1539 - SpX Math

Welcome Dr. James Beckett Sports Card Insights. Continuation of what I did on Monday with the education episode looking at real world math using the example of Upper deck, sending me an spx box of hockey 25, 26 spx hockey as a practical application of some of these math concepts that some of you may know. But I think everybody should know these things because otherwise you're going to be at a disadvantage. I want to make the hobby a game of skill. If it's going to be gamified, make it a game of skill, not hoping for luck. You make luck by being well prepared and understanding and not making bad bets. Understanding the true scarcity is part of that and understanding where the value in the product comes from. So thanks, Upper Deck for providing the box. Thank you. Tops and Panini provided stuff in the past. Heritage Auctions, Hugs and Scott Auctions. Mike Stadium Sports Cards, Burbank sports cards, COMC.com and Beckett Media, Beckett Grading, Beckett Authentication. Anyway, I got this box of SPX and I opened it. It's not too tough because it's three cards per pack, eight packs per box. Guaranteed at least one serial number card srp. When I checked from my friend Adam Martin at David Adams SRP about 150, 20 boxes in a case. That makes a $3,000 case. So $150 box. SPX used to be a very premium brand. 150 doesn't sound outrageous in this day and age. Now it's hockey, which is a better deal in many cases than basketball, football and baseball. But I'm trying to get y' all to think about when you're buying the box, whether you're putting it away or opening up. Yes, you're buying the cards, but you're buying a set of probabilities. You should be trying to figure out, did I get a good deal or not? And if you haven't studied up on what good could I get out of there? And I' talking about beyond just what's the best card I could get? You know, some of these things where you check all the above, all the ones that apply. Do you buy for fun? Do you buy for investment? Do you like the look of the product? Are you buying the chance for a big hit? It could be any and all these things, but every box, every product has a mathematical structure. And the guys who used to work for me, there's some at every card company how we were able to make sense of the values. They brought that analysis to the card companies to know how to price a box so that collectors will be pleased now they can't. That just comes up with the SRP once. Once you get way above the srp, it's not that all bets are off. It's just the product was intended to be a good deal at $150. And if it's $300 the next week, then it's not as good a deal unless the singles in that product are hitting the stratosphere as well. Even if you're making an emotional buy, understand that part of that is that the mathematics of it is also important statistics and the probability. So thanks, Upper Deck for sending the product. SPX Hockey is compact, and the box touts one of one gold rookie holograms. It says you're guaranteed to get a serial numbered card. And I did. In fact, I got a couple. I got an autograph, which you're not guaranteed, but I did get that. But not just what did I get, but what could you learn from my experience? You can look at product breaks, and that's part of it. But I'm just taking out a sheet of paper, the back of the envelope, and doing a little bit of math. And I want to let you in on some of the things that I do to think about that product and whether it's a good deal and having some understanding of knowing why you're buying. So SPX is, I think, easier to do the math for that because it's not a huge product. And you can read the back of the box and get pack odds or box odds. And the literature suggests how many parallels. The key is if you can figure out how many boxes are produced, then you're a long way toward figuring out expected values. Because if they tell you there's one serial numbered card in every box, there's 50,000 serial numbered cards because you've got 165 subjects, and they've each got a number to 150, number to 100, numbered to 50, numbered to 32, and a number to one that's 333. You multiply by 150 or 165, you get around 50,000 serial numbered cards. And if there's one in every box, again, if there's two in a box. But then there's some other anomalies too. And I don't think there's necessarily blasters and things like that. I'm just looking at this product configuration. That's 2,500 cases. If there's 20 boxes per case, that's a 7.5 million product. For Upper Deck. It actually may be higher than that. But I'm giving you assumptions, I'm not trying to be exact, but it's a compact enough product that you can do that. So if there are 50,000 boxes, then as I said on my other episode on Monday, if there's a million dollar card in the product, and I don't think there is, but if there was one, then you know that million dollar card is in one of the boxes and that means there's a 1 in 50,000 chance you have of getting that. Which means that million dollar card, if it's in there, the contribution that card has to the box's expected value is only $20. So it's $150 box. Now, again, if you got the $1 million card, your expected value goes out the window. But to buy boxes in hopes of getting that, that particular lottery type choice, that ticket is really kind of worth $20 of the $150 value. So my thought is, if you're thinking about a box, if your only reason to buy the box or to buy the product is to get the one card, that's a lottery, you're really just doing a lottery. And the chance at getting a million dollar card at a 1 in 50,000 is worth $20, that's not 150. That's worse than doing the state lotteries, which sometimes return 50%. The private equity guys, when they're betting on long shots and they sometimes have big hits, the black swan theory, they kind of underestimate the chances of unlikely events just in your mind. But collectors do the opposite. They kind of overestimate. They know somebody or they saw somebody hit and they know somebody's going. Unlike the lottery, where you know 100 million dollar lottery and you don't know the person, but somebody won. But this is real. And in fact, if you watch breaks on YouTube or other places, you can see pandemonium when somebody hits something big. The other issue, let's forget about the million dollar card for now. Let's just talk about the 165 one of ones that are in this product. Some of those are going to be worth a lot. Those would really be very valuable. And there's autographs too. But I'm just talking about the