You pay $75 to participate in a massive Monopoly tournament, where the grand prize for winning is $5,000. Midway through the tournament the top players have a significant amount of Monopoly money, such that even landing on some of the most heavily reinforced spaces barely puts a dent in your budget. Meanwhile those on the verge of bankruptcy can barely watch as they roll the dice each turn. Then the unexpected happens.
Someone breaks the rules of the game and offers real money when they land on that Boardwalk with a hotel on it—not $2,000 mind you, but maybe $10 of real money. After all, in doing so they can remain in the tournament and try to bounce back from near-defeat. The other player accepts the offer and real money is exchanged.
Suddenly everyone is considering both Monopoly money and real money for each transaction the game demands. The value of the Monopoly money rapidly drops—players demand large premiums above what the cards require if a player wishes to pay with Monopoly money rather than real U.S. dollars. The economy becomes unbalanced as the demand for real dollars far outweighs that of Monopoly money, and ultimately the game collapses.
The Parallel to Magic
Obviously the above scenario won’t ever happen. For one, there is no such thing as a Monopoly tournament…at least, not one with the payout I described above. Additionally Monopoly is a self-contained economy per the rules of the game. But if Monopoly money and real money could be interchanged, the resulting economy would drive massive inflation for the Monopoly money because it loses all value once the game ends.
Let me try to draw out how this scenario could parallel Magic: the Gathering. Consider that pieces of cardboard are like Monopoly money. The cards are necessary to win games and therefore have immense value within the game. But outside of playing Magic, the value is far less. Sure, there is a collectible aspect that Monopoly lacks, but let’s put that aside for a moment and assume a significant portion of card value is determined by playability.
As we all know, the Monopoly money of Magic, meaning the cards, can be interchanged for real dollars. This is a two-way street because as long as players require the cards to win games, they will be willing to give up real dollars to acquire these cards. But what happens if more cards are printed, introducing more inflation in the game? Suddenly there are more cards in the economy of the game, but the cards become worth less relative to the U.S. dollar. Simple enough.
But if the lower-end cards become worth less relative to the U.S. dollar, then they can’t be as easily traded towards higher-end cards. This interferes with the flow upward of card values within the Magic economy. Four Snapcaster Mages can no longer be traded for a Library of Alexandria as was once possible.
So for someone who wants to acquire a Library of Alexandria, they have two choices. They can either trade more than the equivalent of four Snapcaster Mages—maybe ten copies instead, or perhaps throwing in a couple of Tarmogoyfs—or they can pay with real dollars. With the former they end up forfeiting more critical game pieces, and in the latter they need to forfeit real dollars, which could have been used for other things in life.
Here’s the Problem
While lower-end cards (Standard, Modern, et.al.) were rising in price and offered significant value, there was no difficulty making trades for higher-end cards. Standard could be turned into Modern, Modern into Legacy, and Legacy into Vintage over time. But something has changed. Hasbro has altered their strategy to grow sales of product by introducing Masterpieces, Modern Masters sets, and an array of other reprint products.
This act is lowering the bottom rungs of the MTG ladder, making it more and more difficult to reach to the upper rungs. Suddenly, many people are becoming priced out of Legacy and Vintage because their collection values are shrinking. The only option becomes paying up with real dollars, but it is very difficult to stomach an outlay of hundreds or thousands of dollars for a couple pieces of cardboard.
When everyone was using “Monopoly money,” people didn’t give this as much thought. Sure, you were giving up “$600” by trading that set of Tarmogoyfs for a played Mox Ruby, but it was a cardboard-for-cardboard transaction. Or maybe you buylisted the cards to a vendor, took the store credit, and picked up that Timetwister you’ve been wanting for Commander. The economy was self-contained, so this wasn’t an issue.
With many price trends drifting downward lately, these trade-up transactions may be occurring less frequently. To me, this poses a major problem for high-end cards. They will end up becoming less liquid because the market cannot afford them with “Monopoly money” and they will not want to pay up using real dollars as often. This may cause Power prices to remain stagnant at best or even drop at the worst. I genuinely believe this is a real possibility now.
And if a few owners of Power decide they don’t want that “Monopoly money” any more and insist on cash, they may be willing to sell at a slightly lower price. It may be slow, but the market will adjust lower. It has to.
