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Home Run Investments
Collecting sports memorabilia is a multibillion-dollar industry. Here’s how to turn your love of sports into a lucrative endeavor. BY MARK HENRICKS
Owning shares in a hot-performing mutual fund offers an investor a certain satisfaction — as well as the occasional opportunity to crow at cocktail parties about your investment-picking acumen. But what if, instead of some numbers in a quarterly statement, the visual evidence of your investment consisted of, say, a baseball bat signed by Babe Ruth?
Sports memorabilia collecting is a multibillion-dollar industry with millions of participants who, unlike many other investors, experience a special relationship with the objects of their investments. Buyers of trading cards and other memorabilia may do so in order to reconnect with their childhoods, or to satisfy the simple urge to surround themselves with organized assortments of precious objects. “People’s love of history and the great players of the past are what cause people to collect this,” says Doug Allen, president of Burr Ridge, Illinois-based Mastro Auctions, the largest auctioneer of sports memorabilia.
But sports memorabilia is also a profitable industry based on sound economic principles of supply and demand. “The reason my business has grown in the past decade is that the materials continue to appreciate in value,” says Allen. Sometimes the appreciation rivals that of conventional investments. For example, Allen cites Babe Ruth-signed baseballs, which are readily available, much in demand, and therefore something of a benchmark for sports memorabilia collectors. “You used to be able to buy a really nice Babe Ruth-signed baseball for $10,000,” he says. “Now a nice Babe Ruth-signed baseball is $20,000 or $30,000, and certain examples go for $100,000 or more.”
Sports memorabilia investments don’t always appreciate, however. Alan Rosen of Montvale, New Jersey, is one of the nation’s best-known experts and dealers in sports cards and memorabilia. He styles himself “Mr. Mint,” and says he has bought and sold more than $125 million in cards and memorabilia during a three-decade career. But even he has had some losses. The big problems are overpaying and buying a fake. When Rosen spent $525,000 on a large collection of unopened card packets, he thought he was getting a deal. Instead, he got an education. “It wasn’t in my regular realm of business, and I quickly lost $200,000,” he says. “I just paid too much.”
Sports collectibles are subject to pricing cycles and even boom-and-bust episodes. When baseball card collecting took off as a business in the 1970s, prices mushroomed past sustainable levels before collapsing, recalls T.S. O’Connell, editor of industry bible Sports Collectors Digest in Iola, Wisconsin. “Then people started doing the same thing with memorabilia,” O’Connell says.
That era, which began in the mid-1990s with the rise of authentication companies that would verify the authenticity of such items as game-worn jerseys, is still in the process of playing out. Already, however, collectors can experience price weakness. “There was a time you couldn’t touch a Babe Ruth playing bat for less than about $60,000,” says Allen. “Lately some have sold for $40,000 or $50,000.”
Currently the hottest items are career contemporary autographs, which include balls, pucks, helmets, programs, and other objects signed by players during their playing days. Autographs are also becoming quite popular as authentication agencies are able to investigate and certify signatures as well as the provenance of equipment and apparel, Allen says.
Memorabilia’s authentication Achilles heel became widely recognized in the early years of this decade when the Federal Bureau of Investigation unveiled a long-running investigation of a ring of forgers said to be part of a national counterfeiting industry responsible for perhaps hundreds of millions of dollars in fake sports collectibles. Now collectors such as Rosen won’t touch collectibles or autographs unless they have been authenticated.
The good news is that authenticated gear is widely accepted as genuine. “It’s virtually impossible to have a fake now,” Rosen asserts. Especially with contemporary collectibles, the use of technology such as ink watermarks invisible in ordinary light is making forgery harder, at least.
Yet the risk remains. Not long ago, Rosen bought a set of circa 1880s baseball cards at a price based on their being in mint condition, only to find that they had been trimmed to remove bent corners and other signs of wear, which greatly reduced their value. “I just sold them two days ago and lost $65,000,” he laments.
You don’t need to risk hundreds of thousands of dollars — or even hundreds of dollars — to get going enjoyably and safely, however. The best advice is to start small and stick to areas where you are already knowledgeable. Starting small can still mean a purchase you’ll be proud to display. “You can get a Mickey Mantle card in very good condition, which looks good but has rounded corners and maybe a crease or two, for $100,” says Allen.
Want to spend more? A Mantle card with no wear discernible under a microscope would go for $3,000. “His 1952 Topps, which is Mantle’s rookie card, you can get in very good condition for $10,000 to $12,000,” says Allen. In mint condition, it could cost $250,000, he adds.
Knowledge about sports is critical to investing in sports memorabilia. For instance, someone not familiar with the performance-enhancing drug controversy surrounding baseball slugger Barry Bonds might assume that, as the all-time home run leader, his trading cards would be quite valuable. Bonds’ rookie card, in average condition, goes for $2, though, while a card in the same condition of the player in second place in the home run derby, Hank Aaron, fetches $1,000. “Hank Aaron, of course, is an older card,” Rosen adds, “but I could sell 500 Hank Aarons for every Barry Bonds.”
Most collectors start with cards, and today the vast majority of the business — Rosen estimates 70 percent of his own trade — consists of cards, especially baseball cards. There are good reasons for that, including the fact that trading cards were the first widely collected items, and that baseball can trace its history back to the mid-19th century, much farther than other sports. It is hard to start as a card dealer today, however, because of the much larger number of cards being manufactured. Rosen estimates inventory for a startup card dealer would top $50,000, just so a full spectrum of current cards could be offered.
Memorabilia such as clothing and equipment is the boom area now, partly because it’s harder to come by, especially when it comes to vintage as opposed to contemporary player memorabilia. For instance, while today’s players may go through dozens of jerseys in a season, in the old days uniforms had to last longer. “You can look at an early contract for Lou Gehrig,” Allen says of the legendary Yankee baseballer. “He was given two road and two home jerseys for the next year.”
Behind all the wheeling and dealing in auctions, shows, and on the Internet is one of the most intriguing aspects of sports memorabilia collecting. That is that the very limited stream of new material coming in is often found serendipitously by people going through old attics and closets. One of the most widely publicized auctions Mastro has held recently was a trove of legal documents from the trial of several Black Sox players for throwing the 1919 World Series. That lot sold for $100,000 and, according to Allen, two collectors found them in a garage sale. “Hobby finds like those still happen,” he said, “and those are still the things that get people charged up.”
CELEBRITY COLLECTORS
Not all hoarders of sports memorabilia are profit-minded businesspeople. Some are ordinary rich and famous celebrities. Comedian and baseball fan Billy Crystal once spent $239,000 for one of Mickey Mantle’s old gloves (pictured). Film producer Penny Marshall owns items autographed by Ty Cobb, Ted Williams, and Barry Bonds. And actor Charlie Sheen is a buyer and seller of items ranging from a signed photo of footballer Bo Jackson to a picture autographed by boxer Roberto Duran.
Sometimes fame and collecting overlap, as with Pearl Jam frontman Eddie Vedder, who collects baseball items and also produces them, such as a 2001 World Series baseball signed by the singer/baseball fan.
Nor are celebrities necessarily tyros. TV sportscaster Keith Olbermann not only has a personal collection reportedly worth an estimated $10 million, but is considered by experts to be one of the most knowledgeable persons around on early-20th-century baseball cards.
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