PSA’s Move to Halt Submissions? A Good One

This was bound to happen. Last April Professional Sports Authenticator (PSA) told its customers that it was overwhelmed with orders. It simply couldn’t fulfill them on a timely basis.

Steve Sloan, PSA president, wrote in a letter that in early March the company received more cards in three days than it did in the previous three months. So it decided to temporarily suspend its value, regular and express service levels. If you really want to have a card graded right away (super express) you will pay hundreds of dollars. But unless that card is worth thousands that wouldn’t be a wise way to spend your hard-earned dollars. The current goal is to bring all suspended service levels back by July 1.

Some collectors might wonder if a moratorium on new submissions is the answer to PSA’s problem. Many loyal PSA submitters will just hold onto their cards rather than submit to a different third-party grader (TPG) like SGC. Then on July 1 PSA would likely be bombarded with new submissions.

But from a pure business point of view, this was a smart move. No company wants to have the kind of backlog PSA has now. It currently has approximately 800 employees and has been on a hiring jag for months. It recently added an additional 58,000 sq ft to its California operation on top of the 62,500 sq ft it added earlier this year. None of this has been enough to keep up with order demand. In fact, I can’t help but wonder if it will have to push back that July 1 date to September 1 or October 1.

One smart move its making is opening up new grading locations in the U.S. A lot of potentially qualified employees don’t want to pick up their families and move to Newport Beach, Calif., PSA’s headquarters.

“This will help diffuse submissions across multiple locations and allow PSA to tap into new grading talent across the hobby,” Sloan writes in his letter.

What does this move, clearly a judicious one, mean for PSA’s future? Right now the vast majority of submissions to PSA are modern cards that aren’t worth much if they’re not graded. Submitters of these cards are praying for PSA 10s so they can put them up for sale on eBay and get thousands (if not tens of thousands) of dollars for the cards. A game is being played here (card roulette?) and PSA has been sucked into it.

How does this all shake out for the company? No one knows. But as Peter Spaeth points out on the net54baseball forum, PSA does have a new owner, Nate Turner, who probably has new ideas he will want to implement. Spaeth notes that Turner might want to position PSA as “more of a high-end, high-dollar grader than a low-dollar mass grader. Maybe he sees more of an opportunity to flip the company or do another IPO in that posture.”

That could mean that PSA might tell customers that effective six months or a year from now it will only grade cards before, say, 1980. This could make PSA cards more valuable when sold on the open market. It could also result in its competitors being flooded with card submissions. Or PSA could divide itself into two segments: modern and vintage.

But admittedly this is all speculation. I find it hard to believe that Mr. Turner, a young and very successful businessman, is going to sit on his rear end and watch the money roll in after PSA starts accepting all levels of card submissions again. He will want to make changes.

The move by PSA was overdue. Once the “card acceptance” spigot is turned on again, will prices return to previous levels? Selfishly I would hope so but the jury is still out. If the current higher prices stay where they are now I will have to think long and hard about which vintage cards I submit to PSA and which I either leave raw or submit to SGC. For now I’ll take a wait and see attitude.