A Reality Check
As someone who collects Magic cards as an investment, I have one fear when it comes to positions in these cards. This fear dictates all of my recent transactions, including a concentration of value in Reserved List cards that cannot be reprinted. But even that strategy won’t make me immune to this: a retraction in the MTG market.
There are already signs that this is happening. I haven’t changed the people I follow on Twitter, yet instead of hearing about card prices and trends, I am reading more and more about Hearthstone, Pokémon, and even political movements. It seems many are already finding other avenues to spend time (and money) on outside of Magic. One look at the top spectated games on Twitch further reinforces Magic’s lagging position.
Then you have Wizards of the Coast releasing nonstop sets. The market flooding of new products keeps prices down and suppresses demand for anything other than the newest and shiniest product. Add in Star City Games’s and WotC’s dwindling support of non-rotating formats and you have a recipe for a stagnating market.
So now there are no new players, Standard is inexpensive and Modern is getting cheaper, and there are far fewer opportunities to enjoy Legacy and Vintage. What does it all mean? Less demand for high-end cards.
So let me ask the question this way: would you rather have an Unlimited Black Lotus or a family vacation? An Ancestral Recall or a mortgage payment? A Mox Sapphire or a year’s worth of college textbooks? When we were looking at Magic cards as “Monopoly money,” we didn’t really consider these options. Now that real dollars need to be involved more frequently, however, I think this begs the question: are we making the right choice?
Every day I choose to keep my Black Lotus I am simultaneously choosing not to remodel my bathroom’s shower stall (true story). This used to be a subconscious decision I was making, but should it be? Perhaps not.
Perhaps going forward, we should be considering opportunity costs a bit more seriously. In a world where the Monopoly money of the game of Magic is depreciating, we need to truly consider if we’d be better of with “real money.”
Put another way, I will feel incredibly stupid for sitting on all these Magic cards at these valuations for the foreseeable future only to watch their value steadily decline. Since I don’t play Magic much these days, I’d probably be fine swapping out a piece of Power for home repairs or mortgage payments (or in my case, college tuition savings). I won’t be fine to watch that opportunity escape my grasp if card values drop.
Wrapping It Up
This article has tended to ramble a bit, and for this I apologize. If there seems to be some hesitation in the paragraphs above, this is simply because I am struggling with this decision and you’re picking up on that. Magic is a game—and one day the game may end. If that happens collectibility will certainly keep some values afloat, but overall a collection’s worth will be much lower than it is today.
Current trends in Magic are starting to worry me. There’s more and more supply of cards in the system, increasing the gap between Standard/Modern pricing and Legacy/Vintage. As this gap widens, players will be unable to use their “Monopoly money” for Power and other high-end staples. Instead they’ll have to use cash. Will these players choose to spend that cash on Magic cards? Or will they choose other real-world applications? Trends may slowly drift from the former to the latter.
I, for one, know my spouse doesn’t care much if I trade a bunch of cards into a vendor for store credit so I can purchase a $1,000 card. But if I told her I was spending $1,000 new dollars on a Magic card, she’d certainly express her reservations. And now, without a prospect of decent price appreciation on the horizon, I can’t even build a compelling case to do so.
Maybe it’s time I start considering that opportunity cost. Maybe we’ve gotten to a point where investing in mutual funds can yield better returns than a Time Walk. Maybe. I need to think on this further—I’ll be sure to share my thought process through this journey, and I hope you will all share your thoughts in the comments below as well. We’re all in this together, so let’s work together to make sure we are maximizing value as best as we can from our collections.
- Old School cards continue to be a pocket of strength in a decaying market. For example, Hypnotic Specter remains one of the cornerstones of black strategies in the format. Therefore it’s no surprise to see Star City Games sold out of Alpha and Beta copies ($129.99 and $79.99 respectively).
- Another bull market in Magic is the casual market. Here, you need to be cautious about reprints. But dodge them for long enough and you have some real upside potential. Consider Time Warp for example. The card is $18-$19 now, depending on the set it’s from. When was the last time Time Warp was so expensive? Perhaps when it was first printed in Tempest?
- It looks like Mirror Gallery is hitting all-time highs lately. Once again, a casual card from an older set with a unique ability is the perfect recipe for profits. That is, as long as you can dodge that reprint. Star City has a handful of played copies in stock in the $4-$5 range, but that may not last if demand sustains.