Understanding Reserve List Buyouts

Over the last couple weeks, the trend of reserve list buyouts has not only returned but hit an all-time high. In just the past week, 31 cards from Arabian Nights, Antiquities, and Legends (along with one from The Dark) have increased by at least 50% in price, with most more than doubling in price. While we've had reserve list buyouts in the past, it's mostly been a card here or there, rather than this full-scale assault on any reserve list cards from the earliest years of Magic. The other big difference this time around is that, in the past, many of the buyouts made a least a little bit of sense from a demand perspective. While Moat and Lion's Eye Diamond have limited demand from Legacy and a few Commander players, they do have at least some demand. Meanwhile, many of the cards that have been bought out over the past few weeks have zero demand from anyone looking to play the game of Magic. At this point, it feels like the price floor on the oldest reserve list cards is being reset. People are betting that, rather than certain individual cards (often staples or at least playables) being underpriced, these sets in general are underpriced. You know how bulk rares are worth about $0.10, no matter how good or bad the card may be? People are betting that this isn't true of the oldest reserve list sets and that bulk rares from Arabian Nights, Antiquities, and Legends are actually worth $5 or $10 based on their scarcity alone. 

While I'm certainly not a fan of buyouts, when many Magic players hear the word "buyout," they automatically think of a shadowy MTG finance cabal lurking in some underground lair and coming up with nefarious plans to make old cards more expensive. Thankfully, this is actually far from the truth. When it comes to the oldest reserve list cards, it's actually incredibly easy to buy out a card, since there simply aren't that many copies of these cards in existence. 

Even discounting the absurdly low numbers for Alpha and Beta (and remember, this is the number of copies that originally saw print. I wouldn't be the least bit surprised to find out that fewer than half of the copies are still in existence, based on how many conversations I've had with early-years players who have lost their cards over the years), there simply are not a lot of early reserve list cards in existence. Take Legends as an example. With only 19,500 of each rare printed, perhaps half lost or destroyed over the past 25 years (bringing the number down to perhaps 9,750), and some untold number still around but locked away in collections and unlikely to ever hit the market (based on our 9,750 number, only 2,437 of the estimated 20,000,000 Magic players—or 0.0001%—would need to own a playset of Moat for there to be zero available copies on the market), literally only a handful of these cards are actually for sale at any given time.

What this means is that buying out a reserve list card is actually incredibly easy. It doesn't take a shadowy cabal. It doesn't take a big-money dealer. It doesn't take a deep-pocketed vendor. In fact, most Magic players could buy out a reserve list card and make that card increase 100% or even 1,000% in price in 10 minutes and for a couple hundred dollars. 

Anatomy of a Buyout

Take Tuknir Deathlock—a Legends reserve list rare that hasn't (yet) been bought out. While I'm not actually going to buy out the card because I don't want to be responsible for increasing the price to write an article (which seems ethically questionable), let's see what it would take to buy out Tuknir Deathlock on Friday, August 25th. As you can see, the retail price is currently somewhere between $4.50 and $5.50, so just how much money and work would it take to perform this buyout?

The first stop is TCGplayer, which has an outsized impact on card prices, since it forms the basis for many price sites (including our prices here at MTGGoldfish). Right now, TCGplayer has a total of two copies (neither near mint) in stock, both from ChannelFireball. Card Kingdom is already out of stock, and Amazon has a total of three copies (none near mint), with one being from ChannelFireball, which we probably shouldn't count, since it's likely the same copy we see on TCGplayer. 

Meanwhile, eBay has a total of nine copies available, but one of them is graded (which makes it super expensive) and three are already priced between $15 and $20 (already 300% above the market price), which means only the five that are between $5 and $10 are really important to our hypothetical buyout. StarCityGames has the most in stock. Although it is sold out of near mint copies, it has 13 LP and one MP priced at $4.50. ABUGames already has its single NM copy priced at $10 but has 12 SP copies at $5.99. We could keep digging around with smaller vendors and probably pick up a few more copies here or there, but this isn't really necessary if your goal is to buy enough copies to increase the price of the card. 

All in all, this gives us a total of 34 Tuknir Deathlocks easily available at an average price of about $6 a copy. This means that, to buy out the Internet of the Legends rare, we'd need to spend about $204 (and in reality, buying all 34 copies really isn't necessary to achieve our goal). In theory, we could just buy out TCGplayer and clean out the other cheap (sub-$5 copies) and near mint copies from other vendors, immediately list our copies on TCGplayer and eBay for $20 (or $40, or $1,000), wait for all the pricing sites to adjust, and suddenly—for less than $100 and in 10 minutes—we turned Tuknir Deathlock from a $5 to a $20 card: an increase of 300%!

