The Expected Value of Fate Reforged

As financiers, or even just Magic players in general, one thing that is pounded into our heads over and over again is "don't crack your packs!" As a rule of thumb, this is good advice because more often than not you can expect to lose money by opening sealed product. However, there are certian situations where buying and opening booster boxes is not only acceptable, but also profitable. One of these situations is when a new set releases. 

Now, this does not hold true for every set, or even most sets. But every now and then it does happen. For instance, when Returned to Ravnica was first released, you could expect to open about $130 of buylist value from a $100 box: a nice little profit with the bonus of being able to crack packs guilt-free. The same thing held true for Khans of Tarkir with about the same margin. On the other hand, there was no point where cracking Dragon's Maze or Born of the Gods could be expected to generate a profit. 

Because of this, I've made a habit of calculating the expected value of each new set that is released once the full set is spoiled. At first I did this for myself to see if I could expect to make a profit by purchasing boxes, and then I started posting my EV calculations on reddit. Since it's sort of a tradition at this point, I figured I might as well keep it going.

What is Expected Value?

I talked a little bit about expected value (EV) on last week's podcast, but I think it's worth going over the basics again. Expected value calculates the odds of opening specific cards in a booster box, then uses the price of each card to determine how much value could be in the box from that card. Finally, by adding up all the cards, we can determine just how much value to expect from the cards we acquire by opening the box. 

Now, expected value isn't "my thing." There are other sites out there which calculate EV from sets going back through the history of Magic, but during release periods I prefer to do the calculations myself because my methodology is a bit different than most. 

Buylist Prices

Most EV calculations use sell prices, things like TCG low (or mid) or the prices vendors like StarCityGames or ChannelFireball sell cards for. But unfortunately, these numbers do not mean much to me for a couple reasons. First, I (and most of you) can't get StarCityGames or TCG-mid prices when we sell our cards (wouldn't that be nice?). Instead we get eBay minus fees and shipping or buylist value. As such, in calculating the value of the cards in the set, I'm trying to use the number that I realistically think I can get for the card tomorrow (this is important, because new sets tend to decrease in value quickly). For this I use a combination of completed eBay listings minus 15 percent for fees and shipping, best buylist prices, or, as a last resort, vendor prices minus a typical spread of 35 percent.

When it comes to making a profit by opening boxes, timing is everything as prices drop quickly once a new set starts being opened. A set can go from positive EV to negative EV in less than a week, sometimes even overnight. Basically, by opening boxes on release day (or release weekend), we can take advantage of the excitement for the new cards (creating demand) and the fact that the freshly-opened cards haven't had a time to reach the market yet (lack of supply). 

Notes on Methodology

1. Commons are considered to be bulk, which I value at $5.00 per thousand. This means that an entire booster box worth of commons adds $1.80 to the expected value of the box. 
2. Most uncommons are also worthless for my purposes. If you can't expect to sell an uncommon for $1 or more per play set, it goes into the bulk piles along with the commons. 
3. Foils are not included. When calculating EV, I consider opening a valuable foil like a little bonus lottery ticket you get for free with the purchase of a box. The odds of opening a foil Monastery Mentor is so slim (one in every 2,160 packs) that it's just not worth considering when crunching the numbers. When it happens, it's great, but don't count on it. 
4. These prices won't be good for long. Remember, the idea is to determine if Fate Reforged is worth opening on release weekend. If you buy a box at the beginning of February, don't be mad a me when these prices are wrong. I can tell you right now they will be wrong, and possible very wrong in the future. Again, we are trying to take advantage of the hype (demand) created by the new set and the lack of supply.
5. Another reminder: You don't actually make a profit until you sell the card. So just cracking boxes on release weekend isn't enough, you need take the next step and actually list the cards on eBay or sell them to a buylist. 
6. Finally, be aware of variance. If you open enough packs, these numbers will be accurate, but like most aspects of the game, in small samples, variance can have a huge impact on profitability. In theory (although not in practice), if you open one box it could contain zero mythics and all bulk rares, or it could contain a complete set of foil mythics. The more packs you crack, the more accurate the EV becomes because you smooth out these outliers. 

