In a nutshell: It doesn’t take a lot of money to become a sports fan, but until a few years ago, there was no way for retail investors to access the lucrative and growing sports collectibles market. By offering fractional shares of iconic sports memorabilia including cards, uniforms and artifacts, Collectable allows fans at all income levels to show their commitment, diversify their assets and generate additional cash to use in lieu of credit.
Sports fans spend a lot of time and energy looking for their favorite players and teams. Year after year, devoted fans support their teams through the ups and downs of the seasons and track players’ careers, some of which records will go down in history and serve as benchmarks for the future.
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Truly devoted fans become experts in their sport, able to recall the most mysterious details and discuss the most intricate nuances of strategy.
It’s no wonder, then, that sports collectibles have such great appeal. For example, baseball cards on one level are sheets of cardboard with a photo on one side and some statistics on the other. But on another level, they are a gateway to greatness, with the most prized cards having an extremely high sustainable value, sometimes running into millions.
In fact, cards, vintage uniforms and other sports memorabilia can be considered one of the original alternative asset classes. High net worth individuals and accredited investors have long been willing to park money in sports collectibles, and those investments have often stood the test of time.
However, everyday fans and retail investors were shut out until 2016, when the JOBS Act relaxed regulations and made this previously exclusive market more accessible. Now both casual and high-end investors are dealing online Collectable to buy fractional ownership in iconic sports collectibles. The result is extra money that can reduce reliance on credit.
“We recognized fractionation as a way to democratize sports collectibles and provide more liquidity and flexibility in the category,” said CEO Ezra Levine.
“Sports fans know who is good and who has the chance to become legendary,” Levine said. “Collectable is a great way to tap into those insights and use them for something that can really grow.”
Before Collectable came on the scene, something like a game worn and signed Michael Jordan Chicago Bulls Shirt would have been way out of reach for most people – it equates to an investment of about $250,000 in today’s market.
Collectable makes owning a piece of that sweater and many similar museum-quality offerings something anyone can do. From baseball to basketball, soccer, hockey, soccer, golf and more, Collectable’s team of acquisition specialists and advisors find the best of the best and make it available to a nationwide investment audience.
“We’re like a high-end auction house that ships items for resale,” Levine said. “We have a lot of data to suggest which athletes and collectibles have historically performed the best over a long period of time, and we use our expertise to determine which pieces will make it onto the platform.”
Collectable then turns those carefully selected items into effects. The lowest valuations come in at around $10,000 with the highest ever valuation on the platform reaching $4 million.
However, the minimum price for partial ownership of a piece is always the price of one share. And that’s an average of $10.
“You literally buy stock the same way you would buy stock in a company,” Levine said. “It’s the same principle applied to high-end sports collectibles.”
Every week, Collectable issues new securitized assets as IPOs (IPOs), essentially creating a separate business entity behind each item. On the web or through the full-featured Collectable app, users link their bank accounts or credit cards to the platform to start investing. All offers are verified and reviewed by third parties, insured and stored securely.
“Once fans join this industry, they generally fall in love with it,” Levine said.
Continuous trading in Collectable’s secondary market allows investors to acquire diversified liquid exposure at affordable prices almost instantly. In a market that significantly outperforms traditional investment, that money is put in the pockets of traders who can use it in place of credit.
Once IPOs are fully funded, there is generally a lock-up period of approximately 65 to 70 days. Investors can then submit bids and ask questions 24/7. Qualifying offers will then be available for trade matching that takes place within a one hour window each weekday.
In addition, during this “power hour,” which takes place Monday through Friday from 3:00 PM to 4:00 PM EST, live bids and offers that fall within the market parameters are instantly matched.
“You can buy and sell anytime, any day,” Levine said. “I am confident we can say we are the most liquid fractional platform out there.”
Trading on the secondary market requires pre-funding from a wallet stored on the platform, with Collectable also performing standard KYC/AML identity verification procedures before traders are eligible to participate.
“People traditionally think of collectibles as a really good store of value,” Levine said. “It is a relatively uncorrelated asset class that has shown really positive returns in the past. And now it is affordable.”
Other opportunities for liquidity gain come from incidental buyout offers. These are subject to a majority vote of each community of shareholders, with each vote weighted pro rata in accordance with the ownership position of the participant. Items that have left the platform have brought significant cash payouts to shareholders.
“Our view is that fractionation has become a leading indicator and the main way people want to participate in collectibles,” Levine said. “If you can bring a bigger stake in something that ultra-high net worth individuals were already interested in, that bodes well for the asset class.”
A lot has happened since the JOBS Act put alternative securitization and fractionation of assets into the mix for retail investors in 2016. When Collectable started, the idea was so new that observers wondered if investors would be willing to buy something they couldn’t physically see and feel.
But with the rise of purely digital non-fungible tokens stored on blockchains, that criticism seems almost strange.
“Now we’re the conservatives in a sense, where you actually own partial equity in a physical item,” Levine said. “That’s very different from owning an item that will never have a physical component.”
Meanwhile, interest in the asset class has never been higher. More and more accredited investors are looking for alternative assets, including sports collectibles as hedges, with Collectable’s proprietary data demonstrating the strength of the class.
“Our index shows that if you invested $100 evenly in every item we had on the platform between September 2020 and April 2021, you would be up 47.7%,” Levine said.
But as a class, the biggest advantage of sports collectibles is the enthusiasm of the fans. Collectable offers opportunities from the top to casual investors looking for a way to store their credit cards.
“There’s real financial justification for this market,” Levine said. “We have seen in recent years that alternative assets in general are gaining prominence, both in terms of mind share and wallet share.”
“And we’ve seen a lot of new and different types of players pop up in the sports collectibles category,” Levine said. “Besides millions and millions of retail participants, you have institutional capital, you have celebrities and athletes and entertainers, you have mainstream media. The level of focus and attention has never been higher.”
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