Manufactured Gold

[Ze-man]

 

If I'm struggling Dealer X, and I'm not independently wealthy, and I've got a mortgage to pay and maybe a kid on the way.....and I don't have a huge professional practice on the side to subsidize my comic biz.....I'd probably ask myself why I should leave mucho bucks on the table just so some other sleazebag will scoop it up and resub.

 

 

 

And that is the exact same reasoning why dealers are not in favor of disclosure. If they openly disclose their books are pressed, or worse yet disassembled. They more then likely take a hit because people will not pay a premium for disassembled, pressed books(most people anyways). So then the buyer could just take that book, relist it and not disclose it was pressed. And probably sell it for more then he bought it for. Poof.. instant cash..

 

The entire resub system makes it easier for dealers to make more and more money, then it is to just be honest and sell the books as they are. Money is funny that way.

 

Even if I had the money seriously doubt I would buy HG anymore, too many landmines out there.

 

Very interesting material Filter, and Chief.

 

Thank you for taking the time and putting it out there for every one to see , and make up their own mind.

 

Ze-

[mica]

This isn't about pressing. Who mentioned pressing? The books that Master Chief has been showing here have had more than pressing administered to them.

Exactly.

[Red Hook]

 

 

And that is the exact same reasoning why dealers are not in favor of disclosure. If they openly disclose their books are pressed, or worse yet disassembled. They more then likely take a hit because people will not pay a premium for disassembled, pressed books(most people anyways).

Ze-

 

Too bad for them. So the unaware buyer should subsidize the game, right?

 

 

Not.

[Ze-man]

 

 

And that is the exact same reasoning why dealers are not in favor of disclosure. If they openly disclose their books are pressed, or worse yet disassembled. They more then likely take a hit because people will not pay a premium for disassembled, pressed books(most people anyways).

Ze-

 

Too bad for them. So the unaware buyer should subsidize the game, right?

 

 

Not.

 

Poor dealers, they really wanna do what's right, but there are just too many bad guys out there that would take advantage of the situation.

 

Plus the extra money is nice too.

 

Ze-

[drbanner]

Wake up, folks! Heritage can make a whole lot more money from this business strategy than merely gobbling up the vig from buyer and seller. Once the books that are consigned to Heritage are in their hands, they can look them over for the most likely "upgrade" candidates, and then attempt to win as many of them as possible at auction.

 

 

And remember, a few years ago there was apparently some innuendo that Matt Nelson was working for Heritage. Having the books in-hand to identify "likely candidates" would definitely be the way to go if you were looking to crack/improve/resub, whether it was formally through Heritage, or as a buyer/consignor.

 

Just as I remembered - Cleaned And Pressed By Matt Nelson. Matt working for Heritage (or not), Heritage buying their own books, improving them, and re-selling them, even ablue proclaiming "cleaned and pressed is the way to go!"...it's all here from 2 1/2 years ago!!

[Red Hook]

Thanks for the trip down memory lane.

 

Is it really Groundhog Day?

[Filter81]

Nice Find.

 

That thread does bring up an interesting point though. It is my understanding that Halperin has always said Heritage employees can bid on books for their own collections, but will not bid against you for resale purposes.

 

(Because obviously that would not be looked at in a positive light considering Heritage employees would potentially have a built-in discount, not to mention having the ability to log into Heritage's system and see what other competing bidders have bid. Also, there would be a serious conflict of interest if Heritage employees are trying to get books on their site to sell cheap so they can resell them for a profit, when first and foremost their job as consignors should be to get the best possible price for their clients.)

 

Anyway, my point is, unless I have been misinformed, Halperin has always said Heritage employees will not bid on books for resale purposes. And yet at the time of that thread Matt was apparently an employee of Heritage who was buying books for resale purposes. Should Halperin amend his statement to say "Heritage employees are not allowed to bid on books for resale purposes... except for Matt"?

 

I don't have a problem with Matt playing the game, same as everyone else, but it seems to me this is just another example of Heritage saying one thing and then doing another.

[qualitycomix]

Nice Find.

 

That thread does bring up an interesting point though. It is my understanding that Halperin has always said Heritage employees can bid on books for their own collections, but will not bid against you for resale purposes.

