By: Derek Madlem

If you’ve followed my travels in recent weeks and months, you might have noticed that I’ve been working some events as a buyer for a few fine card retailers. On the other side of the table you notice things and you talk with the other buyers, and you encounter the same issues time and time again. Some people just don’t understand. That’s where I come in, because I’m here to help.

Obviously none of my employers would be thrilled if I was giving away their back end information so I want (need) to make it clear that these numbers are all semi-informed hypotheticals used simply to illustrate a point. Consider this all to be a work of fiction.

The Costs

One of the moments that arises when buying cards is people don’t understand why you can pay 50-60% all day long on $10+ cards but not on a $1-3 cards. The costs, kid. The costs.

There are a lot of things you just don’t think about as a consumer at an event. Most people don’t even consider that many events cost as much or more for three days than most of their local game stores pay for an entire month.

Let’s take a look at some “best case” hypothetical numbers here just to get a frame of reference.

Booth cost at a Grand Prix: let’s say you’re getting a bargain at $3,000 for the weekend. It’s got tables and chairs and probably some table cloths but it’s going to be a small booth.

Subtotal: $3,000

Employees: since you were cheap and opted for the small booth, you only need four guys to run it. You’ll need one guy at the buying station, one guy selling, one guy standing in the middle barking orders, and one guy that’s mostly just dead weight so the rest of you can resent him all weekend. Each of those guys is a Magic groupie so they’ll work for $100 a day, so that’s $100 x 3 x 4 = $1200

Subtotal: $4,200

Food: Did I mention you have to feed those guys? Since you’re in fantasy bargain town, let’s assume you can feed them for $5 per meal per person. $5 a meal at 3 meals per day, times 3 days times 4 people = $180. We’ll go ahead and round that to $200 because of snacks. Mmmm snacks.

Subtotal: $4,400

Lodging: Despite popular belief, the people working a booth at a Grand Prix DO NOT sleep in the event hall; you’ve gotta spring for lodging. That’s going to be four nights at a modest $100 a night because everyone is doubling up in queen beds for the weekend and running water is pretty sweet.

Subtotal: $4,800

Transport: Wow, this is getting expensive fast, luckily the GP was within driving distance so there’s only the $100 in gas to worry about. Never mind that you couldn’t really get to a GP in a vehicle that would get that kind of gas mileage, transport your whole team, AND supplies. Don’t forget parking for the weekend!

Subtotal: $4,900

Let’s go ahead and add another $100 to round it out, gummy bears and cocaine get expensive and hypothetical scenarios just work a lot better with nice round numbers.

Final Booth Subtotal: $5,000 (nice round number)

So in an ideal world where every card was purchased at 50% of retail and every single card is sold, that’s $10,000 in sales JUST TO BREAK EVEN. But realistically most sales are not occurring at events, they’re happening through online stores, brick and mortar stores, or through TCGplayer type sites that charge a percentage. Don’t forget that PayPal wants their cut as well.

So now you’re wondering why I spent 400 words explaining to you that it’s expensive to set up at a large event aren’t you? Don’t worry, we’ll get there eventually.

Some of you might be wondering why you only get offered $1 for that Wingmate Roc when it sells for $3? So take all that information above and keep in mind that you have to sell $10,000 in cards at a 50% margin just to break even. But in reality, there is no such thing as 50% margins.

Business is Expensive

There are more costs. Before you can even sell a card you have to sort, grade, price, list, and stock the cards. Then you start selling them, whether that’s in a brick and mortar store or an online retailer. It also turns out that there is no Magical Christmas Land where you get to sell through 100% of the cards you pick up so there’s always going to be some percentage of toxic inventory squishing that bottom line as well. Did I mention that there are still more costs?

Math!

So let’s look at that Wingmate Roc that you wanted to sell. For demonstration’s sake we’ll say that we paid $1.50 for it. When a store sells that card online they have to pick it, pack it, and ship it in addition to the sorting, grading, pricing, listing, and stocking the cards mentioned above. Even if they have the most efficient system in place for all these steps, you’re still looking at somewhere upwards of 25¢ in labor assuming they’re employing adults in America rather than children on the other side of the world.

