When approaching the sports collectibles market as a potential investment strategy, it is imperative to enter with eyes wide open and invest only what you can afford to lose. It can be risky, valuations can fluctuate substantially, and the timing of any purchase or sale will ultimately determine long-term success.
Sports memorabilia has been changing hands for more than a century, and recent events suggest that values may get a boost as a more efficient and liquid market for collectibles emerges. The latest evidence: Fanatics, the multibillion-dollar ecommerce platform focused on sports team merchandise, plans to launch a collectibles events business next year.
Fanatics Events seeks to create the Comic-Con equivalent for sports, which means current and former player appearances, panels and a vibrant marketplace. The company is capitalizing on the growing popularity of collectibles and will partner with entertainment giant Endeavor's IMG unit on the event series.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Collectibles can be good alternative investments
Quality sports collectibles have long been a solid alternative investment, and the creation of an accessible, high-visibility marketplace is bound to spur further momentum. Any market that has heated up significantly, of course, runs the risk of overheating.
Have we reached that moment? Probably not.
Collectibles markets of all stripes — from cars to watches to NFTs — got a lift during the pandemic. People stuck at home took more of an interest in collecting, quickly shifting the hobby to a business opportunity. And big money always chases opportunity.
The market for sports collectibles has begun to show signs of increasing orderliness. We see a tiered list of players that includes legends, potential future legends and stars.
The top names, true legends of their sport, such as baseball Hall of Famers Babe Ruth and Mickey Mantle, are blue chips. Those players’ memorabilia, owing to their vintage and exclusivity, are likely going to rise in value over time.
Memorabilia of current sports stars with proven records, like NBA players LeBron James or Steph Curry, fall a level below that of Ruth and Mantle. These players’ careers are in full bloom, and prices have been pushed up high as a result. Because of the long-term nature of their performances, however, their legacies are assured, and they almost certainly will become blue chips one day.
Upside potential but with some risks
Items associated with star players who are not among the top echelon for extended periods of time have upside potential but may be a riskier bet — like smaller technology stocks. This is because some may emerge as the best to play the game, while most will fade too quickly to be considered true legends.
Older cards carry a scarcity value — only so many were printed at the time. It’s harder to predict what may happen with newer players. Popular outfielder Aaron Judge, for example, has a good, yet short, record, and he plays for the Yankees in New York, a media hotspot. The question is, can he maintain his fame and extend his performance record? Products tied to him have upward price momentum now, but the trajectory for the future is less understood.
The sports memorabilia market has a different dimension, too. Unlike stocks, collectibles have an abstract value driven by a passionate base — much like fine art.
As Fanatics develops its events business, opportunistic buyers may enter the market, unsure of how to value collectibles. Witness the collapse of the market for NFTs, which had been wildly overvalued.
A step forward, thanks to events like these
Fanatics Events is likely to have a big impact on the market, as a bigger marketplace offers potentially higher transaction volumes and more transparency. One significant risk of the market has been liquidity, and while these events alone won’t obviate that, they inevitably mark a step forward.
Sports collectibles can be an excellent component of an asset portfolio — but probably not a major one. A hobbyist who enjoys the pastime of collecting and sees value in owning sports memorabilia might want about 10% of their portfolio in collectibles. That’s a reasonable risk to take.
It’s also wise to keep a collectibles portfolio that’s weighted toward blue-chip stars. Full disclosure: I own a pair of Muhammad Ali fight-worn trunks. I have a passion for boxing, and I think it’s a very good bet that his status as an American icon will continue to drive their value.
related content
- Estate Planning for Memorabilia Collectors: Don’t Leave Your Family in the Lurch
- Collectible Vintage Photos Emerge as Investable Asset Class
- How to Help Your Kids Profit From Their Collectibles
- What Assets Should You Put (or Not Put) in Your Trust?
- Pros and Cons of Adding Alternative Investments to Diversify Your IRA
-
Savings Goal CalculatorTools Want to know how much you need to save each month to reach your financial goals? Our calculator helps you build a realistic savings plan.
-
Cash vs. Mortgage: How to Pay for Your Second HomeShould you buy your second home outright or finance it with a loan? Weigh the pros, cons and tax implications before making the leap.
-
Gray Divorce Can Throw Your Retirement a Curveball: What to KnowIf you're entering retirement and going through a divorce at the same time, you've got some work to do to shore up your long-term financial security.
-
I'm a Real Estate Investing Expert: Optional 721 UPREIT DSTs Can Be the Best of Both WorldsBefore investing in any 721 UPREIT exchange, look for one that offers a straightforward, investor-friendly exit.
-
How an Expired Passport Thwarted Blackmail (and What Other Important Documents You Should Keep)An optometrist produced his expired passport to foil a blackmail attempt by the daughter of a former employee. After proving he was out of the country on the date of a forged diary entry, he took it a step further.
-
Optimize, Grow, Retain: The Power of Annual Client ReviewsFinancial advisers can use annual reviews to help enhance client outcomes, strengthen relationships and build their practice.
-
I'm a Real Estate Investing Pro: This Is What Investors Should Know About Truck Stop InvestmentsTruck stops might seem like good investments, but they can actually be a risky gamble due to unstable fuel prices, unreliable operators and coming changes in transportation. Instead, consider safer options like industrial or residential properties.
-
Don't Disinherit Your Grandchildren: The Hidden Risks of Retirement Account Beneficiary FormsStandard retirement account beneficiary forms may not be flexible enough to ensure your money passes to family members according to your wishes. Naming a trust as the contingent beneficiary can help avoid these issues. Here's how.
-
This Is How Life Insurance Can Fund Your Dreams NowBeyond a death benefit, life insurance can provide significant financial value and flexibility through 'living benefits' while you are still alive, helping with expenses like education, business ventures or retirement.
-
Potential Trouble for Retirees: A Wealth Adviser's Guide to the OBBB's Impact on RetirementWhile some provisions might help, others could push you into a higher tax bracket and raise your costs. Be strategic about Roth conversions, charitable donations, estate tax plans and health care expenditures.