 

(Because obviously that would not be looked at in a positive light considering Heritage employees would potentially have a built-in discount, not to mention having the ability to log into Heritage's system and see what other competing bidders have bid. Also, there would be a serious conflict of interest if Heritage employees are trying to get books on their site to sell cheap so they can resell them for a profit, when first and foremost their job as consignors should be to get the best possible price for their clients.)

 

Anyway, my point is, unless I have been misinformed, Halperin has always said Heritage employees will not bid on books for resale purposes. And yet at the time of that thread Matt was apparently an employee of Heritage who was buying books for resale purposes. Should Halperin amend his statement to say "Heritage employees are not allowed to bid on books for resale purposes... except for Matt"?

 

I don't have a problem with Matt playing the game, same as everyone else, but it seems to me this is just another example of Heritage saying one thing and then doing another.

 

You're assuming that Matt was an employee of Heritage. Has that been proven?

 

Maybe he just worked as a consultant and thus wasn't on the payroll.

[esquirecomics]

Nice Find.

 

That thread does bring up an interesting point though. It is my understanding that Halperin has always said Heritage employees can bid on books for their own collections, but will not bid against you for resale purposes.

 

(Because obviously that would not be looked at in a positive light considering Heritage employees would potentially have a built-in discount, not to mention having the ability to log into Heritage's system and see what other competing bidders have bid. Also, there would be a serious conflict of interest if Heritage employees are trying to get books on their site to sell cheap so they can resell them for a profit, when first and foremost their job as consignors should be to get the best possible price for their clients.)

 

Anyway, my point is, unless I have been misinformed, Halperin has always said Heritage employees will not bid on books for resale purposes. And yet at the time of that thread Matt was apparently an employee of Heritage who was buying books for resale purposes. Should Halperin amend his statement to say "Heritage employees are not allowed to bid on books for resale purposes... except for Matt"?

 

I don't have a problem with Matt playing the game, same as everyone else, but it seems to me this is just another example of Heritage saying one thing and then doing another.

 

You're assuming that Matt was an employee of Heritage. Has that been proven?

 

Maybe he just worked as a consultant and thus wasn't on the payroll.

 

My understanding was that to the extent Matt was "working" for Heritage it was as an independent contractor, not employee.

[adamstrange]

Nice Find.

 

That thread does bring up an interesting point though. It is my understanding that Halperin has always said Heritage employees can bid on books for their own collections, but will not bid against you for resale purposes.

 

(Because obviously that would not be looked at in a positive light considering Heritage employees would potentially have a built-in discount, not to mention having the ability to log into Heritage's system and see what other competing bidders have bid. Also, there would be a serious conflict of interest if Heritage employees are trying to get books on their site to sell cheap so they can resell them for a profit, when first and foremost their job as consignors should be to get the best possible price for their clients.)

 

Anyway, my point is, unless I have been misinformed, Halperin has always said Heritage employees will not bid on books for resale purposes. And yet at the time of that thread Matt was apparently an employee of Heritage who was buying books for resale purposes. Should Halperin amend his statement to say "Heritage employees are not allowed to bid on books for resale purposes... except for Matt"?

 

I don't have a problem with Matt playing the game, same as everyone else, but it seems to me this is just another example of Heritage saying one thing and then doing another.

 

You're assuming that Matt was an employee of Heritage. Has that been proven?

 

Maybe he just worked as a consultant and thus wasn't on the payroll.

 

My understanding was that to the extent Matt was "working" for Heritage it was as an independent contractor, not employee.

 

I'm confident that Matt has worked as a contractor for Heritage and I'm not aware that he has been an employee.

[adamstrange]

But doesn't your post proceed from the assumption that everyone cares about pressing? Many are not practicing self-delusion, they simply don't care if a book has been pressed or not.

 

Jeff, I'm not talking about simply Pressing.

 

I'm talking about the whole discounted purchase of consignment items/resub/resell model that Filter outlined so well last night. To me, it smacks of a serious conflict of interest between the auction house and the consignor.

 

The 19.5% buyers premium will always insure Heritage has the upperhand over outside bidders on any item it wants, and to add insult to injury, the seller still has to give up a 10% commission for the sale.

