You may recall that trading cards had their heyday in the 80s and 90s, when the hobby – like everything else – was more analog. It wasn’t the most efficient or reliable marketplace, but millions of people, young and old, enjoyed trading cards enough to consider them an investment.
But in recent years, the enthusiasm for investing in trading cards has seen something of a resurgence. And it’s a lot more high-tech than keeping your best cards in an old shoebox.
As digital collectibles in the form of NFTs burst onto the scene and then fade away again (at least for now), trading cards continue to generate interest — just take note of YouTube celebrity Logan Paul wearing an ultra rare card in the ring, or Derek Jeter opening his trading card market.
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And it’s big business, too: The sports trading card market is projected to grow by another $6.7 billion by 2026.
Why are trading cards suddenly a big deal again? Part of the answer is, quite simply, that people like them.
“She’s still sports, she’s still American,” says Jesse Craig, vice president of sales for PWCC Marketplace, a platform for buying and selling trading cards and other collectibles. “And if you can combine investing with collecting and something you love, we believe most Americans would much rather do that than dump money into the stock market.”
The trading card market has also been resurgent in part due to the COVID-19 pandemic, Craig explains.
“It allowed people to be home and that kind of sparked some nostalgia,” she says. “People had more time on their hands, or were working from home, and may have dug through their closet, finding collections.”
That spark of nostalgia coincided with the emergence of technologies that made it easier than ever to buy and sell collectibles. PWCC holds regular auctions and a fixed price marketplace on Amazon Web Services, claiming to host the largest trading card marketplace in the world.
The business, however, is more than just a custom-built version of eBay. In addition to providing a platform for buying and selling cards and other collectibles, PWCC serves as a physical clearinghouse through which all assets move. Its Tigard, Oregon facility features custom-built robots, sophisticated camera setups, and a bank-grade vault, built with 750,000 pounds of concrete, to ensure rapid and secure tracking of assets.
To get their collectibles on the PWCC platform, a seller must first ship their goods to PWCC, where the items are monitored with cameras from the moment they are opened in the post office. Each consignment is marked with a QR code and linked to a consignment number, customer account number and other basic information. PWCC receives thousands of cards every day. To process all of the cards and input information to its deck, the cards move through one of two custom-built machines.
With a robotic arm, the machine picks up each card, takes a picture of it, and flips it over to take a picture of the other side. The high and low resolution images are linked to the appropriate submission numbers and the submission is recorded in the customer’s account. Using optical character recognition, the machine can recognize what type of card it is and assign it an appropriate label for the auction site. Using machine learning, the system gets better at labeling cards with every send. The whole process takes about six seconds per card.
If the card or collectible is going to be auctioned in one of PWCC’s major monthly auctions, it moves to PWCC’s 360-degree imaging station. Using three cameras, the system captures 36 images of the card as it rotates 360 degrees. PWCC has reduced the process from about five minutes per card to just 30 seconds.
“With sports cards, condition really matters,” explains Jared Hippler, head of asset control at PWCC. On PWCC’s auction site, he says, “you can see every angle of the card at three different heights, and these are all very high definition images. You can actually zoom in and see every little detail.”
From there, the cards go through a vetting process, which is central to PWCC’s equity lending program. The company provides loans and cash advances to customers, using trading cards as collateral. PWCC recently secured $175 million to expand its lending, in a deal led by Whitehawk Capital Partners, LP, the first institutional banking deal of its kind. The company was able to secure the debit line because it demonstrated how, using the vast transaction datasets and sales histories it has amassed, it can accurately predict the value of a card at auction.
“Data is really at the heart of so much of what we do,” says Craig.
Finally, the trading cards go into the vault, a 2,000-square-foot space surrounded by 11 inches of concrete on all six sides. To enter, you must open one of two 7,500-pound doors. There are 140 security cameras closely monitoring everything in the vault, as well as motion-detecting sensors and security personnel during business hours. Temperature, humidity and lighting are all carefully controlled in the vault to preserve stored items. Only select PWCC employees are allowed in the vault, but anyone using the vault can view high-quality photos of their assets online.
The vault is the heart of the PWCC ecosystem, the physical structure that has enabled PWCC to create a trading card platform for the digital age. With all physical assets in one place, PWCC can offer a fast-moving and reliable trading platform as well as modern financial services that leverage the value of clients’ holdings.
“Storing assets digitally and building cash for our clients – it’s all really circulating in the vault,” says Craig.
PWCC encourages traders to use the vault by making its storage services free of charge for any trading card worth more than $250 or any assets purchased through PWCC. A one-time nominal fee is charged for all other items.
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While trading is an old-school hobby, the majority of PWCC’s clients have taken the digital approach: in fact, approximately 80% of the assets in PWCC’s vault never exit. People buy and sell cards on the digital platform, while sitting physically safe in the vault.
“For those long-term collectors who like to keep their items on a daily basis, vaulting isn’t for them,” acknowledges Craig. “But there are a lot of people who collect [who] don’t look at their articles every day or every week, or even every month, e [those items] go sit in a closet or a safe, or whatever it is… The beauty of the vault is that you can have it there, it is digitally archived, stored securely and fully insured… and you can enjoy them anywhere in the world by logging into your PWCC account.”
At first glance, a trading card you never hold is “not much different” from an NFT, says Craig. PWCC has probably been building its own version of NFT since 2019, when it started offering digital archiving services, albeit an NFT not connected to the blockchain.
“It’s a digital representation, but it’s supported by a physical asset,” qualifies Craig.
While there are certainly corollaries between trading card and NFT markets, Craig says trading cards are less volatile because of the emotional connection people have with their cards.
“It’s the last thing they want to get rid of,” she says. “Usually, during times of inflation, people need cash and dump and sell [their investments]. We see less of them in our space than in traditional markets due to the emotional attachment people have towards them.”
Craig cites data to support this claim. For example, when the S&P 500 fell more than 50% from its peak during the 2008 subprime mortgage crisis, trading cards were down only about 10%.
In fact, PWCC has created various market indexes, presented on its website, to illustrate the impressive investment performance of professionally ranked trading cards relative to the S&P 500.
The company is branching out further into other collectibles, adding space in its archives for comics, video games, and other memorabilia (think a pair of Michael Jordan-designed shoes or a jersey worn by Lebron James). The company recently secured a new 51,000-square-foot facility to expand its operations, with plans to build a museum of collectibles for visitors.
“I think the younger generation wants to put their money into things they understand,” says Craig. “You know, they’re still making Marvel movies, so the comics are hugely relevant. The history of coins is really interesting and unique. Almost everyone has played video games at some point in their life, right? The connection people have with these asset is, I believe, really the engine of our business”.