(dramatic music)
- [Narrator] The market for sports trading cards is booming.
- Sports is a lot of people's escape.
Why not invest in a player as opposed
to investing in stock?
- [Narrator] The top 25 most expensive cards
in history were sold in the last two years,
including an Honus Wagner card sold
for over $6.6 million.
- A lot of us were holding on these cards for 30 years,
hoping some day that they'd be worth something,
hoping some day I could say I told you so.
- [Reporter] Big time investors like hedge funds
are also in on it.
They've begun buying trading cards
as alternatives to equities.
- It's culture as an asset, it's nostalgia as an asset.
- [Narrator] So how did trading cards balloon
into a multi-billion dollar industry?
And why are both everyday people
and big name investors turning to trading cards
as investment assets?
This is Niche Markets,
a series that examines small, lesser-known markets
that despite their size, punch well above their weight.
- In front of us, we have a bunch of cards,
one of 'em being as early as the 1934.
A famous card called the Goudey,
all the way down to Honus Wagner and Joe DiMaggio.
We believe that they are authentic.
We'll send them in to get graded.
- [Narrator] To verify a card's authenticity
and determine how much it's worth,
today's card owners rely on a practice known as grading.
Collectors send their raw or ungraded cards
to grading agencies where their cards will be examined
and assigned a 1 through 10 grade.
Card scores are based on four different factors:
centering, corners, edges and surface.
- So we ended up getting them all graded.
They all came back real.
One is the lowest grade you can receive.
That is as terrible as it comes.
There's a crease right down the entire middle of it,
corners are all peeled up, edges are all dinged up.
This card's probably around a 100 to $200 card raw
but once you get it graded, it's real,
it's authenticated, it's now a one.
We now know the value.
It's around 800 to $1,000.
To know that its value is worth X or Y
because of its grade is what really turned this hobby
into what it is now as a stock market.
- [Narrator] In the past, buyers had to take a seller's word
on the legitimacy of a card's condition
but today thanks to grading companies like PSA,
Beckett and SGC acting as neutral arbiters of quality,
a card's price is much easier to verify.
- One of the things my mom always said
that I couldn't really have an answer for
was that card's not worth $20 until you get someone
to give $20 for it.
And that's no longer true.
(pensive music)
- [Narrator] Burt Deveau, Jesse Deveau,
and Jeffrey Ferraro are the owners
of FRESHPULLZ, a trading card shop located
in the outskirts of Boston.
The three friends opened the store in May
after making a small fortune auctioning cards online.
- We did $2 million in sales.
We should break the $3 million mark
within the next month by the end of September.
- [Narrator] Since the trio started their business
in March of 2020, they've all left their jobs
in the hospitality industry,
and seen their material circumstances transformed.
- I used to work 70 hours a week
in a kitchen and be absolutely miserable.
Now I can work 150 hours here
and it doesn't seem like 150 hours.
- [Narrator] FRESHPULLZ's story is but one example
of card owners striking it rich in today's market.
Since the pandemic began,
reports of former hobbyists digging up their old collections
and discovering a windfall have not been uncommon.
Sports cards have existed since the early 1900s
but in the 1980s and 1990s,
prices for newer cards cratered
after manufacturers flooded the market.
- Ken Griffey Jr., his rookie card is known
for being one of the most mass-produced cards,
and it's just not valuable.
- [Narrator] The pandemic also triggered a string
of deals and acquisitions that have shaken up the industry.
Earlier this year, the investment firm The Chernin Group,
along with celebrities like Mark Cuban and Kevin Durant
invested $40 million in one
of the industry's best-known auction houses,
Goldin Auctions.
This July, Goldin was acquired
by the investment group Collectors Holdings.
- It's an exciting time for everybody here at Goldin.
It's an exciting time for the industry as a whole.
- [Narrator] Also in July,
Blackstone acquired a majority stake
in the grading company Certified Collectibles Group,
which values CGC at more than $500 million.