 

And let's not forget, its no longer Pressing, its now Disassembly and Pressing. Because anyone who buys a high dollar slabbed book has to accept the possibility that the book has been taken apart as well as Pressed if its sitting in a Blue label holder.

 

The 19.5% advantage is not quite what you think. If Heritage sells the book to a non-Heritage customer, they get a 19.5% payment, income they won't receceive when they purchase it for their own account. Smart accountants will actually separate the transactions so that they credit the Auction division with the 19.5% they would have gotten, forcing the Sales division to make the type of return that a dealer or customer would.

 

BTW, what makes you certain that Heritage is able to extract 19.5% from its biggest consignors?

[JiveTurkeyMoFo]

But doesn't your post proceed from the assumption that everyone cares about pressing? Many are not practicing self-delusion, they simply don't care if a book has been pressed or not.

 

Jeff, I'm not talking about simply Pressing.

 

I'm talking about the whole discounted purchase of consignment items/resub/resell model that Filter outlined so well last night. To me, it smacks of a serious conflict of interest between the auction house and the consignor.

 

The 19.5% buyers premium will always insure Heritage has the upperhand over outside bidders on any item it wants, and to add insult to injury, the seller still has to give up a 10% commission for the sale.

 

And let's not forget, its no longer Pressing, its now Disassembly and Pressing. Because anyone who buys a high dollar slabbed book has to accept the possibility that the book has been taken apart as well as Pressed if its sitting in a Blue label holder.

 

The 19.5% advantage is not quite what you think. If Heritage sells the book to a non-Heritage customer, they get a 19.5% payment, income they won't receceive when they purchase it for their own account. Smart accountants will actually separate the transactions so that they credit the Auction division with the 19.5% they would have gotten, forcing the Sales division to make the type of return that a dealer or customer would.

 

BTW, what makes you certain that Heritage is able to extract 19.5% from its biggest consignors?

 

Second question first: Isn't the cost to the seller/consignor normally 10%? (or less)

I thought the 19.5% Buyer's Premium applied to all bidders across the board.

 

As to your first point, consider this:

 

1). Heritage buys book X for $1,000 (should have been $1,195.00 with Buyer's Premium, if anyone else were to buy it). Now, does the 10% seller's fee come out of the gross (with BP) or the net bid? I'm guessing its the net, which would mean after the seller's fee, they really only pay $900 for the book.

 

2). Heritage resells now "improved" book X for $1,792.50 several months later to a legitimate bidder ($1,500 bid plus $292.50 Buyer's premium). $500 profit on the book (minus restoration fees), and an additional $292.50 BP.

 

The BP rises exponentially with the profit on the book. I don't know, it seems like they would do pretty good in that hypothetical scenario.

[adamstrange]

But doesn't your post proceed from the assumption that everyone cares about pressing? Many are not practicing self-delusion, they simply don't care if a book has been pressed or not.

 

Jeff, I'm not talking about simply Pressing.

 

I'm talking about the whole discounted purchase of consignment items/resub/resell model that Filter outlined so well last night. To me, it smacks of a serious conflict of interest between the auction house and the consignor.

 

The 19.5% buyers premium will always insure Heritage has the upperhand over outside bidders on any item it wants, and to add insult to injury, the seller still has to give up a 10% commission for the sale.

 

And let's not forget, its no longer Pressing, its now Disassembly and Pressing. Because anyone who buys a high dollar slabbed book has to accept the possibility that the book has been taken apart as well as Pressed if its sitting in a Blue label holder.

 

The 19.5% advantage is not quite what you think. If Heritage sells the book to a non-Heritage customer, they get a 19.5% payment, income they won't receceive when they purchase it for their own account. Smart accountants will actually separate the transactions so that they credit the Auction division with the 19.5% they would have gotten, forcing the Sales division to make the type of return that a dealer or customer would.

 

BTW, what makes you certain that Heritage is able to extract 19.5% from its biggest consignors?

 

Second question first: Isn't the cost to the seller/consignor normally 10%? (or less)

I thought the 19.5% Buyer's Premium applied to all bidders across the board.

