The private equity firm that is buying and renting homes en masse all over the country has also just bought one of the most popular Pokémon card grading companies.
Blackstone Group Inc. has bought a majority stake in Certified Collectibles Group (CCG), a decades-old memorabilia authenticating and grading company that in recent months has been overwhelmed with a mass influx of Pokémon card grading submissions caused by a white hot market during the pandemic. The deal valued the grading company at more than $500 million.
“We had always thought that we would never sell this incredible company, but when we were approached by Blackstone, we quickly realized that we shared the same vision for a larger, more vibrant and more trusted collectibles market,” Mark Salzberg and Steven Eichenbaum, the founder and CEO of CCG respectively, wrote in a letter to customers. “We also knew that Blackstone's enormous resources, expertise and experience would help propel CCG and the markets that we serve to new heights. With Blackstone's support, we will accelerate our growth by hiring and training more graders, expanding our facilities, serving new markets, developing our digital offerings and much more. These efforts will benefit our customers, employees, company and industry.”
As part of what is already a pretty bizarre deal, Jay-Z's Roc Nation is also making an investment in the company.
For months, CCG and its collectibles grading imprint CGC has been trying to explain why it cannot turn around Pokémon and Magic the Gathering card grades on a reasonable timeline. Thousands of collectors across the country have been flooding the grading companies CGC, PSA, and Beckett Grading Services with what a PSA executive called “an avalanche of cardboard” during the pandemic. Highly graded rare Pokémon cards can fetch thousands or tens of thousands of dollars on the secondary market. To be clear, CCG works in a variety of different collectibles markets. It authenticates coins, grades comic books, throws various industry events, and, about a year ago, started grading Pokémon, Magic the Gathering, and Yu-Gi-Oh cards. Pokémon cards are now one of the company's biggest markets.
In May, CGC CEO Max Spiegel told Motherboard that is trying to keep up with a huge influx of new card submissions.
“Since November, each month has been a record in terms of submissions,” Spiegel said. “We’ve received more than 1 million Pokémon cards alone, which to me is a mind boggling number.”
Blackstone said in a press release that it is interested in the company because of CCG's role in the "physical and digital collectible" space.
"We have been closely following the rise of the global physical and digital collectibles industry for several years and we were drawn to CCG because of their leadership role in the categories that they serve, and Blackstone’s ability to grow the platform through both organic and inorganic initiatives. We look forward to working together to help the company continue and even accelerate its impressive growth trajectory,” the company said.
In recent months, CGC has been hiring for virtually every position at the company and has been offering new hires a $2,000 “start bonus” in an attempt to turn cards around for customers. Blackstone is one of the largest private equity firms in the world; it manages more than $619 billion in investments. The company is most famous for purchasing homes en masse during the financial crisis of 2008 and renting them out en masse. A United Nations working group on human rights called this the “financialization of housing” and said it has had “devastating consequences for people.”
“The financialization of housing is having a grave impact on the enjoyment of the right to adequate housing for millions of people across the world,” the group wrote. Earlier this summer, the Wall Street Journal reported that Blackstone bought a company called Home Partners of America, which owns 17,000 homes throughout the United States. Blackstone paid $6 billion for that company. Blackstone is now, perhaps bizarrely, adding a card grading company to its portfolio.
On the CGC forums, some collectors were very upset about the acquisition, with some people specifically calling out Blackstone's real estate investing.
“I get CCG is a business at the end of the day but Blackstone is literally buying up as many houses as possible across the nation for permanent rentals," one poster wrote. "We will end up with an entire generation that will no longer be able to ever afford a home and will be rental serfs the rest of their lives...Literally talking about letting those guys call the shots at CCG now.”
The move comes during a period of huge growth for the card grading industry, and CGC has faced a major labor shortage.
“People are just working really, really hard,” Spiegel said in May. “The industry has never faced a situation like this … this is really off the charts in terms of demand … from my perspective we just need to stay the course. And unfortunately, there’s going to be a period of slower turnaround times.”