Buying The Flip

Let’s talk about grading from the perspective of investors in cards, not as collectors.

What got me thinking about this were a series of recent sales of CSG (CGC) graded card at a fraction of what the comparable PSA cards sell for. People, especially newbies, can be incredibly naïve about grading. That is likely the main reason the cut-rate services manage to eke out a living for their owners. I’d venture a guess that most of the people submitting cards to those services do not understand that the perceptions about who graded the card is even more important than the grade it receives. The same is true when newbs buy graded cards. So, as a service to the newer collectors who read this column and want to make some money at this thing of ours, here is a rundown of the older non-mainstream grading service holders that you are likely to encounter and some opinions on Third Party Graders (TPGs) from a money perspective:

ASA: You may never see a card in an ASA holder but if you do, be aware that you are holding both a piece of hobby history and a very likely overgraded and/or altered card. Alan Hager was the creator of the card grading concept, the 1-10 scale, and the ‘arrowhead’ holder with the areas around the card corners hollowed away to prevent pressure damage and dings. Hager created his own, completely unsupported, fake price guide, slabbed and graded his own cards very unobjectively, and sold them. It was a hot mess. He lost all credibility in a short time, especially after a series of scathing articles about his self-dealing and made-up prices ran in Vintage & Classic Baseball Collector magazine, but reaped royalties from PSA for years for the 1-10 scale. One reason early SGC holders have a completely different 0-100 scale is that they did not want to pay Hager a licensing fee. If you see an ASA slab, assume the card is altered or grossly overgraded. That said, there are gems in ASA cases; Hager was not completely corrupt. A recent example: a fortunate collector bought a 1933 National Chicle Nagurski in an ASA 8 case. It was rejected by PSA for cross-over. He cracked it out, resubbed the raw card, and got a 5.5 from PSA.

The Nagurski incident also points out the utter absurdity of the whole grading endeavor. Simply put, TPGs offer a service that is bullshit, but enough people buy into it that it has real market effects. All you are buying is an isolated opinion of some anonymous drone who sees a card for a few seconds, and that has only gotten worse since the services scaled up following the pandemic. PSA, for example, now grades the same number of cards in a month that it used to grade in a year. If you read the small print in the contracts, the graders don’t even guarantee the integrity of their work. And with good reason, as the Nagurski thing shows. The card in the Hager holder, specified a 5 as minimum grade on the card, is rejected. The same card ends up a 5.5 once it was subbed raw. Why? Not because the card changed. You just know that the graders at PSA saw the ASA slab and said “no way” on that basis alone.

PRO: Run and hide. Whether it was created for it or not, PRO quickly became the dumping ground for card doctors’ experiments that they could not get through PSA. About 99% of what you see in a PRO holder is trimmed trash.

CSA: This old-school grading service is a mixed bag. They were around for quite some time. Their original holders were 'arrowhead' holders like the ASA holders, with red bordered white flips. Some of those cards are OK, some are not. They next introduced a garish blue insert slab. Also sometimes OK, sometimes not. In those two iterations, the company wasn’t malicious, it just wasn’t very good, and it more or less got beaten by doctors inadvertently and frequently. Buy a CSA card in those forms of holder and you are shooting craps. I got an altered 1953 Bowman Spahn and a good 1954 Topps Williams in the red flips. The only blue one I ever bought was a good 1933 Goudey Hubbell. Bought that one in person at a show and believe me, it got the third degree before I paid for it, at a substantial discount to PSA. The third iteration of CSA slabs with the holo logo, nothing but bad news; run away. I would never buy a high-grade card in a CSA holder, even an early holder, unless I get to see it myself in hand and the price is really, really good.

Sports Collectors Digest Authentic. SCDA is a true missed opportunity. The venerable publication created a grading service, and they did a nice job. Their initial product had a red labeled flip with the magazine logo. Nice holders and good work product. I still buy them when they are at a substantial discount because they were as good as the majors at sussing out counterfeits and alterations and the grading was analogous to SGC’s. One of my favorite basketball cards is a Jordan rookie (Star not Fleer) in a SCDA holder that cost me a fraction of what a BVG card would have cost at the time. When they decided to terminate the business, they sold it to someone else with the condition that they switch to a blue logo on the flip. The blue labels are a total shit-show. Run away.

KSA. This is a Canadian service that is legit but over grades 2-3 grades on average. Their 8 is a 5-6 from the majors. It’s like BCCG with a maple leaf, back bacon and a toque. They’re not entirely hosers, but when I come across their stuff, I say “take off”.

