For decades, PSA has been the leading grader and authenticator of sports and non-sports cards. The company ran like a well-oiled machine, rarely making headlines but always making money. Though the money part continued, the machine began to slow last year and came to a halt in March, when the company shut down new grading submissions in order to catch up on its backlog.
That decision was the first major announcement for PSA’s new owners, who purchased PSA’s parent company and took it private in February. The new owners were led by long-time collector Nat Turner’s investment firm, supplemented by New York Mets owner Steve Cohen and a who’s who of sports names, including Kevin Durant, DeShaun Watson, Andy Roddick, and Larry Fitzgerald. Turner became the executive chairman of the board of directors, and in a press release, he noted that the “collectibles markets require scalable, modern infrastructure to support the maturation of the industry.”
Multiple news items relating to PSA in July reflect this statement perfectly, encapsulating the ever-evolving nature of the industry. The beginning of the month saw a major announcement that Collectors Holdings, the group that was formed when Turner and his crew took Collectors Universe private, was purchasing Goldin Auctions. Founded by Ken Goldin, the auction house has become one of the major outlets for sales of high-end sports cards, including those graded by PSA. As talks of conflicts of interest swirled, Turner and Goldin assured everyone the companies would be separated by a “firewall” and operate independently. In a statement, Goldin suggested that he didn’t believe Collectors Holdings was finished expanding.
He was right. Two weeks later, Collectors Holdings purchased Wata, the major video game grader in the space. Along with PSA and it’s coin grading business PCGS, Collectors Holdings suddenly had a foothold in three major hobbies. With the video game grading industry just beginning to boom the way graded sports cards have for some time, the timing could not be more impeccable.
While the purchase of Goldin Auctions sent major shockwaves throughout the industry, it was the resignation of PSA CEO Joe Orlando last week that may be the most consequential news item of July. Orlando has been with the company since 1999, and served as its public face for most collectors. While almost no one could name executives at rival graders or even at card companies, Orlando was front and center for collectors, and in fact was considered for our Mount Rushmore contest several years ago after several nominations.
Why do I feel that someone leaving PSA is the biggest news of all? Quite simply, it’s because I think it’s an indicator of the market beginning to consolidate. The sports card market has been growing both in revenue and in number of companies and services for many years. As in most industries, unfettered growth is not possible, so in order to generate revenue the industry leaders typically find ways to consolidate power and control as much of the market as they can.
Orlando is absolutely the hottest “free agent” the sports card world has seen in a very long time. He should be extremely desirable on the open market and his next move, since it won’t be with Collectors Holdings or PSA, will almost certainly make wherever he lands a worthy challenger to his old bosses. Might he go to one of the other grading companies, or start one of his own? Could he end up at a card company as an in-house consultant, or at an auctioneer to run their sports card business? Could he join Alex Rodriguez’s Slam SPAC, which is likely to complete a $2 billion merger to take Panini public on the stock market? Any one of these moves, or a similar one, would put Orlando and whatever his new company is in direct opposition to Collectors Holdings.
As for Collectors Holdings, I don’t think they’re done making moves. Looking ahead to the next year or two, it would certainly not surprise me to see them acquire a smaller grading competitor. Already this year they acquired Genamint, a company that was developing AI software for card grading but had not yet gone to market. If Collectors Holdings were to buy a company like SGC, they would be able to expand their footprint I having offices in the southeast (SGC is based in Boca Raton, FL) and reaching a segment of clientele (namely pre-war collectors) that tends to prefer SGC’s sleek black matting. Down the road, it also wouldn’t surprise me to see them either start or acquire a card manufacturer. Topps and Panini are likely out of the question, but a company like Leaf may not be, or even a group like Rittenhouse that works primarily with non-sports cards.
The industry continues to evolve and PSA, as an industry leader, is at the forefront of that evolution. Over the next few years I expect to see their parent company, Collectors Holdings, expand its footprint in the market and consolidate power by continuing to innovate and acquire other companies. And wherever Joe Orlando lands, you can bet they’ll be a major player in the field, too.