You may recall that trading cards had their heyday in the 1980s and 1990s, when the hobby – like everything else – was more analog. It wasn’t the most efficient or reliable market, but millions of people, young and old, valued trading cards enough to consider them an investment.
But in recent years, the enthusiasm for investing in trading cards has seen a resurgence of sorts. And it’s also much more high-tech than keeping your best cards in an old shoebox.
As digital collectibles in the form of NFTs appeared on the scene and then melted away again (for now, at least), trading cards continue to generate interest – watch YouTube celebrity Logan Paul carrying an ultra-rare card into the ring, or Dirk Jetter opening his own marketplace for trading cards.
And it’s big business too: the market for sports cards is is expected to grow by an additional $6.7 billion by 2026.
Why are trading cards suddenly so important again? Part of the answer is simply that people like them.
“It’s still sports, it’s still Americana,” said Jesse Craig, VP 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, then we believe the majority of Americans would much rather do that than dump money into the stock market.”
The trading card market also experienced a resurgence, in part due to the COVID-19 pandemic, Craig reasons.
“It allowed people to be at home, and that sparked some nostalgia,” he says. “People had more time on their hands, or were working from home, and maybe they were digging through their closets to find collections.”
That spark of nostalgia coincided with the emergence of technologies that have made it easier than ever to buy and sell collectibles. PWCC regularly holds auctions and a fixed-price marketplace on Amazon Web Services, claiming it hosts the largest trading card marketplace in the world.
However, the company is more than just a custom version of eBay. In addition to providing a platform for buying and selling cards and other collectibles, PWCC acts as a physical clearing house through which all assets pass. The Tigard, Oregon facility is equipped with custom robots, advanced camera setups and a bank-grade vault – made from 300,000 pounds of concrete – to ensure fast and secure asset tracking.
To get their collectibles on the PWCC platform, a seller must first mail their belongings to PWCC, where items are tracked with cameras from the moment they are opened in the mailroom. Each submission is tagged with a QR code and is linked to a submission number, the customer’s account number, and other basic information. PWCC receives thousands of cards every day. To process all the cards and enter the information on the platform, the cards pass through one of two custom machines.
Using 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. High-resolution and low-resolution images are matched to the appropriate entry numbers and the entry is logged in the customer’s account. With the help of optical character recognition, the machine can recognize which type of card it is and give it an appropriate label for the auction site. With machine learning, the system gets better at labeling cards with every submission. The whole process takes about six seconds per card.
If the card or collectible is auctioned in one of PWCC’s top monthly auctions, it will be moved to PWCC’s 360 display station. Using three cameras, the system takes 36 images of the card as it rotates 360 degrees. PWCC has cut the process from about five minutes per card to just 30 seconds.
“With sports cards, fitness really matters,” explains Jared Hippler, PWCC’s asset control manager. On PWCC’s auction site, he says, “you can see every corner of the card at three different heights, and these are all very high resolution images. You can even zoom in and see every little detail.”
From there, the cards go through a review process, which is essential to PWCC’s Capital 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 business, in a deal led by Whitehawk Capital Partners, LP – the first institutional banking deal of its kind. The company was able to secure the debt facility because it demonstrated how it can accurately predict the value of a card at auction using the massive datasets about transactions and sales histories it has collected.
“Data is really at the heart of a lot of what we do,” says Craig.
Finally, the trading cards go to the vault – a 2,000-square-foot room surrounded by 11 inches of concrete on all six sides. To get in, you have to swing open one of the two 7,500-pound doors. There are 140 security cameras keeping a close eye on everything in the vault, as well as motion detection sensors and security personnel during business hours. The temperature, humidity and lighting are all carefully controlled in the vault to preserve the archived items. Only select PWCC employees are allowed in the vault, but anyone using the vault can view high-quality photos of their belongings 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 provide a reliable, fast-moving trading platform, as well as modern financial services that leverage the value of clients’ positions.
“Digital archiving of assets and creating liquidity for our clients – it’s all circulating around the vault,” says Craig.
PWCC encourages merchants to use the vault by making its storage services free for any trading card worth more than $250 or assets purchased through PWCC. All other items will incur a one-time nominal fee.
While trading is an old-fashioned hobby, most of PWCC’s clients have embraced the digital approach – in fact, about 80% of the assets in the PWCC vault never leave. People buy and sell tickets on the digital platform, while they are physically safe in the vault.
“For those longtime collectors who like to keep their stuff on a daily basis, the safe isn’t for them,” admits Craig. “But there are a lot of people who collect [who] don’t look at their items every day or every week, or even every month, and [those items] sit in a closet or a locker, or whatever it may be… The beauty of the vault is that you can have it there, it’s digitally archived, securely stored and fully insured… and you can access it from anywhere enjoy in the world by logging into your PWCC account.”
At first glance, a trading card that you never actually hold yourself is “not very different” from an NFT, says Craig. No doubt PWCC has been making its own version of NFTs since 2019, when it started offering digital archive services – albeit an NFT that is not connected to blockchain.
“It’s a digital representation, but it’s backed by a physical asset,” qualifies Craig.
While there are certainly corollaries between the 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,” he says. “Usually during periods of inflation, people need cash, they dump and sell [their investments]. We see that less in our space than in traditional markets because of the emotional attachment people have to them.”
Craig cites data to support this claim. For example, when the S&P 500 fell more than 50% from its peak during the subprime mortgage crisis of 2008, the trading cards fell only about 10%.
In fact, PWCC has created several market indicesshowcased on its website, to illustrate the impressive investment performance of professional trading charts compared to the S&P 500.
The company continues to expand into other collectibles, adding space to its archives for comic books, video games, and other memorabilia (think a pair of shoes signed by Michael Jordan or a sweater worn by Lebron James). The company recently secured a new 51,000-square-foot facility to expand its business, with plans to build a collectibles museum 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 comics are super relevant. The history of coins is really cool and unique. Most everyone has played video games at some point in their life, right? The connection people have with these assets is, I think, really what drives our business.”