 

As to your first point, consider this:

 

1). Heritage buys book X for $1,000 (should have been $1,195.00 with Buyer's Premium, if anyone else were to buy it). Now, does the 10% seller's fee come out of the gross (with BP) or the net bid? I'm guessing its the net, which would mean after the seller's fee, they really only pay $900 for the book.

 

2). Heritage resells now "improved" book X for $1,792.50 several months later to a legitimate bidder ($1,500 bid plus $292.50 Buyer's premium). $500 profit on the book (minus restoration fees), and an additional $292.50 BP.

 

The BP rises exponentially with the profit on the book. I don't know, it seems like they would do pretty good in that hypothetical scenario.

 

The "buyer's premium" is money paid by the purchaser to Heritage that does not go to the consigner. Hence it is part of the Heritage commission. Smart consignors will negotiate the lowest overall commission possible, up to and including zero percent BP and seller's commission. Will Heritage bite at zero? Probably not. Might they bite at something less than 30? 20? Very possibly -- if it's a deal that would justify a lower rate.

[adamstrange]

But doesn't your post proceed from the assumption that everyone cares about pressing? Many are not practicing self-delusion, they simply don't care if a book has been pressed or not.

 

Jeff, I'm not talking about simply Pressing.

 

I'm talking about the whole discounted purchase of consignment items/resub/resell model that Filter outlined so well last night. To me, it smacks of a serious conflict of interest between the auction house and the consignor.

 

The 19.5% buyers premium will always insure Heritage has the upperhand over outside bidders on any item it wants, and to add insult to injury, the seller still has to give up a 10% commission for the sale.

 

And let's not forget, its no longer Pressing, its now Disassembly and Pressing. Because anyone who buys a high dollar slabbed book has to accept the possibility that the book has been taken apart as well as Pressed if its sitting in a Blue label holder.

 

The 19.5% advantage is not quite what you think. If Heritage sells the book to a non-Heritage customer, they get a 19.5% payment, income they won't receceive when they purchase it for their own account. Smart accountants will actually separate the transactions so that they credit the Auction division with the 19.5% they would have gotten, forcing the Sales division to make the type of return that a dealer or customer would.

 

BTW, what makes you certain that Heritage is able to extract 19.5% from its biggest consignors?

 

Second question first: Isn't the cost to the seller/consignor normally 10%? (or less)

I thought the 19.5% Buyer's Premium applied to all bidders across the board.

 

As to your first point, consider this:

 

1). Heritage buys book X for $1,000 (should have been $1,195.00 with Buyer's Premium, if anyone else were to buy it). Now, does the 10% seller's fee come out of the gross (with BP) or the net bid? I'm guessing its the net, which would mean after the seller's fee, they really only pay $900 for the book.

 

2). Heritage resells now "improved" book X for $1,792.50 several months later to a legitimate bidder ($1,500 bid plus $292.50 Buyer's premium). $500 profit on the book (minus restoration fees), and an additional $292.50 BP.

 

The BP rises exponentially with the profit on the book. I don't know, it seems like they would do pretty good in that hypothetical scenario.

 

I didn't say it wasn't in Heritage's interest to have a "Sales" Division to wring additional profits in comics. It's quite clear they have been very clever in their coin division to identify any and all means to make money. If they haven't done that yet with comics, it's not because they don't understand how to do it. My explanation that follows is more on how a typical company would organize to support this type of business model and does not speak to whether Heritage has or should do this.

 

In your example, their Comic Sales Division has to put at risk 900 bucks of capital + pressing + resub fees in hopes of eventual profit, which may or may not happen. Businesses only have so much capital and have to continually evaluate whether to take the sure thing (commision on the initial sale and possible commission on the second sale -- remember they are encouraging a network of dealers to set up in Dallas/Texas). That sure thing requires minimal capital for them (cost of insurance, cataloging, etc) and may generate a relatively high ROIC (return on invested capital) -- which is the measure more and more companies are focusing on.

 

Suppose that the bright kids in the Comic Sales Division buy a comic to "improve" it but then end up selling it for equal or less than what they paid. Now the Comic Auction Division has twice incurred the expense of the auctioning of the comic, while receiving only one payment for it. That isn't fair and it encourages unduly risky behavior by your Comic Sales Division. To forestall that, you the Comic Sales Division to pay the same premium that regular customers would. Not to mention there will most likely be somebody running the Comic Auction Division who wants to be profitable. He does not want the Comic Sales Division to "take" his guaranteed income -- plus he may in fact have to rebate BP to account for a special consignment deal.

