Professional Sports Authenticator (PSA) and Beckett Grading Services (BGS) have some good news for collectors: there is light at the end of the tunnel.
The top two grading companies used by card collectors had to shut down some of their services earlier this year due to being slammed with items being submitted. But PSA and BGS are both making headway with their massive backlogs.
At the end of October, Sports Collectors Digest caught up with Nat Turner, the CEO of Collectors Universe, the parent company of PSA, and Jeromy Murray, President of Beckett Collectibles, to talk about how the two companies are handling the “tsunami” of cards that invaded their buildings and severely impacted the sports card industry.
PSA DOUBLES CAPACITY, MAKING ‘A LOT OF PROGRESS’
When PSA shut down the majority of its submissions on April 1, the Santa Ana., Calif. company had a backlog of 13 to 14 million cards, according to Turner. But with each passing day, that number is gradually shrinking.
“We’re making a lot of progress,” Turner said. “The backlog is probably close to half of what it was when we shut down, if not better. And our capacity has grown so much, the rate of burning it down is accelerating. We’re doing over 40,000 cards a day now, which is a big deal. When we bought the company, it was half that. So, we’ve doubled capacity, basically, since the start of the year.”
Turner said PSA’s goal is to use 90% or more of its capacity on the backlog each day. A big reason PSA has been able to slash its backlog is because it is continuously hiring new graders. Turner said the grading team has doubled in size since he took over as company CEO earlier this year.
“There’s some technology benefit that we’ve seen, but I would say most of the heavy lifting has just been through hiring,” Turner said. “We’re still hiring 10-plus people a week — not all on grading, I wish. Grading is really difficult to find good people in because it’s a very skilled position. It’s a lot of training and it requires a certain personality.”
Even though PSA is about seven million cards behind, Turner noted there is light at the end of the tunnel because the backlog doesn’t need to reach zero.
“The company always had a backlog of over a million-plus cards,” he said. “You want turnaround times to be three months or less, even at the slowest level. Therefore, you can have about three months’ worth of backlog, that’s kind of totally fine. That’s our goal and we’re not that far away.
“We won’t fully reopen this year, in the next two months, but I think Q1 (first quarter) next year, we will.”
Turner said the only service level that is behind is Bulk, which turnaround time is about eight to nine months.
“We’re fully caught up on Regular and above,” he said. “We used to have … this Economy service level, which was in between — we consider that very similar to Value. It was a kind of cheaper service level, too. But looking at those together, our Value, our Bulk service levels are really the only ones impacted to this point.”
PSA is still offering collectors the option to submit to Express ($150 per card) and Super Express ($300 per card) levels. Turnaround time is about a week for those services.
When PSA shut down its Bulk level option in April, that eliminated an option for collectors to submit cards for under $20. Turner has always been adamant since the shutdown that it’s important for the company to return to a $15-$20 price point.
“We will not be there when we reopen in Q1, and there’s only one reason, and it’s not about money,” he said. “We cannot receive twice or three times as many cards as we can grade, like we did last year or this year. We just can’t allow that again, otherwise the backlog will just shoot right back up.
“When we reopen, we need demand to be around what our capacity is at the time. So, let’s say we’re saying 50,000 cards a day at that point, our demand needs to be right around there. Frankly, at $10 or $15, demand would be much, much, much, much higher than that. Again, we want to get there, we will get there, but we can’t do it until capacity is higher.”
In other company news, PSA named Kevin Lenane the company’s new president. Lenane spent the last seven months as the company’s vice president of product. He was the CEO and founder of Genamint when Collectors Universe purchased the AI company in April 2021.
“That’s not a mistake or a coincidence,” Turner said about Lenane taking over with his vast background. “Our intention with PSA is to nudge the business closer and closer to technology solutions as opposed to purely manual. We’re never going to replace the human grading element, that’s not our goal and not possible. But we think we can kind of augment it with software and make it better and faster. We haven’t seen a ton of gain from that yet, honestly. Everyone thinks we’re grading harder and it’s because of software. No. The grading team is doing the same thing they’ve been doing for 30 years, we just have more graders.”
Lenane took over for Steve Sloan, who moved to Collectors Universe to be the chief marketing officer.
“Steve did a really good job and I appreciate everything he did in that role,” Turner said. “Kevin brings a little more product technology focus to that role with his background in kind of the tech world. Big collector. He’s a passionate vintage baseball card collector. Also, he’s not from the hobby — he’s not a dealer, he’s not an industry person. He’s able to take a very fresh look at what’s needed. I’d say a very big focus on the collector, because he is one. Someone who really understands the value of the set registry and set builders and set collectors and those sorts of things.”
BGS MAKES PROGRESS BY CHANGING APPROACH
BGS announced in June it was halting its services and it tried to alter how its card grading process flowed.
One big issue was when shipments were sent to BGS, they weren’t invoiced and processed in a timely manner. That meant customers didn’t even know if their items had been received or where they were in the process.
“When we first shut the services down, there were so many orders that had not even been opened or processed,” Murray said. “So, we didn’t even have a real (backlog) number at the time when we shut this down.”
BGS’s Standard level — formerly it’s 10-day service option — was around a nine-month wait to get products back in June.
“We’ve gotten that down to about four months, so big change,” Murray said. “We’ve had that service shut down for about three months and we’ve gained five months in that turnaround, which is great.”
Economy level, which is BGS’s lowest price point, is still backlogged about 14 to 15 months, Murray said.
“It hasn’t gained as much as we wanted, and the reason for that is those are the biggest orders, those are the huge orders that come in at the lowest price point,” Murray said. “We’ve gained a couple of months there, so we’ve got some work still to do on those orders.”
Murray added that BGS’s sales team has been contacting customers and giving them options to see if they are interested in moving their orders to a different service level to shave off some months on getting their shipments back.
When BGS shut down, it was advising customers not to opt for subgrades on its cards. That also cut down return time. Most people are adhering to that advice.
“Especially on these larger orders, not on real high-dollar stuff,” Murray said. “Still, the real high-dollar stuff, especially if you’re doing even gaming cards and things like that where subs are so important, they’re doing subs. But on a lot of just base-type cards [they] are going to that no-subgrade stuff and it helps us process stuff quicker, it helps us get cards back to the customer a little bit quicker.”
Since the National Sports Collectors Convention at the end of July, BGS has hired five new graders in what Murray called an aggressive hiring spree. The grading team is working hard to get caught up.
“We have crews working seven days a week, constantly at different times of the day,” Murray said. “That’s not just our graders, but our production team as well to get stuff out of there.”
BGS never shut down its Premium service, which is sitting at a return of two to five business days. The company is slowly opening up its Express level, starting with some major card shows BGS will be attending in November. BGS is knocking out Express orders in about five to 10 business days.
“A perfect scenario, I would say our Express, which was formerly five days, opens up Dec. 1, as we head into the holidays. We know a lot of people want that — that’s our goal and we sort of put a stake in the ground for that,” Murray said.
“My goal is to have Standard open up at the first part of the year, January, February at the latest. Economy’s going to take a little bit longer to get that, because those are those bigger orders that it takes a little bit of time to go through. A lot of those are gaming cards and magic cards that you have to be a little bit more careful about. I don’t know about Economy. It’s probably further into 2022.”
When service levels reopen, Murray is expecting price points to be the same as they were when the shutdown occurred.
“We have no plans right now to change our prices up or down,” Murray said. “As I’ve said before, ideally, I want to get the price going back down so more and more people can submit cards. But a lot of (companies) across the board are increasing prices and we have no plans on increasing prices right now, hasn’t even been discussed.”