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Book Excerpt: Grade Scarcity and Box Value

Editor’s Note: What follows is a second (edited) excerpt from Jeff’s book,  The Modern Baseball Card Investor.  The first excerpt, The Four Basic Types of Ungraded Strategies, can be found here.

As of January 2014, unopened boxes of 1987 Donruss could be had for $20 to $30 per box, with multi-box lots and 20-box cases running for as little as under $20 per box. Each box contains 36 packs with 15 cards per pack, for a total of 540 cards per box. There are 660 total cards in the 1987 Donruss set; as such, if you open a random box, you will pull a given card 540/660 or 81.8% of the time on average.

Modern Baseball Card InvestorPut differently, if you purchase a box and open every pack, you will pull 0.818 Greg Maddux RCs per box, with an ungraded book value of $10 and a graded BGS 9.5 Gem Mint book value of $100.

For reference, in the three months from August to October 2013, there were 30 actual sales of such BGS 9.5 Gem Mint copies and 27 sales of PSA 10 Gem Mint copies on eBay, ranging from $45 to $107 each including shipping (BGS 9.5 copies marked both the bottom and top end of the range, with BGS 9.5 and PSA 10 copies otherwise generally selling in roughly the same range). By December 2013 – ahead of the January 8 Hall of Fame vote – PSA 10 copies were consistently in the $100+ range, with one sale at $129 shipped. And upon Maddux’ easy vote into the Baseball Hall of Fame on January 8, 2014, another PSA 10 copy sold at auction for $130.50 shipped.

Greg Maddux BGS 9.5 1987 DonrussThink about that for a minute. Let’s assume for a moment that every Greg Maddux you pull will grade Gem Mint, and that the cost of grading is $10. Let’s also be conservative and assume that the actual street value of a BGS 9.5 or PSA 10 Gem Mint 1987 Donruss Greg Maddux RC is $70 on average.

In this scenario, you will on average pull 0.818 Gem Mint Greg Maddux RCs worth $70 each, for an average value of ($70 x 0.818) or $57.26 per box. The average cost of grading per box will be ($10 x 0.818) or $8.18 per box, yielding a net value of ($57.26 – $8.18) or $49.08 in Greg Maddux RCs per box.

Considering that the cost of a box is $20 to $30 (or potentially less if you buy in bulk), if every Greg Maddux you pulled was Gem Mint, you would turn a profit of about $20 to $30 per box on Greg Maddux alone for a gross return on investment (ROI) of 66.7% to 150% (before backing out shipping costs and eBay and PayPal fees on the sale). Moreover, the Greg Maddux RC is not the only card of value in the set, which includes the rookie cards of Barry Bonds, Barry Larkin, Bo Jackson, Rafael Palmeiro, and Will Clark, as well as Mark McGwire’s first card in an Oakland A’s uniform (officially, the 1985 Topps Team USA Olympic card is McGwire’s only RC) – all yielding additional potential value.

1987 Donruss: Notable Cards

Player # UngradedBV BGS 9 Mint BGS 9.5Gem Mint BGS 9.5 Adj.Multiple
Greg Maddux RC 36 $10 $25 $100 5.0x
Barry Bonds RC 361 $12 $20 $40 1.8x
Barry Larkin RC 492 $4 $20 $40 2.9x
Bo Jackson RC 35 $5 $20 $50 3.3x
Mark McGwire 46 $8 $20 $30 1.7x
Rafael Palmeiro RC 43 $5 $10 $25 1.7x
Will Clark RC 66 $1.50 $8 $20 1.7x

Source: Beckett.com, Dec. 2013

So if a BGS 9.5 or PSA 10 Gem Mint 1987 Donruss Greg Maddux RC is pushing $100+ a pop, and Greg Maddux RCs fall at a rate of about four Greg Maddux RCs every five boxes, how can it be that unopened boxes of 1987 Donruss can be routinely had for $20 to $30 per box?

The answer is simple: Though Greg Maddux RCs in general are easy to pull, Gem Mint condition copies of the 1987 Donruss Greg Maddux RC are quite difficult to pull.

Anybody who’s handled Donruss cards from 1985 to 1991 knows that the cards from these issues are thin, flimsy, and fragile. Cards pulled from wax packs from this time period are liable to have bent corners or rough edges, while the front and back cards in a pack might have wax stuck to it, destroying any chance at a passable (9 or better) surface grade. And then even if you can pull a card in perfect condition, it must also be centered properly in order to attain a BGS 9.5 or PSA 10 Gem Mint grade, which itself is no small hurdle.

The more likely scenario is that you might open 10 boxes of 1987 Donruss, pull eight Greg Maddux RCs, and have five that look clean enough but only one that will actually grade Gem Mint. Moreover, the penalty for grading below Gem Mint is steep in this case – even in late 2013, PSA 9 copies were running in the $15-$20 range with a few outlier sales as high as $25-$30, while BGS 9 copies (which nobody really looks for) were running as low as $10-$15 each.

That said, when gems are difficult to build even out of the box, box value deteriorates.

Jeff Hwang is a gaming industry consultant and the best-selling author of Pot-Limit Omaha Poker: The Big Play Strategy, and the three-volume Advanced Pot-Limit Omaha series. Jeff’s latest book, The Modern Baseball Card Investor, was published June 30, 2014.

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