Professional Sports Authenticator Fails To Make the Grade In Business

Lots of people have lots of different hobbies, pastimes that distract them from the mundane tasks of work, bill paying and watching a U.S. presidency reduce itself to rumble. Some hobbies are continuations of ones started at a young old, others are brand spanking, straight from the internet, new, and most everything else falls somewhere in between.

In August 1996, while vacationing with my then 10-year-old son at Disneyland in Anaheim, California, a promotion at a local Denny’s restaurant caught our attention. It was a free giveaway and, if I remember correctly, one was entitled to receive a free baseball card in exchange for any purchase at Denny’s. The restaurant chain had teamed up with a card manufacturer, marketing the Pinnacle brand, to distribute one random card, part of a 28-card set, in foil packages.

6293136882294259363
This one card “pack” started a hobby that insidiously morphed into a nightmare.

When my son and I each collected our first packages, we were wowed by the full-motion hologram design of the card. And, we were also hopeful that each successive time we’d qualify for another pack, we might pull one of the special “Artist’s Proof” cards, the odds of which were one in 360 packs.

Thus began the “chase” that fortnight in 1996, and the word chase also caught on in the baseball card industry too. Those artist proof-type cards, along with serial numbered and  autographed ones, became known across the hobby as “chase cards.”

Anyway, after our little vacation — and, yes, we did see all the Disney characters — my son went back to school and I went back to work and this hobby continued, for one of us. That would be me, the kid. I couldn’t get it out of my system. Yes, I could could let go of the chase of the “raw” card within a year or two, but something else, far more insidious and expensive immediately took its place.

I’m referring to card grading, sending a plain ol’ trading card, be it a chase card or a rookie card, or even just a cool-looking card for that matter, to a third-party grading company and paying for their professional opinion about the card’s condition. Like a diamond, the higher the grade, the higher the value. All of a sudden, with someone’s else’s “endorsement,” a raw card could increase in value by an almost unfathomable multiple, in some cases well over a hundred times.

All of the grading craze seemed to take off just before the new millennium. I may not be exactly right, but I think I’m pretty close. I remember this because I was just about to end my corporate career with Time Inc. at the age of 45 and have a lot more time on my hands to devote to my hobby.

To give credit where credit is due, the company that made the quickest and most lasting impact as a card grader and an autograph authenticator is Professional Sports Authenticator out of Newport Beach, Caifornia, a rather posh coastal city some forty miles from Los Angeles. Everyone has, and still calls the company “PSA.” For the record, the company is not in the business of warning middle-aged men about the prospects of prospect cancer.

Not only does PSA assign an overall grade to the card (from a PR 1, which is poor, to a Gem Mint 10, in whole numbers, which is open to major interpretation, because, I assure you, not all 8s, 9s or 10s are created equal), it also encases the card in a clear holder with the card details, the grade and a certification number. It’s a nice looking presentation.

Front and back view of a PSA graded GEM MINT 10 Derek Jeter rookie card.

A few years after PSA created a virtually monopoly on the grading business, another company, Beckett Grading Services came into the game and with some pedigree. They had been, and continue to be, the publisher of raw card price guides. So they were in a very unique position to see the direction the hobby was headed.

Beckett’s card grading service was unique to PSA’s in two ways. First, in addition to assigning an overall grade, it also assigned separate subgrades too, for centering, corners, edges and surface.  Secondly, Beckett assigned half as well as whole grades, and by Beckett’s strict standards, a Gem Mint 9.5 was the same as a PSA Gem Mint 10. In the arrest of cases, a card might get graded as a Pristine 10, but those grades didn’t come easy, far less than 1 percent of the total number of cards submitted to grading.

Front and back view of a BGS graded GEM MINT 9.5 Derek Jeter rookie card.

So Beckett ate into PSA’s market share, and collectors like me started to send cards which had been previously graded by PSA to Beckett for cross-over grading. In other words, I could instruct Beckett to put a PSA 10 card into a Beckett holder if Beckett would assign it a grade of Gem Mint or Pristine. If the card didn’t cross over, the card would remain in the PSA holder and be returned to me. The secondary market would never know the difference. It would be our little secret.

Cards with Beckett Gem Mint 9.5 grades began to fetch more money than PSA Gem Mint 10 cards, especially if all four of the Beckett subgrades were gem mint. And a Beckett Pristine 10 would fetch at least two-three times that of a Gem Mint 9.5.

