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Business Observer Friday, Mar. 22, 2019 8 months ago

Collectibles spell big business for area company that grades coins, comic books and more

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Mark Salzberg, chairman of Certified Collectibles Group, says the group's companies provide comfort and security to collectors.
by: Grier Ferguson Sarasota-Manatee Editor

The overhead lights are turned off. Room after room is instead filled with the glow of table lamps on individual desks. Employees sit in rows. They hold up coins under the light, or they turn the pages of comic books. Their goal: get a better look.

This scene plays out nearly everyday inside the fortress-like walls of Certified Collectibles Group, tucked away in the Sarasota County side of a Lakewood Ranch corporate park, a few miles east of Interstate 75. The firm has graded 43 million coins, 4 million notes and 5 million comic books, magazines and posters since it was founded some 30 years ago. 

About 275 employees work out of its 60,000-square-foot headquarters, with another 85 people in international offices. 

The items it grades appeal to people of all ages, occupations and economic status. Collectibles of many kinds are growing in appeal, not just in the U.S. but worldwide. “It’s like collecting art," Certified Collectibles Group Chairman Mark Salzberg says, "but in my mind, it’s better.”

The company’s profile, relatively low in the area, is high in the collector world. “The Simpsons” has referenced the company, including showing off a comic book in a holder from the Certified Collectibles Group in a recent episode. It’s also been featured on “The Big Bang Theory.” Salzberg says, “We’re part of pop culture.”

The company has also expanded its reach, both in terms of collectible types and areas served, to the point where it did more than $100 million in revenue in 2018. Now, through an emphasis on market research and hiring the right people, it’s poised to continue that growth.

Worth Every Penny

Certified Collectibles Group is known as an industry leader that grades millions of coins, paper money and comic books. But what got CCG’s chairman started in coin collecting was a single simple act when he was a child: “A little girl walked up to me on the street and handed me an Indian penny,” Salzberg says.

That’s all it took — a 1903 Indian Head penny — and he was hooked. Salzberg started collecting when he was seven. His dad got him his first coin book, and at age 10, he started working at a coin shop. By 11, he was a dealer. A few years later, he was making more than his teachers.

His parents were Holocaust survivors, he says, and he escaped into the world of coins and collecting.

In 1986, a group of dealers got together and formed a company, Professional Coin Grading Service, to authenticate and encapsulate coins. One of the founders of the company, John Albanese, peeled off in 1987 and founded Numismatic Guaranty Corp. Albanese had known Salzberg since they were kids attending coin shows together, so he asked Salzberg to be a grading finalizer for his new company. Salzberg joined him in 1988, became president in 1991, CEO in 1998 and chairman in 2002. 

The firm expanded beyond coins in 1999 to include a comic book company. It later created Certified Collectibles Group, an umbrella network for its grading entities. That list now includes a paper money grading company, Paper Money Guaranty, launched in 2005; Authenticated Stamp Guaranty, founded in 2017; and Collectibles Authentication Guaranty, formed in 2018 for collectibles, memorabilia and estate items. Two other companies also fall under CCG — Numismatic Conservation Services, a coin conservation company, and Classic Collectible Services, a pressing, restoration and restoration removal service for comic books. The companies have common ownership and senior management.

The firm started in New Jersey and relocated to Sarasota in 2001. First the headquarters was near U.S. 301 and then relocated to Lakewood Ranch, in 2006, when it had grown so much it needed its own custom space.

Make the Grade

While Certified Collectible Group’s process is elaborate and exacting, the company's premise, Salzberg says, is boiled down to a couple words: comfort and security.

The grading process opens collecting up to a wider range of people who Salzberg says feel more comfortable when they know experts have graded and certified their collectibles. The company’s process also includes describing items and encapsulating them.

People can go online to sites such as eBay and buy an NGC-certified coin. “It’s extremely safe and easy,” Salzberg says. “What we do here is pretty straightforward in terms of unlocking value.”

