The Future Of Collectables

Goldin Auctions received a $40M investment from The Chernin Group yesterday, but what does it mean for the industry's future?

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Friends,

Whether you believe it’s because nostalgic collectors in their 30s and 40s are circling back to the hobby they loved as children, investors are searching for inflation-hedged assets after more than $20 trillion in economic stimulus was allocated globally in 2020, or just the COVID-19 effect, the result is clear:

The sports trading card and collectible market are on fire.

Think about this…

In 2012, Ken Goldin founded Goldin Auctions, a marketplace for collectibles and trading cards (think Sotheby’s for sports), and grossed about $800,000 in year-one. But in 2019, just 7 years after launch, Goldin Auctions saw $27M in auction volume — a 65% CAGR.

The crazy part?

In 2020, as investors flocked to the asset class for various reasons, Goldin Auctions saw more than $100M in auction volume last year — a 270% jump year-over-year.

Even crazier?

This year, in January alone, they’ve completed $33M in sales for over 1,000 items. That’s more than they did in all of 2019 and puts them on pace for $200M in sales this year, or 2x the record $100M year they saw in 2020.

Simply put, the demand has been insane.

Now, it’s time to double down.

The Chernin Group (TCG), along with an impressive list of celebrity investors across sports, media, and entertainment, announced yesterday that they are investing $40M into Goldin Auctions.

As part of the deal, Ken Goldin will transition to executive chairman, and Ross Hoffman, who held senior positions at Twitter, Google, and Headspace, will join the company as CEO.

Additional investors include:

• Mark Cuban (Thirty-Five Ventures)

• Kevin Durant (Thirty-Five Ventures)

• Rich Kleiman (Thirty-Five Ventures)

• Bill Simmons (Founder & CEO at The Ringer)

• Dwayne Wade (Wade Ventures)

• Mark Wahlberg (Actor & Entrepeneur)

• Deshaun Watson (NFL & Bleecker Trading)

• Adam Bain (01 Advisors)

• Dick Costolo (01 Advisors)

• Rich Greenfield (LightShed Ventures)

• Chad Hurley (Co-founder YouTube)

• Anthony Pompliano (Pomp Investments)

• Timothy “Timbaland” Mosely (Musician & record producer)

• Christian Oestlien (VP Product at YouTube)

• Logan Paul (Entrepreneur & Creator)

• Shiva Rajaraman (VP Product at Facebook)

• Spencer Rascoff (Zillow & Hotwire Co-founder)

Furthermore, this isn’t The Chernin Group’s first investment in a niche, sports-related, and undervalued business.

TCG’s portfolio includes bets on Barstool Sports, which was sold to Penn National Gaming last year, Action Network, The Athletic, Stadium Goods, the Premier Lacrosse League, and more.

In the simplest of terms, they know what they’re doing.

P.S. — Ken Goldin is holding about $8M worth of sports cards in the picture below.

(Image Credit / Ken Goldin)

My take on the investment?

This is just the beginning.

When it comes to sports trading cards and collectibles as a legitimate alternative asset class, the typical talking points revolve around annual returns beating the S&P 500, which, at an ROI of 270% compared to 160% since Jan 2008, is true.

That’s all great, but let’s be honest, the aggressive allocation to sports trading cards and collectibles involves much more than historical returns.

The truth is, younger generations don’t want a 60/40 portfolio of stocks and bonds. They don’t want a basket of dividend stocks, and if the GameStop fiasco taught us anything, they sure as hell don’t trust Wall Street.

They are interested in investing in the future, which, whether you want to accept it or not, they believe to be trading cards, collectibles, cryptocurrencies, NFTs, digital art, and more.

Again, whether you believe in those items as legitimate investment vehicles or not, it doesn't really matter. An entire army of retail traders equipped with more access, information, and technology than ever before believe so.

In the end, that’s what matters.

Here’s how I think about it…

Step one of turning collectibles into a long-term viable alternative asset class was sustained consumer interest. We have that. Now, step two revolves around venture capital investment in the ancillary services that will improve customer experience and reduce marketplace friction, ultimately accelerating overall industry growth.

Spoiler alert: that’s already happening.

TCG investing $40M into Goldin Auctions to improve the companies technology, operations, and audience development is one example. Others include venture-backed startups like Collectable, Rally Rd., and OTIS, which allow you to buy a fractional share of expensive collectibles, or new portfolio management tools like ALT.

Don’t forget, Wall Street legends Steve Cohen and Dan Sundheim teamed up with entrepreneur and sports card collector Nat Turner to buy Collectors Universe, the premier authentication and grading services company, for $850M earlier this year.

That’s obviously a big deal also.

In the end, trading cards and collectibles have something that only a few assets in the world can replicate — emotional attachment & community.

Price volatility will eventually settle, but you never want to bet against a community-based asset with a strong emotional attachment, which will ultimately determine that asset's future value. As always, supply & demand economics will win.

The winners of tomorrow realize that today.

As for step three?

That’s increased institutional investment, which, if you look closely, appears to already be on the way.

Have a great day, and we’ll talk tomorrow.

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