Have you heard the latest news? PSA has acquired SGC! I’m being facetious. After searching “PSA buys SGC” on YouTube, I found 15 videos ( all video thumbnails featured in the banner above ), all covering the news, offering opinions, and trying to interpret its significance. I believe the rush to break the news first doesn’t add much value for collectors. This isn’t targeted at any specific content creator but rather the culture of prioritizing speed over depth. Now, let’s dive into the question of “PSA buys SGC, what does this mean?” Leveraging my ten-plus years of analytics experience, I’ll analyze two events that could provide insights into potential outcomes for the secondary market of SGC graded cards pre-buyout.
On March 30th, 2021, PSA (Professional Sports Authenticator) made a savvy move by announcing the temporary suspension of all grading services below Super Express ($350 per card) for at least 90 days. This strategic decision was aimed at addressing the backlog caused by an overwhelming surge in submissions, with PSA receiving more cards in just three days than they had in the previous three months. The hope was to reopen all services around July 1st, 2021, demonstrating PSA’s commitment to maintaining service quality amidst unprecedented demand. Unfortunately the closure last longer than expected.
Here’s why I think this closure can be used to learn the potential outcome of PSA buying SGC and gaining more market share.
The temporary closure of PSA’s grading operations and PSA’s acquisition of SGC—affect the secondary market of graded sports cards similarly, but for different reasons.
When PSA temporarily closes its operations, it creates a backlog of cards waiting to be graded. This backlog can lead to a scarcity of newly graded cards entering the market, which can drive up prices for existing graded cards.
On the other hand, when PSA, which holds over 70% of the market share, buys SGC, which had 7% of the market share, it consolidates its dominance in the grading market. This acquisition can impact the market by potentially reducing competition and increasing PSA’s control over grading standards and pricing. This increased control can also lead to changes in the market dynamics and pricing of graded cards.
Overall, both events can impact the secondary market by affecting the supply, pricing, and competition within the graded sports card market.
Now, let’s delve into some insightful analysis and solutions. I’ll employ a causal impact time-series approach to evaluate the CardLadder CL50 index. The forecast will be generated prior to March 20th, 2021. Following that, I’ll refine both the forecast and actual sales data to ensure a more accurate comparison. This method will enable me to effectively assess the deviation between the actual and forecasted values, providing you, the collector, with valuable insights.
After conducting causal impact time-series modeling on the CardLadder CL50 index data, a positive short-term impact becomes evident. Following the announcement of the PSA shutdown, over the subsequent four months, we observe an average 10% increase in trading card value. This increase lends support to the hypothesis that collectors placed a premium on pre-PSA shutdown graded cards. This belief was prevalent at the time, and some still maintain that the standards for a PSA 10 were relaxed when grading services resumed. Now let’s see how the CL50 index performed through the end of 2021.
The halo effect, or the impact on the CL50 index from the PSA shutdown announcement, persisted until the end of July 2021. However, we then witnessed a decline in the actual value of the index, to the extent that our smoothed actual value fell below our smoothed forecast. What was initially a 10% increase in value has now become, on average, an 8% decrease in value.
The lesson here for collectors is to be cautious when speculating on what other buyers will deem collectible, particularly regarding manufactured scarcity and the perception of graded card values due to changes in grading companies.
Having examined the impact of the PSA grading closure, let’s now turn our attention to another potential market indicator stemming from the PSA buyout of SGC. CGC’s decision to merge their sports and TCG businesses under the new brand name CGC Cards, along with the introduction of new labels and the discontinuation of their old grading scale, presents an intriguing development. The hypothesis is that collectors may place a premium on the old blue labels, particularly those with a 9.5 gem mint rating. This hypothesis underscores the potential market response to changes in grading practices and branding within the industry.
Here’s why I think the CGC announcement on June 20th, 2023 is a good indicator of what the potential outcome for the SGC buyout can lead to on secondary market value.
The change in label design and grading scale by CGC, and the acquisition of SGC by PSA—affect the secondary market of graded sports cards similarly, particularly in terms of collectors’ preference for older grading scale formats.
When CGC changes its label design and grading scale, collectors may value the older blue labels with the 9.5 gem mint rating more than the new labels. This preference for the older format can create a scarcity of these cards in the market, potentially driving up their prices.
Similarly, when PSA, which dominates the market with over 70% share, acquires SGC, which had 7% market share, it consolidates its control over the grading industry. This acquisition can lead to changes in grading standards and practices, which may impact the market dynamics and pricing of graded cards. Collectors may also place a premium on SGC-graded cards with the old grading scale, further influencing the market.
Overall, both events can affect the secondary market by influencing collector preferences and creating scarcity of certain graded cards, particularly those with older grading scale formats.
Now, let’s delve into some insightful analysis and solutions. I’ll employ the same approach as I did for the first event, casual impact time-series, to evaluate the top ten most sold CGC 9.5 gem mint cards from the CardLadder Pokemon TCG index. The forecast will be developed prior to June 20th, 2023. Following that, I’ll refine both the forecast and actual sales data to ensure a more accurate comparison. This method will enable me to effectively assess the deviation between the actual and forecasted values, providing you, the collector, with valuable insights.
