The Business of Grading Memorabilia

Something has been irking me for a while. The value of trading cards, and the economy around grading them, specifically. There’s something about it that just doesn’t sit right with me. I’m just not convinced that there aren’t a lot of folk out there trying to make a quick buck and rip collectors, off.

Sure scarcity of cards makes them rare, and of course, the better the condition, the more valuable it would be. Common sense, right?

So why do people sometimes pay hundreds, if not thousands to get them graded? I’ve done some digging to see how reputable the industry is. Tied-in with the growth of Pokemon cards and the boom in Pokemon in general, it’s lucrative, but is it legit?

Grading

The memorabilia grading market has seen significant growth in recent years, driven by a surge in interest in collectibles of all kinds. This has led to a growing demand for reliable and trustworthy grading services that can authenticate and assess the condition of items.

But….there is no single governing body overseeing the memorabilia grading market. So the entire trade is left to trust and self-regulation of the companies that do it. No accreditations, no criteria, nothing beyond whatever they decide themselves.

Self-regulation tends to include:

• Grading scales: Most companies use a 10-point grading scale (or a variation of it) to assess the condition of memorabilia. This provides a common framework for evaluating items.
• Authentication: A crucial aspect of the grading process is authentication. Reputable companies have experts who verify the authenticity of autographs, memorabilia, and cards before grading them.
• Encapsulation: Graded items are typically encapsulated in tamper-proof holders with labels indicating the grade and other relevant information. This helps protect the item and maintain its value.

The Major Players in the Market

The two largest and most well-known grading companies are Professional Sports Authenticator (PSA) and Beckett Grading Services (BGS). These companies have established themselves as leaders in the industry through years of operation, building trust and brand recognition. They have their own internal standards and procedures for assessing and grading items.

There are also other reputable companies, such as Certified Guaranty Company (CGC), which is known for comic books and other collectibles, and Sportscard Guaranty Corporation (SGC). Each company has its own set of standards and methodologies.

Potential Conflicts of Interest

Some critics argue that the lack of independent oversight can lead to conflicts of interest, as grading companies generate revenue from the items they grade. For example, a company may be more likely to give a higher grade to an item if it is more valuable.

The biggest companies, making the most money are able to trade purely on reputation. Able to define the market and squeeze what they want out of customers. It’s not a crime, but where’s the authenticity? It just feels fraudulent, a multi-million dollar industry made on good will.

Efforts Towards Standardization

Thankfully, there are some efforts underway to standardize the memorabilia grading industry. For example, the Certified Collectibles Group (CCG) is a parent company that owns and operates multiple grading services, including CGC, CSG (Certified Sports Guaranty), and ASG (Authenticated Stamp Guaranty). This helps create some consistency across different collectible categories.

But this is again, just one big company trading as several. You get consistency from their businesses, but it’s self-regulated, again.

Tips for Collectors

If you are considering having memorabilia graded, it is important to do your research and choose a reputable company. You should also be aware of the potential for conflicts of interest and the limitations of grading.

Here are some additional tips for collectors:

• Get multiple opinions: If you are unsure about the authenticity or value of an item, you may want to get it graded by multiple companies.
• Understand the grading scale: Familiarize yourself with the grading scale used by the company you choose.
• Consider the cost: Grading can be expensive, so it is important to factor in the cost before you submit an item.
• Protect your items: Make sure your items are properly insured and protected before shipping them for grading.

A way forwards?

It seems to me that memorabilia grading if a valuable process for collectors looking to prove the worth of their collections. But it’s also entirely dependant on how much you want to pay and who you can get to grade things for you.

I’d go so far as to say, whilst the big companies have the clout, you may well be better off looking for independent grading companies or individuals. Those that love the things they’re grading. Passion and personal joy should outweigh massive entities trying to make money off the back of their self-created regulations.

Also, what’s more important to you? Selling your collection, or getting it graded to display and share your love for these things?