tulip Mania four centuries ago to the Beanie Baby Sensation of the late 1990s, we’ve seen low (or no) intrinsic value collectibles reach frenzied levels after being promoted as can’t-miss investments, only to quickly collapse.

And there’s an even closer comparison. Thirty years ago, baseball cards were the investment du jour… Until they weren’t.

Is it different this time? And even if it is, will it end the same way as it has in the past?

My Background in Basketball Cards

You may be wondering:

What makes me an authority on this subject?

As a kid, I collected cards for fun.

Then, years later and with some disposable income, I sensed there was a potentially lucrative side-hustle in basketball card speculation.

I speculated on card values from 2015-2018. But in 2018, I cashed out to raise capital for other endeavors.

I did well, but left over $100,000 on the table in profit. If this keeps up, I’ll be like one of those guys who sold Bitcoin in early 2016.

I’ve continued to follow the long-term trends out of curiosity — and because my brother has made a small fortune during the boom.

I now act as an informal advisor to him. With decisions often having five-figure implications, I choose my words carefully.

As kids, we never could have imagined the current boom – which is fitting when you consider the humble beginnings of the industry.

A Brief History of the Card Industry

Sports cards have appealed to fans since the early 1900s. Over the first 75 years of the century, few of them were worth much. They were simply vehicles for kids to connect with their favorite athletes. Many kids flipped cards across their rooms, placed the cards into bike spokes, or otherwise neglected them.

In the mid 1970s, a small group of people sensed that there was money to be made on cards that were difficult to find in mint condition. They began searching the country for collections, often finding uninformed owners willing to sell for bargain prices.

By the 1980s, word of the investment potential of baseball cards had spread nationwide. Seduced by the values of the old cards, everyday Americans bought thousands of modern cards, hoping that their collections would someday make them wealthy.

The card companies took notice and cranked up the print runs, determined to squeeze the boom for all it was worth. Tens of billions of cards were produced per year during the late 80’s and early ’90s. And seeing the high value of mint condition cards from past generations, the vast majority of collectors  were sure to carefully handle and store their cards.

You see where this is going…

So, why were so many speculators blindsided?

At the time, they didn’t realize just how many cards were being produced as card companies kept production numbers under wraps.

And with the internet in its infancy, there was no online marketplace like eBay where the market could constantly find equilibrium. Instead, collectors relied on the Beckett magazine, a monthly price guide that (problematically) determined prices through anecdotal evidence.

May 1989 Beckett Baseball Cover

The speculative craze faded as people realized that the supply of ’80s and ’90s cards was much higher than the demand would ever be.

Old (and rare) classics such as the Mickey Mantle rookie card maintained high values, but sales of new sports cards plummeted to a fraction of their peak.

But the industry was kept afloat by a group of people with an early connection to it – and expanding wallets.


Nostalgia is one of the biggest factors that drives the collectibles industry. You’d be right to assume the adults that lost a lot of money in the ’90s betting their futures on overproduced cards would never drive another boom. But while the adults were largely in it to get rich, tons of kids were collecting with pure intentions.

But the (maturing) kids were far from a captive market. While they weren’t buying cards to get rich, they wanted what collectors of anything want – the thrill of the hunt for rare collectibles.

The card companies wised up and provided that. While manufacturers couldn’t rely on the organic forces that kept supply low until the 1970s, they could limit the production of certain cards.

Now, card companies disclose exact print runs on the backs of some cards with serial numbering.

This Mike Trout rookie is limited to 500 copies.

And it’s easy enough to formulate rough production estimates of cards that lack this numbering.

These limited cards provide collectors with the thrill of the hunt. And, perhaps unsurprisingly, lead to high secondary market prices.

A New Group of Speculators

From the mid 1990s to the early 2010s, there were speculators in the card market that looked to capitalize on fluctuating values. But it was a low percentage of the overall activity and prices would mostly move due to player performance as collectors looked to add emerging stars to their collections.

With obvious profit potential, it was only a matter of time before speculators would re-enter the card market en masse. The strong economy of the late 2010s provided the ubiquity of disposable income necessary for such a boom.

But unlike 25-30 years ago, the basketball market is leading the way.

Why Basketball?

The NBA has enjoyed soaring popularity around the world this decade. NBA superstars have turned into larger than life figures as it has become clear that one amazing player can lead a team to glory. Individual players in other team sports simply cannot influence winning to the same extent. 

This global popularity and individual impact has combined with the 24/7 news cycle to create constant chatter among talking heads about the greatest players of all time.

Speculating on basketball cards is a way for people to bet on the careers of active players and the legacies of retired icons.

The Online Markets

As I touched on earlier, eBay did not exist during the baseball card boom of 25-30 years ago. Its existence today, combined with social media groups and other online marketplaces, allows for a marketplace that’s always moving towards equilibrium. 

Panini, the sole licensed NBA trading card company, has predictably cranked up the printing presses to satisfy rising demand. But unlike the boom of 30 years ago, when supply was impossible to estimate, online marketplaces enable speculators to observe supply and adjust their bids accordingly. 

In today’s market, a rookie card of a 2013 draftee will sell for much more than the rookie card of an equivalent 2018 draftee because of known differences in production.

The Giannis rookie below usually sells for 300% more than the Luka rookie despite it being the same card and the two players having similar statures in the card world.

This disparity makes sense when you consider that there are around 2,000 of the Giannis and 9,000 of the Luka in circulation.

Although online marketplaces have increased transparency over the past 30 years, they have vulnerabilities that have been exploited by shady characters. And these vulnerabilities aren’t the only threat to the hobby’s integrity.

Where There’s Money, There’s Corruption

The fair market value of a collectible is determined solely by what other people are willing to pay for it. There’s no price to earnings ratio, return on equity, or revenue growth.