Mythics

$ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00

The mythics of Fate Reforged are unique, unprecedented, and powerful. I've talked about this in past articles as well as last week's podcast. The trouble with mythics is you just don't open them all that often; the stated odds are one in every eight packs. As such, to calculate just how much value any individual mythic adds to a booster box, we need to divide the number of mythics in the set (10) by the number of mythics in the average box (4.5) to find the odds of opening a specific mythic in a box (0.45). We then multiply the price of the mythic by the odds to find how much value it adds to the box. 

As you can see, the mythic slot currently adds $42.62 of expected value to a Fate Reforged box, with just the possibility of opening a Ugin, the Spirit Dragon or Monastery Mentor accounting for almost half of the expected value. The fact that these two cards account for such a large amount of the EV isn't surprising, but it does reinforce the problem with variance if you are only cracking one box. If you happen to miss on both the planeswalker and the monk, your chances of making a profit drops significantly to close to zero. 

Sidebar: Torrent Elemental seems to be on the rise. Although you can still pick it up from some vendors for $1.99, it's sold out on SCG and consistently selling for $3+ on eBay. I had figured this would be fighting with Ghastly Conscription for bulk mythic of the set, but maybe it's better than I think. Also of note, as of this writing (Sunday, January 11) Ugin, the Spirit Dragon, Whisperwood Elemental, Shaman of the Great Hunt, and Monastery Mentor are also all sold out at SCG.

Rares

$ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00

Fate Refogred rares are in an interesting place value-wise. With an abnormally large amount of expensive mythics, it seems likely that the prices of rares will suffer eventually. I mentioned in an article on my blog last week that when it's all said and done, there will probably be 10 or less non-bulk rares in the set, so some of the currently just-above-bulk rares (and even some of the expensive rares) are likely to end up at bulk by the time M16 hits shelves this summer. 

I probably should have mentioned this under the methodology section, but since we are dealing with buylist values (the price you can expect to sell a card for immediately), all of the rares that vendors are selling for $0.49, and some that they are selling for $0.99 fall into the bulk rare category (which I value at $0.10) for the sake of calculating expected value. While you might be able to do a bit better in trade, right now we are dealing with cash prices. 

The rares add another $22.73 to the expected booster box value, a low but unsurprising amount considering there is no land cycle in the set. In past sets I've analyzed, the presence of worthwhile lands is one of the biggest factors in determining if a set is worth cracking. For instance, look at Khans of Tarkir. Just the opportunity to open fetchlands in Khans of Tarkir adds more to the expected value of a KTK box than all the rares of Fate Reforged add to a Fate Reforged box, and it's not particularly close. 

Considering there are 53 rares in Khans of Tarkir, one in every 10.6 rares will be a fetchland, which means you should open about 3.5 per box. Since the average sell price for fetchlands is about $14.60, if we deduct 30 percent for the spread, we come up with a buylist value of about $10.22 per fetch. Multiply that by 3.5, you'll find that just the five fetchlands add $35.77 to the expected value, $13.00 more than all the rares in Fate Reforged. 

Overall the rare value is predictably uninspiring. There really are not any high value rares to open (think Snapcaster Mage in Innistrad or Deathrite Shaman in Return to Ravnica), and this is makes it hard to count on getting value from a box. Sure, you'll open four or five mythics, but what if you miss on the three big ticket mythics? This can and will happen. Because of this, even more so than in most sets, variance will play a large roll in box cracking. If you open a Ugin, the Spirit Dragon, Monastery Mentor, or Soulfire Grand Master, you'll likely be fine. But if you miss, it'll be hard to turn a profit. 

