The Wax Game

By Rick Behar April 14, 2016

From the 1930's until now, card manufacturers have been enticing customers to purchase their sportscards from packs and boxes.  Many tactics have been used over these many years to motivate buyers to keep buying more and more.

In the early years, a common tactic was an elusive (or never distributed) card randomly inserted in packs (if at all) causing furious kids to keep buying packs trying to complete an impossible or near impossible to complete set.  Eventually, Topps began issuing the cards in series.  The first series was printed in a certain quantity, and then series 2-6 began to produce the cards in varying but usually lower quantities.  By the time series 7 came around, it was already football season, the world series was over, and the production run was usually 10% or less of the first series.

Consequently, these "High Numbers" are worth significantly more money than their common "Low Number" counterparts.  If you can find a box of High Numbers from those 1960's - 1972, you will have yourself a little gold mine!

After a slight downturn in the industry, Topps went back to issuing everything in one series in 1974.  It was the first time you could get card #1 and #660 in the same pack.  Topps also test marketed a complete factory sealed baseball set in 1974.  They would not do that with any regularity again until 1985. During all these years, the manufacturers were packaging these cards in  wax paper wrappers.  Thus the term "WAX" became the acronym for all sports card packs/boxes.

Mass production of sportscards effectively began with 1974 Topps Baseball cards. With all the cards being available in all the packs, the production of every card went up since all the cards were in production from March through October.

From then until now, there is a minimal desire for base single cards from the core sets of any manufacturers. The few exceptions are the result of high demand Rookie Cards or short printed cards made in significantly lower numbers.

So what makes wax prices tick?  Why are there $1000+ packs/boxes now? Well, it comes down to the simple formula I have developed:  Scarcity + Demand = Value!

The Skews!

There are a number of potential skews when considering buying or investing in wax products.  The first and most obvious is Hobby Vs. Retail.  Cards are packaged basically two ways.  One for Mass Retail, and one for Hobby stores.  The card manufacturers simply don’t have the hits (Game Used Jersey and Autograph cards) to insert in mass marketed products.  Consequently, they must package products separately for the mass market (Walmart, Target, Kmart and other national/regional chains).  To offset this key flaw in their desire to maintain price points yet failing to be able to produce par REAL items of value, the manufacturers have found a contrived solution.  They create specific cards which are exclusive to their Retail products such as serial numbered refractors, manufactured patches, etc. to entice buyers.

The truth is, dollar for dollar, buyers would be better off buying Hobby products.  Hobby products guarantee a certain number of hits per box/case.  They produce the vast majority of the key hits product after product, and are the main raison d’etre (reason for being) for both the card manufacturers, and their main target market…The cardboard crack addicts.

Yes I said it…

CARDBOARD CRACK ADDICTS
I COINED THE PHRASE "CARDBOARD CRACK" AND "CARDBOARD CRACK ADDICTS" 20 YEARS AGO (but failed to buy the website) AND IT’S STILL TRUE TODAY.

The card manufacturers have gotten better, but there are "tells" in most products.  Savvy store owners know that heavy or light boxes mean something.  Not knowing this allows savvier collectors the opportunity to remove the best items from a box without the dealer even knowing what happened.  Savvy dealers know not to allow collectors to weigh/handle packs or boxes from products with obvious tells.  While unscrupulous store owners/dealers could weigh their own product and unknowingly skew their customers, in the long run this is a bad policy.  The best thing that can happen to a wax store owner is to have his customers get ALL the big hits in their store. Many store owners have gone out of business because they were skewing their customers. They were either were shamed after being caught, or were presumed to have done so due to a lack of heavy hits over time in the store.

Contrived Scarcity VS. REAL Scarcity

While the entire newer card market is based on the concept of contrived scarcity, the vintage card market is based on the combination of demand and REAL scarcity.  With PSA and BGS performing independent 3rd party grading services, there is now a way to assess true scarcity.  Visiting the PSA or BGS (POP) population report sites will yield some amazing results with regards to the scarcity of graded cards.

Cards with POP reports of less than a certain amount have garnered some amazing sales results at auction and at shows.  While this has created an entire sub culture (PSA Set Registry, etc.), still, the majority of cards remains ungraded.  I have a customer who is generally opposed to PSA and fees to grade his cards, etc.  He has, over time, built a near complete collection of NM/MT and better Topps Baseball Sets from 1952 on.  None of these cards will get graded until and if they ever see the light of the market until he passes.

