A year ago, Collectors Universe Inc. was taken private by a group of investors who paid $853 million for the Santa Ana-based authenticator of baseball cards, coins and other memorabilia.
In March, these same investors, who include the owner of the New York Mets and professional athletes such as Kevin Durant, invested another $100 million in the growing business.
The value one year later: $4.3 billion, according to company officials.
“The growth of the business is significant,” Chief Financial Officer Jason Harinstein told the Business Journal.
“The increase in growth justifies the value. You have (a) group of investors who have been around the table for a year seeing its growth.”
The company has grown from $105 million in sales in calendar 2020 to more than $300 million last year, Harinstein said. In Collectors’ three prior fiscal years, sales hovered around $40 million.
The company—profiled in the March 14 print edition of the Business Journal—has a new name to go with the new valuation. It ditched the “Universe” part of its name and is now called Collectors Holding Inc. to better reflect its group of businesses.
It’s the owner of PSA, which authenticates trading cards and memorabilia; PCGS, which grades coins and currency; and WATA, which values video games and pop culture.
“All of our businesses are growing,” Harinstein said.
$522B Industry
Collectors dates to 1986 when Professional Coin Grading Services (PCGS) was founded in 1986 and then Professional Sports Authenticator (PSA) in 1991. Collectors went public in 1999 and for a decade hovered around a $30 million market cap.
In the past 10 years, it steadily climbed in value from around $100 million until its eventual purchase for $853 million last year.
Chief Executive and Chairman Nat Turner, who sold FlatIron Health for $1.9 billion in 2018, led a group of investors that included hedge fund magnate Stephen Cohen, owner of the New York Mets, and Dan Sundheim, whose DI Capital opened a $5 billion fund in 2018 and is part owner of the Charlotte Hornets. Other investors include The Chernin Group and athletes such as Kelvin Beachum, Larry Fitzgerald, Ken Kendrick, and Andy Roddick.
The collectibles industry is expected to be worth $522 billion globally by 2028, up from $372 billion in 2020, Collectors said.
The company said its earnings before interest, taxes and depreciation more than doubled in 2021.
“Our valuation wasn’t based on sales but on EBITDA,” Harinstein said.
Buying Spree
In recent months, it’s made five acquisitions, including an online collectibles marketplace called Goldin that Harinstein describes as a high-end online auction house that does for cards what Sotheby’s does for art.
The $100 million will be used to for more acquisitions, he said.
“We didn’t need to raise it in the sense that business is quite profitable,” he said. “It’s [an] opportunistic raise to give us more dry powder. We wanted to make sure we were nimble. It’s a fast-moving environment.”
Last year, the company was so overwhelmed by demand that it had to shut down accepting new valuations so it could work through its backlog of 13 million items. Harinstein said the company still sees plenty of growth in the U.S., noting it recently opened a second grading site in New Jersey.
Harinstein is expecting to expand its operations in Japan where Pokémon cards are popular.
“Globally, our brand is being recognized,” he said.
The company is planning to open a 11,000-square-foot vault in Delaware where collectors can digitally manage their collection through Collectors.com and then offer the cards for sale at any time through the Goldin marketplace.
“We’re performing an important function to bring trust to customers,” Harinstein said. “We’re removing friction from those who received certified cards and maybe prefer to have a secure place to store them rather than home. We’re making it much easier to sell a card. We have the ability to say this card exists and it is what the owner says it is.”
Local Expansion
In the past three years, Collectors has expanded its Santa Ana base of operations from 60,000 square feet to 185,000 square feet. The company is still looking for more space in Orange County, Harinstein said.
It’s also looking for more employees. It wants to double the number of employees from 1,000 at the end of last year to 2,000.
“We’re continuing to attract top-tier talent from really significant companies. There are a lot of people out there passionate about collecting,” he said.
“This isn’t a small niche cottage industry anymore. There’s a lot of capital and revenue flowing through the business. Now it’s a booming empire.”