Fetchlands

$ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00

Fetchlands in the generally worthless basic land slot adds an interesting wrinkle to the EV calculation. I still haven't found confirmation on just how often they will show up, so I'm running with the Dragon's Maze shockland based estimate of one in every 22 packs. 

While it may come as a surprise, the fetchlands in Fate Reforge add almost as much expected value to a booster box as the rares, despite the relative infrequency in packs. 

Uncommons and Bulk

$ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00

I'm not going to do a whole chart for uncommons simply because most of them fall under the bulk category. Every booster box contains 108 uncommons. Since there are 60 different uncommons in the set, you can expect to open 1.8 of each per box. This means that any uncommon worth more than bulk prices can simply be multiplied by 1.8 and we'll have the amount of expected value they add to the box. 

By my count there are seven above-bulk uncommons: Battle Brawler, Cloudform, Hero's Blade, Mardu War Reaper, Reality Shift, Valorous Stance, and Wild Slash. As far as buylist prices, I have Battle Brawler, Cloudform, Hero's Blade, and Mardu War Reaper at $1.00 per playset, Valorous Stance and Wild Slash at $2.00 per playset, and Reality Shift at $3.00 per playset. At these prices we end up with the non-bulk uncommon slot adding $4.05 to the expected value of a box. 

Considering we have 360 bulk commons, nearly 100 bulk uncommons, and 36 bulk lands, the easiest way to handle the bulk in our calculation is just to count it as 500 bulk commons and uncommons per box. At a rate of $5/per thousand, this mean all all the other cards from in a Fate Reforged box add about $2.50 to the expected value of a box, making the total value added from commons and uncommons $6.55. 

Summary

So, is it worth it to crack boxes of Fate Reforged in an attempt to make a profit? Let's turn our attention to one more chart and find out:

According to my methodology, you can expect to open right around $90 worth of value (at current prices) from a box of Fate Reforged. This is both good and bad news. Obviously, with this set it's not going to be worthwhile to buy a bunch of boxes at $100 and hope to make a profit from the cards you open. The numbers just don't add up. However, $90 in EV means you're not really losing much to buy a few boxes to draft with your friends, because you are going to open, on average, almost as much buylist value as you pay for the box. 

The reason I wanted to lay everything out in charts and spend so much time explaining the methodology I used for calculating expected value is because I realize not everyone will agree with my method of pricing. Maybe you can get more than buylist/eBay minus shipping and fees value for your cards, or maybe, instead of selling the Fate Reforged cards you open you plan on sticking them in your trade binder. With everything laid out this way, you can plug in any numbers that you want and do your own calculations. 

For example, do you think you can get $40 for your Monastery Mentor after it crushes the Modern PT in February? Stick $40.00 where the $21.25 currently is, multiply it by 0.45, and add the difference between my calculation and your calculation ($18.00 - $9.56= $8.44) to the total EV (in this case, instead of $90, the EV would be $99.56).

It's also worth mentioning that this same methodology works for any set. For other sets of the same size (10 mythics, 35 rares), you can just plug in card names and prices and use the same multiplier. For big sets, the multiplier changes, but the method stays the same.

I would encourage you to run your own numbers, using your own valuations, and use your calculations to determine whether buying boxes of Fate Reforged are right for you. And don't forget, cracking packs is fun — lots of fun — and fun doesn't show up in my data. There is something to be said about treating yourself to the joy of opening a box and chasing the dream of a foil Ugin, the Spirit Dragon. Just don't do it under the illusion that you can expect to make a profit in the process. 

Conclusion

That's all for today. As always, give me your thoughts and opinions in the comments, or on twitter @SaffronOlive. If you want to keep up with my musings between articles, you can head to my blog. Finally, if you haven't listened to it yet, I'm part of the new MTGGoldfish Podcast along with Richard and Chaz. So if you want to hear me spout off about how Warden of the First Tree is a playable card to the horror of my co-hosts, make sure to check it out.