The sports trading card boom: Baseball cards selling for millions and the crypto craze hits NBA Top Shot

Collectors have spent more than $230 million on virtual "moments" on Dapper Labs' NBA Top Shot.
Source: Dapper Labs

Dallas Mavericks star Luka Doncic set a record on Feb. 28. But it wasn't for his moves on the court. Instead, his autographed NBA rookie trading card sold for $4.6 million, making it the most expensive basketball card ever sold.

Just a month prior, a 1952 Mickey Mantle card became the highest selling sports card ever at $5.2 million. Then, in April, iconic sports card brand Topps announced it was going public through a merger with special acquisition company (SPAC) Mudrick Capital Acquisition Corporation II, in a deal valuing Topps at $1.3 billion.

And it's not just physical cards. In February, a highlight clip known as a "moment" showing a LeBron James dunk sold for more than $200,000 via NBA Top Shot. The blockchain-based, online platform saw more than $150 million in sales of NFT highlight clips during the final week of February alone.

Sports trading cards are suddenly booming, with returns on sports card investments even outperforming the S&P 500

The majority of the approximately $5 billion sports card trading market has been cards sold in eBay auctions. But now, a new wave of online start-ups and blockchain-based digital collectibles could change the way enthusiasts and investors collect and sell sports trading cards forever.

Cards go digital

The sports card trading boom has officially extended to the virtual world.

There is a furor around digital collectibles like those sold by Panini America and platforms like Dapper Labs' NBA Top Shot, where users buy and sell short video highlight clips, called "moments," featuring NBA players. Vancouver-based Dapper Labs has raised more than $357 million in funding from investors such as private equity firm Coatue Management, current NBA players like Kevin Durant and Andre Iguodala, and even NBA legend Michael Jordan.

Digital trading cards have been around for several years on mobile apps, but blockchain technology has changed the game, allowing platforms to actually track ownership of digital assets, like NFTs. (NFTs, or non-fungible tokens, can take the form of anything from a sports collectible to so-called "crypto art." A viral animation of a flying cat recently sold for $580,000.)

Even though the moments for sale on NBA Top Shot feature video clips that can be found online for free, collectors are still lining up to shell out hundreds, even thousands, of dollars for the bragging rights to officially own a unique or limited run moment that's been licensed by Dapper Labs and the platform's partners, the NBA itself and the league's players association.

On Feb. 26, for instance, more than 200,000 collectors waited in an online queue for the chance to buy one of just over 10,600 new virtual packs of those NBA Top Shot moments in Dapper Labs' latest release event (each pack, which cost $99, contained six moments total).

Count Mark Cuban among the investors obsessed with NFTs, as the billionaire owns moments featuring dunks of his own Dallas Mavericks players and he recently said he'd focus on blockchain and NFTs if he were to start a new business today.

Caty Tedman, one of the creators of NBA Top Shot and the head of marketing and team partnerships for Dapper Labs, tells CNBC Make It that it's been "exhilarating" keeping up with the demand the platform has already seen. 

"What do basketball fans love?... It's the spectacular play that happens on the court every night," says Tedman.

Dapper Labs also built off the key features of physical trading cards and added digital elements like video highlights, animations and a wider array of player statistics.

"The amount of stuff that we can cram into a collectible is a lot more than you could have on a physical [card]," Tedman says.

The Vancouver-based company is now reportedly valued at $2 billion, and more than $280 million has been spent on the NBA Top Shot platform since it launched online in October, according to data tracker CryptoSlam.

Not surprisingly, there are plenty of skeptics who believe the high prices and massive demand for Top Shot moments are bound to fall back to earth. Even Cuban believes that "pricing will settle down" for NFTs like Top Shot moments over time, but he's adamant that the interest in the blockchain technology behind them is legitimate and not going anywhere.

And Tedman notes that Top Shot's success has been driven by more than just six-figure sales, as the platform has performed more than "half a million transactions in the $9 range."

