L.A.-based entrepreneur Brian Lee, who previously co-founded and ran The Honest Company, ShoeDazzle.com, and LegalZoom, has launched a new sports card collecting platform that’s likely to make a splash, not least because his cofounder in the endeavor is Baseball Hall of Famer Derek Jeter.
Backed by $9 million in funding from Lightspeed Venture Partners, Defy.vc and BAM Ventures (also cofounded by Lee), the outfit launched today with a somewhat unique and digitally-enabled approach to helping collectors sell, store, and verify their sports trading cards.
First, what it’s not is an NFT play (shockingly), though you could see a future where digital trading cards are on the table, so to speak. Instead the pair are looking to bridge the physical and digital worlds of sports collecting by creating online showrooms where users on the platform can buy, sell, trade and display their cards, while the physical cards are locked in a “state of the art” vault controlled by the company, which is called Arena Club.
If a collector wants their cards close at hand after they’ve been authenticated by Arena Club, the startup will send the cards back in protective “slabs,” it says. Which brings us to another facet of the business. According to the outfit, it will provide users with a faster and more transparent authentication and grading process through computer vision and machine learning. (They’ve brought on as advisor a big name in AI, too: Jia Li, an AI Fellow at Stanford and formerly the head of R&D at Google Cloud, head of research at Snap, and head of visual computing at Yahoo! Labs.)
According to Arena Club, for every card graded on the platform, it will release a transparent grading report to collectors that explains in detail a justification for the grade.
As for how Arena Club will make money, Sports Collectors Daily notes the new outfit has a few cards up its sleeve (sorry). It’s charging $25 fee to grade, vault and list cards for sale on the site, or $35 to grade a card and return it. Additionally, Arena Club plans to charge a 5% fee to the seller based on the cash value of each transaction.
Lee and Jeter are chasing a big and growing market that was kicked into overdrive during the pandemic, when people were trapped at home and looking to spend some of the money accruing in the bank accounts. Underscoring some of that growth, Topps, the most iconic card maker, was bought by licensed sports apparel and merchandise giant Fanatics for $500 million in January. (Topps had actually planned to go public through a blank-check company last year, but the deal fell apart when Topps soon after lost a 70-year trading card deal with MLB to Fanatics.)
It’s possible to track the growing excitement around sports cards by looking at cards of Jeter himself, which have sold for increasingly large fortunes. In 2018, a Derek Jeter rookie card sold for $99,100 — the highest price ever paid for a modern-day baseball card at the time. In 2020, another of his rookie cards set another record, selling for $180,000. Last year again, a record was reportedly broken when a Derek Jeter rookie card in mint condition was sold for an astonishing $690,000.
There has been so much froth in sports card trading that the space has become crowded, which could prove challenging for Arena Club, as could the fact that some cards are coming down in price. (According to a report last month in The Athletic, high-end collecting in particular remains robust while other segments are struggling.)
While Lee is well-known in investor and founder circles, Jeter is also becoming more of a known quantity off the baseball field. In 2014, the year he hung up his cleats, he cofounded The Players Tribune, an athlete-driven website that was acquired by Minute Media in 2019. He was, for a time, part owner in the Miami Marlins baseball team, which he led as CEO until February. Jeter has also made numerous startup investments since retiring from baseball, including investing in the video conferencing company Blue Jean Networks.
Jeter was slow to embrace social media, creating Twitter and Instagram profiles in May of this year.
He hasn’t used either account yet to promote Arena Club, however. Tech investors and founders will know he has fully crossed the Rubicon when he does.