Bull Case Bear Case: Ronaldo Rookie Sticker and 1st Edition Lord of the Flies
March 15, 2022
By
Dylan Dittrich, Bradley Calleja
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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. Don't forget to upgrade to Pro (and receive a free seven day trial) for a look at great analysis on even more offerings.
Rally
William Golding: Lord of the Flies (1st Edition)
3/15 @ 12:00PM ET
Valuation: $14,000
Bull Case
Strong secondary market returns. There are currently 32 books trading on Rally and the asset class has an average ROI of 5.56%. That number on its own is not worth celebrating, but once you drill deeper, the performance looks even better. Books from the 20th century are up an average of 13.1% and the only other offering from 1954, the Lord of the Rings Trilogy, is up 124%. While books have struggled recently, most asset classes have struggled to find their footing in the last couple of months on Rally.
Blue-chip and best-seller. Find any list of the top books published and there is a good chance Lord of the Flies is mentioned. With over 25 million in US sales alone, the book is a cult classic that has become a staple in grade-school libraries across the country. The rare book market is still young and in a developmental stage. Investors looking for the lowest amount of volatility with robust upside will likely continue trending towards books that the general population is familiar with.
Controversy as a catalyst. Like the saying ‘All press is good press’, when it comes to books, is all controversy good controversy? Lord of the Flies has consistently made its way onto lists of banned books and while the initial push against the novel started in the 1990s, there have been anti-LOTF movements through the 21st century. As a matter of fact, as I type this bullish case, the Oklahoma Attorney General is currently reviewing a list of 51 books, one of which is Lord of the Flies, to determine whether it violates the state’s “obscenity laws”. So why is controversy and potential banning a bullish case? It helps maintain the relevancy of the book. The primary force that has driven this book throughout the last 50-years has been its influence within the school system. Students are reading less today, and one study by the National Assessment of Educational Progress found that high school students are reading at the lowest levels since the mid-1980s. Even at a time when reading is not as popular, one way to keep a book relevant is the keep it in the headlines, which is something that Lord of the Flies has never had a problem with.
Bear Case
Outlier or overall trend? To date, there has been one five figure sale ever recorded for a first edition copy of this book. That sale, which occurred at Christie’s in September, closed at $16,250, which nearly doubled the most ever paid for a copy of Lord of the Flies. To further emphasize how much of a breakout that sale was, the book opened with an estimate between $2,000-$3,000 on Christie’s. Rally’s book was purchased for $11,000 and carries an additional 19.3% in fees and expenses. Even though the Rally IPO price is below that most recent sale, it is still double the price of the other two sales that occurred in 2021 and would be the second highest valuation ever for a first edition copy. The overall returns for Lord of the Flies have not been the greatest either. In 2013, Dominic Winter Auctions sold a copy for $9,058, which at the time, was an outlier sale that was nearly $2,000 higher than any previous price. That $9,000 result would stand as the highest price paid for more than eight years. From 2014-2021, there were seven sales of comparable copies and only one, the Christie’s sale, struck a hammer price that surpassed the 2013 result.
Lack of book buyouts. While the secondary market for books on Rally has returned positively on average thus far, that has been the only source of liquidity for the asset class to date. There has yet to be a single buyout offer made for a book on Rally let alone an accepted offer, and with the current trend of volatility on the platform, the boom or bust returns provided by the Rally trading floor might not provide an attractive outlet for investors looking for a quick-flip. Books were completely ignored during the buyout bonanza of comic books and while 11 different comic offerings have been sold, every traditional book offered by Rally is either trading, or awaiting trading.
Box office bust. There are books like the Wizard of Oz, which delivered iconic movies that are still attracting attention and money today. There are also book such as Dune, which have had movie adaptations developed within the last year. Then there are books like Lord of the Flies, which bombed at the box office. While over 25 million copies of the book have been sold, the movie, which premiered in 1990, reeled-in just 14 million in gross sales. There were rumblings of a new Lord of the Flies movie, but at this time there has not been much development. The potential filming is still listed in pre-production status and the latest update came in April 2020, which means at best, filming could end later this year with a potential release date in 2023. Whether or not a new movie will even deliver a positive impact is suspect though. There is no word yet on the budget or the actors that will participate.