“What we do here is pretty straightforward in terms of unlocking value.” — Mark Salzberg, chairman, Certified Collectibles Group

One recent example of the company's work: It certified an 1854 $5 gold piece from the first year of the San Francisco Mint. Salzberg says only three specimens were known and when a dealer came to them with the coin, the thinking was it was counterfeit. The next phase involved lots of research, including contacting the Smithsonian. “Everyone was skeptical,” he says. “We proved it was a new discovery.” It sold for over $2 million.

The company intentionally stays out of the selling process. “We want to be completely focused on being impartial grading experts,” says Max Spiegel, senior vice president of sales and marketing for Certified Collectibles Group.  

The majority of business comes from a few thousand dealers who send items to CCG. Individual collectors send in items as well.

The most valuable coin it’s graded is a 1787 Brasher Doubloon. It was insured at $10 million and sold for $4.6 million. The most valuable comic book it graded was an Action Comics No. 1, released in 1938 and known for being the first appearance of Superman. It sold at auction on eBay for $3.2 million.

Expand the Collection

People who collect items CCG grades aren’t limited to folks like the characters on “The Big Bang Theory.” “A lot of these things are collected by hedge fund managers and billionaires,” Salzberg says. And it’s not just kids collecting comic books — it’s doctors and lawyers, too. After all, some items are trading for six and seven figures.

As the market for different collectibles has grown, CCG has seized on opportunities.

“There’s enough low-hanging fruit for us,” Salzberg says. The company plans to dig deeper into what it’s already doing, including ancient coins. That’s an area he says is vibrant and growing quickly.

It also plans to continue its expansion into other areas, using a methodical, research-based approach to new business.  

Before the company expanded into comic books, for example, some of its experts and executives attended comic book conventions and asked industry leaders if it made sense for there to be a grading service. “They were very quick to say ‘yes,’” Spiegel says.

The company has also started grading stamps in China, where the market has been more active, for now, than in the U.S.

When the company considers expansion options, the process starts, Salzberg says, with the marketplace. Officials consider the quantity of items available and whether they can be encapsulated easily. Comic books can be encapsulated, Salzberg says, but old video games and action figures are difficult to encapsulate.

Shift Around

There’s also the matter of finding good employees. “I wouldn’t even go down the road unless we found the right expert,” Salzberg says. A number of experts are needed, he says, because no one person knows it all.

CCG has also expanded geographically. It opened offices in Munich and Shanghai in 2013, Hong Kong in 2014 and London in 2018.

There are challenges with opening international offices, Salzberg says, such as tariffs and legal fees. “If we could snap our fingers and have FedEx deliver, we would.” But there’s a comfort level for people of having an office near them, he says.

Salzberg says there are four important legs to the business: consistent standards, turnaround time, customer service and having a great website. CCG’s worldwide offices help facilitate those crucial elements.

Because the company works with a variety of items, it can shift employees around to different areas as needed. If comics are slow, it could move people to the encapsulation room to work with other items.

That diversification, both the variety of markets and items it grades, provides strength. “I think one of the hallmarks of us as an employer is the stability we offer,” Spiegel says. “One of the ways we are able to be so stable is we’re active in a lot of different markets.”

Collectibles Authentication Guaranty is the company’s latest addition and foray into a new kind of market for authenticating collectibles, memorabilia and estate items. It recently certified artifacts from a collection of the Neil Armstrong family. At auction, about 1,000 items from the collection took in over $5.2 million.

“We’re hoping this new category will be attractive to museums,” Salzberg says. Museums could have items certified, encapsulated, stored and sold if they don’t fit into its collection. 

When CCG starts new companies and opens new offices, Salzberg admits it takes time for people to adapt. For example, the company has had an office in Europe for several years, and Spiegel says it only finally clicked recently. “Now we can’t keep up," he says, "but we’ve been trying for 10 years.”

That lengthy process is something the company has learned to expect. “The world takes time to embrace these things,” Salzberg says. “All of a sudden it will reach critical mass and people will understand it.”

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