A Matter of Timing, Rotation, and Redemption

We are now less than two weeks away from the official Dragons of Tarkir previews, which feels weird. It seems like only yesterday that I writing about the Expected Value of Fate Reforged and the Week One Metagame of the new standard. This feels weird because it is weird. We are approaching a period of set releases on an unprecedented schedule: Fate Reforged at the end of January, followed by Dragons of Tarkir at the end of March, followed by Modern Masters at the end of May, and then Magic Origins in July. When it's all said and done, we will have four set releases in six months. And that's not even including three Pro Tours, a massively hyped three-GP weekend, and weeks and weeks of spoilers. Crazy.

When you look a bit deeper and consider that spoilers start two or three weeks before the pre-release (which itself is a week before the actual release), it's pretty clear that we don't have much time to recover between sets. The following chart shows the number of days between set releases over the past few years. 

Notice something? While the time between fall and winter sets has remained relatively consistent, the time between winter and spring sets has been decreasing little by little for the past five years.

Only Wizards knows the true reason for the early release of Dragons of Tarkir, but if I was forced to guess, I would pick Modern Masters 2015 as the culprit. The original Modern Masters was released only 35 days after Dragon's Maze and swiftly overshadowed the Return to Ravnica block both in paper and online. While Dragon's Maze was fairly forgettable in its own right, once it was fighting against Tarmogoyf, Vendilion Clique, and one of the most fun draft formats of all time, it didn't stand a chance. From a financial perspective, it seems fairly clear that Modern Masters contributed to the insane price tag of Voice of Resurgence. People just didn't open the set as much as normal; in part because the set sucked, and in part because the focus was on Modern Masters. While small sets are generally less opened than large sets, Dragon's Maze was opened less than any other small set.

Pushing up the release of Dragons of Tarkir will put a more reasonable amount of time between the set and Modern Masters 2015; rather than 35 days, we will get 63. This is especially important because unlike Dragon's Maze, Dragons of Tarkir is a large set which brings with it a whole new draft format. Wizards simply couldn't let a whole new limited format enter the multiverse only five weeks before Modern Masters 2015. No matter how great FRF/DTK/DTK is as a limited format, it's basically impossible for it to beat out Modern Masters 2015 in popularity, and most likely value. 

So instead of keeping the "normal" schedule, Wizards spread everything out to even intervals of two months. The question we need to answer is "what does this accelerated release schedule and shorter cycle mean with respect to card prices?" To answer this question, let's go set by set. 

Fate Reforged

One of the first common thoughts is that the early release date for Dragons of Tarkir will decrease the supply of Fate Reforged (compared to other winter sets). I think there is some evidence that supports this hypothesis, but other evidence that suggests the impact might not be as great as you would assume. Let's take a peak.

1. It is probable that fewer booster boxes of FRF will be opened, and fewer sets of FRF will be redeemed. 

The Magic world runs in cycles: a new set is released and people crack packs and boxes. About a month later, Magic Online redemption starts and complete sets start entering the market. If you look back at the chart in the beginning of the article, you'll see that the fall set cycle is always right around four months, while the winter set cycle is generally three months. For Fate Reforged, this cycle is only two months. In fact, Magic Online redemption will kick in right around the time that Dragons of Tarkir spoilers begin.

While some number of people will crack boxes months (or years) after a set is released, and others will hold off redeeming Fate Reforged until next fall, the period right after a set's release is generally the most profitable time for either of these activities. While I can't find hard numbers, it seems likely that a majority of the cards that enter the market do so during the three or four month period after a set's release. Cutting a whole month off the cycle for Fate Reforged could very well decrease the supply compared to other winter sets. 

One of the unintended consequences of moving Dragons of Tarkir up to avoid being overshadowed by Modern Masters 2015 is that instead, Fate Reforged may get overshadowed by Dragons of Tarkir. While it may not be to the extent that Dragon's Maze faced, Fate Reforged may be worse off than a typical winter set in terms of supply. A lower supply has potential to increase prices. However, it's not quite this simple. 

2. Fate Reforged will still be in limited for a while. At least until the release of Modern Masters 2015 at the end of May. 

The way a set is drafted along with the timeframe of these drafts both play a role in the supply of cards. Big limited events lead to thousands and thousands of packs being opened, not to mention all of the drafts taking place at local gaming stores and on kitchen tables throughout the world. Let's look back over the past few years and see how this impacts supply.

Scars block has the traditional big/small/small set breakdown and was drafted in the typical SOM/SOM/SOM, MBS/SOM/SOM, NPH/MBS/SOM manner. This means that one pack of Mirrodin Besieged was opened in every draft between February 4th 2011 and July 9th 2011. This means Mirrodin Besieged was drafted x1 for just about five months. 

