Bonus: The booming industry of trading cards | eBay

Bryce: [00:00:15] Welcome to another episode of Equity Mates, a podcast that follows our journey of investing, whether you're an absolute beginner or approaching Warren Buffett status. Our aim is to help break down your barriers from beginning to dividend. My name is Bryce and as always, I'm joined by my equity buddy, Ren. How are you going? 

Alec: [00:00:30] I'm very good. Bryce. Good to be here for a special bonus episode where we're talking investing, but we're not talking stocks now. 

Bryce: [00:00:40] We're talking trading cards. 

Alec: [00:00:42] Trading cards? Who would have thought? Go back to our primary school days. Opening packets of Pokemon cards. I don't know if they made it to Wagga. 

Bryce: [00:00:50] I did. I was a big trader. Well, yeah, but I was very black market trading. I did it quite unethically. 

Alec: [00:00:55] Please explain. 

Speaker 2: [00:00:57] Not. 

Bryce: [00:00:59] Doesn't paint myself in a very good picture. It was very profitable. 

Speaker 2: [00:01:01] But what are you doing? 

Bryce: [00:01:04] No, I'm not saying.

Alec: [00:01:06] Well. 

Bryce: [00:01:07] Okay, I see. 

Alec: [00:01:09] The thing is, now everyone's people's minds are running wild. 

Bryce: [00:01:13] That's fine. 

Alec: [00:01:13] Was he counterfeiting cards? 

Bryce: [00:01:15] That was. He was going to end up on an episode of Dirty Money. 

Alec: [00:01:18] Was he making into classrooms and stealing them from other kids?

Bryce: [00:01:22] Nah, there was an element of that. Yes.

Alec: [00:01:25] Oh, right.

Bryce: [00:01:28] But anyway, let's not get stuck in too much of what I was doing. We've got an episode where we're going to have a look at trading cards in a little bit more detail, because this episode is brought to you by eBay where you can buy and sell trading cards, whether you're a card player, a collector or an investor. eBay is the platform that you're looking for. 

Alec: [00:01:48] Yeah, and everyone is familiar with eBay. It is the original online marketplace for collectables and for so much else. It launched in 1999 in Australia and it is now Australia's number one most visited online shopping site with over 11 million monthly visitors in Australia. That's almost half the population.

Bryce: [00:02:09] Yeah, it's pretty surprising, actually. I did not know that. Well, we just do want to make it clear as well before we crack in that none of the opinions that we're about to give regarding trading cards are that of eBay. They're ours only. 

Alec: [00:02:21] Yeah, we've done our research and it is just a fascinating industry and one that we want to chat about today. Did you say that last year in the height of the covered target, like the big retailer over in the US, had to stop selling trading cards because like the I think that every Wednesday they would have new stock come in and there were fights and there were overnight lines for trading cards. 

Bryce: [00:02:47] I remember we did an episode titled something like Everything's a Bubble and. 

Alec: [00:02:51] That's right. 

Bryce: [00:02:52] Yeah. Yeah, crazy starts around what was happening in the trading card market. 

Alec: [00:02:56] And we should also say that not only are these opinions hours and not eBay's, but this is definitely not financial advice. Get personal advice. I don't know if you could get a financial adviser to advise you on trading cards, but you should ask if you're unsure. Do your own research. And obviously past performance is no indication of future performance. The past few years have been incredible for trading cards, but that isn't to say what's going to happen in the future. 

Bryce: [00:03:25] That's it. 

Alec: [00:03:25] With those disclaimers in mind. Bryce, tell me about the past few years.

Bryce: [00:03:28] Well, let's set the scene. And this is some data from eBay since the start of the pandemic where no doubt things really started to take a turn for trading cards. So sales of sports trading cards increased triple digits, sales of trading cards such as Pokémon, my favourite back in primary school, increased triple digits and sales of narrow trading cards grew quadruple digits. 

Alec: [00:03:54] Firearms like more than 1,000%. What were quadruple digits? 

