Billionaire investors have a new passion for collecting, and it’s not for undervalued modern masters or emerging art stars.
Steve Cohen and Dan Sundheim, known for their premier artwork, are investing hundreds of millions of dollars in sports collectibles, a niche market on fire since the pandemic.
Apparently, I am not alone.
Artistic advisor Anita Heriot unwittingly found herself giving a crash course on the subject to her new UK colleagues while updating them on the portfolio of one of her best clients. The collector’s collections included works by Mark Rothko and Andy Warhol, but the most valuable and valued asset was a treasure trove of collectible cards.
It was uncharted territory for a group of art advisers. “What are collectible cards? Heriot said his colleagues had asked.
Pocket trophies featuring legendary and contemporary athletes along with their sneakers and jerseys, bats and balls have grown in popularity, growing the industry from $ 1 billion to $ 10 billion almost overnight, research shows. by Goldin Auctions, a growing home for sports memorabilia.
Boosted by wealthy millennials, fractional ownership companies, and increasing digitization, baseball, basketball and hockey cards fetched as much as the works of Calder and Co-ownership. For actor Rob Gough, purchase A 1952 rookie Mickey Mantle baseball card for $ 5.2 million was like getting the Mona Lisa.
“Money is cheap and people hedge against inflation by buying durable assets,” said Chris Ivy, director of sports auctions at Heritage Auctions, which sold over $ 100 million. sports collectibles in 2020.
Once a popular pastime, sports cards are now considered an asset class. “People in their 40s and 50s have disposable income to invest in these cards,” Ivy said. “When the pandemic hit, they were bored, stuck at home.”
Those who as a child had collectable cards that came out of shoeboxes now buy them for both sentimental and investment reasons. “It makes you feel young again, ”said Ralph DeLuca, an accomplished collector of collectible cards, vintage movie posters and contemporary art. “And the fact that something that brings them pleasure is also an amazing investment vehicle, if you handle it right, is very intriguing to people.. “
Capitalizing on growing demand, investors such as Cohen Private Ventures, Sundheim’s D1 Capital Partners and Blackstone Group, whose CEO Stephen Schwarzman is a major art collector and museum patron, are investing in companies that manufacture, sell and value these collectibles. .
“It just shows the strength of the market,” said Simeon Lipman, a seasoned pop culture scholar and assessor. “A lot of big guns go out because they see an opportunity.”
Just last week, two major investments were announced.
black stone agreed to buy Certified Collectibles Group, which authenticates and categorizes items for sale, and has been valued at $ 500 million.
The arrival of some of the world’s greatest collectors in this space makes sense given that some of them own sports teams. Cohen, who paid $ 2.4 billion for the New York Mets, was vocal on the collection of memories. Sundheim bought a minority stake in the Michael Jordan’s 2019 NBA Charlotte Hornets. Both collectors declined to comment.
“You see a great cross between sports memorabilia, watches and a bit of contemporary art,” said Elisabeth of Habsburg, Managing Director of Winston Art Group.
Traders in this area include musicians, sports figures, and “your usual contemporary art collectors, especially those who have made money in the cryptocurrency or tech industry,” he said. -she adds.
Auction houses are trying to cultivate the crossover. In November, Goldin and Sotheby’s held a joint auction, “A Century of Champions,” with 74 lots ranging from sneakers to rookie cards. The results have been mixed. While the sale totaled $ 3 million, with 67% of its new bidders at Sotheby’s, more than a quarter of the lots have not found a taker.
“Our customers prefer to deal with our platform,” said Ken Goldin, the auction house’s founder, this week.
But sport has a much broader appeal than art, as do sporting collectibles.
“With art, it’s very subjective,” DeLuca said. “You can say, ‘Oh, I have an Andy Warhol,’ and it could be the wrong size or the wrong color, the wrong series that the market wants right now. “
It is much easier to determine the value of collectible cards and other sports collectibles. “That’s why the Robinhood folks and the crypto folks and the hedge fund guys love trading cards,” Goldin said.
The price depends on the condition, which is determined by a handful of grading and authenticating companies. One of them, Message of public interest, was acquired by Cohen, Sundheim and Turner’s Collectors Holdings in an $ 853 million deal earlier this year.
Agencies categorize items and enclose them in hard plastic shells that cannot be opened, a process called paving. While there are many cards from the same player, only a few can earn top rank and record prizes.
“Once it’s covered with a note, a card becomes a commodity,” DeLuca said. “You can trade it like a share. “
Ebay, a major marketplace for low-cost hardware, sold 18 million collectible cards, generating more than $ 1 billion in the first quarter of this year, the company said. This represents around 130 sales per minute, and an increase of 345% compared to the same period in 2020.
At times, demand threatened to overwhelm the system. At Heritage, the wait time for unranked material is six months to a year, Ivy said. A tsunami of submissions and a backlog of one million cards at PSA forced the company to to suspend ranking of the cheapest items.
“The reality is that we recently received more cards in three days than in the previous three months,” said Steve Sloan, president of the company, in a letter to customers in March.
This month some of the services returned, but at higher prices “to handle demand,” Sloan said.
Sign of a new commodification, some owners of collectible cards are trying to take advantage of their treasures. A handful of investors approached Artistic funding from TPC over the past year, but so far the values have not reached the minimum loan amount of $ 500,000 from the company.
“It’s something we would consider if the collection was valuable enough,” said Joe Charalambous, president of the company.
But not everyone intends to go for it.
The collection is “a big world,” said Amy Cappellazzo, who is considering a new art business after leaving Sotheby’s this month.
“Dan and Steve are particularly interested in this world,” she said, referring to Sundheim and Cohen. “I don’t think I have much to add. In the end, I’ll stay in my lane.
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