According to about three minutes of research on TCG’s website, if you’re using TCG Direct you’re going to pay around 75¢ in handling fees. If you package the cards and send them yourself you’re paying 10% + 30¢ credit card processing fee or about 60¢ in total fees; we’ll just ignore the hypothetical customer service scenarios that can eat up your time when the guy on the other end of the envelope is mad because he was planning on getting his Wingmate Roc graded.

For those of you keeping score at home that’s $2.35 – $2.50 cost to sell a Wingmate Roc. Do you know how many of those you need to sell to break even? Let’s get out our calculators!

$10,000 divided by 50¢ is going to take selling 20,000 cards just to break even on that one event. That’s assuming you don’t have any other costs throughout the month.

I did a little bit of research and I was able to determine that there are remarkably few successful businesses built on the premise of “breaking even” every month, so we’d probably need to sell a few more than that if we wanted to be profitable.

Oh did I mention the plethora of other miscellaneous supplies needed?

• Display cases
• Things to write with / on
• Clipboards
• Sleeves
• Rock star sunglasses
• Boxes
• Banners
• Display boards of some kind
• Extension cords
• Computers
• Portable internet connection
• Those sweet custom buy mats you see at every vendor
• Branded attire
• Travel crates / suitcases / what have you

As you can see, there is not a lot money being made on Wingmate Rocs, but retailers are often “forced” to carry the entire line so that you can get all of your shopping done in one stop.

Assumption of Risk

This is a concept that’s absolutely lost on most people that sell cards. When a vendor is buying a card from you, they are also taking on significant risk. Magic cards are not something that people need to live, like water and food. The markets can be very fickle and when a card drops in value, whoever is left holding them is the loser. 

When your Wingmate Rocs dropped from $7 to $3, you “lost” $16 on a playset. But if a store is carrying significant inventory of that card, say ten or more playsets, the loss shoots up into the hundreds of dollars.

When you sell cards to a vendor, they are betting that they can sell enough of those cards fast enough to recoup their investment and just hoping that the rest sell eventually. This is that toxic inventory that I mentioned previously. A card that’s not selling is just money that’s tied up and can’t be used to further grow a business, and it’s certainly not anything resembling profit. This toxic inventory factors into that bottom line just as much as the 30¢ credit processing fee on TCGplayer.

Unintended Consequences

One of the neat things that happens in doing thought exercises like this one is that you occasionally have a couple of “AH HA!” moments in the process and you make connections that you might not have made before.

For the last few years there’s been an “event horizon” for the prices on Standard cards. As cards approached that $3-4 mark they often quickly fell into bulk status and I think this might be much to do with the realities of selling a $3 card these days. Great examples in current Standard of cards that couldn’t escape the gravitational pull of a money sucking black hole are Mantis Rider, Surrak, the Hunt Caller, and Sidisi, Undead Vizier. All of these cards were worth $6+ at one point and then crept down to that event horizon and sucked into the cosmic abyss.

This theory would also explain the opposite effect, which would be the price of uncommons like Stoke the Flames commonly getting pushed up into the $4 range. If it’s going to take an offer of $1 to get a good playable uncommon out of a binder, then selling it for $4 is almost required at that point. As vendor you’re pretty much expected to have at least some of the current formats hottest uncommons, so to carry them you pretty much just have to ramp them up to $4.

What Did We Learn Today?

Well kids, we learned why vendors have to offer you the prices they do on low-cost cards like Wingmate Roc. It’s not just them trying to rip you off, it’s just an economic reality of doing business. The alternative of course is that we give up Grand Prix events all together and just go back to playing locally. You did know that all of these venues are essentially subsidized by the vendors right? Why else would a TO let in vendors other than themselves?

The other thing to consider going forward is that with the absence of PTQs, there are going to be a lot less “low cost” events for vendors to set up at. It’s a lot easier to show up and pay 50-60% on cards when your table only costs $500 to setup and you don’t have to plan on staying over night.