There are a handful of modern slabbers apart from the big dogs at PSA, SGC, BVG and CGC. I’m not even gonna name them because the bottom-line is don’t waste your time or your money submitting to them or buying their work product.

The PSA Set Registry is the other factor that people forget about. Don’t. If your card derives its value from the PSA registry—a $5 modern rookie that sell for $1900 in a PSA 10 holder—do NOT send the card to Bob’s Cost Conscious Grading and expect to recoup your grading fees. You stand about as much chance of that as of safely landing a US fighter jet in Tehran. I have nothing against any other service, nor am I enamored of PSA, but if you want to make money, sentiment plays no role. If the premium attached to the card is dependent on its attractiveness to PSA registry players, there is no equivalent service to PSA, and it is a waste of money pretending otherwise. That won’t stop dealers from trying to get PSA registry prices for other holders, though; like Jim Rome says, if you’re not cheating, you’re not trying. That logic may not hold for SGC in the future: I have heard rumors that Collectors is considering allowing SGC holdered cards into the PSA Registry now that it owns SGC. If that happens, I’d expect SGC cards to take a substantial value uptick for registry-sensitive issues. I’d also expect that some SGC work product will cross to PSA more easily now that they are sister companies, but that may just be the cynic in me.

Now a few words of free advice (which is worth the price) for those of you with raw cards that you plan to submit. Submitting cards for grading, even with the right service, is like using debt to buy commercial property: incredible leverage on your investment when it works out, but horrible when it doesn’t. Buy a raw vintage card for $15, invest the grading fee, and if PSA blesses it as a 9, your market price investment goes up 5x or more, instantly. Pull a 10 and you could be an auction consignor. If GoD (the grader of death) gets the card, however, your nm-mt beauty gets a 6 or a 7, or even gets rejected for minimum size or evidence of trimming; you lose money between the cost and the grading fee. I’ve had cards that I pulled from a pack and sent in that were rejected as altered or too small. Gee, thanks, love absorbing that grading fee and the postage both ways. The risks are compounded because the graders are aware of their leverage effect and have instituted both tiered pricing based on value and a form of dynamic pricing: the upcharge. TPG leverage awareness does make you risk a hell of a lot more on a submission. Say you find what you think is a T206 Wagner in the wild. You better be damned sure because the price of finding out from PSA if it is the real deal is in five figures. PSA charges a significant percentage of the value of your cards to give its opinion, plus postage both ways. I’d suggest you think long and hard and run comps for raw and slabbed cards before you send PSA sub-$200 cards. My experience is that those submissions are money-losers because of the insanely high costs of slabbing and shipping. Upcharges are a mixed bag. On the one hand, it really pisses me off to get hit with an extra fee I wasn’t expecting, but on the other hand, I may root for an upcharge because it is a leverage effect. I sent in a low grade Bill Russell rookie and ended up paying 3x my initial fee. Of course, I was thrilled overall because I bought the card at an “A” price and ended up with a decent numerical grade, so I happily paid that upcharge.

As a buyer-investor, my advice is to not play the TPG submission game if you are looking at lower priced cards. If the card is a commodity card (many examples in the same grade routinely offered for sale) and you want a graded card, just buy it slabbed. No need to assume the rather substantial risk of a lesser grade on a raw card. One good bit of arbitrage as an investor is to look for commodity cards in groups that are being offered at a substantial discount to the grading fees. I bought hundreds of $2-$5 high grade slabbed vintage HOFers during the 2008-2010 period from a major dealer who would blow out dead inventory on the cheap, and when the market went to the races in the pandemic, I cashed out with a sick profit.

Finally, some thoughts on the major grading services today. We have a duopoly shaping up. Collectors owns both PSA and SGC. That leaves Beckett and CGC as potential rivals to it. I am not optimistic about Beckett’s future. Beckett seems to be falling further and further into irrelevancy now that PSA grades Star basketball cards. The chairman of Beckett Media’s parent company, Greg Lindberg, has other concerns, having been convicted and/or pleaded guilty to a laundry list of serious felonies. CGC is part of a strong company that belongs to a different set of rich investors, so it could be the other leg of the duopoly. I hope CGC establishes itself as a decent competitor to PSA/SGC. Thus far, it has struggled to gain respect in the sports field, but it is a leading service for game cards and for print collectibles. A CGC grade on a comic or magazine is a gold standard and has a multiplier effect like PSA does on a registry common. The field needs competition—anyone wanna bet on how long it takes Collectors to jack up the cost of SGC’s services until they match PSA’s extortionate rates? But I gotta get paid and I just don’t see making my inventory part of the CGC experiment right now.