Bryce: [00:03:58] Who would have thought? I would not have picked that? NBA cards grew by nearly quadruple digits in 2021 as well. So huge growth across all different types of trading cards. Sports, particularly NBA and Nrol really going to the moon.

Alec: [00:04:13] And I think we should probably just pause and clarify. When we say trading cards, we do literally mean cardboard printed cards. 

Bryce: [00:04:21] Yeah. How do they verify they're not fraudulent? 

Alec: [00:04:23] Well, you should know that you will. Black market counterfeiting 93 so fraudulent you are flooding the market. 

Bryce: [00:04:31] Anyway, I ran according to eBay, the highest price card to sell in Australia in 2021 was a 2018 2019 PRISM. Luka Doncic card. 

Alec: [00:04:44] You know the liquorice map to you? Yeah. Yeah. Who is it he plays for? Mark Cuban's taking the Dallas Mavericks. 

Bryce: [00:04:51] They guy. Nice. That could be another part of the podcast. Priceline's pop culture and true and high profile sports figures. Anyway, it's sold for a whopping 140,000 AUD. A piece of cardboard. Yeah, a writing card. 

Alec: [00:05:06] If you think $140,000 is a lot. I do watch this space. 

Bryce: [00:05:10] Okay. 

Alec: [00:05:11] Because we've. They get higher. 

Bryce: [00:05:14] So that's the stats from eBay since the start of the pandemic. But what else have we got? 

Alec: [00:05:19] Yeah, so let's. We kind of structured this a little bit like an industry Deep Dive. So let's start by looking at the trading card industry as a whole. According to Digital Journal, the global trading card industry is worth more than $6 billion. And according to this same digital journal research, it's predicted to grow at 7.8% a year until 2030, reaching about just shy of $12 billion industry. So expect it to double by the end of the decade.

Bryce: [00:05:51] Here's an idea. Trading Card ETF. 

Alec: [00:05:54] Well, it's funny you say that because there is a trading card index. 

Bryce: [00:05:58] There you go.

Alec: [00:05:58] And it's outperformed the S&P 500. 

Bryce: [00:06:00] Okay. 

Alec: [00:06:01] We will get to that. 

Bryce: [00:06:02] Okay. Sorry. Jumped the gun. 

Alec: [00:06:04] So some of the biggest categories of Pokémon you mentioned, and we spoke about how during the pandemic, Target had to stop selling magic, the gathering. I've heard of it. I've never played it. It's really the O.J. card game. It brings in over $1,000,000,000 annually. Wow. Yeah. Pretty amazing. But I think probably the biggest category or the category that's really exploded in popularity over the last few years is sports. Now, I said that there's an index that tracks trading cards, the P, w, c, c not to be confused with P.W. said yes, that they say 500 index tracks the 500 biggest sports trading cards. So if you were to compare the P you say 500 to the S&P 500, that tracks the 500 biggest U.S. stocks. Which do you think has done better? 

Bryce: [00:07:02] Well, you just told me that it was true. 

Alec: [00:07:05] And also, like, I wouldn't be introducing this start to the upside. 

Bryce: [00:07:09] And it's the S&P 500. 

Alec: [00:07:11] So since 2008, the trading card index has returned 216% and the S&P 500 has returned 135%. 

Bryce: [00:07:21] Wow. There you go. I will point out, though, to put a bit of perspective, the projected growth rate for the next, what, 15 years or so? Eight years is actually 7.8 is sort of below your average market return. So just putting it in. 

Alec: [00:07:38] There you go. 

Bryce: [00:07:39] Just putting it in perspective. 

Alec: [00:07:40] So when we talk about sports cards, this is an American index. So think American sports, basketball, baseball, hockey, NFL. What do you think the majority like? Where do you think of those 500 top cards in the index? What sport do you think is most represented? 

Bryce: [00:07:59] Hockey. 

Alec: [00:08:02] You know, hockey is 9% of the index. 