Pokemon Details CGC 9.5 Gem Mint
| wdt_ID | wdt_created_by | wdt_created_at | wdt_last_edited_by | wdt_last_edited_at | Card | Lift | Percentage Points | Set | Pokemon | Year | Number Of Sales |
|---|---|---|---|---|---|---|---|---|---|---|---|
| 1 | ferrt041 | 03/02/2024 11:03 PM | ferrt041 | 03/02/2024 11:03 PM | 2021 Pokemon Sword & Shield: Shining Fates Charizard VMAX #SV107 | 0.09 | 8.95 | Shining Fates | Charizard | 2021 | 267.00 |
| 2 | ferrt041 | 03/02/2024 11:03 PM | ferrt041 | 03/02/2024 11:03 PM | 2020 Pokemon Sword And Shield: Darkness Ablaze Charizard VMAX #020 | 0.09 | 9.07 | Darkness Ablaze | Charizard | 2020 | 199.00 |
| 3 | ferrt041 | 03/02/2024 11:03 PM | ferrt041 | 03/02/2024 11:03 PM | 2022 Pokemon Sword and Shield: Brilliant Stars Charizard V #154 | 0.07 | 6.53 | Brilliant Stars | Charizard | 2022 | 113.00 |
| 4 | ferrt041 | 03/02/2024 11:03 PM | ferrt041 | 03/02/2024 11:03 PM | 2020 Pokemon Sword And Shield: Champion's Path Charizard VMAX #074 | -0.01 | -1.45 | Champion's Path | Charizard | 2020 | 97.00 |
| 5 | ferrt041 | 03/02/2024 11:03 PM | ferrt041 | 03/02/2024 11:03 PM | 2021 Pokemon Sword and Shield: Evolving Skies Umbreon VMAX #21 | 0.02 | 2.47 | Evoling Skies | Umbreon | 2021 | 91.00 |
| 6 | ferrt041 | 03/02/2024 11:03 PM | ferrt041 | 03/02/2024 11:03 PM | 2019 Pokemon Sun and Moon: Hidden Fates Charizard GX #SV49 | 0.08 | 7.82 | Hidden Fates | Charizard | 2019 | 68.00 |
| 7 | ferrt041 | 03/02/2024 11:03 PM | ferrt041 | 03/02/2024 11:03 PM | 2019 Pokemon Sun and Moon: Hidden Fates Glaceon GX #SV55 | 0.04 | 3.84 | Hidden Fates | Glaceon | 2019 | 68.00 |
| 8 | ferrt041 | 03/02/2024 11:03 PM | ferrt041 | 03/02/2024 11:03 PM | 2019 Pokemon Sun and Moon: Hidden Fates Cynthia #SV82 | 0.04 | 3.66 | Hidden Fates | Cynthia | 2019 | 67.00 |
| 9 | ferrt041 | 03/02/2024 11:03 PM | ferrt041 | 03/02/2024 11:03 PM | 2019 Pokemon Sun and Moon: Hidden Fates Mewtwo GX #SV59 | 0.16 | 16.26 | Hidden Fates | Mewtwo | 2019 | 63.00 |
| 10 | ferrt041 | 03/02/2024 11:03 PM | ferrt041 | 03/02/2024 11:03 PM | 2019 Pokemon Sun and Moon: Hidden Fates Ho-oh GX #SV50 | 0.05 | 5.00 | Hidden Fates | Ho-oh | 2019 | 62.00 |
| Card | Lift | Percentage Points | Set | Pokemon | Year | Number Of Sales |
After conducting causal impact time-series modeling on the top 10 Pokemon TCG cards graded 9.5 Gem Mint CGC by items sold in the CardLadder Pokemon TCG index data, a positive impact becomes evident. Following the announcement of the CGC label and grading scale change, over the next two months, we observe an average 5% increase in trading card value. This increase grows progressively, with the highest uptick of 9% occurring in the most recent week.
Similar to the PSA shutdown’s impact on the CL50 index, this lift supports the narrative that collectors place a premium on pre-announcement graded cards. In the case of the CGC change, the assumption is that the lift is additive due to the alteration in the grading scale and collector sentiment regarding CGC being known for its stringent grading standards compared to other companies.
Lesson number two learned here for collectors the larger the scale of the grading card change ( a change in the grading scale vs the temp. shutdown of services ) the more sustainable the impact is.
In summarizing this analysis, we’ve gleaned two key lessons from our approach to answering the question, “PSA buys SGC: What does it mean?”:
- Collectors should exercise caution when speculating on what other buyers will consider collectible, especially regarding manufactured scarcity and the perceived value of graded cards due to grading company changes. Initially, the PSA Shutdown led to a 10% increase in the CL50 index value, followed by an 8% decrease.
- The scale of the grading card change matters significantly in terms of sustainability of impact. CGC’s transition to a new label and the alteration of the grading scale had a more profound and lasting effect on trading card value compared to the temporary shutdown of services.
The next time breaking news floods your feed with 15 videos on the topic, it’s wise to take a step back. Instead of relying solely on sensationalized content, look at the available data and form your own opinion based on data-driven insights. While my analysis may not perfectly apply to every situation, I hope it provides value beyond the typical questions like “What does this mean for Fanatics? What is Fanatics’ next move?” I aim for this analysis to be a valuable or complementary perspective to the quick, often superficial takes seen elsewhere. My goal is not to chase likes, views, and comments but to leverage my career experience to empower collectors like you.