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By: Derek Madlem

For those of you that missed it, the first GPVegas was well…a valuable learning experience. Things quickly grew out of control because nobody had anticipated that level of attendance, and it showed. As the final days drew closer a cap was instituted and players were warned that on-site registration was going to be limited at best. This was the first GP to really push the preregistration game.

Two pairs of restrooms and one concession stand is not what you’re hoping for when you attend a GP…especially when over 4500 people show up.

But they’ve learned a number of lessons this time around…and we’re looking at upwards of 8,500 players cracking Modern Masters 2015 by the fist full.

6x 8,500 = 51,000 packs opened

With 1 in 8 packs containing a mythic rare and 15 mythic rares total you’re looking at roughly 425 copies of each mythic rare without even going into the FOIL copies.

Keep in mind this doesn’t even take into account the numerous side events that will be happening from dawn until dusk for four straight days.

This is not a Magic tournament, this is a Magic convention.

Money…

I’m sure many of you are planning to bring a binder, box, or Ziploc bag full of cards with you to Vegas. After all those buffets aren’t going to pay for themselves…but when’s the best time to sell?

Well let’s think it through here. You can expect the FIFTY vendors at GPVegas to roll out their war chests for this event so there’s going to be a metric expletive ton, expletive load, or different expletive load of cash flying at you. There are even a number of vendors with $1,000,000+ buy budgets for this event. I feel pretty safe in guessing that there will be $10-15 million in cards bought by vendors over the four day weekend.

So what’s that mean for you?

Obviously those war chests are not going to be balanced evenly, so a number of the “small timers” are going run out of money fast. $50,000 in cash might get you through an average Grand Prix, but in Vegas that’s going to be gone on day one.

If you haven’t figured this out yet: sell as early as possible.

There are going to be 9,000 people in a city that inhales cash. People aren’t flying to Vegas to play EDH, they’re flying in to be a part of the biggest Magic event in history in a city that provides 24 hour a day amusement of any kind. You also have to keep in mind that many of these people are not collectors or speculators … they’re just people that play Magic and off their extra cards to allow them to keep playing Magic.

From the vendor side of things, there’s a “break even” point for events like this. If they’re buying cards at 50% of retail, then they need to buy at least double their expenses to break even. Once stores buy enough to justify their trip, they’re going to want to switch to “good buys” … which means they’re looking to buy anything CHEAP. 

As that war chest shrinks, vendors are going to be more picky about what they’re buying and they’ll be more prone to push a trade bonus on you to make their cash last a bit longer. I’ll go into trade bonuses in another article, but they’re really not quite all they’re cracked up to be.

The Bad Guys

With the amount of money changing hands on the convention center floor, you can bet that this event has caught the attention of some ill-intentioned individuals.

Common sense will get you pretty far in most cases:

• Don’t leave your stuff unattended
• Your friends are terrible stuff attenders
• Put your bag under your chair during your match

But an event of this size is likely to attract professionals. So you might want to be a little more precautious:

• Don’t flaunt your “bling”
• Be aware of your surroundings at all times.

You can be almost certain that numerous people are going to have cards stolen. I would even venture a guess that a non-zero number of people have cards stolen out of their rooms, vehicles, or from their person.

Another threat that we’ve heard so much about over the past year or so is the increasing quality of counterfeits. If these guys will show up to a Starcitygames event in Indianapolis, IN…you can bet they’ll be around at GPVegas. While you probably don’t have to worry much about anything printed after Magic 2015 thanks to those embedded holograms, any of the older cards is on the table as a possibility.

If you’re looking to pick up power, dual lands, or even those Juzam Djinns for your #mtgunderground deck, buy from a vendor you trust or ask your trade partner if you can get a second set of eyes on the card if you’re not sure what to look for. There have been countless articles about how to spot fakes, so I won’t go into that here but it’s important to know that they’re out there.

Modern Masters Buy Prices

There has been a lot of debate and chicken-little antics regarding Modern Masters on Twitter the past few days about what a beating the recently reprinted cards are taking.

