When it comes to long-term investment in vintage cards, baseball reigns supreme. Baseball is after all, America‘s pastime and one of her time-honored traditions. Baseball transcends generations through it’s stability and predictability. The players change, but there will always be baseball. Any deviation from the charted path — the strike of ’94 — isn’t viewed as a labor dispute or trivial misunderstanding. It’s viewed as an attack on America’s game: a disruption of shared history, the desecration of America and her ability to create history for future generations. If they tug enough on the interwoven threads of our shared history, the whole damn thing will likely unravel. It’s why performance enhancing drugs aren’t just illegal, but rather a mortal sin that requires unending repentance. Baseball has never been about three strikes, a set of outs, or nine innings. Baseball’s about the conversations between singular events and the stories of heroism retold until they’re America’s version of Greek mythology.
We’ve built cathedrals that dot the horizon of every major city to honor these baseball gods. We flock en masse to worship at their feet and bare witness to historical events while paying ten dollars for a beer just for that shared experience; that sense of belonging to something bigger than us all. It’s about witnessing miracles not for our personal gratification, but for the experience you’ll share high-fiving a stranger and then retell to your children and their children and maybe even their children, if you’re lucky. Everyone frames the story differently and while the experience is shared between millions, each family recounts it from a different perspective.
Baseball is dying, though. In turn, as the demographics age, the value of vintage baseball cards will suffer. To understand why baseball’s decline will influence the vintage baseball card market, it’s important to understand why people seek and collect memorabilia. Whether it’s civil war memorabilia or sports cards, the driving force behind collecting (not hoarding) is often the simple sense of enjoyment that accompanies the acquisition process. As the market expands and players begin to compete for memorabilia, another benefit enters the equation. These collectibles are now worth tidy sums of cash not just because they tell a historic tale despite having little tangible value, but because they are also considered an investment. As the hobby continues to expand, the increasing price and profitability of sports collectibles grows exponentially to the point where in addition to enjoyment and investment, collectibles become a status-symbol simply because they are expensive and difficult to acquire. This only further inflates an already fragile market. In the end, it all boils down to the collectors, though. If the collectors stop collecting, there is no investment potential for those whom investment rather than collection is the driving force. Without the investment potential, there is very little prestige associated with owning a piece of cardboard.
Championship Nielsen Ratings
Unfortunately for baseball, the golden age has long since passed. You’ll notice in the graph to the right, the steady decline of the World Series [1] Ratings. The NFL’s Superbowl has become more of an entertainment event than a championship game, but its popularity is indisputable. Although the NFL is the only major sport with a championship game rather than a series, the relative trends are important. The NFL has continued to strengthen its television and fan base to the point where their regular season Sunday broadcast toppled Game Four of the World Series and their Monday Night Colts-Texans broadcast came within a couple points of knocking off the conclusion of the World Series.
People just enjoy the NFL more than baseball on television. It’s neatly packed into an easy-to-digest sixteen game season that pinnacles with the Superbowl. Unlike baseball, football comes a neat three hour package and it’s the easiest of the major sports to bet on. The NFL has projected football as a game of non-stop action, crushing blows, and separating the men from the boys. This sits well with a generation of Americans whose attention spans have been eroded by televisions, computers, iPads, and video games. Baseball on the other hand revolves around intricacies, minutia and perseverance. Games get lost in the shuffle of a 162-game season and there’s never a sense of urgency.
For vintage baseball cards, the pool of potential consumers has stagnated for quite some time yet the prices have remained relatively high. The easiest way to describe this phenomenon is through the population pyramids of the United States located to the right. As of 2010, the majority of the population is still within prime purchasing years. However, a glance into the future yields painful insights for the Vintage Baseball collector. The children of the last great baseball generation (the 80′s) are well into their 30′s and 40′s and should continue to purchase for the next ten-to-twenty years. These people lived through the hype of the Honus Wagner sale and collected during the mass-production era. Many of these collectors have collected not just to relive their childhood but as a form of investing and in turn, should begin to sell their collections as they reach retirement age and beyond.
The generation of collectors that preceded the children of the 80′s and started the first real boom in the baseball card market are currently entering retirement and are beginning to sell their cards. Ebay has made the liquidation of these assets infinitely easier and we’re already seeing the price of low-grade, high-availability cards drop steadily. High-Grade cards have maintained a steady growth and will continue to increase in value (or at least mirror inflation) for the foreseeable future. The problem of oversupply will rear it’s ugly head in about ten to twenty years, when the current generation that’s just purchased the previous generations cards begins to sell off all of their assets at the same time. At this point, almost all of the cards, including the cards that were unsold and included in an estate, will enter the market. The current generation along with beneficiaries of estates will all enter the market simultaneously and the prices of all but the most sought after cards will plunge.
It’s not like the market will evaporate, but there will be a sharp and immediate correction. Fifty years of highly collected baseball cards will become available in a ten year period and the prices will drop. Only furthering the problem is the ethnic and geographical distribution of America. Baseball has forever been equated with the Mid-West and North-East, both of which have seen a sharp decline in growth rate compared to the Southern and Western states. The Southern States have long-since called Football their sport and the American population shift will only further cement the NFL’s popularity. Immigration has also sealed baseball’s fate, despite their attempts at a World Baseball Classic. By 2040, the United States Census bureau predicts that minorities will account for over half of the United States population and will continue to immigrate to the southern and western states.
While baseball’s shared history will continue to be passed through generations and a Mickey Mantle card will always have value, the market must increase in size, at least at the same rate as the population, for cards to keep up with inflation. Age alone isn’t enough to maintain the value of a collectible, even if they’re a hundred years old. The only other possibility for an increase in value if we’ve decided the market itself will stagnate or shrink is a decrease in the card population. The boom of the 1980′s and 1990′s all but assured that cardboard would no longer be tossed out, and almost all of the older cards have already been slabbed and categorized.
From an investment perspective, the demographics and nielsen ratings make your choices fairly clear. You can invest highly in incredibly difficult to attain slabbed baseball players or gradually transition to a football based portfolio. Even if football’s history isn’t as storied as baseball, it will build tradition as its popularity continually increases. Beyond the traditional sport-based investment, it may be wise to begin to invest in Latino players rather than African Americans ( 1/6th of the population by 2050) or even Caucasians.