Dark Ascension, on the other hand, came from a big/small/big block. Avacyn Restored was drafted solo. This means that Dark Ascension was only drafted x1 for for three months. At least in theory, this suggests that Innistrad block limited events only contributed to the total supply of DKA at about half the rate that Scars block limited did for MBS. 

Return to Ravnica was another unique block structure with big/big/small. As a result, Gatecrash was drafted x3 for three months leading up to the release of Dragon's Maze, and then x1 for another couple of months before the release of Magic 2014. Theros block headed back to the "normal" big/small/small structure, so Born of the Gods resembled Mirrodin Besieged being drafted x1 for five months. Fate Reforged is basically the same as Born of the Gods, being drafted x1 first with Khans of Tarkir, and then with Dragons of Tarkir. The only real difference is that the release of Modern Masters 2015 is two weeks earlier that the typical Core Set, meaning Dragons of Tarkir will only be drafted for 4.5 months instead of five.

Unfortunately there seem to be other variables at work beyond how long a set was drafted because card values don't correlate with the pack-opening duration. Dark Ascension is a notoriously low value set despite the fact that it was in limited for a much shorter time than any other recent winter set. If a shorter time in limited meant higher prices, we would expect Dark Ascension to be more valuable. Meanwhile Mirrodin Besieged is a relatively high value set, but was opened for a "normal' length of time. Basically time being drafted cannot be correlated with set value because other factors are in play.

3. The New Rotation Schedule

We have known about the new two-set block structure for a while now, but Fate Reforged is the test case for how this will play out in the real world. In the olden days, Core Sets had the shortest Standard life — approximately 15 months from release to rotation. Fate Reforged will have exactly one year in Standard. While this might not seem like a big deal, check out the price trajectory of Mutavault, the chase rare of M14:

Mutavault followed a fairly typical trajectory for a Core Set card: It was released in the summer, peaked six months later in the winter, and then spent the rest of its time in Standard declining towards rotation. On first glance, it seems like Fate Reforged cards will follow a similar trajectory — the problem is, this would put the peak right in the middle of the summer, which is generally a lull where prices decline rather than increase. 

Under the old system, cards like Monastery Mentor and Soulfire Grand Master would seem like slam dunk rotational targets: buy them in the summer while everyone is focused on Modern Masters 2015, and sell them in the fall when Theros rotates. The problem under the new rotational schedule is that fall rotation for Theros is only four months before the winter rotation of Fate Reforged. If you go back to Mutavault, you'll see that four months before rotation, it was already down nearly 25% from its peak. In the two months that followed, it lost another 25%. It's possible that the peak for Fate Reforged has already passed and that Ugin, the Spirit Dragon and friends will slowly decline towards rotation (barring random spikes from tournament results). 

Of course, this is all theoretical — while it's clear the new rotation schedule changes things in mtgfinance, no one is certain just how the market will react. For now, I think that the old plan of buying for rotation should be put on hold until we see how all of this shakes out. At the very least, be aware of this potential and plan accordingly.

What About Khans of Tarkir?

While it might not be as obvious, the release changes impact Khans of Tarkir as well. Due to the block structure, Khans of Tarkir will no longer be drafted once Dragons of Tarkir is released. While the cycle for Khans of Tarkir is the same as other fall sets, the amount of time being drafted will tie it with Return to Ravnica for the least among recent fall sets. 

(Note on methodology: one month of being drafted x3 is the equivalent of three months being drafted x1. This is how a set like Scars of Mirrodin has 20 months of being opened x1.)

As with the winter sets, just being opened less in limited doesn't necessarily mean that card prices will increase (see the Dark Ascension example above). This may be especially true for Khans of Tarkir since the money cards from the set (fetchlands) are reprinted in Fate Reforged. Plus it appears that the cycle is more important factor than time being opened in limited anyway.

Back to Dragon's Maze

As I noted earlier, Dragon's Maze had a historically short cycle with one month between its release and the release of Modern Masters. This, combined with the lacking quality of the set, led to the crazy prices for Voice of Resurgence. 