This math isn't limited to Tuknir Deathlock. I spot-checked a bunch of the reserve list cards from Arabian Nights to Legends that haven't yet been bought out, and it's roughly the same. In fact, Tuknir Deathlock actually has more supply on the market than many other similar cards, not to mention that some of the cards are actually even cheaper than Tuknir Deathlock, meaning the overall cost of buying out the card is even lower (for example, Ur-Drago). 

The point of all this is that buying out reserve list cards is easy. The fact that the supply is so tiny, the community relies so heavily on TCGplayer for prices (and TCG still hasn't released an API for it's market pricing), and the fear of reprinting (which is what keeps these types of buyouts in check for non-reserve list cards) is off the table thanks to the very nature of the reserve list creates a sort of perfect storm that allows for these types of buyouts to happen. 

What Happens after the Buyout?

So, let's say we actually did buy out Tuknir Deathlock and reset the price to $20. Now what? The answer here is, not much. The problem with these reserve list buyouts is there simply isn't much demand for the cards being bought out, which means it will be next to impossible to actually sell our 34 copies. 

A classic example of this is Narwhal, which was one of an early batch of reserve list buyouts that happened nearly a year ago. Before the buyout, copies were readily available at $0.25 because nobody actually wants copies of Narwhal. The buyout spiked the price to $10 over the short term, and now a year later, TCG mid on Narwhal is close to $1.50. If you look at this on paper, it sounds like a great deal. A card you bought for $0.25 is worth $1.50, so you get a massive 500% gain, right? 

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The problem is that nobody actually wants copies of Narwhal. Go take a look at the eBay completed listings. In the past month, a total of five copies of Narwhal have been sold, and most of these were for $0.99, which means when you take fees and shipping into account, even if you bought copies for $0.25, you really aren't making any money. Compare this to a card with real demand, like Chandra, Torch of Defiance. eBay alone shows 17 copies sold in the last day.

As a result, even though we'd have 34 copies of Tuknir Deathlock that are now "worth" $20 each, it's exceedingly unlikely that we can find anyone who will pay us $20 for a Tuknir Deathlock. Actually, our best hope to sell any of our copies is to take advantage of amateur MTG finance types who don't really understand the way buyouts work and end up chasing the buyout. Instead of trying to sell all of our copies for $20, maybe we sell some for $10 or $12 to people who really do believe that $20 is the going rate and think they are getting a discount and can turn around and immediately resell the card at a profit. 

Now, this isn't to say that you can't make money buying out cards. Odds are we could take our 34 copies of Tuknir Deathlock and, after hopefully selling a few to people chasing the buyout, sell the rest incredibly slowly—maybe a copy a month for perhaps $10. This means that, over the course of the next 3 years, we turn our $200 into $300 or $400. While this is still a reasonable profit, there's a lot of work attached to making this money. So, while it's easy to look at the price spikes on paper and think, "oh my god, someone is making a ton of money," this isn't really the truth most of the time. While this is especially true of low-demand cards like Tuknir Deathlock and Narwhal, in many cases it's true of staples as well.

Perhaps the best example of this is Lion's Eye Diamond. Back in January 2016, the Legacy staple was around $80 a copy. Then, it was bought out, jumping to about $130. Six months later, it was bought out yet again, driving the price all the way up to $250 for a short while, but then a strange thing happened—the price started to drop. In fact, today, Lion's Eye Diamond is actually worth less than when it was bought out at $130. 

This price history of Lion's Eye Diamond specifically does an amazing job of showing both sides of buyouts. On one hand, someone made a bet that Lion's Eye Diamond was legitimately undervalued at $80, so they bought every copy they could find, and it turns out they were right. Lion's Eye Diamond actually was undervalued, and the person who bought copies at $80 likely had no problem selling them at $130 (especially considering it was bought out again at that price). On the other hand, someone made a bet that Lion's Eye Diamond was still undervalued at $130, and it turns out they were very wrong. People simply weren't willing to pay $250 for Lion's Eye Diamond, or even $180, or $150. 

And this is likely the case with many of the reserve list cards currently being bought out. Based on the numbers we talked about in the beginning of the article—like only 19,500 of each Legend rare ever being printed—it's probably true that Legend rares are undervalued. While demand is tiny, if someone is trying to compete a collection of Legends and needs a copy of Tuknir Deathlock to reach their goal, they will almost certainly pay $10 or even $20 for a copy. On the other hand, when you look at the movers and shakers page and see drastic spikes, it's important to remember that these are asking prices and not what people are paying for cards. 

A couple of weeks ago, my little brother called me and told me he was rich. He had stumbled across an article saying that old Disney VHS tapes with a black diamond on the case were worth thousands of dollars. He went and dug through my mother's basement and found a bunch of them. Of course, the article was pretty far off base (and the VHS tapes are actually very common) because it based its claim on the fact that some Disney VHS tapes were listed on eBay for thousands of dollars. A quick check of completed listings (which displays Disney VHS tapes that actually sold for real money) showed that most Disney VHS tapes—even black diamond Disney VHS tapes—go unsold, and the ones that do sell are often in bundles of 10 for maybe $20. 

