No matter how you look at it, the 1% is by definition an elite group. Some come from humble beginnings and others start with a silver spoon in their mouth. Others leave their homeland with a dream and then make the most of their opportunity to make it big. We celebrate them and love to tell their tale, which is crafted over the years in a way that tries to justify that their greatness is the product of destiny and hard work and maybe just a tiny bit of good luck. I’m not talking about the economic 1% here, although this group certainly fits that criteria as well. I’m talking about NBA players that are ‘the man’ on an NBA championship team.
Let’s look at the players in the NBA this year. I count 4 active players that can pretty much be considered part of this group. Here they are listed in alphabetical order (so that we can prevent arguments over the greatness of each):
I realize Kawhi Leonard may be able to lay claim to a spot and add one more to this list, but I feel like the Spurs championship in 2014 was more a product of what Tim Duncan had built than Kawhi being transcendent (even though he was outstanding). There were 494 players on 2018-19 opening day rosters in the NBA. So, even if we say there are 5 players that meet these criteria, the percentage is still right at 1%.
Being in the 1% is what every player dreams about. The same goes for card collectors. These typically are the guys who ultimately get the most interest, and subsequently most investment, from collectors. James Harden has the same types of cards as Stephen Curry (RCs in 2009-10), along with an NBA MVP award, but his rookie cards sell for a fraction of those featuring Curry. The count of active MVP award holders is just 7, so it’s not like Harden is just a run-of-the-mill good player.
What role does luck play in all of this? What if Curry was selected by the Minnesota Timberwolves in 2009? Has there even been a draft botched so badly? Does Curry, Wesley Johnson, and Derrick Williams sound like a juggernaut championship team? How would the story line change for these players? Does LeBron James have 7 straight titles now? What if Harden was selected 2nd by the Memphis Grizzlies in 2009, instead of the Grizz grabbing Hasheem Thabeet? Does he stay with Memphis and lose just a bit of the motivation that was the result of being traded to the Rockets? As much as we like to give credit to players for their success, we should consider all the possible scenarios that could have happened and how each may have led to a different outcome for each. We should even consider all the times a player did or did not get injured. Sometimes it’s a very fine line. Yes, it does take hard work and incredible skill to be in the 1%. It also requires that you are very, very lucky.
The same goes with collecting rookie cards for investment. I’m not talking about flipping a card you bought over the course of a few days or weeks. I’m talking about long term investments that appreciate based upon demand exceeding supply. In 2009, Tyreke Evans led the pack of NBA rookies and took home the Rookie of the Year award. He averaged 20 points, 5 rebounds, and almost 6 assists while shooting about 46% from the field. That’s a great rookie season. It is arguably better than the rookie season anyone is having this year. Luka Doncic, the rookie torchbearer for greatness this year, is putting up 18 points, almost 7 rebounds, and just under 5 assists while shooting around 43% from the field. After having some of the most expensive rookie cards in 2009-10, Evans hasn’t gone on to receive much hobby love or achieve a legendary level of NBA success. The style of play in the NBA has changed. Evans has had numerous injuries, and subsequent surgeries, to his knees. He has been on losing teams most of his career. He has been better than you might think, though. His career PER is right around 17.4 That’s right on par with Anfernee Hardaway and higher than players such as Dikembe Mutombo, Tom Chambers, and Earl Monroe. You could claim to have been able to predict the future of Evans, Curry, and Harden in 2009. But, if you did you were just lucky and not truly clairvoyant.
All this leads me to 2018-19 Prizm Basketball. As of today, 12/16/2018, there is one Silver Prizm RC in the set that is over $100. That card belongs to Doncic. Is $250 for a Silver Doncic a good deal? What about some of the other Prizm parallels in the set or even the other players? Will their value appreciate and give you a good return on investment? Perhaps they’re all a good deal and everyone is just selling on the cheap, so they can pay off their credit card balances. There is no way to know right now. What we can expect is that the future value of these cards is likely going to be related to supply and demand. A lot of things on this blog have to do with the supply side of things. The print run estimates I make on this blog help us quantify supply. Supply is the thing we can know in this scenario. The demand side of things is nearly impossible to predict. Who will be the most desirable players in the future?