[JiveTurkeyMoFo]

In your example, their Comic Sales Division has to put at risk 900 bucks of capital + pressing + resub fees in hopes of eventual profit, which may or may not happen.

 

I don't think this is so hard a proposition as you suggest. Between an expert evaluation of a book they have in hand, whether it be Matt Nelson or someone in-house, and the available CGC notes, I would say their success rate is probably pretty high. And when it comes to GA books of note, it doesn't take a huge bump in grade to justify the expense.

 

Of course, something not often mentioned before is the possibility of Heritage or its own employees shilling their own auctions.

 

After all, how great would the temptation be to know what an outside bidder is willing to pay for a book by logging into the system and checking their maximum bid on one of your own restored/reslabbed/resell books?

 

We see how common shilling is on ebay by dozens of "gotcha!" threads posted on these boards over the years.

 

Do you really trust Heritage to play fair and not bend the rules of the game to suit their financial interests? Why would they ever take a loss on one of their own books when they could avoid it with a timely bid? Heck, they don't even have to put the same book on auction over and over again, they could just send it to Lewis Wayne Galleries and get rid of it that way.

[adamstrange]

In your example, their Comic Sales Division has to put at risk 900 bucks of capital + pressing + resub fees in hopes of eventual profit, which may or may not happen.

 

I don't think this is so hard a proposition as you suggest. Between an expert evaluation of a book they have in hand, whether it be Matt Nelson or someone in-house, and the available CGC notes, I would say their success rate is probably pretty high. And when it comes to GA books of note, it doesn't take a huge bump in grade to justify the expense.

 

Of course, something not often mentioned before is the possibility of Heritage or its own employees shilling their own auctions.

 

After all, how great would the temptation be to know what an outside bidder is willing to pay for a book by logging into the system and checking their maximum bid on one of your own restored/reslabbed/resell books?

 

We see how common shilling is on ebay by dozens of "gotcha!" threads posted on these boards over the years.

 

Do you really trust Heritage to play fair and not bend the rules of the game to suit their financial interests? Why would they ever take a loss on one of their own books when they could avoid it with a timely bid? Heck, they don't even have to put the same book on auction over and over again, they could just send it to Lewis Wayne Galleries and get rid of it that way.

 

The point of my post is about how businesses organize and account for activities. I'm pretty sure Heritage does organize something like this (they are financially very sophisticated). I just thought that this explanation might be helpful to those that haven't looked at this subject.

 

I will leave the other issues you raise for others to comment on.

[jkrk]

I'm not trying to beat a dead post but...........................

 

Under the new, new, newly understood definition on Restored books... What do I have?

 

 

1)A restored book?

2)A book in which the restorer left some parts out of his finished job?

3)A book in a holder that will change color if the staples are put in?

4)An incomplete restoration with a book in the pending file?

5)A book that contained vintage staples that were needed elsewhere?

6)A book that is halfway to paradise?

7)It is what it is?

 

Part "B"

If staples are put in. is the book worth?

 

A)More?

B)Less?

C)The same?

D)All of the above?

[LearnedHand]

Finally found the time to read this thread. MasterChief’s due diligence has reinforced what many of us know all too well – once real money is involved, the profiteering becomes more obvious and maybe more rampant. I’ll be the first to admit that I do not like tampering of any kind, and it’s unsettling to think that a book can be taken apart and put back together yet receive an unrestored designation by CGC. That said, I think the scorn leveled at Matt Nelson, the auction houses, and CGC is unfair given today’s climate. It seems like this recurring scorn stems from one fundamental point – distrust. I’d like to challenge the manifestations of this distrust a little:

 

Matt Nelson:

 

Matt Nelson, to my knowledge, was never a Heritage employee. He would, therefore, be free to bid as would any other non-employee.