base 165 card set. Each one of those has a one of one. So one 65 one of ones. Again, they're sprinkled in the 50,000 boxes. And so you've got a 165 out of 50,000 chance of getting a one of one. Again, very slim. And unless those one of ones are worth thousands of dollars on average, then that's less than a million dollars worth of one of ones if you got them all. So again, it doesn't contribute very much to buy boxes in hopes of getting a one of one is also not a good deal. Okay, you need to buy boxes where you're excited about the product. And there's other stuff too. But like I said, if you got a one on one you have a big winner. But your chances are slim. One other thing I was going to pass along. I've done all this pro bono consulting and I just was realizing when I opened my box, I got a gold and I got three silvers. And the product narrative suggests that's what you're supposed to get. Well, if there's 50,000 boxes and there's one cold per box, then golds are scarce. There's only 50000 golds spread out over the 165 base cards. That means in the low 3 hundreds or 300ish golds per player. And if silvers are triple that, that that means there's maybe 900 or a thousand silvers of each card. Those aren't serial numbered, but maybe they should be. Upper deck has gone to the trouble of saying you're going to get a serial number card. They could say you're going to get five serial numbered cards. You're going to get a serial number to 150, 150, 32 or 1. But you're also going to get a serial number to 300 which will be a gold and three serial number silvers. But they didn't serial number them. I don't think it costs that much more, but the implicit value generally I think the golds would be more in demand if they were serial number to 300. I think the psychology would change even if the number is same because I think the perception is that a serial numbered card is tougher than a non serial number card. That's not always true. Another philosophical thing I always hear for the people that are working the showcase is buy the card, not the slab. Don't get enamored of whether slab is good or bad, where the grade is high or low or the grading company. Just look at the card, you like the looks of the card and then buy it. But the same thing is going on with unopened product. When it's a sealed product, buy the product if you like the product instead of just buying it because you're looking for the one card. I'm just going for The Chase card, that's really just a lottery. Go for the products where you like the product. This SPX is a nice product. You actually could put together this set and you could have some fun with some of the inserts and all that. So it's a nice product. The consolation, I'm against the all or nothing against it being completely luck. It's a free world, people can do that. But I'd like to help educate collectors to make good choices and there's better ways to try to hit the lottery. Another thing that happened is that the 20 bucks case David Adams was selling for 3,000 bucks. But the random team breaks of 32 teams, they were originally priced at $92 per team, which is about a 2% discount from the case price. Now they've lowered it to 85 bucks. 85 times 32 is almost 10% less than the $3,000. So actually you'd be better off buying all 32 spots of the break than you would be buying a case. Now, I don't think that's what people do. And if you bought the spots in the break, presumably they would break it for you and I guess they would ship it to you with all the base cards and all the stuff. Not everybody does that. So why is David Adams doing that? They're smart. Why are they selling brakes at a discount? And I think it's because brakes are stickier. Once you get in a breaking ecosystem and you get comfortable with the on air talent, you become more loyal to that brand. Other people are watching and somebody's going to get the case hit. People cry about brakes, but it is perhaps the preferred way for people, so much so that David Adams, who are capitalists, are discounting the price because they think, and it's not necessarily a loss leader, but they're going to get more repeat business at an $85 break position than $150. Buy the box position and the person might be happier, cost less and more fun. This came up in the hobby dinner conversation when box prices are volatile, when you have to decide what am I going to do? You're being encouraged to buy quickly to buy the first day because it could go up. So you got to hit your LCS on the release date because the next week it could have doubled. And especially on the premium products. On the other hand, your reward for rushing in is again, you can put it away. But if you open it and you want to send some stuff to grading, the current grading climate, almost regardless, the major companies are pretty overwhelmed, pretty slammed. Even if you get in early, you're going to hurry up and wait. Unless you submit at a premium price that gets you a shorter turnaround period, you're liable to get stuck in the queue and get your card back in months. And gem rate is good for a product. I advise looking at that. What percentage of the submitted cards are gemming when the product just came out? You just don't know. I just think an informed collector, that's math stat probability savvy is going to do better over time. I don't want to get rid of all the emotion, but I want you to have some guardrails of knowing when you're stretching. It's fun to hope for something great, but like I said, you're paying for that. You better get a lot of psychic joy because it's not generally going to be a good return on the investment. But like I said, If I had 150 bucks and I've got to spend it, I could go to Disney World for a day. I don't know, I wouldn't be able to eat anything and I wouldn't be able probably get in the fast lane. But for 150 bucks, I'd rather have a box of cards and I'd rather just have somebody else open up all the SPX's and let me go to a dollar box and pick the cards I like there, pick 150 bucks there. But there's no SPX is in the dollar box unless the product is sold broken and then, and then triaged into this is, this is going to get graded and, and this card is just, is, you know, it's just, it's a dollar card, you know, and you want to get something out of it, you want to liquefy it. No problem with that. The hobby ecosystem has, has, you know, big fish and little fish. It's, it's healthy when everybody's doing well. So thanks upper deck for a great product and thank you listeners for persevering.