Bryce: [00:08:04] Oh, okay. Baseball. 

Alec: [00:08:07] Baseball is 73% of the index. So baseball is the biggest. 

Bryce: [00:08:12] Yeah.

Alec: [00:08:12] Yeah. 

Bryce: [00:08:13] Couldn't tell you one by a baseball player that is currently playing well. 

Alec: [00:08:17] The most expensive piece of sports memorabilia was jumping the gun a bit. But given you've mentioned it, the most expensive sports memorabilia, not just cards, just any sports memorabilia is a trading card and it is a baseball trading card. Wow. Do you know the player? 

Bryce: [00:08:33] Rodriguez? 

Alec: [00:08:37] No. A Mickey Mantle 1952 baseball card. $12.9 million. Ridiculous. What was previously the most expensive was Maradona, Hand of God, Jersey, you know, in that World Cup where he allegedly headed it into the goals. That was about 9 million. That was the most expensive piece of memorabilia that Jersey Maradona wore that day. But then the Mickey Mantle card beat it. And Michael Jordan, his jersey that he wore for in the I think the 96 playoffs or in a famous game, sold for about $10 million. 

Bryce: [00:09:16] Wow.

Alec: [00:09:16] So this piece of cardboard with Mickey Mantle on it is selling for more than Maradona and Michael Jordan's jerseys.

Bryce: [00:09:23] Wow. I'd be interested to see, though, what's happened to these cards over the last six months. And I don't know if we have data, but a lot of these hot, hot, hot assets have taken a bit of a hit, particularly these ones that are, I would say, on the speculative side, more than the investing. 

Alec: [00:09:40] As opposed to the blue chip trading cards. 

Bryce: [00:09:43] I'm talking like trading cards full after they fall in. 

Alec: [00:09:46] The cards are the folks that do that.

Bryce: [00:09:48] And we'll put you there. We need to be clear here that it's a speculative investment. But anyway, let's. 

Alec: [00:09:54] So we. Yes. 

Bryce: [00:09:57] Anyway, let's keep moving.

Alec: [00:09:58] So you're right. Bryce is speculative, no doubt about it. We've made some fun of nfts on our Instagram and looked at what they sold for at the peak of 2021 and what they sold for today, I think. Logan Paul, one of the Poles, spent like 600 grand on an NFT in 2021, and it's worth $10 today. So, like, the bubbles burst and the 2021 bubble has burst. But the really interesting thing is that in the trading card space, some are saying as an alternative asset class and there was this story out of the US where you say, say Marketplace, that company that runs an index we were speaking about before, established $175 million asset based credit facility with white hot capital partners. And what that means beyond the jargon is funds are willing to lend against trading card crazy. They say white hot capital partners have seen the trading cards of enough security for a loan to lend against it. You know, you used to have to put your house up as collateral. Now you can put your trading card collection out again. 

Bryce: [00:11:09] And how do they know this stuff is real? Well, how does fraud Valentino. 

Alec: [00:11:13] Any assets real? Like we had Michael Douglas on the show a few weeks ago. It's about a $3 billion wine fraud industry. Like fraud. 

Bryce: [00:11:20] Exist. Yeah, I know. Yeah. I'm just asking the question, like, I want, like, can you loan again? Can you loan against a bottle of Penfolds Grange, I wonder. 

Alec: [00:11:28] Probably that, actually. Definitely. 

Bryce: [00:11:31] Really? 

Alec: [00:11:31] Yeah.

Bryce: [00:11:32] Just bring it out. I'm trying to buy a house. I should bring out my Penfolds Grange collection. It's fascinating that, like, a hundred $75 credit facility, $75 million, 75 million.

Alec: [00:11:46] $175 credit facility is what you would have got back in vogue in 2000. 

Bryce: [00:11:52] That's right. Yeah. That's what I was taking out at recess for people to use at the canteen. Yeah. 

