A recent swing and miss at auction, amounting to a near $3.2 million loss on the sale of a 1914 Baltimore News Babe Ruth rookie card, could be a sign of what's potentially ahead in the trading card industry.
The owner of the rare and historically significant card — only 10 to 15 are believed to exist — sold the card through Heritage Auctions on Oct. 24 for $4.02 million, well below the $7.2 million the collector paid for the card in 2023, Sports Illustrated reported.
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The card ranked fourth on the list of the highest collectible sports trading cards ever sold before the auction. The loss is widely believed to be the largest taken on a trading card.
This cliff dive has led to questions and widespread speculation about how a near-mythic collectible had become one of the year's biggest financial flops.
Prosperity From a Pandemic-Fueled Pastime
As the COVID pandemic began keeping people at home in 2020, many turned to the old pastime of trading sports cards. Collectors, one-time collectors and investors dug out old cards, revived collections and found new ways to spend stimulus checks, and trading sports cards boomed, according to The New Chicagoan.
From 2020 to 2022, the sports card market surged. A mint condition 1952 Topps Mickey Mantle card sold for $12.6 million, nearly doubling the record of $6.6 million set for a sports card the year before, according to Cardboard Connection.
The hobby, as it's known among trading card enthusiasts, powered ahead, receiving an additional boost from celebrities such as DJ Steve Aoki, who at first was skeptical until seeing a friend flip a card for a $10,000 profit, LA Weekly reported. Other celebrities, including Drake, Logan Paul, Snoop Dogg, Bryan Cranston and Mark Wahlberg, helped set the hobby ablaze.
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Between August 2020 and August 2023, 10 of 12 of the most expensive sports cards ever were sold, including the 1909-11 T206 White Border Honus Wagner Sweet Caporal for $7.25 million in August 2022 and the Babe Ruth rookie card that sold for $7.2 million in December 2023, according to Cardboard Connection. A 2003-04 Beckett Exquisite Collection LeBron James Rookie Patch also sold for $5.2 million in April 2021.
Letting the Air Out of an Overinflated Market
Several years later, sports card trading continues to thrive, but it has cooled from the pumped-up card prices fueled by the pandemic. Lower prices aren't all bad; they allow more collectors and investors to get into the hobby. And demand remains for many high-end cards.
Some collectors who had jumped in during the pandemic are concerned about their financial future because of inflation, economic uncertainty and reduced liquidity in the card market.
"A lot of people came into the hobby when they were stuck at home," Adam Martin, co-owner of Dave & Adam's Card World near Buffalo, New York, told the New York Times. "The world has now improved. A lot of people who jumped in then, they've not continued."
Card Ladder data reported by Sports Illustrated at the end of 2024 showed value indexes for cards for all major sports have gone down: basketball is down 2%, football is down 6% and baseball has fallen by 8.35%. Hockey has dropped the most by 11%.
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How Could Things Go So Wrong With the Sultan of Swat?
Sometimes, collectibles sell for less than expected. But $3 million less than the previous sales price? And for a collectible sports card that carries the historical and emotional weight of Babe Ruth, the American sports icon whose celebrity endures to this day?
Speculation abounds on just what went wrong with the sale last month. Maybe it was too soon for a public auction after paying $7.2 million in 2023. The assumed value could be the result of hype and not fundamentals. Additionally, more mature buyers are more skeptical about the condition of the card.
Ruth's rookie card is still one of the iconic pre-war baseball cards, but it's a reminder that the card hobby is ever-changing, according to Sports Illustrated.
Sticking to Fundamentals, Even With Alternative Assets
Nostalgia assets, or collectibles, can diversify your investment portfolio but cannot replace your traditional investments. Financial advisors suggest you keep collectibles and other alternative investments at no more than 5% or 10% of your portfolio, according to Consumers Credit Union.
The value of collectibles can be volatile, and you have no sure way to time the market just right. Focusing on emotional benefits only can overrule discipline and long-term, rational planning for successful investing.
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