In my humble opinion, if Beckett had remained struct in its grading, PSA may well have gone out of business. But something loosened in Beckett’s grading standards, and no one knows exactly why. Slowly but surely, by about the year 2012 or so, the public perception was that Beckett was awarding too many grades of Gem Mint 9.5 and Pristine 10. The gap  between the two competitors in the realized market value (i.e. eBay auction prices) of equally graded cards closed very quickly.

PSA did a major carpe diem and began to promote consistency in its grading as well as newer and newer tamper-proof casing of its cards. A PSA holder had been easier to jimmy (leading to inferior card substitutions in its holders) because it had no inner sleeve like the Beckett holder.

Front and back view of a PSA graded GEM MINT 10 Kirby Puckett rookie card in an earlier generation of holder. Apparently, this version wasn’t as “tamper proof” as the newer holders.

Before one could say, “Bob’s your uncle,” PSA began to offer cross-over grading too. For collectors like me, it was, in effect, a reconfirmation grade, because I had once owned the cards as PSA 10s, then as BGS 9.5s, and now I wanted them back in a PSA 10 holder, which should easily happen, because once a 10, always a 10, right?

Such a win-win, greed fuels greed business model has wonderful prospects of success. After all, PSA has graded some 20 million baseball, football, basketball, and other sports and non-sports trading cards since its inception, and regrading just 5 percent of those same cards would gross them $15 million in “low-hanging fruit” revenue. And, yes, it will always continue to grade cards for the first time as new rookie cards are released by manufacturers and recently discovered vintage cards are unearthed by collectors.

The price PSA charges for a card to be graded and holdered depends on how many cards one grades, how quickly one wants them graded, and how much one declares the card to be worth. But an average of $15 per card is a very reasonable estimate.

But in order for collectors to trust the system, PSA has to play by the rules. At the end of March 2017, I called PSA Customer Service and spoke with a rep named Nick. I explained to Nick that I wanted to “play the cross-over game,” but before sending all of my once PSA 10, now BGS 9.5 cards at once (remember it’s an average of $15 a card), I’d test the system by sending in six cards, with the highest BGS subgrades. Nick assured me that unless Beckett had damaged the cards while placing them in their holders, I should do “just fine.”

I paid $119 for a one-year PSA membership that included six grading vouchers. So it worked out to just under $20 a card plus return shipping and handling of $24. That $144 investment on my part would absolutely make PSA $119 richer, and if Nick were right, the eventual eBay prices I’d realize from the first six cards in PSA 10 holders versus BGS 9.5 holders could have increased overall sales by $500-$1,000. Naturally, I took the chance, and began to imagine how this could unfold when, not if, I sent in the remaining BGS 9.5s.

The six cards, all in BGS holders, were all carefully stickered with their original PSA certification numbers, just in case anyone doubted my honesty.

The regraded cards were returned to me in late April of this year, and the report card (as shown) for submission #10057058 returned only one card with the grade of PSA 10. Four others failed to meet the minimum grade and one other did not meet the “minimum size requirement,” which is PSA code for “it looked trimmed.”

PSA1

“How could this possibly be?” I asked Nick at PSA. He went straight on the defense. He offered that once a card is out of the PSA holder, there are no guarantees of getting the original grade again. When I reminded him of our original conversation, he denied it ever took place.

I went over Nick and spoke with the PSA Customer Service Manager, Stephanie Marine. Although she had Nick’s back, she did offer me a voucher for $60 to use towards having the five cards still in BGS holders regraded. I accepted and sent in three of the first five “failures”, plus another former PSA 10 turned BGS 9.5 card with 4 x 9.5 subgrades. My financial outlay was only $30 in return shipping and handling. Again, I stickered the BGS holders the with original PSA certification numbers.

This second batch of cards came back in late June, and, again, one of the cards had crossed back over to PSA 10 but not the other three. Remember, the one that did cross over had “failed” in April. What was Stephanie Marine’s response? “Every grader has a different opinion,” she offered. I was aghast. PSA had just morphed into a gambling company disguised as a card grading company in front of my very eyes.

PSA 2

To make matters even worse, the one PSA 10 card that came back in the second shipment was “caught” in its holder. It wouldn’t freely move around inside the holder and my fear was that it had been pinched. PSA agreed to pay to have that card returned for reholdering and, once they took a look, Marine acknowledged, in writing, that PSA had caused the damage. They would put the damaged card in a new holder, but the card had to be downgraded to a PSA Excellent 5. The report card, as shown above, originally reported a grade of GEM MINT 10 and was changed to EXCELLENT 5.