Who gets to be part of the 1%? Draft position for a player seems to be somewhat of an early indicator of who might get to join the club. Our big 4 listed earlier in this blog were drafted #7, #2, #1, and #9. Kobe Bryant, a former member of this club, was drafted #13. Giannis Antetokounmpo appears to have the potential to join this elite group someday. He was selected #15 overall in 2013. So was Kawhi in 2011. Clearly, being the top pick or even a top 5 pick, doesn’t guarantee that a player will become one of the 1%. Of course, teams select whoever they think has the most potential to be an all-time great with their #1 pick. They’re wrong a lot of the time. So are collectors.
Since Dirk Nowitzki’s draft in 1998, there have been 315 top 15 draft picks selected. All 4 of our 1% players fall into this category. That means if we decide to just examine a sub-group of players selected in the top 15 during this time, the probability of them becoming one of these elites is 1.3%. Even if we want to be extremely selective and use the benefits of hindsight to only look at drafts from 1998 to 2009, encompassing the draft years of our 4 players, there is only a 2.2% probability of such greatness.
Let’s say you are incredibly lucky, and/or smart, and/or clairvoyant and you hit upon a 1% player as the one you’ve been prospecting. Doing that means your player has likely hit peak demand in the hobby. I’m going to execute an exercise here using Stephen Curry as an example. I don’t think anyone can argue that the 2-time league MVP and 3-time NBA champion, who probably is the best shooter ever to play the game, doesn’t represent at least one embodiment of peak demand. If we’re collecting cards to return a profit, we all hope that our player can be that successful and generate as much as demand there has been for Curry. Since this post is about Prizm as well, let’s look at the current state of the most analagous releases from 2009-10 and 2018-19: hours Topps and Topps Chrome rookie cards of Curry and those of our newest hero, Luka.
First let’s explore the Topps Chrome cards. There are a few variations of Stephen Curry’s 2009-10 Topps Chrome rookie card. The base card is numbered to 999. The refractor is limited to 500 copies. Gold is serial numbered to 50. And, of course, there is the 1/1 Superfractor. From the Topps side of things, there is a base card that I’m estimating at a print run of 30,000 (using some rough calculations), Gold numbered to 2009, and Black numbered to 50. That’s the supply side of things. Again, demand should be high. He’s an absolute international superstar amongst NBA fans and a known celebrity to the rest of the general public. Let’s take a look at his rookie card values:
Those are some nice cards. I wish there were some of those sitting in my collection!
Now that we have some data about card prices and print run, we can do something with it. Let’s plot out the price versus print run on a couple of graphs. Graphs are fun. I love how data changes your perspective when it becomes visual. The first chart will be just for Curry Topps rookie cards. The second will be for Curry Topps Chrome rookie cards. The data points will all be for BGS 9 cards, that way we filter out the noise associated with super low population gem mint cards. The price for some low population gem mint cards is so amplified by the condition sensitivity of the card that it skews things disproportionately. BGS 9 also gives us the best opportunity to have a stable population with at least some of the rare cards having sold in that grade. Finally, I’ll go into Excel and add a best fit trend line to each set of points and display the equation for that trend line. The equation is a just mathematical model that predicts the price of Topps and Topps Chrome Stephen Curry rookie cards based upon the print run.
Awesome. So now what? Let’s run a math experiment. What if we hopped into our DeLorean, fired up the flux capacitor, and zoomed ahead 10 years into the future. There is no Biff there, but there is Luka Doncic having a career that parallels the success Curry has enjoyed. He’s one of the true elites of the game. Remember, realistically there is at best only about a 2% chance this will happen. But, we’ll assume we beat the odds and it happened. What would Luka’s card prices look like if they followed the same pricing versus print run equation as Curry’s Topps Chrome and Topps rookie cards? Wouldn’t we need to know the print run for a whole bunch of different Luka Doncic Prizm cards? Guess what, we do! I’ve been pulling together print run data on hobby and retail formats for 2018-19 Prizm. I have enough data to make a reasonably accurate prediction of the print run for every type of parallel released in Prizm (not including Choice or Fast Break). Here is what you’ve been waiting for … drumroll please … the total print run for 2018-19 Prizm Basketball Prizms:
Please note that these numbers are estimates. Some employees at Panini are the only people that know the exact answer. I have a very high statistical confidence in some of these numbers, based upon being able to view a large quantity of the cards opened on YouTube. Having an exclusive serial numbered card in those breaks helped immensely. The Super Value Packs and Mega Boxes make it difficult to get an exact measurement. The lack of exclusive serial numbered cards in these formats is the culprit. However, in order to predict the print run of these formats, I have decided to turn to eBay for help. I determined the number of active and completed listings on eBay for the non-numbered format exclusive cards (for example Red, White, and Blue in Value Packs) and compared it to a count of active and completed listings for other retail cards that have a pretty well-established print run (for example Purple Wave in Blasters). It stands to reason that flippers are going to flip regardless of the parallel type, so a ratio of listings on eBay between an unknown and known print run should be a reasonable way to make an estimate. This unlocks the mystery and everything else can be scaled based upon the hit ratios in boxes I saw on YouTube.
