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What is the market premium on unopened packs? Calling all analytical minds. March 2019 version

PADIdiverPADIdiver Posts: 133 ✭✭✭
in Trading Cards & Memorabilia Forum

I've seen a few threads on the premiums being paid for unopened packs but I'm wondering if anyone has run this through a model in Python, R or any other software.

Some important things to note:

  • I realize collecting cards is for fun and not necessarily as an investment
  • We all know we are paying a premium for unopened packs for the chance of a hit (similar to a lottery). I'm trying to find an answer of what that premium is (10%, 50%, 100%, 1000%?)
  • This is all in fun... I don't have the money to buy unopened packs from that era and I'm simply curious about what the expected outcome (in terms of value) is in opening a package like that vs what is being paid for it.
  • The easy answer is who cares as this is a hobby but I'm curious about what the outcome looks like! I buy lower priced packs for fun because that is what this hobby is all about!

The question is what is the market premium for an unopened pack of baseball cards from the '60s vs buying raw cards online. The main hypothesis to be solved for is how much more money are you paying for an unopened pack for the chance to hit an amazing card vs the value you'd get from the pack. Another way to look at it... if you were to open 1000 packs of let's say 1969 Topps what is your expected outcome (in terms of $ value) from those packs vs what you paid for the unopened packs.

A few assumptions for this model (or if you've run the model please state your assumptions):
1. Pick a year (let's say 1969 unopened packs)
2. I'm looking to understand the expected value of cards from a random wax pack vs the price paid (therefore arriving at the premium paid for the pack)
2. Assume you get to send all cards into PSA for grading for free (easier to predict the expected value of what you get)
3. We'll have to assume some sort of PSA grade per card in a random pack. For example, I'm assuming you'd have to calculate the odds of getting a Reggie Jackson Rookie from a pack and then on top of that calculate the odds of a PSA grade for that card. For example, there are 664 cards in the set. Assuming an equal chance per card the odds of getting a Reggie rookie is 1 in 664 cards. The odds of getting a PSA 10 is X with the value being $Y. Obviously better data than this may exist but I'm listing an example
4. Let's say you are doing this as an investment (not for the sake of collecting). Therefore you will open the pack.
5. Let's assume you'll sell the cards immediately on ebay to avoid including future price growth in the model

Hopefully someone can help with this! I wish I had tried this type of model when I took a python course recently but realistically my skills may not be there yet to run this sort of thing! I may try to post this type of question on Kaggle should there be no answers but wouldn't mind some help in framing the question better!

Comments

  • softparadesoftparade Posts: 9,271 ✭✭✭✭✭
    edited March 14, 2019 7:15PM

    Most collectors buy unopened packs with the intent of keeping them unopened. Then there is the growing faction that buy them with the intent to sell spots for a profit and live rip the packs in an obvious form of gambling.

    ISO 1978 Topps Baseball in NM-MT High Grade Raw 3, 100, 103, 302, 347, 376, 416, 466, 481, 487, 509, 534, 540, 554, 579, 580, 622, 642, 673, 724__________________________________________________________________________________________________________________________________ISO 1978 O-Pee-Chee in NM-MT High Grade Raw12, 21, 29, 38, 49, 65, 69, 73, 74, 81, 95, 100, 104, 110, 115, 122, 132, 133, 135, 140, 142, 151, 153, 155, 160, 161, 167, 168, 172, 179, 181, 196, 200, 204, 210, 224, 231, 240

  • PADIdiverPADIdiver Posts: 133 ✭✭✭

    @softparade said:
    Most collectors buy unopened packs with the intent of keeping them unopened. Then there is the growing faction that buy them with the intent to sell spots for a profit and live rip the packs in an obvious form of gambling.

    good point.. I guess the model would need to consider what that % is. I think the unfortunate part is that the collectors who like unopened packs may be getting squeezed out of the market due to the growing population of people looking to gamble.

  • SdubSdub Posts: 736 ✭✭✭
    edited March 15, 2019 9:58AM

    1969 is not a good year for your analysis, IMO. Not enough sales and anything pre-77 is priced based on supply, not PSA 9/10's. The first place I'd go to is gretskyfan's ripping of unopened. He's noted the percentages of "gradable" cards in various rips. From there, you need to multiple by percentage of 10's vs the overall submissions (PSA pop reports), deducting for knuckleheads that submit 1982 PSA 7's. This ratio will leave with the knowledge that ripping is a losers game.

    With this data, you can then overlay pricing of the unopened, which you can find on e-bay sales, to give you a ratio of cost per PSA 10 from a rip. But your not done.

    Get a subscription to VCP. You can query a cost for a full PSA 10 set of any year. Divide that by the number of cards in the set and you get an average of cost/PSA 10. With this ratio you can get a sense of what unopened has the best price ratio vs. hit (PSA 10) ratio.

    Weather you sell the pack or break it will not change your success of getting 10's. But the break price will be an astronomically bad bet. If you really want to get into this, PM me. I was working on some spreadsheets but life got in the way.

    There is a lot of objective data, with a few minor assumptions, you can get some good comparable ratios for each year.

    Collecting PSA 9's from 1970-1977. Raw 9's from 72-77. Raw 10's from '78-'83.
    Collecting Unopened from '72-'83; mostly BBCE certified boxes/cases/racks.
    Prefer to buy in bulk.
  • JWBlueJWBlue Posts: 489 ✭✭✭
    edited March 14, 2019 10:45PM

    Having a feeling 1980s packs with key cards are the next sleeper market.

  • balco758balco758 Posts: 1,312 ✭✭✭✭✭

    Based on my own experience, I believe that any way you do the math, the P/L of ripping is a big L.

    I’ve ripped many boxes from 75-82 (not 76) over past 10 years and I have had a ton of fun but definitely cost myself money. In order to make profit of any kind you need to get multiple top cards in 9. Even then the cost of the packs plus grading take away much of the value of that 9. For example, I bought a 78 OPC box from Steve recently. Even if you nail an Eddie and it grades a 9, your costs of box, grading, shipping, etc is $1000+ and at best you have a $500 card. And this is a way better than average outcome!

    My experience has been nothing but fun, but I have now stopped ripping (most days :)) and instead building an unopened pack run from 69.

    Steve

  • ReggieClevelandReggieCleveland Posts: 3,854 ✭✭✭✭✭

    To the OP, I think the inherent problem in your pursuit is that the majority of unopened pack market activity is driven not by what may be inside but by the unopened pack itself, as an entirely different entity. For example, the most valuable unopened Topps pack right now would probably be a 1956.

    @JWBlue said:
    Having a feeling 1980s packs with key cards are the next sleeper market.

    The amount of bad material in this category that is currently out there is gargantuan. I wouldn't be putting any money in this area under any conditions.

    Arthur

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