This time around, instead of one set like Dragon's Maze, we get two half-Dragon's Mazes in Fate Reforged and Dragons of Tarkir. While I'm not sure these cycles are short enough to lead to another Voice of Resurgence, it does seems likely that mythics from both of these sets will decline a bit less and rebound a bit quicker. This may be especially true for Dragons of Tarkir because the set may actually put less of each individual rare and mythic into circulation than Fate Reforged:

1. Dragons of Tarkir will be in limited even less than Fate Reforged. Fate Reforged gets drafted x1 for 4.5 months, while Dragons of Tarkir gets drafted x2 for two months. 
2. The Modern Masters 2015 hype is stronger than the Dragons of Tarkir hype. While Modern Masters 2015 doesn't hit the shelves until the very last weekend in May, it seems likely that the entire month will be dominated by the set. Even right now I see more on Twitter about Modern Masters 2015 and the three-GP weekend than about Dragons of Tarkir. This could lead to people buying even less boxes of Dragons of Tarkir as they pre-order or save up for Modern Masters 2015. 
3. Dragons of Tarkir is a big set. In a small set like Fate Reforged, a complete set of 10 mythics is opened every 2.2 boxes. It takes 3.3 boxes to open all 15 mythics from a large set like Dragons of Tarkir. So if the same number of boxes are opened, there will be significantly less of each Dragons of Tarkir card than Fate Reforged.

On the other hand, Dragons of Tarkir could be oozing with value, have a ton of splashy dragons, and sell like hot cakes despite the timeframe limitation. If you look back at some of the supply data and charts from earlier in the article, you'll see that the biggest difference between high-value and low-value sets isn't how long the set is drafted, or the number of days between releases, but the power and playability of the cards in the set. This is why Dark Ascension can have low supply and still be valueless. Crap is still crap, regardless of how limited the supply may be (unless you happen to be Cards Against Humanity, then apparently crap is gold.)

Opportunity

The combination of all of these forces present one very obvious opportunity: Magic Online redemption. One thing that happens on Magic Online every time a new set releases is that the prices of Standard-legal cards drop. This is because people sell off their Sorin, Solemn Visitors and Ugin, the Spirit Dragons to pay their entries into pre-release events. Set prices usually recover relatively quickly and don't sink too low, however having two major set releases in a row drops the floor even further. Let's look back on how Return to Ravnica and Gatecrash (the fall and winter sets when the first Modern Masters was released) behaved with the help of total set prices. 

Return to Ravnica

In April 2013 (between the release of GTC and DGM) a complete set of Return to Ravnica would set you back 182.5 tix on Magic Online. RTR bottomed out at 119 tix on June 14th, the exact day that MMA released online. While the set eventually rebounded in the digital world (back to 171 tix when Theros came out), the most interesting part is the the price of paper sets didn't change, remaining between $190 and $200 from April through M14, before peaking at over $270 when Theros was released. 

Now, when you consider fees, shipping, and everything else, redeeming a digital set for $180 and selling for $195 isn't profitable. However, redeeming a digital set for $119 and selling that set for $270 is great. Even assuming you can't get full retail value for your cards, 70% of $270 is still $189 — not bad for a short term investment of $119. If things go well, you can double your initial investment in a couple of months simply by understanding how the Magic Online market works and the relationship between digital and paper cards. Better yet, on Magic Online you can lock in your buy prices; if you build your sets while everyone else is selling out to dump their money into MMA (or this year MM2015), you can wait and redeem them whenever you like. If something goes horribly wrong, you can always cash them out on Magic Online, which at the very least should earn you some tix for very little work. 

Gatecrash

Maybe RTR is an outlier, so to play it safe, let's look at another set: Gatecrash. It was 109 tix in April and hit a low of 78 tix the day after MMA was released online. By the fall, it was back up to 113 tix. Just after Theros was released, a paper set of Gatecrash was worth $239. Another huge increase even taking into account that the cost of redemption went from $5 to $25 between RTR and GTC. 

Part of this is normal; if you look over other sets, they also hit their low-point sometime in late spring or early summer. The difference is when you have a much hyped summer release, the low is considerably lower. Innistrad for example, was 107 tix in April, and hit a low of 89. Scars of Mirrodin went from 97 to 73. Basically the release of a summer set like Modern (or Vintage) Masters makes the low for the fall set around 10% lower. While it might not sound like much, 10% is a huge difference when it comes to making a profit from redemption. 

As such, I believe buying completes sets of KTK and FRF (especially KTK, due to the presence of fetchlands) when MM2015 releases and then selling the cards over the summer is the real opportunity in this release schedule. Paper sets don't decrease when a MMA, VMA, or MM2015 release online. Digital sets do. This is the inefficiency to exploit. 

Conclusion

That's all for today. What do you think? How will this accelerated release schedule impact card prices? What about the new rotation schedule? When will FRF peak (if it hasn't already)? Is buying over the spring or summer with an expectation to reap profits at rotation still a reasonable strategy? Do you have any experience with Magic Online redemption? Let me know in the comments, or on Twitter @SaffronOlive.