Damaged

fine Wait, there’s more. The re-re-regraded and re-holdered card arrived in the mail damaged! Some sort of discoloration from a dropped or crushed box, I figured. I immediately wrote Stephane Marine and asked her to file a claim with the USPS. She responded, on July 25, “There wasnt any discoloration when it left PSA.” No doubt, but it was damaged en route, as anyone can clearly see. And that’s the last I’ve ever heard from her or anyone else at PSA.

The re-re-regraded Maddux PSA 10 card and the reholdered/damaged aftermath.

So how does a customer get reimbursed for the lost value in a downgraded card? Not easily or, as in my case, at all. I thought the issue could be best resolved if PSA replaced the damaged card with another PSA 10 they could obtain in the secondary market, or give me the money to do so myself. The card, by the way, was a 1987 Greg Maddux Topps Traded Tiffany #70T rookie card, issued only in a limited number of factory-issued collector sets. I’ve only seen one for sale on eBay in the past thirty days, and the Buy It Now (fixed price, not auctioned) asking price is a $237.49.

eBay

The only 1987 Greg Maddux Yoops Traded Tiffany PSA 10 available on eBay, as of 8/10/17.

No way, said Marine. The card is worth $99 (the value they put on it in the monthly Sportscard Market Report that PSA’s parent company, Collector’s Universe, a publicly traded company on the NASDAQ (symbol: CLCT) publishes. Their prices are like appraised housing values, i.e. always under the real market prices. For insurance purposes, when they apply, do doubt.

To add insult to injury, Marine offered, “Do you know how nearly impossible it is to receive a PSA 10 from crossover grading? The graders can’t even see the whole card through the BGS case!” Really? Then why is it that ALL ten of my BGS 9.5s crossed over to PSA 10s in a previous submission in 2016, AND why doesn’t PSA warn customers of such when they are submitting crossover orders?

PSA Sub

PSA issues no warning that cards submitted for crossover grading are done somewhat “blindly.”

So, promises or not, and Marine did promise in an email to “file an insurance claim” and send the $99 to me, I have nothing. No card, no $99, no apologies, no offers of having the other cards regraded. In fact, Marine and her boss, PSA President Joe Orlando, will no longer return my phone calls or emails. I’ve met Orlando at trade shows in the past and let me just say this about him. He’s the kind of guy that late-night host Stephen Colbert might describe, while showing his picture on the screen, as “the prodigal Italian son who grew up idolizing Anthony Scaramucci.”

I’m still bothered by something in Marine’s email. What does PSA mean by “file an insurance claim?” Do insurance companies covers human error? I doubt it, but it’s possible. After all, one can drop a smartphone in the toilet, and insurer SquareTrade will replace it for free, minus a deductible. But I sincerely hope that PSA is not trying to get the U.S. Postal Service to pay for the damage.

Not overlooking the abysmal and deceitful customer service I’ve received, this whole random grading business is terribly disturbing. A grade of PSA 10 should be unquestioned by any employee of the company responsible for grading. It leads to massive opportunities for favoritism and other such shenanigans.

Then there’s the business of the holder, that wonderful tamper-proof, security-proof holder that PSA has advertised for ages and upgraded five times, each time promoted as “the new generation of holder,” in the last five years. I thought a generation was longer than one year. Collectors are scared silly that if they don’t offer their “Gems” in the latest holder, they won’t maximize their sales. So PSA has made a nice little profit center by charging $7 each time a card gets re-holdered. It’s a flagrant business abuse, and I don’t know how they are allowed to get away with charging for the new holders.

Lighthouse

Ads for this new PSA holder began running in June 2017.

My hobby has been ruined, my time has been consumed, my wallet has been drained, but my pen, oh my pen, has been sharpened. Harvard Business School, the California State Attorney General’s Office, NBC LA and other television consumer units across the country, are you all listening?

PSA should be forced to issue a variety of disclaimers before accepting another nickel from anyone. As I said earlier, they are currently a gambling business disguised as a card grading business. Imagine a diamond being graded the way PSA does business. The price points are eerily similar.

Update 09/25/17: After two months and many broken promises made by Stephanie Marine and her staff about the status of the reimbursement for my damaged card, it finally arrived in the mail today. Note the day the credit was issued (07/28/17).

PSACheck

 

 

 

 

 

 

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s