Here’s the thing, retail stores ultimately determine and guide the value of cards. There’s a lot of factors that they take into account when determining where to set the bar, including supply and demand; but when the big stores set a buy price on a card, that is more or less drawing a line in the sand. Everyone else can play the “race to the bottom” on TCGPlayer, but ultimately they’re in the business to make money so if they’re going to sell every copy of a card they have in stock at $10, there’s absolutely no reason to sell it for $8. 

When a Channel Fireball level store says “we’re paying $110 for Tarmogoyf” then other stores either starting paying somewhere close to that price or they don’t get many Tarmogoyfs. We’ve seen this time and time again, especially with Starcity’s buylist. Force of Will floated back and forth between $65-80 for months on end, then one day Starcity pulled the trigger and upped their buylist price to $75 and everyone else pretty much fell in line and now Force retails in the $115 range.

With an event like Vegas on the horizon, many stores have been too preoccupied with planning, packing, and preparing to bother wading into the fray to buy Modern Masters cards. They also know that they’ll be in a room with 51,000 freshly acquired cards, so they’ve been tightening up their bank roll in anticipation for this event while gleefully watching the prices plummet.

Vegas will likely be pretty close to the “bottom” for many of the cards in Modern Masters 2015, you can bet that many of the vendors will be buying up as much Modern as they can get their hands on, reprints included. With fifty vendors in the same room, prices for these cards are going to sort themselves out pretty quickly. While there will be a few “barn burners” blowing out cards at ridiculous prices on Thursday, prices will stabilize by Friday and we’ll know where to expect these cards to land going forward.

History lesson for those that missed it: two years ago we had our first Modern Masters Grand Prix in Las Vegas, Tarmogoyf was hovering around $110 with a reprint coming in that was sure to decimate it’s price. During one of the early rounds of the event when 4,500 players were preoccupied with their matches Starcity sent their agents into the field to buy every single Tarmogoyf in the room from the other vendors at full retail, cementing Goy’s future as a $200 card.

Stores WILL be making moves at this event; some of them will undoubtedly be mistakes, but some will be home runs.

It’s Not Time to Panic

Yeah, Modern Masters prices are going LOW. That’s great, Timmy spent his allowance and drafted Modern Masters so he’s got a Tarmogoyf to sell – good for him. Unfortunately for Timmy, he can’t reinvest his profits in a ton more Modern Masters because that supply is going to quickly run dry.

Here’s the thing about Timmy that you need to keep in mind – Timmy only plays burn, and is generally a complete degenerate. Timmy’s burn deck doesn’t include any copies of Mox Opal, Tarmogoyf, or Vendilion Clique so he sells every copy of those cards he opens. Did I mention that Timmy is an absolute degenerate? Seriously, Timmy’s the kind of guy that finds a stray cat, feeds it, and leaves it out in the yard to get pregnant and litter the yard with kittens because he has no concept of the future.

The thing to keep in mind with Timmy is that he’s going to ship those cards, and he doesn’t really care what he gets for them because he’s got reservations for one at Denny’s tonight and those grand slams aren’t going to pay for themselves.

If you’re not going to Vegas this weekend, it’s going to be a great time to snipe some cheap auctions on eBay as everyone’s attention will be focused on the festivities and the bulk of Magic’s loose money is going to be on the battlefield in Vegas.

Modern Masters strategy in a nutshell: If you see a good price on a card you need – BUY IT. If you’re just trying to time the bottom so you can profit – GOOD LUCK, this is the sort of thing that could be an eight hour window or you could have an entire week, as long as you’re generally buying low you should be in good shape.

Shameless Self Promotion

I’ll be working with Aether Games this weekend in Vegas, come by the booth and “holla at ya boy” if you feel so inclined. I’ll try tweeting out SOME information on how prices are shaking out if I get a chance this weekend, so you can follow me on Twitter @GoingMadlem for that.

Also there’s a slap bet that may or may not be settled between one of the other owners and Aether Games’ own Kyle Lopez (@itsyourboyLOPE)…so I’ll try to announce when that’s going to happen or at least post a video.

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