- These people have people to tell them
where to invest their money.
They're not telling them to invest billions
of dollars into the card market for it to just collapse.
- Right now I'm holding two of my most favorite cards.
They both are a 1997 Kobe Bryant Precious Metal Gems.
The red version, there're 100 of them in the world.
This is a PSA 5.5, this one's a PSA 4.5.
This card right her I bought for $13,000.
It's probably worth between 160 and $200,000.
- [Narrator] Leore Alvidar was an avid card collector
when he was younger,
especially for Kobe Bryant cards
but he didn't return to the hobby until 2016.
- I went on eBay,
and the first box of cards that I went
and looked for was the E-X2000.
I had never gotten that Kobe Bryant green card
that I really wanted when I was young.
And I saw that there were different price points,
like some were selling for $30,
and there was one that was selling for $3,000.
And I was like why is one 30 and why is one $3,000?
- [Narrator] Alvidar, who has a background in finance,
saw opportunity in the inefficient way
in which pricing was determined.
- And I remember seeing that the probability,
the expected value was positive,
meaning if I kept buying the boxes,
and probabilistically, I will get the Kobe Bryant card
and then I sell it on eBay,
I'll make 10 to $20 a box.
- [Narrator] After five years of buying and selling cards,
Alvidar turned his passion into a business.
In March of 2020, he launched Alt,
which aims to be a sort of Coinbase for collectibles
where users can buy and sell cards,
just like more conventional assets.
Alt brands itself as a modern financial institution
that allows people to invest
in things they're passionate about,
just like stocks.
- When you log into Alt,
it feels a lot like Coinbase or Robinhood or Fidelity.
In real time, you can actually see
how much your portfolio is worth.
- [Narrator] Similar to how Zillow uses its Zestimate figure
to track home prices,
Alt created the Alt Value to track card prices.
- The number one question when people start getting
into cards is how much are my cards worth?
The whole point of the Alt Value
is to give people confidence around the values,
and just increase some of the transparency
that exists in the ecosystem
but just hasn't been brought out
and democratized on the internet so far.
- [Narrator] Alt is just one of a new crop
of digital services catering
to the rapidly growing trading card market.
Collectable and Dibbs allow users
to buy and trade fractional shares of cards.
StarStock brands itself as a stock market
for sports cards.
- All right, guys, good luck, good luck, good luck.
FRESHPULLZ has made most of its money
by hosting a relatively new type
of online auction called Case Breaking.
- Patriot Julian Edelman and a Kid Reporter.
Nothing there to start.
- [Narrator] Case breaking is essentially gambling
on unboxing videos.
A break involves groups of collectors co-investing in a case
inside of which are packs of cards,
and then watching a livestream of the unboxing.
- Paton, my boy, Manning, rookie.
Nice card, that's how we start off.
First box, Mojo, baby.
So there's a $2,000 box of NBA Basketball.
10 of us spend $200 and we each get three random teams.
So let's say you have the Celtics, the Knicks
and the Wizards.
I open up the box,
every Celtics, Knicks and Wizards cards
in that entire box all goes to you.
- [Narrator] Days later, collectors receive the cards
they won in the mail.
Two packs left, two packs left.
- One of the things that people asked us at first,
like why would somebody pay you to open their cards?
And it's not that they're paying us to open the cards,
they're having an experience.
If you take the pack home and open it by yourself
in your bedroom, you're alone.
When you do it with us, you're in a room full
of your friends.
- In the grand scheme of things, it's a casino.
You're coming in here, and gambling.
Most of the people in this world love sports,
and Fantasy Football, and gambling.
Those are the things that aren't going anywhere.
Joshua, Kelly, Rookie.
Too bad it wasn't a damn Herbie.
I don't see the card market going anywhere
for a long, long time.
Van Jefferson.
The card, Purple Star.
That is fresh. - That is dope.
(pensive music)