SI Vault
House of Cards
John Garrity
July 29, 1996
Driven by greed, the sports-trading-card industry all but collapsed. Can it rebuild itself?
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July 29, 1996

House Of Cards

Driven by greed, the sports-trading-card industry all but collapsed. Can it rebuild itself?

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We arrived too late to ask George Pierce what he thought about the sports-trading-card crash. The name of his once-thriving business, Triple Play Sports Shop, in Overland Park, Kans., had already been removed from the storefront's marquee. All that was visible inside the abandoned store was a patched carpet and some debris.

So we moved on. Five miles away, at Kansas City's Ward Parkway Shopping Center, we found Allen Martin, the owner of Jay's Sportscards and Collectibles, sitting on a stool behind his counter, watching a basketball game on TV. No, he said, it wasn't a bad time to talk. There wasn't much chance that we would be interrupted—certainly not by the endless stream of boys in Kansas City Chiefs caps and Chicago Bulls jackets who were hustling past the store on their way to the 22-screen multiplex. "Card shops are dropping like flies," Martin said. "There used to be 20 in the city. Now there are six or seven."

Judging from the few boxes of trading cards on Martin's shelves, the remaining shops were barely hanging on. In one of those paradoxes that make capitalism so intriguing, Martin had so few cards because, he said, the trading-card industry was flooded with them. From the beginning of the 1995 baseball season through the '95-96 basketball season, there were 23 sports-card lines (a line typically contains different sports cards for each brand) distributed by the Topps Company, 22 by Fleer, 22 by Pinnacle, 15 by Upper Deck, seven by Donruss, seven by Pacific, four by Collectors Edge, three by Classic and two by Playoff—an avalanche of pretty pieces of cardboard bearing stamped foil, computer-generated art, gilt edges, holographic effects, and glossy finishes that would put an old-world furniture maker to shame.

"There's so much out there, that people don't know what to collect," the 28-year-old Martin said. "So they don't." And since Martin couldn't afford to pay the manufacturers as much as $1,600 a case for cards of unpredictable appeal, he was reduced to buying a box at a time from a wholesaler across town—36 packs (12 cards per) of Leaf Baseball '96, say, for $56.

This wasn't what Martin had in mind last year when he took over Jay's Sportscard store after its previous owner was evicted for not paying rent. Martin had worked part-time at Jay's for a few months. He could smell a 1963 Sandy Koufax in a shoebox full of Topps commons, and he had always wanted a store of his own. Now he had not only the store but also a perplexed look. He wondered why a hobby shop like Jay's had to pay the card companies cash before delivery, while Venture and K-Mart could discount to the bone and return their unsold cards for full credit. He wondered why recent mergers and acquisitions by card companies seemed to have produced more, not fewer, card lines. And he questioned his rationality in clinging to a business that, he admitted, exploited the naiveté of card hounds like him. "I believe a card store is for kids," he said. "The kid who wants a dollar pack and buys it with a dollar he saved means more to me than a guy who buys a $200 box." Reflecting on those words, Martin sighed and added, "I guess that's why I'm not making squat."

It's known in the business world as a shake-out: First you have a boom, which occurred in the trading-card business in the late 1980s and early '90s, when dozens of manufacturers sprouted and hobby shops spread like pollen. Then you have a bust, which leads to mergers, buyouts and failures among manufacturers, and extinction for shop owners. The bust in sports-trading cards has seen industry-wide yearly sales plummet from about $1.2 billion in '91 to some $700 million in '95.

Lee Toner, a trading-card broker and the owner of Americana Collectors, a wholesale and retail collectible business in Independence, Mo., believes crash is not too strong a word to describe what has happened in the industry. Traffic to Americana Collectors, in a strip mall off busy Noland Road, has slackened to a small mix of classic-card fans and teenagers addicted to "cardboard crack"—slang for a collectible-card sword-and-sorcery game called Magic: The Gathering. Several sports-card fanatics persist in their pursuit of "inserts" or "chase cards"—premium cards of exotic design that manufacturers distribute, at a ratio that varies from one card to every two boxes to one card to every case, to stimulate interest. Toner calls inserts "the mini-Lotto" and laments that they have not been enough to sustain the card industry in hard times.

"In the K.C. metro area there might be 20 stores left, down from 40 two or three years ago," Toner said in May. "I've lost two or three accounts in the last 30 days."

To the little guys, Toner is a big guy, a regional broker who buys unsold stock from retailers and speculators and then sells cards and other collectibles (such as coins and stamps) via hobby publications and the Internet. To survive these days in the card business, according to Toner, you need to be realistic. "This was new yesterday," he said, pointing to a 10-card pack of 1996 Upper Deck baseball cards, which sold for $1.99. "This is new today," he continued, tapping a 12-card pack of 1996 Leaf baseball cards at $2.50. "There's almost no dollar packs anymore." And no shelf life either. Less than a week after Upper Deck's Silver Collection of football cards appeared on his counter, Toner was prepared to declare it a loser. "People are already bailing out on it," he said, meaning that dealers were discounting the line to cut their losses. "You hold it two or three months, it's worth half or less. It creates a selling frenzy."

And what of the speculators, those buyers with calculators for hearts who bought cases of cards in the late 1980s and put them away, unopened, hoping to make a killer profit in the '90s? Toner said he used to hear from them regularly. The conversations went like this:

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