Several years ago I consulted with my uncle, whose comic book collection had not seen the light of day since 1950.  He had every rare book.  I had told him don’t ever let anyone know what you have.  You will turn the comic world upside down.  When he finally sold the collection at a Heritage auction, almost every comic achieved the highest grade for that book.  Although he sold it at the bottom of the economy, he was satisfied to see them sold and liquidated in a competitive environment.  Since then, many of the books have been resold for multiples of what he sold them for.  Their true scarcity now known, collectors realized occurrences like that are fewer and fewer, and less likely to happen with each occurrence.

SportsCard Central Set to Re-Open FALL 2024

THE BIGGEST SKEW!

The biggest skew is actually performed by the manufacturers themselves.  It is their inclusion of Redemption cards in products.  Originally their story was that they couldn’t get certain players to sign before the product had to go to packaging.  Now it has become a common and abhorred practice.  Here is the deal… The manufacturers get to print a redemption card for a card of value.  If you redeem it in a timely manner, and if they get the card in hand from the player, they will send it to you in a (usually) untimely manner.  If they never get the card from the player, they may over time make an attempt to swap it for something they have in stock of similar value.

However, every redemption card has an expiration date.  WHY????? If and when the expiration date hits, you will no longer be able to redeem it, thus diminishing the value of the wax boxes on the if/come of a card of value being randomly inserted who’s redemption has expired.  This is a hidden profit center for the card manufacturers, and a source of continued negative conversation with every single wax cracker.

I personally and privately met with Richard McWilliams along with my then partner Jeff C. in McWilliams UD CA office in 2009.  We talked about a lot of things, finishing on the subject of expired redemptions.  We showed him a stack of 20-30 Tiger Woods Autograph Rookie Redemptions we had and asked why he can’t walk down the hall to the redemption card room and just pull them out of the drawer and give them to us.  His classic and horrific response was “Rick, have you ever been to Safeway to buy Fish? You buy a beautiful piece of fish and take it home.  Then you get too busy and don't get around to cooking it up for a week or so.  Then you notice your fridge stinks and you throw  that beautiful piece of fish in the garbage.  Rick, your fish has expired.  Rick, Our redemption cards are like that fish.  They are dead and gone.”

With that said, it was clear that Upper Deck and the others had no intention of using the redemption for its original purpose, but for its new purpose, to increase corporate profits at the expense of unknowing consumers. No statistics are available for the percentage of unredeemed cards.  However, between unopened product past expiration date, and unredeemed cards by unsophisticated or lazy users, I project it is 20%. 

It's ALL Contrived Scarcity

While the wax products in this Game Used Era have gone up and up in price (Exquisite packs were over  $1000 each), so has the quality.  Cards are amazingly beautiful and full of features that draw you in.  Yet what is the difference between an Official American League Sweet Spot signed Baseball Certified by PSA by Cal Ripken Jr., and an Upper Deck Sweet Spot Black  #/5 Autographed card with a facsimile sweet spot of a ball and a real signature?

The OAL PSA/DNA certified Ripken Jr. Ball sells for $70 while the card sells for about $500.

This contrived scarcity, the perception that a card that has a number stamped on it is worth more than the same card without a number on it, has driven this market.  What was once an affordable, fun little hobby has turned into an all or nothing gamble with big money at stake with every rip of the wrapper.

Wax prices rise and fall like the stock market based on a number of factors in no particular order  including but not limited to:

• Remaining hits product wide (after a review of hits that are known to have been pulled from box breaker web sites and ebay, etc. 
  
• What is potentially left in boxes?
  
• Strength of the Rookie Class of players whose first cards are in those products.
  
• Production numbers (cases made / remaining unopened)
  
• Strength of Hits inserted (loaded with common players or Major Hall of Famers, etc.)
  
• Quality of aesthetics of cards.

When a card manufacturer produces a product, case/box prices are roughly calculated based on the proposed value of the entire population of all the cards included in the product divided by the number of cases/boxes produced. 

Continued below

The card manufacturers can use those cards to replace damaged cards, or to swap for cards they are unable to get from players.  What is not taken into consideration is the fact that the redemption cards are calculated into the proposed value of all the cards in the entire product when valuing the product for wholesale and retail prices.  Thus, consumers are paying for those cards at the stores and the manufacturers do not ever have to deliver a % of them.  Imagine buying a redemption card after market on ebay for a high price, only to find that the player never signs, and the manufacturer tries to swap you into another player you could care less about.  Either way, redemptions serve as a hidden profit center for the manufacturers and a source of never ending frustration for collectors.