2002 Panini Stickers Cristiano Ronaldo RC (PSA 10)
3/17 @ 2:30 PM ET (Previously Early Access)
Valuation: $109,500
Bull Case
Most popular athlete on the planet. Cristiano Ronaldo is the only person alive with over 400 million Instagram followers. 400. MILLION. That is a truly preposterous number, and it’s estimated that he could charge $1.6 million for a single sponsored Instagram post. The reality is that you could not find an athlete for which there is a larger potential TAM on a global scale. That makes the theoretical supply and demand imbalance incredibly attractive, particularly as the Hobby grows more international in nature. Many point to the 2022 World Cup as a potential catalyst for that globalization and for the rise of soccer collectibles in particular - however, Ronaldo and Portugal still have to make it through a four team playoff which includes Italy to secure their tournament berth.
Earlier than recognized rookie card. Ronaldo’s most valuable and recognized rookie card is the 2003 Panini Sports Mega Craques card, with the record price paid standing at $312,000 back in October. You’ll notice that card is actually from one year later than the sticker here, which raises questions about the “true rookie” status in soccer. It’s often the case that there are earlier stickers or cards from less celebrated manufacturers or sets that are overlooked by the market in favor of a more traditional, albeit later choice. The population of the 2002 Sticker is actually vastly lower than the 2003 Mega Craques card as well, with just 22 PSA 10s and 48 BGS 9.5s, versus 38 PSA 10s and 41 BGS 9.5s for the latter. Yet, the most a PSA 10 has sold for is $138,000 back in December. A bull would believe that there is a gap that needs closing at play here.
Fractional community in search of post Pele grails. Following the record $1.3mm buyout sale of the Alifabolaget Pele Rookie on Rally, fractional investors have been in search of other places to allocate their funds for exposure to soccer GOATs. Through 2/24, the average 2022 YTD ROI (or since inception in the case of those that began trading this year) of soccer cards, excluding the bought out Pele card, is 8.5%. Two of the Mega Craques cards have been offered fractionally, one on Otis in early 2021 and the other on Rally in October. They are up 250% and 21% respectively.
Bear Case
Authenticity concerns. Recall in our discussion of populations that the BGS 9.5 population of the sticker is actually higher than that of the Mega Craques card. Well, as it turns out, that population has increased dramatically in recent months. It grew from 32 in July of 2021 to 35 in August, 45 in September, and 50 in October. Such a rapid rise for a sticker that had been in existence for nearly 20 years understandably raised concerns. And those concerns turned out to be warranted, as many in the community have pointed out that Beckett examples appearing on eBay and elsewhere at auction appear inauthentic. It has been suggested that many of these examples were sent to PSA and denied before ultimately being graded at BGS, so the concerns appear less applicable to PSA graded example; notably the PSA 10 population has not grown at all in the last year. Nonetheless, authenticity concerns may continue to weigh on the market for this sticker.
Ever the laggard. Perhaps as a result of the above, the sticker has not had a bright start to 2022. After that record December sale, the next sale came at Goldin earlier this month, when one sold for just $80,400, 42% lower in just a couple of months. While just one sale, that does of course put the valuation here 36% above the most recent comp. It’s also worth noting that the record $138,000 sale was 28% above the next highest sale ($108,000), making this the second highest valuation ever recorded for the sticker.
Few short term catalysts. While the long term secular tailwinds appear strong as discussed in the bull case, the short term catalysts skew more positive than negative. Rather than challenging for titles, to which Ronaldo is accustomed, his biggest focus at the club level with Manchester United will likely be Champions League qualification (though the club is still alive in this season’s Champions League). On the international stage, Portugal is at risk of missing the World Cup altogether, with a semifinal set against Turkey before potentially opposing Italy in the playoff final. Not that Ronaldo needs even more global exposure, but not appearing on the pitch at an event expected to have significant sports card implications would be an unfortunate miss.
Note: approximately 46% of the offering will be retained by the consignor.
2021 Joel Embiid 50 Point Game Worn Jersey Photomatched
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