Glenfiddich
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Just finished teaching "The Economics of Hockey Cards" -- a short week-long module in one of my classes. Here are a few observations on the industry:
1) 2020-21 Boom: Demand increased substantially from March 2020 onwards due to:
(a) lockdowns, which saw a lot of people have more free time;
(b) generous government income supports, which actually led to a RISE in average household income despite higher unemployment;
(c) lack of spending opportunities on other leisure activities (e.g. travel, sporting events, concerts, restaurants, movies, etc.) which allowed for more spending on trading cards.
--> This excess demand is currently ending as restrictions ease, income supports are removed and pent-up demand for travel and other leisure activities is allowed to be satisfied. So: Expect lower overall spending on cards, and less time devoted to the hobby by average collectors, from 2022 onwards.
2) Baby boomers and their offspring: If you want to follow the cycle of the hockey card industry, you just need to monitor data on births:
(a) The baby boomers (born 1946 to 1964) drove the demand for hockey cards from the 1950s to the 1970s, as these were exclusively targeted at the large number of kids in society.
(b) The "baby bust" of the 1970s led to fewer 10-year-olds in the 1980s to buy cards -- OPC even reduced its set size from 396 to 264 cards for this reason.
(c) When the large number of baby boomers were having their own kids in the 1980s, they became nostalgic for their own childhood, so they started collecting old toys, comic books and cards. They started buying hockey cards with their own kids in the late 1980s and early 1990s, which led to the first major card boom.
(d) As we know, the 1990s boom ended badly, largely due to over-production. Prices for many boxes in the 1990s still haven't fully recovered some 30 years later.
(e) The past decade saw a third demographic ripple, as kids of boomers were themselves having kids -- so, Boomer Grandkids. They may be getting initiated to card collecting by their parents or grandparents, but unfortunately few of them will become interested in the hobby on their own due to a lack of affordable products. Cards are today generally targeted at collectors, so the average kid can't afford the sticker price (and places that are supposed to have entry-level products, such as Wal-Mart or Target, have been overrun by collectors/speculators). We need more affordable products aimed at kids, such as Tim Horton's cards (which, unfortunately, are only available for one month per year.) If kids today don't become interested in card collecting, then they certainly won't feel any nostalgia for cards when they have jobs and disposable income in 20 years.
3) Supply-side issues: The current boom won't come crashing-down due to oversupply like in the 1990s -- manufacturers have done a good job of building scarcity into their products (e.g. limited print runs, memorabilia, autos, etc.). However, there's a risk that there may too much BREADTH of product. There may be a limit as to the number of different sets, subsets, variants, etc. that the hobby can absorb, but I'm not exactly sure where that limit lies.
For example, Alexis Lafreniere already has 690 different hockey cards. By contrast, for the 11-year period from 1979 to 1989, Wayne Gretzky only had 275.
--> This breadth of supply may dilute the value of some cards, which can impact those who view cards as an investment rather than a hobby.
4) Vintage cards: Pre-war cards are no longer subject to nostalgia as a driver of demand -- rather, they can be lumped-in with antiques, fine art or other historical collectibles. The collectors holding these sets would largely be boomers, who are currently in their 60s or 70s. Expect to see more pre-war cards to hit the market in the coming years as boomers begin to divest themselves of their collections, or when their inheritors (who may lack the same passion for card collecting) try monetizing them.
5) Information/Technology: Hockey cards are much more liquid than they were in the early 1990s thanks to the Internet. This means that casual investors are still going to be interested in buying cards of well-known players (Gretzky, Orr, McDavid, Howe, etc.) since they're going to have an easier time selling them.
Hobbies and work don't often overlap, but it's fun when they do ...
1) 2020-21 Boom: Demand increased substantially from March 2020 onwards due to:
(a) lockdowns, which saw a lot of people have more free time;
(b) generous government income supports, which actually led to a RISE in average household income despite higher unemployment;
(c) lack of spending opportunities on other leisure activities (e.g. travel, sporting events, concerts, restaurants, movies, etc.) which allowed for more spending on trading cards.
--> This excess demand is currently ending as restrictions ease, income supports are removed and pent-up demand for travel and other leisure activities is allowed to be satisfied. So: Expect lower overall spending on cards, and less time devoted to the hobby by average collectors, from 2022 onwards.
2) Baby boomers and their offspring: If you want to follow the cycle of the hockey card industry, you just need to monitor data on births:
(a) The baby boomers (born 1946 to 1964) drove the demand for hockey cards from the 1950s to the 1970s, as these were exclusively targeted at the large number of kids in society.
(b) The "baby bust" of the 1970s led to fewer 10-year-olds in the 1980s to buy cards -- OPC even reduced its set size from 396 to 264 cards for this reason.
(c) When the large number of baby boomers were having their own kids in the 1980s, they became nostalgic for their own childhood, so they started collecting old toys, comic books and cards. They started buying hockey cards with their own kids in the late 1980s and early 1990s, which led to the first major card boom.
(d) As we know, the 1990s boom ended badly, largely due to over-production. Prices for many boxes in the 1990s still haven't fully recovered some 30 years later.
(e) The past decade saw a third demographic ripple, as kids of boomers were themselves having kids -- so, Boomer Grandkids. They may be getting initiated to card collecting by their parents or grandparents, but unfortunately few of them will become interested in the hobby on their own due to a lack of affordable products. Cards are today generally targeted at collectors, so the average kid can't afford the sticker price (and places that are supposed to have entry-level products, such as Wal-Mart or Target, have been overrun by collectors/speculators). We need more affordable products aimed at kids, such as Tim Horton's cards (which, unfortunately, are only available for one month per year.) If kids today don't become interested in card collecting, then they certainly won't feel any nostalgia for cards when they have jobs and disposable income in 20 years.
3) Supply-side issues: The current boom won't come crashing-down due to oversupply like in the 1990s -- manufacturers have done a good job of building scarcity into their products (e.g. limited print runs, memorabilia, autos, etc.). However, there's a risk that there may too much BREADTH of product. There may be a limit as to the number of different sets, subsets, variants, etc. that the hobby can absorb, but I'm not exactly sure where that limit lies.
For example, Alexis Lafreniere already has 690 different hockey cards. By contrast, for the 11-year period from 1979 to 1989, Wayne Gretzky only had 275.
--> This breadth of supply may dilute the value of some cards, which can impact those who view cards as an investment rather than a hobby.
4) Vintage cards: Pre-war cards are no longer subject to nostalgia as a driver of demand -- rather, they can be lumped-in with antiques, fine art or other historical collectibles. The collectors holding these sets would largely be boomers, who are currently in their 60s or 70s. Expect to see more pre-war cards to hit the market in the coming years as boomers begin to divest themselves of their collections, or when their inheritors (who may lack the same passion for card collecting) try monetizing them.
5) Information/Technology: Hockey cards are much more liquid than they were in the early 1990s thanks to the Internet. This means that casual investors are still going to be interested in buying cards of well-known players (Gretzky, Orr, McDavid, Howe, etc.) since they're going to have an easier time selling them.
Hobbies and work don't often overlap, but it's fun when they do ...
