Welcome to the latest edition of Bull Case Bear Case. As always, the goal is to give investors a clear, balanced view of both sides of the coin. Prepare to tackle the week with confidence! This week, we preview the 1954 Sports Illustrated #1 which will IPO on Rally. This marks the first ever fractional magazine.
Rally
1954 Sports Illustrated #1
4/26 @ 12:00 PM ET
Valuation: $10,000
Bull Case
Catch the wave of the rising magazine market. In February, Heritage Auctions sold a CGC 9.4 graded 1981 Sports Illustrated for $30,000. The sale established a new record price for any sports magazine and signaled a potential rotation of money into yet another sector within the sports collectibles market. While cards have long held the title of flag-bearer within the hobby, sports memorabilia has gained more attention over the last few decades and the shift has led to additional sectors finding their footing in a volatile yet appreciating market. Prices for sports tickets soared in the latter half of 2021 and in the first quarter of 2022, we had the first half-million dollar ticket sale in addition to multiple six-figure results. The market here is already established, to a point, as there have already been six-figure magazines sales as well-conditioned copies of The Shadow and Playboy command attention at the auction block.
The print that defined sports journalism. It once seemed like every sports fan born before the turn of the century had a subscription with Sports Illustrated. Armed with a murders row of writers, from Frank Deford and Rick Reilly to Gary Smith and George Plimpton, Sports Illustrated established a brand that has never been replicated within the sports media industry. Since its inception in 1954, four US presidents have graced the magazine's covers in addition to multiple celebrities including Arnold Schwarzenegger, Shirley MacLaine, and Big Bird. Where the news has Time Magazine, sports have had Sports Illustrated. There has never been a sports-specific magazine read more than S.I. and based on the current trajectory of print, there likely never will be.
Sports on Rally's secondary markets. The average return on for assets trading on Rally is 3.44% across over 300 active offerings. In total, more that 34% of all assets on Rally are sports-related and the average return for sports cards and memorabilia is 6.51%. Additionally, there have been 14 accepted buyout offers for sports-related assets on Rally with an average return of 50.34%. Not only are sports outperforming the broader market on Rally, but vintage sports are performing at an entirely different level. The average ROI for pre-1960s sports assets is 62.65% and the average for assets from the 1950s is 53.22%. The 1950s were a golden-era in sports, with players like Aaron, Clemente, and Mantle starring on the baseball diamond while a new generation of athletes like Bart Starr helped upstart leagues known as the NFL and AFL attract attention towards professional football.
Bear Case
Is the market real and if so, is it sustainable? While there seems to be potential within the sports magazine market, it has not been completely realized yet. The most expensive public sale for a Sports Illustrated is just $30,000, which might sound high but compared to cards, tickets, and memorabilia, is well below the price of other markets within the sports investment world. With sports memorabilia, there have been million-dollar sales throughout the 21st century and while prices have climbed recently, paying five and six-figures for a baseball or a jersey is nothing new. The same goes for sports cards which have decades of performance and sales data to justify valuations. Prior to 2020, this Sports Illustrated #1 has never sold for more than $3,000 and there has never been a public sale for a v1 copy above $12,000. Print is dying at a rapid rate and we don't have enough evidence yet to confirm that even though people are reading less magazines, they will start investing into them.
Volatile history. For an asset that has only broken above $10,000 once, prices have been extremely volatile. The record price for a 1954 copy is $11,100, established last May at Heritage Auction. Since that sale, the price for other CGC 9.8 graded examples has fluctuated significantly. The peak price realized in 2021 was $9,700 and the floor was set at $3,480. In some cases when you see price differences that dramatic, it can be due to the venue in which the magazine was sold through. With this Sports Illustrated #1, the place of sale does not seem to play a role in valuation though. The most expensive sale occurred at eBay while the lowest sale took place at Heritage Auctions. In 2022, Heritage sold a CGC 9.8 for $4,920 but eBay sold a different copy for $9,555 less than two months later. The price chart for this Sports Illustrated has struggled to stabilize through 2022 and the $10,000 market cap would be the highest valuation placed on a first edition Sports Illustrated since that May 2021 sale. Whether or not prices will recover and soar past this current market cap remains to be seen but for now, the $10,000 valuation is the ceiling in 2022.
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