There is an entire world of “collectors” out there who are either current/reformed gamblers, repressed in some way, or OCD to a certain extent.  When it comes to Cracking Wax, they are the diehards who support their local stores and ultimately the manufacturers full tilt.  They can’t stop.  They won’t stop, and they don’t have the support system to stop themselves.  Many of them are closet Cardboard Crackheads.  They have separate credit cards and paypal accounts to hide their hobby’s expense from loved ones who don’t get it.

Although the odds of pulling a card that pays for the pack is unlikely, the occasional Big Hit keeps them coming back.  One of our big wax buyers recently confessed he knew he loved cracking wax so much, and he had come to terms that over the long haul, he was only getting about 70% return on his money after opening $100,000 in wax.  Frankly, I thought that was good considering the resale value on ebay of the majority of the cards.

The proliferation of autographs has diminished their value over time.  Bill Russell was a notorious non signer throughout his career.  He only admitted to signing a few autographs for fans throughout his epic NBA career. Until Russell signed his contract with Topps (then Upper Deck, Leaf and others) to provide them with autographs for insertion in packs, autographed items by him were worth many hundreds or thousands of dollars.  Since then, almost anyone can buy an autograph from arguably the greatest player in NBA history, Bill Russell, for under $100.

SCARCITY + DEMAND = VALUE!

Beginning in the mid 1990's, card manufacturers tuned in to the need to segment the market in order to achieve greater results and work around licensing deals with the leagues/players associations.  People were done buying 1000 count lots of their speculated rookie or superstar cards. Each manufacturer tested multiple separate brands in the hopes of hitting a Home Run with collectors.  Some stuck while most others were discontinued after a year or two.

 The "Less is More" mentality creeped into the equation.  So how could the card manufacturers get more money out of their customers yet produce less cards?

Along Came Jerseys

Thus began the Game Used / Autographed insert world.  By cutting up pieces of player’s jerseys and other equipment and obtaining authentic autographs from them, manufacturers were able to add value to their product.  This new process was widely, but not universally accepted by collectors.  The proponents (the vast majority) found a whole new genre of ways to collect cards, and a huge surge took place.  The hunt was on for Game Used or Autograph cards of your favorite players.  Furthermore, "Player Collectors" who exclusively collected cards of a particular player were in heaven and hell.  All these new cards of their favorite players were coming out, but in limited quantities creating a whole subculture market.

And Then There Was EBAY!

The founding of EBAY happened to coincide with this new card phenomenon, and the 2 were a marriage made in heaven.  Trading Cards were the single most transacted category for the first phase of EBAY's growth. 

Regardless of regional distribution, any card could be found by any person anywhere in the world.  The card manufacturers tuned in to this, and began an all out assault on collectors.  Every manufacturer was hiding Game Worn, Event Worn, Game Used, Event Used, Autographed, and any other kind of enhancement that could be performed on cardboard into their packs to entice a collector to part with their cash.

The Honus Wagner T206 card has been held out as the holy grail of the sports card industry.  However, there are a number of them in existence.  When I had BGS coming to town in 2010 to do live grading in SportsCard Central, I had arranged for 3 people in the area who had ungraded T206 Wagner's to come in and get them graded at my expense.  When they each found out the other was coming in, they all got spooked and wouldn’t come in.  They were afraid that bringing 3 of them out at once would demystify the market and diminish values.  Meanwhile, obscure cards of par players have come and gone in the market place with pedestrian results.

I purchased a collection with a 1915 Zeenuts Harry Heilmann PCL card.  None have passed through any auction house in years.  Mine is the only one graded by either PSA or BGS at this time.  Heilmann is a great hall of famer.  The last player to hit .400 before Ted Williams.  The 9th highest batting average in MLB history.  What should this card be worth.  Why is it poo pooed by collectors as inconsequential?  I have it on ebay for $199,999.99 more to get a reaction than expectation for a sale.  Still, it is more scarce than virtually all other cards of par players that have sold for high 5 figures and up.

At the end of this whole study of the Wax Game, Scarcity and Contrived Scarcity and Supply Vs. Demand, we get back to the core of why we even had this discussion.  We love sports cards.  We love handling them.  We love opening the packs.  We love the hunt.  We love the auction.  We love putting them in holders in our closet and pulling them out once in a while and reminiscing.  To all you card lovers, keep loving it, and enjoy all the pros/cons of  the Wax Game.

Rick Behar

Owner/CEO SportsCard Central