Alec: [00:11:57] So I think but for me, like this story isn't as interesting as what the story means, like what it shows that happening in the industry which is that lenders are saying it as. An alternative asset in the same way that would lend against, you know, you mentioned one, but also that would lend against are or, you know, luxury cars like they see it as an asset that can hold its value enough that if they don't get repaid, they can take the asset and recover that money. But I don't see a lot of people lending against NAFTA. 

Bryce: [00:12:31] No. 

Alec: [00:12:31] Well, but they probably do. You know what? They definitely do. 

Bryce: [00:12:35] So one of the problems that we face as investors when it comes to these initial tentatives is the liquidity of it. You know, if you have a trading card, it's not like it's publicly available and you can turn around tomorrow and say, I want to sell this just like I want to sell my ETF positions. So this Mickey Mantle baseball card, for example, what did it go for? 12.9 million. You've got to find someone out there who's willing to pay more than 12.9 if you want to make a profit. Very difficult to do. 

Alec: [00:13:04] Very difficult. And traditionally, you know, before eBay and before the Internet, you would have been, what, going to the sports memorabilia store? Yeah. And I don't even know if this does exist anymore. Yeah. In your local town or in, you know, a nearby city or whatever. You'd be driving from Wagga to Sydney to try and flog it off? Definitely. 

Bryce: [00:13:26] I didn't have to go far.

Alec: [00:13:28] And you'd be hoping that you could sell it, but because there wasn't a massive supply of potential buyers, you probably weren't realising the full value. Yeah. And so I think, you know, obviously this episode is sponsored by eBay, but it is really online marketplaces like eBay that have enabled these super niche, super nice alternative asset classes to exist because they've just created depth and liquidity in these markets. They've expanded your potential pool of buyers beyond the sports memorabilia shop and the pawn shop in your local town to millions, potentially millions of collectors or players or investors around the world. And we've seen super nice asset classes take off before on online and on eBay. Jemmy and Beanie Babies were massive. 

Bryce: [00:14:22] Massive fraud there as well. 

Alec: [00:14:23] Really? Yeah. Well, are you selling them? And we'll go back. 

Bryce: [00:14:25] And I never got into Beanie Baby. 

Alec: [00:14:27] I think they're a little bit before our time. Yeah. And obviously, that market didn't end up doing too well. So there's a cautionary tale for everyone. These online marketplaces have really been the fuel for that. They've been the structural change that has been necessary for this market to exist because, you know, baseball cards and stuff, they've always had value. But the explosion of value has really been a liquidity story. 

Bryce: [00:14:54] Yeah, absolutely. And in eBay's 2021 State of Trading Card report. Yes, that's a report. They announced more than 142% in growth in sales in the US, which was in addition to 4 million more cards than the year before, 4 million cards traded. Unbelievable here in Australia as well. There's been some pretty phenomenal growth of 379% compared to 205% in China, 149% in Canada and 113% in Europe. So still pretty solid growth numbers around the world in trading cards on eBay. So it's staggering to think how many are being traded. Millions and millions. 

Alec: [00:15:36] And. 

Bryce: [00:15:37] Millions of cards.

Alec: [00:15:38] And millions of cards are being traded and we're seeing records being broken. I said 12.9 million for Mickey Mantle. My mistake, 12.6 million. 

Bryce: [00:15:47] I thought you said 12.6. 

Alec: [00:15:49] Well, there we go.

Bryce: [00:15:51] Maybe I wasn't listening anyway. 12 points, but it's 12.6. Yeah. 

Alec: [00:15:55] Apparently the next highest card. And we didn't actually get which card this was 7.25 million. So Mickey Mantle.

Bryce: [00:16:04] Absolutely killed it. 

Alec: [00:16:04] Yeah. So that's the most expensive trading card. That's the most expensive piece of sports memorabilia. Let's go to Pokemon cards. Your name? Your name? 

Bryce: [00:16:15] Yeah. 

