Rumor Mill: PSA acquiring SGC

[NYRE2PECT]

Was told an interesting rumor during a private conversation today that PSA was going acquire SGC and the deal was all but done.

Reaction, if true?


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[Southpas2013]

That would be great.

I dont use SGC , so they woukd inherent more graders desperately needed and another office to send cards should help the bottle neck.

[RufussCkingston]

The only way I can rationalize such a thing happening is that PSA is basically buying graders. But does SGC really have that many where it would be worth the effort of basically doing a slight re-train and having to handle the logistics of a new grading location.

[rms13]

Originally Posted by RufussCkingston

The only way I can rationalize such a thing happening is that PSA is basically buying graders. But does SGC really have that many where it would be worth the effort of basically doing a slight re-train and having to handle the logistics of a new grading location.

Exactly. And couldn’t they lure them away with better job offers instead of buying the company? It might make sense if they just wanted to put competition out of business


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[ScooterMcRibs]

Originally Posted by RufussCkingston

The only way I can rationalize such a thing happening is that PSA is basically buying graders. But does SGC really have that many where it would be worth the effort of basically doing a slight re-train and having to handle the logistics of a new grading location.

Yes, SGC only makes sense as an acquihire, and even then it probably makes no sense. SGC as a business has no value to PSA.

[ophion]

That's hard to believe seeing that SGC video tour was released recently and that SGC is in Florida.

[salthill]

Originally Posted by ophion

That's hard to believe seeing that SGC video tour was released recently and that SGC is in Florida.

Which makes sense if PSA want to open in new locations. Which PSA have said they do.
Hmmmm.

[Woodsy074]

Pretty sure this would violate the Sherman Antitrust Act. PSA effectively has a monopoly in the space. One random lawsuit and it’s tied up forever and the courts will likely not allow it to happen.

[premium1981]

Originally Posted by Woodsy074

Pretty sure this would violate the Sherman Antitrust Act. PSA effectively has a monopoly in the space. One random lawsuit and it’s tied up forever and the courts will likely not allow it to happen.

What? Do you know what a monopoly is? I can list 5 well known grading companies right now off the top of my head and I can expand that to 10 with adding some crappier competition. Businesses get bought out all the time. This one would be no different if it actually happened.

I personally think it makes sense for PSA. They need more locations. You can only find so many graders in one region. Expanding opens up more opportunities for them, which they have stated they are looking to do. No clue if it will happen or not, but it makes sense.

[Woodsy074]

Originally Posted by premium1981

What? Do you know what a monopoly is? I can list 5 well known grading companies right now off the top of my head and I can expand that to 10 with adding some crappier competition. Businesses get bought out all the time. This one would be no different if it actually happened.

I personally think it makes sense for PSA. They need more locations. You can only find so many graders in one region. Expanding opens up more opportunities for them, which they have stated they are looking to do. No clue if it will happen or not, but it makes sense.

I don’t know the exact number but PSA easily has the largest market share right now (thought someone did the numbers once looking at published pop controls and it’s something absurd like 75% and growing). That’s effectively a monopoly by any textbook. SGC is probably #3 behind BGS right now so yeah, think this is a example of where the law would be applied. Not saying it is going to happen nor should the government waste time regulating trading cards but have seen the US government do crazier things in my lifetime so it’s a definite possibility. All it takes is one lawsuit and then it’s tied up for years in the courts.

[ArmyDC]

No brainer from PSA, you get their setup in Florida. No offense to the Cali bros but Florida is an easier place to get people to work/setup shop.

[Scottish Punk]

This seems a bit far fetched. SGC doesn't seem like the company that would want to sell and disappear after spending so much time changing their image.

It does make a certain amount of sense for PSA to expand faster. This gives them a new location and equipment for more throughput. When you are as back logged as they are now, organic growth is likely not enough. They are private, so Foreman is the one that needs the sweet deal - money and stock options.

As an SGC collector, it would suck. The company would basically disappear. I don't see why PSA would honor SGC slabs for registry or whatnot. Maybe a limited time cross over special is the best to hope for.

[Scottish Punk]

This seems a bit far fetched. SGC doesn't seem like the company that would want to sell and disappear after spending so much time changing their image.

It does make a certain amount of sense for PSA to expand faster. This gives them a new location and equipment for more throughput. When you are as back logged as they are now, organic growth is likely not enough. They are private, so Foreman is the one that needs the sweet deal - money and stock options.

As an SGC collector, it would suck. The company would basically disappear. I don't see why PSA would honor SGC slabs for registry or whatnot. Maybe a limited time cross over special is the best to hope for.

[KhalDrogo]

Makes perfect sense for both parties if the price is right and SGC actually has the capability to pump out PSA slabs at good volume. It would be almost an overnight capacity bump that PSA desperately needs. They are sitting on hundreds of millions in untapped revenue because they don’t charge until the order is complete.