Unsurprisingly, there are people with vested interests in particular cards that will take any measure to convince the masses that their card is worth a lot of money.

Let’s say someone owns 200 copies of a card with 1,000 copies in existence. The card sells for $1,000 each and there are currently ten copies listed on eBay for overpriced buy-it-nows of $1,200 to $2,000. The person could buy all ten copies and potentially convince buyers that the card is now worth double what he paid for his stash. 

While this ruse would only work with a select group of cards under particular circumstances, it has been successfully deployed countless times by unscrupulous characters. And eBay allows for anonymity that makes it impossible for market participants to definitively suss out this type of activity. It’s always plausible that the rise is organic and several participants have agreed that a card was previously undervalued.

Besides price manipulation, altering cards is another unethical practice that has proliferated. It has even caught the FBI’s attention. For those unfamiliar with the intricacies of the card market – small differences in condition can change the value of a card by thousands of dollars. 

The way it usually works is:

  1. Buy a lower grade card and crack it out of the case.
  2. Trim the card ever so slightly to eliminate rough edges and corners.
  3. Re-send the card to the grading company.
  4. Often avoid detection if it’s done carefully.
  5. Re-sell at a huge profit.

There are other scams in the industry, but these are two of the most prevalent (and problematic) in today’s marketplace. These practices may seem to paint a bleak picture for the long-term legitimacy of the hobby, but they won’t necessarily torpedo this speculative boom.

Here’s the deal:

Price manipulation can be detected by having a discerning eye for the legitimacy of a card’s rise. If a card all of a sudden triples in value, and there is no underlying reason for the increase, it can usually be chalked up to price manipulation and prices will soon return to normal. On the other hand, if a player’s cards triple during an MVP season, the rise is likely legitimate.

Trimming is a trickier issue, but this problem is mostly confined to certain cards. The most obvious short-term solution is for speculators to focus on brands that rarely have faulty edges and corners to begin with. And if grading companies begin to precisely measure the dimensions of every card they evaluate, this whole practice would no longer be viable.

But even if price manipulation and trimming don’t lead to the downfall of basketball card speculation, could this market realistically have staying power?

Why This is Sustainable

A lot of middle-class people are now sinking tens of thousands of dollars into basketball cards. They heard about rising values and figured they would capitalize on their basketball knowledge. Many of them are not well-versed on the card market, and whether they know it or not, are just uneducated gamblers. They are going to get burned.

But there are also plenty of educated participants in the market, many of whom have high net worths. They understand that cards are a risky place to put their money, but they treat it like gambling.

Educated or uneducated, an influx of gamblers would at first glance appear to foreshadow an imminent collapse for the card market.

But it could work the other way around… At least for a while.

Legalized sports gambling is a $10 billion market. And it’s estimated that $150 billion is illegally bet on sports each year.

Cards becoming a mainstream gambling vehicle could push prices even higher.

For comparison, the flagship rookie cards for the two premier players in the NBA are the Topps Chrome PSA 10 for LeBron James and the Prizm PSA 10 for Giannis Antetokounmpo.

The market caps of these two cards are around $14 million (~2,000 copies x $7,000) and $4 million (~2,000 copies x $2,000) respectively.

LeBron and Giannis cards have soared due to a perfect storm of on-court success and a hot market. Prices could have more upside from here.

While there are other prominent cards of the two players, and other superstars in the NBA, these numbers show that valuations are a drop in the bucket compared to what’s being wagered on sports.

Why This Won’t Last

There are, of course, reasons for pessimism. The global economy is very strong and disposable incomes are high. What happens when we have a recession? 

Even millionaire speculators won’t want to watch 5-10% of their net worth evaporate. Middle and upper-middle class speculators will feel it even more. 

The card market provides something that sports gambling does not – the ability to bet on the long-term career trajectory of a player.

Early buyers of Kawhi Leonard rookies capitalized on his 2019 success more than sports gamblers ever could have.

But there’s a downside:

There are no clear terms and conditions in card speculation.

In gambling, someone can make an even-money bet that a player will score greater than 29.5 points.

There are only two possibilities:

  1. The player scores 30 points or more and the gambler doubles their money.
  2. The player scores 29 points or less and the gambler lose their entire investment.

The outcomes are inherently unclear in card speculation and subject to many variables. If LeBron James becomes the consensus greatest player of all-time, his rookie card could soar from $7,000 to $30,000.

But LeBron’s future performance falling short of expectations is just one thing that could decrease the card’s value. The economy could go south or cards could simply lose popularity as a speculative vehicle.

Where Do We Go From Here?

So, the million-dollar question (literally, for the Gary Vaynerchuks of the world) – how is this all going to unfold?

I could see the market continuing to heat up in the short to intermediate term. The gambling money is out there, the NBA is a global behemoth, and basketball cards have that “it” factor.

But this market is inherently fragile.

I expect a major recession to cause a mass sell-off.

Speculators now outnumber collectors by a big margin. The speculators will not hesitate to sell pieces of cardboard – that they only bought to flip later – when the next recession hits.

Once card values begin to trend down, there will likely be a fear-inspired mass exodus. Prices can easily collapse to a fraction of their previous heights.

Fortunately for my brother, he’s playing with house money after getting in near the ground floor. I advise him, and anyone else in this market, to hedge their bets by buying very selectively and gradually taking profits.

In practice, FOMO makes it difficult to deploy that type of strategy. The cards could easily be worth double a month later, after all…

But speculators must remember Tulip Mania and the Beanie Baby Sensation – this won’t last forever.

Few will have lasting fortunes at the end of this boom. Many will experience crippling losses.

Historical awareness and emotional fortitude will be the difference between those that end up in the former and latter category.

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