Politics & Policy

Bearish on Bonds

The trading-card market renders a verdict on a slugger's alleged misbehavior.

San Francisco Giant Barry Bonds is now only a couple of home runs away from eclipsing the career record of 755 set by Hank Aaron. Under normal circumstances, that 756th homer would be a joyful event — drawing cheers from across the baseball world. But Bonds’s long-suspected steroid use has cast a dark cloud over the occasion.

Of course, Bonds can claim a good many supporters among ballplayers and fans, particularly in San Francisco. But infamy seems the tenor of the baseball moment. And while Bonds may never see the inside of a courtroom, the marketplace is stating clearly that it is less-than-impressed with this pending historical event.

Which marketplace, you ask? Well, the trading-card marketplace, a multi-billion dollar, free-wheeling, capitalist spontaneous order, replete with private, non-governmental classification and grading systems, and a pricing system studied by Dr. James Beckett, a one-time Ohio statistics professor who today heads a Texas publishing empire

Prices send signals, and prices in the baseball card market are suggesting slow, not spectacular price appreciation for cards featuring Bonds and other sluggers under suspicion of alleged steroid use. These include Jose Canseco, Mark McGwire, and Sammy Sosa — all called to testify before a 2005 congressional committee.

The rookie cards of Canseco, McGwire, and Sosa are trading at prices only slightly above their 1998 levels, back when Yankee slugger Roger Maris’s season record of 61 homers fell. Bonds’s rookie cards have appreciated more in the last decade, but the returns have not been as spectacular as older cards featuring Ruth and Aaron, or cards of modern-era stars untainted by scandal.

According to Beckett Baseball, most of Bonds’s rookie cards, issued in 1986-87 by several firms including Topps, a public company, trade in the $8 to $25 range if they are in near-mint or mint condition. The 1986 Topps Tiffany card of Bonds (a low-distribution card with a print run of 5,000) is the priciest, peaking at $300.

There is little doubt that the value of playing cards for baseball’s greatest sluggers, like fine wine or rare art, will only improve with age. And since Bonds is still playing, and Aaron and Ruth hung up their cleats in eras gone by, there’s no way that Bonds should be in the same trading-card league as these all-time greats.

But only $8 for a near-mint Barry Bonds rookie card? That does not indicate a bright future on the trading-card floor.

And it’s unlikely that Bonds’s rookie card will appreciate at the rate of Aaron’s once he sets a new record. Aaron’s rookie card climbed from 20 cents in 1974 (the year he broke Ruth’s record of 714 homers) to the current $1,000-plus range. Bonds’s rookie card would have to appreciate to $40,000 by 2040 to record an equivalent return.

The economic concept of scarcity is the major reason why Aaron and Ruth cards will continue to command higher prices.  These cards are scarce for many reasons, including recycling drives during World War II, parents cleaning out collections when their kids reached a certain age, the old perception that the cards were worthless junk, and production runs that were much smaller than they are in the modern era.

But the perception of scandal, real or imagined, has also affected the card prices of players like Bonds. As a comparison, the rookie cards of Bonds’s contemporaries who are likely Hall of Famers are all trading at higher prices. These include Roger Clemens ($25), Derek Jeter ($12), and Ichiro Suzuki ($15).

In short, the market is awarding a price premium to good behavior.

There are baseball cards that command six-figure sums that the envious find exorbitant. Their value is not derived from labor or production costs, which are pennies on the dollar. Rather, these cards are reminders that non-coercive exchange has been considered a positive-sum game since Carl Menger developed the concept of subjective value. Marx and other socialists insisted that capitalism is a big zero-sum endeavor. But you won’t get far with that lame argument in a convention hall full of thousands of card traders.

Barry Bonds will hold the all-time home run record. But don’t quit your day job in order to trade his cards in the secondary market. The market is king, and it is seriously questioning Bonds’s legacy — no matter how many homers he belts.

– Greg Kaza is executive director of the Arkansas Policy Foundation, an economic research group in Little Rock.



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