Whatever happens, the platform's emergence comes as the overall market for sports cards has seen a major resurgence in recent years.

"I think the trading card boom certainly kind of kicked it off," Dapper Labs' Tedman says of the current interest in digital sports collectibles.

Meet the three sisters who own 6,000 pairs of sneakers
Meet the three sisters who own 6,000 pairs of sneakers

Start-ups and investors flock to the scene

The recent surge in sports trading card sales has been inspired by fans looking for new ways to engage with sports during the pandemic, as well as nostalgia among older millennials who collected cards as children and now have enough money to invest in their hobby, says Beckett Media's Norton.

And with billions being spent online each year and cards setting records, the trading card boom has inspired more investors and entrepreneurs to enter the market.

Among them is Leore Avidar, 32, a former stock trader who was a sports card collector in his childhood.

"Starting in 2016, I got nostalgic for buying cards," says Avidar. Specifically, he was a big fan of Kobe Bryant as a kid, so Avidar had his eye on a specific Bryant rookie card (the 1996 Skybox E-X2000), which his parents never let him buy because it came in packs that cost $10.

Kobe Bryant in 1996
Jennifer Pottheiser | National Basketball Association | Getty Images

As an adult with a successful business, Avidar sought out the card.

"When I had that disposable income, I was like, 'I want to buy it.' I just wanted to feel like a kid again," he says. Even though the card was worth only about $30 at the time, Avidar says, finding it in a pack of cards he bought on eBay "was honestly one of my most favorite days that I remember."

Avidar's background as a trader took over and he started investing in sports cards more seriously, performing "10 to 20 transactions a day" and he eventually "turned less than $10,000 into a multi-million dollar portfolio," he says.

Last year, Avidar launched a start-up, called Alt, which he says will serve as a marketplace for sports trading cards while also providing real-time valuations. 

Avidar says finding accurate, up-to-date values for all of his cards was a big problem in growing his collection, and his investment. He often had to comb through card listings and past sales on eBay to try to get a sense of how the market valued any given card.

So Avidar wants Alt to make buying and selling sports cards as easy and transparent as investing in the stock market. He says his platform will allow users to track all of their trading card assets in their own online portfolio, including following fluctuations in their value. (Eventually, he wants Alt to include other alternative assets beyond trading cards, like art, watches and sneakers.)

"We're experiencing people like me who finally have enough money and we have that nostalgia effect," says Avidar, who wants Alt to capitalize on the boom in sports collectibles investing. 

He also launched an investment fund, called Alt Fund I, to buy a cross-section of trading cards and which was the buyer for both a $1.8 million LeBron James rookie card (with the jersey patch and an autograph) and a Giannis Antetokounmpo rookie card for $1.81 million, two of the biggest card sales last year. 

And Avidar is not alone. Investors who are eager to capitalize from the booming market have put money behind companies like Goldin Auctions, an existing online auction house specializing in trading cards and other sports memorabilia, which recently raised a $40 million investment from investment firm The Chernin Group and high-profile investors that included Mark Cuban, actor Mark Wahlberg, and athletes like Kevin Durant, Dwayne Wade, and Deshaun Watson. 

Another trading card marketplace called Investacard also recently attracted an undisclosed investment from millionaire investor and entrepreneur Marcus Lemonis (who hosts "The Profit" on CNBC). 

Much like Avidar's Alt, companies like Investacard and Goldin Auctions are betting that they can tap into the huge market for online sports card sales, much of which still exists on more general marketplace sites like eBay, by tailoring their products specifically for trading card collectors.

Lemonis, who announced on Twitter in January that he is partnering with Investacard, tells CNBC Make It that he believes the sports trading card market holds promise because it "allows people to start as novices and work their way up to be expert traders."

"And it truly is no different than trading oil futures or Bitcoin or anything else, except you actually get to be excited about it, you get to follow sports, [and] you get to put something in your hand," Lemonis says.

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