[Scottish Punk]

I guess the other bonus is those trimmers based in Florida will cut down on shipping!!

[premium1981]

Originally Posted by Woodsy074

I don’t know the exact number but PSA easily has the largest market share right now (thought someone did the numbers once looking at published pop controls and it’s something absurd like 75% and growing). That’s effectively a monopoly by any textbook. SGC is probably #3 behind BGS right now so yeah, think this is a example of where the law would be applied. Not saying it is going to happen nor should the government waste time regulating trading cards but have seen the US government do crazier things in my lifetime so it’s a definite possibility. All it takes is one lawsuit and then it’s tied up for years in the courts.

Wrong and wrong. They aren't a monopoly, and any "lawsuit" claiming they were would be almost immediately thrown out if that was what the suit was for.

[peanuts]

Originally Posted by premium1981

Wrong and wrong. They aren't a monopoly, and any "lawsuit" claiming they were would be almost immediately thrown out if that was what the suit was for.

Adding on to this - in order for any antitrust action to be taken, one needs to be able to prove that the entity in question is engaged in concerted efforts to stifle competition. Usually needs to be a visible component that the consumer is suffering because of these actions as well.

PSA doesn’t meet these criteria. They may have a large market share, but legally there’s nothing wrong with that, so long as they play fair and don’t use their position to the detriment of the consumer.

[kabrune2]

Yes, this makes a ton of sense...
- PSA has made it known they want to open another office, SGC is in Florida and has decent office space to grow, Florida is as far from California as it gets
- PSA needs more graders
- PSA needs more resources for plastic, this is a real issue
- SGC cashes out at the height of grading

As for the lawsuit, it has merit and could be tied up for years before being allowed to proceed, but only if BGS/HGA/CGS/etc file a complaint, and you bet they will. If Verizon/Sprint deal was tied up for a year and allowed to proceed (when they had no where near 70% combined), PSA with 70% market share will be scrutinized for any acquisition within its space. I’m not sure what SGC’s market share is, but there will be legal challenges, however I think at the end of the day it’ll be allowed to proceed as it’s a small % of the market share they are acquiring.

[LTLurker]

Originally Posted by rms13

Exactly. And couldn’t they lure them away with better job offers instead of buying the company? It might make sense if they just wanted to put competition out of business


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Acquihires are a real thing, and happen extremely often. "luring away with better job offers" will end up costing significantly more money when you bring in recruiting costs, opportunity cost (time), competition (BGS/CGS doing the same) etc.

[alphaomegas]

if theirs ever a lawsuit it be for slabing 9's on cards that deserves 10 to control pop report.

[TSonn]

I think it makes sense for 2 reasons:

1. New location in Florida
2. PSA would use the SCG location for all bulk/value/economy

[discodanman45]

Originally Posted by TSonn

I think it makes sense for 2 reasons:

1. New location in Florida
2. PSA would use the SCG location for all bulk/value/economy

Number 2 doesn't make sense to me. SGC can only grade 4000 cards a day. It would take them 7 years to get through a year of bulk.

What does make sense to me is SGC becoming the home of grading vintage through the junk wax era cards for PSA. Anything pre 1996 to SGC.

[The_Reverend]

If this rumor becomes reality it would be huge. 2 locations number one. 2nd would provide PSA immediately experienced graders. The negative and this is huge. If the SGC brand went away the value could possibly go as well.

[airforce21one]

Originally Posted by Woodsy074

Pretty sure this would violate the Sherman Antitrust Act. PSA effectively has a monopoly in the space. One random lawsuit and it’s tied up forever and the courts will likely not allow it to happen.

Lol, what?

[airforce21one]

Originally Posted by Woodsy074

I don’t know the exact number but PSA easily has the largest market share right now (thought someone did the numbers once looking at published pop controls and it’s something absurd like 75% and growing). That’s effectively a monopoly by any textbook. SGC is probably #3 behind BGS right now so yeah, think this is a example of where the law would be applied. Not saying it is going to happen nor should the government waste time regulating trading cards but have seen the US government do crazier things in my lifetime so it’s a definite possibility. All it takes is one lawsuit and then it’s tied up for years in the courts.

Monopolies aren't determined by market share, they are determined by the lack of competitors. PSA has the highest market share because they are the industry standard and generally the highest ROI. If PSA was somehow abusing their position - say, by forcing PSA graded cards to be sold specifically on a PSA platform - you may have an argument, but they aren't.

Then courts ask if that leading position was gained or maintained through improper conduct—that is, something other than merely having a better product, superior management or historic accident. Here courts evaluate the anticompetitive effects of the conduct and its procompetitive justifications.


https://www.ftc.gov/tips-advice/comp...zation-defined