2018-19 Prizm Basektball Hobby Print Run Analysis
Updated November 25, 2018 - I caught a minor miscalculation in the stated odds for the different Prizm inserts. I have corrected the error in the table below. The print run estimates remain as previously reported.
My apologies in advance to readers living elsewhere in the world. I’m aware there is much more to the world than America. I’ve been to some other continents and enjoyed many of the people and places I’ve visited. But I’m based in the US so the data sources I’m familiar with make it such that a lot of my economic analysis is going to be US-centric.
Luka Doncic, the Dallas Mavericks 2018 first round draft pick and 3rd overall, signed a rookie contract paying him $5.5 million per year. For most of us that’s a lot of money. But for Mavericks owner Mark Cuban, who has a net worth estimated at $3.9 billion, it means he is paying Luka about 0.14% of his net worth in salary this year. The median US household net worth is just over $97,000. Median means that half of us have a worth greater than $97,000 and half of us have less. What if the median household wanted to invest a similar percentage of their net worth in Luka? Luka does seem to be a one-of-a-kind talent whose level of success in Europe at such a young age has not been witnessed before. Sounds like a reasonable thing to do for a sports card collector. It turns out for the median US household that investment comes out to right around $137.
Black Friday 2018 has come and gone. For basketball card collectors, Black Friday meant busing lots of boxes of the newly released 2018-19 Panini Prizm basketball product. I suspect most collectors were hoping to pull a Luka Doncic rookie card from their boxes. One of the more seemingly obtainable goals for collectors is to pull a Silver Prizm rookie card of Luka Doncic. As of the time of writing this (11:15 am PT, 11.24.2018) there have been 16 ungraded Luka Doncic Silver Prizm rookie cards sold on eBay. The highest price paid was $621. The lowest price was $350. I have no insight into the financial situation of the buyers of the Luka cards. For their sake I hope they are doing well. If we assume they’re representative of the median US household, then they would actually invest a higher percentage of their net worth in Luka Doncic than the person that employs him. If you’re curious the percentages would work out to a range of 0.64% to 0.36%.
In my previous blog entry I provided you with some insights into the 2018-19 Panini Prizm Basketball FOTL release, with some projections of hobby case production, odds per box, and print run for non-numbered parallels of the base cards. These were some early indicators, but nothing that I would consider like a solid prediction. Since then I’ve witnessed the opening of 50 hobby boxes of 2018-19 Prizm Basketball. For each box I counted the number of serial numbered and non-numbered parallels for the base cards in the set. From this information I have been able to make what should be much more accurate estimates. The more boxes witnessed the more probable the estimates are accurate. Statistical analysis and predictions are, by their nature, never exact. Everything is a probability with some level of risk that the findings are incorrect. Sometimes assumptions are wrong and that throws off predictions. However, statistics do provide us with some tools to assist in quantifying the level of uncertainty (again assuming all our basic assumptions are correct). One of these tools is called the confidence interval. I recommend you watch this Khan Academy video if you’re not familiar with the concept. I used this principle to check my estimates. Based on the confidence interval calculations, the estimates for print run presented here are expected to be within +/- 3% of the true number at a statistical confidence of 95%.
Ok. So, no big surprises, right? Gold Prizms are much harder to hit than Red Prizms. Fine, any jackass probably already had that figured out.
But what about the number of cases and the cards without serial numbers? On their own, the print run numbers are relatively meaningless. Let’s add some context to the numbers by sharing the estimate for 2017-18 Prizm basketball. We’ll further the context by sharing an estimate for the Silver Prizm print run for the first year of release in 2012-13 (source).
90%! The increase in hobby print run is 90% compared to last year! How is this sustainable? I’m guessing the number of collectors buying basketball cards didn’t increase 90% in the last year. The US Bureau of Labor Statistics says average hourly earnings have increased 0.7% in the last year. That’s nowhere near 90%. Is the global economy expected to grow 90% in 2018? Nope. The IMF projects global economic growth to be 3.7%. What about Amazon stock? Maybe collectors all own a substantial amount of Amazon stock and now can buy a bunch more Prizm.