Alec: [00:16:16] Let's go to Pokemon cards. Your name? Logan Paul owns the most expensive Pokemon card in the world. $5.275 million is what he paid to get it. What Pokemon is on that card? 

Bryce: [00:16:32] A razor shard. 

Alec: [00:16:35] What is that? I don't know. 

Bryce: [00:16:37] You don't know that it's some. It's the most super niche Pokemon card that comes around, but that's not going to be Pikachu.

Alec: [00:16:45] What a. 

Bryce: [00:16:45] Way. 

Alec: [00:16:46] To play a random elimination. 

Bryce: [00:16:48] You've got to go. I don't know, bro. 

Alec: [00:16:50] Is Pikachu, is it? Yeah. Your kids like. I feel. 

Bryce: [00:16:54] Like. 

Alec: [00:16:55] It's like a level ten illustrator, Pikachu. Okay. I think there were only, like, 30 of these cards made in, like, 1990. I know. Given out or something. Anyway, long story, but yeah, Logan Paul paid $5.75 million for it. 

Bryce: [00:17:09] Jeez. I mean, is that in. Or is he just love YouTube or has too much money? Who knows? Well, he's a YouTuber, right? 

Alec: [00:17:16] So both of them are YouTubers. And then one of them went boxing. Jake. I think Jake's boxing's Jake. 

Bryce: [00:17:23] Paul? 

Alec: [00:17:24] Yeah. 

Bryce: [00:17:24] Oh, my goodness. Well, there you go. So some pretty astonishing numbers are coming out. I mean, these niche asset classes. We've spoken about it on the show before, as I said, doing a caveat that these are more speculative than anything. If you want more information on investments to the rest of radio. But it's just a bit of fun.

Alec: [00:17:46] I'm going to be speaking of a bit of fun. I got a game for you as we get to the end of this episode. So looking at eBay's 2021 State of Trading Cards report, they've got the three that they've got notable sales. And I assume that the top three sales in sports and top three in collectables. I'll read the three and you tell me which you think was the most valuable. And for a bonus point. Ballpark me the price. Okay. Yeah. Deal. Okay. We'll start with sports collectables first. What do you want to start with? 

Bryce: [00:18:17] Are you kidding me? Three from H, three from H. Let's go. 

Alec: [00:18:19] Sports. So starting with sports, we've got the 1996 Topps Chrome refractor, Kobe Bryant rookie. Ah, see, that's one. 

Bryce: [00:18:30] That remote. What is that?

Alec: [00:18:32] I don't know. It's just there's a whole bunch of stuff here. Okay. We've got the 1952 Topps, Mickey Mantle, number three, one one. Okay. And then we've got the 2000 playoff contenders. Tom Brady, rookie. 

Bryce: [00:18:45] See what's RC. 

Alec: [00:18:47] I, I kept my rookie card. Rookie card? Yeah. [00:18:50][3.1]

Bryce: [00:18:50] Remote control card. What's the most valuable thing? [00:18:54][3.2]

Alec: [00:18:54] Which of those three sold for the most? So they were the top three in the notable sales in 2021. [00:19:00][5.4]

Bryce: [00:19:00] Well, I mean, my mind goes to this Mickey Mantle one because he holds the record for the most expensive. I'm not really sure if the year, though, would come through. So Tom Brady's rookie card. [00:19:13][12.7]

Alec: [00:19:14] Juvenile, the. [00:19:14][0.5]

Bryce: [00:19:14] Nice. [00:19:14][0.0]

Alec: [00:19:15] Sort of ballpark number, like a like. 

Bryce: [00:19:20] 800,000. 

Alec: [00:19:21] Pretty close. 550,000. 

Bryce: [00:19:24] 550. 

Alec: [00:19:24] Yeah, really interesting thing. So, one 1952, Mickey Mantle sold for $12.6 million this year, 2022. And this another 1952. Mickey Mantle sells for 428,000 in 2021. 

Bryce: [00:19:40] Wow. 