Now that we’ve got that out of the way. Let’s run our experiment. I applied both the Curry Topps Chrome and Topps equations to Luka’s cards based upon the print runs in the table above. I selected the higher of the two predicted prices in the table below when calculating the potential return on investment (ROI). I did this just so that we can have an optimistic view on things. Here are the results:
Whoa! Those are some huge prices. I need to get that 1/1! That is what can happen when a player becomes as huge as Curry. Remember, in our future scenario Luka crushed it and had a career as good as Curry. He would be a multi-time champion, have multiple MVPs, and he’s a defining figure for an entire NBA generation. Our estimates say there is only a 2% chance, at best, that this happens. 98% of the time his career turns out to be something else. What if he becomes James Harden or Tyreke Evans instead? These are more likely scenarios, although it would be easy to argue that a James Harden career is nearly as rare as a Curry career. There are only a few more players who win MVPs than there are players who are ‘the man’ on a championship team. I’ll show you what happens when we do the same exercise but apply their 2009-10 Topps and Topps Chrome RC print run and prices to Luka’s cards.
Here is a table projecting prices if Luka has James Harden-like success
Finally, here is a table projecting prices if Luka has turns into Tyreke Evans.
In these scenarios, if Luka has a James Harden type career, and you invested in almost anything other than a Silver Prizm, these equations predict your investment will do well. The equations suggest the Silver print run is too high to support the current price level unless Luka achieves Curry level of success. The Tyreke Evans scenario is nothing if not bleak. Tyreke Evans was drafted #4 overall. Evans has the 5th highest career PER amongst the Top 15 players selected in the 2009 NBA Draft (Curry, Harden, Griffin, and DeRozan are ahead of him). He isn’t a bad player. He’s valuable to an NBA team. Unless something changes dramatically (and quickly) he isn’t winning an MVP, going to the HOF, or taking on the role of alpha-dog on an NBA championship team. But he has done better than 67% of his 2009 Draft Top 15 pick peers. If Luka follows this path or worse, and probability suggests this is more likely than not, then most of his Prizm cards would lose over 90% of their value.
So, what is one to do? First, I believe you should collect what you like, spend what is affordable to you, and have fun. To me that’s the whole point. I’m no investment expert. I can’t predict the future with any more accuracy than anyone else. I just use math to play around with numbers, think about things with respect to probability, and explore what the future could look like if different scenarios come to pass. Given the analysis presented here I might suggest that a rational approach to investing in 2018-19 Prizm might be to invest in under-appreciated parallels of one or more Top 15 draft pick RCs that are priced well below Luka. It doesn’t matter if it’s Michael Porter, Collin Sexton, or Mo Bamba. The highs would be much the same. If Porter, Sexton, or Bamba have something approaching Curry’s career it’s likely there will be massive appreciation in their cards. Just know that regardless of the name on the jersey, this is still the most unlikely scenario. If the most likely scenario happens for the players you’ve chosen to invest in, something approaching Tyreke Evans’ career or worse, then you’ve limited your potential losses. Same high upside, significantly reduced downside. Think of it this way, would you rather bet $100 to have 2% probability of winning $10000 or bet $500 to have a 2% probability of winning the same $10,000? If you’re just making one bet, it’s incredibly likely that you will lose. Would you prefer to lose $100 or $500? If you’re making many bets, then long term with enough $500 bets you’ll end up broke. A 2% probability of winning $10000 should rationally be valued at $200 (2% x $10000). Casinos in Vegas use probabilities to tilto the odds in their favor in much the same way. That’s why they have so much money. Following the $100 bet path, in the long term assuming you make lots of bets, you are much more likely to do well. Probability says you’ll come out ahead because if you made that $100 bet 50 times, you might reasonably expect to win once and collect a $10000 prize after having spent only $5000.
Till next time – Jeff