Well, it looks like about a 30% increase in price for Amazon stock compared to last year. Even at the 2018 peak the stock was up less than 90% year over year.
The total annual market for sports cards in the US is estimated to be $5.4 billion. That’s more than Mark Cuban is worth. Collectively we spend a lot of money on sports cards. The article linked above states that the market is $4.7 billion on eBay alone. As a side note, I think that’s an interesting piece of research as I suspect the researchers did not truly understand the nature of sports card collecting. What happens if $500 were spent on a box and $300 worth of cards from that box were then immediately re-sold on eBay? Then the buyer of the $300 worth of cards flips them, does a good job, and sells them all for $400. That $500 box of cards now looks like a $1200 sports card market. It’s not like, for example, the laundry detergent market where we buy it, use it up, and then buy some more. In collecting a lot of what we do is recirculate money amongst ourselves.
Regardless, there is still a limited supply of money we’re willing to spend on our hobby. If we all love Prizm, we’ll spend our money on it. But the sports card market is likely close to a zero-sum market. We’ll decide not to purchase other products and consume the additional 90% of Prizm produced instead. What products are going to take the hit if this is the route collectors choose? Other products not selling through is the likely outcome unless a player from this class achieves LeBron, Jordan, or maybe a Kobe level of success. Sorry Panini, that’s how it is when you’re a monopoly. There isn’t a competitor out there to steal market share from. This move will likely cannibalize sales from some of your existing products. Perhaps that’s why they announced fewer basketball products this year in order to lessen the risk. This would indicate they’re planning on making up the sales with more Prizm.
Let’s look at the Silver Prizms now. A 90% increase in the number inserted into hobby packs bringing the print run so far to about 1140 copies for each card. That’s 1140 Luka Doncic Silver Prizms inserted into hobby packs. That’s also 1140 JR Smith Silver Prizms inserted into hobby packs.
Remember there is a wave of 2018-19 Prizm retail boxes coming soon. In 2017-18 the retail packs were notorious for having Silver Prizms hit at a high rate. I calculated that there were 1125 Silver Prizms for each card released in 2017-18 Prizm Retail Cello packs alone. This did not include blaster boxes. What’s going to happen at retail this year? Will there be just as many boxes? Will the hit rate for Silver Prizms be the same? We don’t know for sure, so the forthcoming is all speculative. We could make a few different assumptions though:
Panini decided that retail wasn’t the best way to distribute their product and they cut down on the amount released. Perhaps Walmart and Target were not satisfied with the rate at which Prizm sold in stores and pressured Panini to reduce production. My guess is that this is unlikely. Last year people hoarded the retail packs they found. There were stories abound about people going on multi-city /multi-store trips trying to find packs.
Panini kept production for retail the same as last year. This is a plausible scenario. There are only so many stores and so many shelves for cards in retail. Target and Walmart were satisfied with sales, but they have larger revenue categories to spend their time trying to maximize so they didn’t ask for more.
The success of last year prompts Panini, Walmart, and Target to want to sell more. Panini keeps the hit rate the same as last year to help ensure product success. From a business perspective I think this is the most likely scenario. Maybe the print run for retail increases 90% as well?
In the meantime, we’ll have to wait and see. I do suggest that if you’re a collector who is looking to pick up a Luka Doncic Silver Prizm, maybe it’s prudent to pause for a bit before making a purchase. On November 4, 2018 a 2012-13 Prizm Anthony Davis Silver Prizm RC sold for $610. The print run on that card is 180. Likewise, the Doncic Silver Prizm mentioned at the beginning of this post was won on November 17, 2018 for $621. The print run is at least 1140 for the Doncic. There is potential for the print run on the Doncic to ultimately be somewhere between 3000 & 4000 once retail hits the market. Can the Doncic card support this price level (or even $300) with a 10x (minimum) or 40x (speculative) print run greater than the Anthony Davis card? Is the Davis card underpriced? Will the demand for Doncic be so much stronger than for Davis? Where should the Doncic land? Would 0.14% of your net worth be right? Share your thoughts in the comments below.
Till next time - Jeff