In October 2019, multiple Magic: The Gathering sets will rotate out of the current Standard format card pool. Each fall, a few sets rotate out of Standard to update the format. An article on Card Game Base explains the 2019 Standard rotation. The specific MTG sets rotating this fall are Ixalan, Rivals of Ixalan, Dominaria, and Core 2019.
In my previous article, I evaluated the investment potential of former Standard set booster boxes. I looked at their historical prices over time to determine growth, profitability, and investment potential. In this article, I will attempt to forecast the future prices and potential returns of Standard set booster boxes rotating this fall.
There are multiple techniques one can use to forecast the future of a product's price and demand. This detailed article on forecasting techniques covers qualitative techniques, time series analysis, and causal models. I did a simple time series analysis to forecast booster box prices over the next year. The data used to predict and analyze rotating Standard booster boxes can be downloaded here. I referenced the worksheet titled October 2019 for this analysis. Data from my previous article is included under the October 2018 worksheet. The data and calculations found on the October 2018 worksheet can be used to establish a basic average growth rate for forecasting future booster box prices.
Evaluating Current Booster Box Prices
Before going into further details, I need to make an assumption that all rotating fall set print runs have ended. While I have no hard proof this has occurred, I believe it is a safe assumption at this time. As long as booster boxes are printed to current demand, their prices will remain fairly stagnant. This analysis also assumes booster boxes were purchased at a low retail price of $80.00. This price is reflective of the cost from a distributor. Also, some businesses sell booster boxes of Standard sets at their cost to move inventory. There are other methods of buying close to distributor pricing as well. The below graphic shows rotating booster box average market prices on eBay for August 2019.
It is interesting how much people are paying for a booster box of Dominaria. The other sets are selling for around the expected retail price of a Standard booster box. Why is Dominaria worth much more money than the other rotating sets? While I cannot provide specific evidence, Dominaria does have a few special qualities. It is considered one of the best drafting sets in recent history. Also, the nostalgia of the set brought back many former MTG players to the game. Half of the players I spoke with at the pre-release came because they wanted to play with Llanowar Elves, Goblin Warcheif, Icy Manipulator, and other iconic cards. I believe these qualitative reasons are reinforced by the lack of expected value (EV) from opening a booster box of Dominaria.
Next, I compared current booster box prices to the EV of each set found on MTG Dawnglare using the default TCGplayer Mid pricing. The set EV and booster box prices do not correlate well. Dominaria booster boxes are selling at two and a half times their set EV. Rivals of Ixalan has the highest set EV and the lowest booster box price. There are other factors beyond set EV affecting current booster box prices.
Forecasting Future Booster Box Prices
I used formulas combining set EV, booster box pricing, and a historic average monthly growth rate to forecast future price movement. First, I divided the current market value of a booster box by its set EV to get a percentage. This basic formula combines the present market prices and underlying value. For example, Ixalan's booster box price of $90.00 divided by $56.12 equals 60.4%. After establishing the percentages across four sets, I wanted to apply known historical information. I multiplied the calculated percentages by the average monthly growth rate of the six previous Standard set booster boxes. The result from this calculation gave me adjusted average growth rates for each set rotating in October 2019. As an example, Ixalan's adjusted average growth rate became 1.07% after multiplying 60.4% by 1.78%. Finally, I multiplied the average monthly growth rate by the number of months for the hold period and added $80.00 (price paid for a booster box). The results showed that Ixalan and Dominaria were likely profitable one year from now after applicable shipping and fees. Another point worth noting is that anyone who bought Dominaria booster boxes at $110.00 or less would likely make a profit. However, buying it now at the current market price of $120.00 is a risky bet.
Accuracy of a Forecast
This analysis is just one method to predict future price changes. While future prices seem reasonable, the model is not without flaws. I am assuming that current market conditions do not change for a year. If there is a global recession in 2020, it could negatively affect future growth rates of booster boxes. The logic is based on the accuracy of my historical booster box monthly growth rate average. If I wanted to test this number for accuracy, I could add additional data for previous Standard sets to the historical analysis. While my data analysis is not perfect, I hope it provides some insight into understanding forecasting models.
*The information in this article is of my knowledge and opinion. It is meant for informational purposes only. I am not a registered financial professional or trying to act as one.*