 

Additionally, if a lawyer uses every legal tool at his disposal to help his client, then he’s doing what he’s supposed to be doing. The same goes for a doctor and a mechanic. If Matt uses tools at his disposal so that his work cannot be detected, this is good. This is very good. Isn’t this the fundamental point of paying for professional restoration – excellent work that appears natural? If Matt keeps professional confidences, then he does what many other professionals do. Should he breach his ethical obligations to his clients in order to comport with some sentiment shared by a few on a message board? Would any of my brethren feel inclined to breach their ethical duties due to some chat board malcontent toward the sanctioned practices of lawyers?

 

Auction Houses:

 

They too are for-profit entities. It’s not the auction house’s job to educate each consignor on how to capitalize on each auction submission. If the auction house can determine which books are good upgrade candidates and buys these books to capitalize on this, then so be it. Let’s not be naïve - if the submitter and auction house do not capitalize on books with potential, someone else will. Like many, I may not like this bottom-line motivation. But as long as the auction house is in compliance with law and its practices don’t offend the greater community, then why wouldn’t the auction house do what’s in its best interest?

 

CGC:

 

I think there is confusion over CGC’s role in this hobby. CGC is a grading company, not the comic book police. It grades books and attempts to detect restoration – for a profit. CGC’s definition of restoration is foreign matter added to, or inherent matter removed from, a comic book. Tampering with staples, if not found in combination with added foreign matter or removed inherent matter, does not fall within CGC’s restoration definition. For reference, the Guide’s definition clearly implies that a book’s staples can be replaced with non-original staples in any grade below 9.6 (I believe) and this is not considered restoration. It seems CGC’s position is stricter.

 

Should CGC create a new category called Manipulated or Suspected Tampering? A staple prong that doesn’t sit right, however, isn’t necessarily an indicator of tampering or that the book was apart, and I am not in favor of paying CGC to guess or draw potentially erroneous conclusions. As I told Mark/Steve today, if there is clear evidence that there has been tampering, I would vote for having this noted in the grader’s notes.

 

By the way, a resubmitted book that’s accompanied by its original CGC label is irrelevant to CGC’s end product. CGC graders do not rely on the original label when grading a resubmitted book. CGC grades each book as it appears on the day it’s reviewed. What would happen if the original label indicated that the book had color touch, yet no color touch could be found? What if a CGC9.0 was cracked out and subsequently suffered a 2-inch tear to the front cover? Should CGC base its opinion on extraneous data and not on its present sense analysis? When an original label accompanies a resubmission, CGC could put this data into its grading notes. Keep in mind, however, that all this would do is offer some extra data for some fraction of all resubmitted books.

 

CGC cannot detect that which cannot be detected through observation and analysis. If CGC’s pragmatic policy offends you and you loathe that you may end up buying a blue label book that has been pressed, taken apart, or dry-cleaned, then the choices seem clear – either: (a) as the paying consumer, continue to lobby CGC for continuous improvement in its restoration detection practices and hope there is room for improvement; (b) pray for real competition, which will confirm what the limitations are for restoration detection (and if the competition validates CGC’s position, then decide what this means for your involvement in the hobby); or © buy raw books if you think you can do a better job of spotting restoration than CGC can (and think you can buy raw books and not argue over grade/respective price).

 

While MasterChief's hard work to bring these issues to the forefront should be applauded, given practical realities, I don’t see how the persecution (by some of the subsequent posters) of those who simply illustrate simple market dynamics (and that happen to be in the limelight) is helpful or constructive.

[Red Hook]

 

Given these practical realities, I don’t see how persecuting those who simply illustrate simple market dynamics (and that happen to be in the limelight) is helpful or constructive.

 

I would say these examples are supplied more for the enlightenment of buyers than for any perceived presecution (a strong word) of the practitioners. As long as more and more people are aware of the true rules of the game, then I believe progress is being made toward a more level playing field.

 

Good to see you posting again.

 

Red

[Silver Surfer]

Learned Hand I appreciate your comments but I think for many its too simplified a version and perhaps a naive view (for the lack of a better word) of what is potentially going on here. We have all discussed the various reason why people feel uneasy about various issues with Heritage, CGC and restoration of books and I don't want to rehash them but your comments almost assume that we should give our full trust in Heritage, CGC, etc with respect to their business practices.