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The point is that there's often a huge difference between the price someone asks for something and the price someone is willing to pay for that something. It seems pretty unlikely that you'll actually find anyone willing to hand over $43 of their hard-earned dollars for a copy of Cleansing, just like no one is going to give you $10,000 for a VHS copy of The Little Mermaid. 

What Does All This Mean for You?

Considering how easy it is for someone with just a few dollars to buy out an old reserve list card, it seems likely that these buyouts will keep happening for the foreseeable future. Looking back over the supply of early sets, everything from Alpha through Legends is free game, and this will likely include lower rarity cards as well. While uncommons and commons lose the safety of the reserve list, many are worded in such a weird way or have such archaic flavor that they are extremely unlikely to be reprinted. Plus, the supply is shockingly low, even for non-rares.

Numbers from Crystal Keep

With this in mind, the most important thing you can do as a regular old Magic player (and not someone trying to speculate) is to look over these sets, figure out if there are any cards that you need or ever might need, and purchase them soon. There really isn't any rhyme or reason to these buyouts. Most of these cards are being bought out because they are in low supply, not because they are in demand, and if being low in supply is the only criterion for being bough out, then just about anything on the above list—no matter how janky and unplayable—could be a target. While the post-spike prices won't stick around, it's also likely that that many of these cards really are undervalued. While Tuknir Deathlock isn't a $40 card, it also likely isn't a $5 card. The true price is somewhere in between, which means if you're planning on building a Tuknir Deathlock Commander deck, you should probably pick up your copy now before it ends up being $10 or $20. 

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Along the same lines, never ever buy into a buyout spike. The peak prices that come right after a buyout almost never stick. When a card jumps to $100 from $30, here's what happens. The first seller lists the card for $100, but no one buys it. Someone else scrapes up their own copies, sees that $100 price, and lists theirs at $90, looking to undercut the first seller. Then, the next seller (or even the first seller again) drops the price to $85, then someone goes to $80, and this continues until copies of the card actually start to sell, which is where the price finally settles. This means if you are in the market for something that's recently been bought out like Gwendlyn Di Corci or Land Equilibrium, you should probably put your purchase on hold for the time being and let the market stabilize before spending your hard-earned money. Remember: when it comes to buyouts and price spikes, the truth is usually somewhere in the middle. Gwendlyn Di Corci may have been legitimately underpriced at $30, but now it's almost certainly overpriced at $100. Give it a few weeks or months, and you'll be much more likely to pay a fair price to pick up your copy (maybe in the $60 range). 

If the ease of buying out an old reserve list card seems appealing, my advice would be to not do it. Unless you are someone looking for long-term investments, the opportunity cost is just too high for the typical Magic player. Sure, you could perhaps turn $200 of Tuknir Deathlock into $350 of Tuknir Deathlock three years from now, but this isn't guaranteed, and even if it were, you'd be without that $200 for the next three years. You could spend that $200 to buy a tier deck for Ixalan Standard, which would likely be way more fun that having a pile of unplayable Tuknir Deathlocks sitting on your desk and then spending the next three years of your life going back and forth to the post office to ship them out one by one. 

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Finally, the good news about these buyouts is they don't really impact the typical Magic player. If we're honest about the cards being bought out, most of them aren't very good or even playable in any format. While it is frustrating to see Magic cards becoming more and more expensive, raise your hand if you really wanted a copy of Lifeblood. I'm guessing that very few—and possibly even zero—hands were raised. If you happen to have your hand up, just pick up a copy of Sanctimony instead. If you look over all the reserve list cards between Alpha and Legends, apart from the dual lands (which are an entirely different issue that Wizards should find a way to solve), almost none of these cards are relevant to anyone interested in playing the game of Magic. While a tiny number might matter to some Legacy and Vintage players like Moat and The Tabernacle at Pendrell Vale, even these are relatively fringe cards that only go into a small number of decks. 

So from a meta perspective, 99% of these buyouts don't matter to 99% of Magic players, which means the right thing for most of us to do is just ignore them. While it may sound scary to see prices spiraling out of control, in reality, these price changes and buyouts don't really impact me, you, or anyone you know. As I mentioned a moment ago, it's probably a good idea to take a quick look over the early reserve list sets just to make sure there isn't anything you need, but after that, just ignore the insanity. In some ways, reserve list buyouts are like getting struck by lightning. It would be nice if it never happened, and I feel sorry for people who are unlucky enough to get hurt by a Lightning Bolt, but the odds that a Lightning Strike will actually impact you or me is so small that it's better to not waste your time thinking about it. 

Conclusion

Anyway, that's all for today. As always, leave your thoughts, ideas, opinions, and suggestions in the comments, and you can reach me on Twitter @SaffronOlive or at SaffronOlive@MTGGoldfish.com.