Alec: [00:19:40] So I guess that's like the condition of the card or maybe the story. The Saraki mantle, Mickey Mantle, was like a shiny one. That was the thing with Pokemon cards back in the day, wasn't it, though? Society. Yeah. 

Alec: [00:19:51] Yeah. 

Alec: [00:19:53] Okay. Let's go to collectables. Yeah. So the top three on eBay are 2021. State of the Trading Cards. State of Trading Cards reports a 1999 Pokemon base set. First Edition Shadowless Holo Charizard. 

Bryce: [00:20:08] Oh yeah Charizard. That's what I'm trying to say. 

Alec: [00:20:11] Yeah I Gem Mint PSA ten Magic The Gathering Black Lotus okay and a 1999 Pokemon base First Edition Hollow Thicc Stamp Shadowless Charizard Charizard popular.

Bryce: [00:20:28] Yes I was going to say that's not trying to say what it said a retired church Charizard it's either of those two and I'm going to say the thick one. 

Alec: [00:20:38] No, it was actually the magic, the gathering. 

Bryce: [00:20:40] Oh, I don't know what that is. 

Alec: [00:20:42] It's like a card game. Okay. Yeah. So that one sold for $511,100. Okay. 

Bryce: [00:20:51] Nothing compared to sports. 

Alec: [00:20:53] I mean, it's like I was about to say it's a house in Australia, but like 15 years ago it was a house in Australia. 

Alec: [00:20:59] Yeah. 

Bryce: [00:21:02] Or around. Well before we close we do want to bring it back to some actual companies here. Given that we're an investment show and plenty of companies are getting in on the action when it comes to trading cards, Disney is getting in on the action. Earlier this year they released their upcoming game. Larkana.

Alec: [00:21:18] Yeah, well, they haven't even released the game yet. The game is out in mid 2023. 

Bryce: [00:21:22] Oh okay. 

Alec: [00:21:23] But they released some of the cards for it. 

Bryce: [00:21:25] Oh there you go. Yeah that's weird. Well, promo. 

Alec: [00:21:29] Well no I think it's because they're realising that trading cards say oh yeah I don't need is probably not the wrong word what is probably. Yeah but some of these cards the game isn't even out yet. Some of these cards are already selling for more than two grand on the resale market. 

Bryce: [00:21:45] So strange. It's like saying I think it's going to release cards for the Essendon Football Club in 2030 when? But yeah, it's not even out yet. How do you know anyway? Let's not get stuck into it. 

Alec: [00:21:54] I think it's, I think it's got like Disney characters on it. Yeah. So it's like people, just people not using cards. Yeah. Yeah, yeah. But I think it's an indication that right now we talk about sports, we talk about Pokemon, we talk about magic, the gathering and some other games, you know, like, I don't know. You know, is that something? But it's like there's clearly other companies with really strong IP, like really strong characters are looking at trading cards as another avenue to monetise. Disney is the king of having really strong IP and finding millions of ways to monetise that cruises to movies and everything in between. Trading cards are getting added to the list. [00:22:33][39.7]

Bryce: [00:22:34] That brings us to the end of the episode. A bit of fun, fascinating niche space along with many of the others that we've been watching Bubble over the last couple of years. So if you are interested in buying and selling trading cards, you can do so by buying and selling trading cards on eBay, whether you're a card player, a collector or an investor. EBay is the platform that you're looking for. EBay is the original online marketplace for collectables since launching in 1999 in Australia. 

Alec: [00:23:01] And whatever you're trying to buy trading cards or anything else, it is the number one most visited online shopping site with over 11 million monthly visitors in Australia, the number one most visited online shopping site in Australia I should say. 

Bryce: [00:23:14] Love it. 

Alec: [00:23:14] So eBay dot com you. 

Bryce: [00:23:16] Check it out. That brings us to the end Ren. Great to chat and we'll pick it up next week. 

Alec: [00:23:20] Sounds good.