If you arrive at the card show the moment it’s scheduled to open, and you’re there to buy top-end modern and ultra-modern cards, you’re probably too late. At most shows of significant size — meaning anything from the regional level and up — the best cards are often sold before the show even opens.
We can thank the economics of repacks and breaking for this. A break is when manufacturer-produced packages of cards or individual cards purchased off the secondary market (repacks) are divided up among collectors who have purchased a slot in that break that entitles them to a certain segment of cards. Sometimes it’s random; other times it’s divided by teams or players. At the Northeast Sports Card Expo in Stamford, Conn., The Athletic talked to Evan Mittwaly from LowPopCardShop to see how the deals go down. What’s in it for the person who is buying cards for breaks, the dealer who brought them to the show and the ultimate buyer of the break at the consumer level?
Note we’re assuming that everything is fair for all parties, that the chase cards are really included, that everyone knows what’s in the repacks, and that who gets what is legitimately randomized. So the trust/transparency that Whatnot, a top live-selling platform, is seeking to instill by requiring third-party authentication of repacks beginning in November changes nothing about the economic incentives of repacks outlined here.
Incentives for the show dealer
The first thing that happens is the buyers for the repacks purchase the most valuable cards, typically before the show is even fully open, by purchasing early admission credentials.
Mittwaly says the buyers at shows trying to assemble repacks are a dream for the dealers who are set up at the show.
“The dealer is hoping that a normal person at the show will pay them 95 percent of the value of the card because when they sell on eBay, they’re only getting 87.5 percent of the price, with eBay taking that 12.5 percent off.
“When a dealer has a rookie Fleer Jordan, they are trying to find a buyer between 87.5 percent and 100 percent. But the buyer for the break comes in and pays 100 percent, no problem, because they need that card for the break.”
For many cards they think will attract buyers to the repack, Mittwaly says the person buying cards to assemble it will sometimes pay a premium over the fair market value.
Mittwaly says buyers for repacks are the first on the floor and “cherry-picking $5,000-and-up cards. And modern ones, not vintage.” And they pay whatever it takes to get inventory for their break, typically even a 10 percent bonus on hard-to-find cards. (Note: Repacks are done at all different price points, not just at this higher-end level.)
Incentives for the repacker
How can the buyers make money if they’re paying up to 110 percent of the value of the cards featured in their repacks?
“Because (repackers) can’t always be a source for the PMGs (Precious Metal Gems) or an Atomic or a Fleer rookie Jordan,” Mittwaly said. “That stuff is extremely hard to find, which is why we will overpay to get it. When we do the break, we know we’ll get big premiums on the lesser offerings on the break, which will more than counteract whatever we paid for that hot stuff.
“Dealers can pay up because they’re selling a $100,000 break for a combined $120,000 or even up to $140,000. Say 20 people enter the break. The cost of entry isn’t the $5,000 per card you would think for the lot worth $100,000. It’s more like $7,000.”
And most of them are going to get in return a card worth no more than $5,000.
So it’s likely a loss for the buyer. Though they’re guaranteed something of decent value, why buy into a repack knowing the most likely outcome is losing a substantial amount of money?
Incentive for the buyer of the repack
Mittwaly said there is one major chase card worth much more than the cost to enter the repack. “They’re all going for that prize card,” he said, “which is why they don’t sell the packs one by one. Because imagine if somebody buys the one pack, the first pack, and pulls the prize. Then the rest of the break is worthless.”
Once the break sells out, everyone tunes in for the results at the designated time, including up to thousands of viewers who just want to vicariously live for the thrill of the break with no financial stake in it.
“Now the person buying the break gets a box/card randomly assigned to them,” Mittwaly said. “It gets opened and we all find out if the card is one worth $20,000 or the many worth only, say, $5,000. Everyone in the break is paying $7,000 in the hopes of hitting a $20,000 card.”
So on average, the customers in the break lose about $2,000 per break 19 times for every one they hit. That’s $38,000 out for every approximately $13,000 won. But of course, everyone thinks they can beat those odds and hit on that card on the first try, or hit on it again two times in a row or the next two times in a row.
They don’t call it a “chase card” for nothing.
Psychology of breaking
Pamela B. Rutledge wrote about the incentives for the buyer of the breaks in Psychology Today. She said motivations include nostalgia of childhood experiences, social connection via the broadcast of the break itself on social media, the sense of community, emotional attachment to the breaker/hosts of the breaks, the thrill of chance, fear of missing out (FOMO) on the chase card, and shared stories even if you are unlucky in the break and can talk about “the one that got away.” Everyone participating in a break is the star of that show for the amount of time it takes the breaker to drag out the unveiling of their card.
Rutledge wrote that age minimums are important and that allowing teenagers to participate in breaks is fraught with danger.
“(The teenage) brain and its ability for abstract thought, judgment and long-range planning skills are still developing. Teens are much more vulnerable to risk-taking behavior and a sense of invincibility.”
Rutledge doubts regulation will help. “Regulations for online casinos,” she said, “have not kept gambling from being readily available online.”
It’s not just teenagers who are losing money in this form of online gambling, a moniker the industry distains. Adults also feel addicted to the chase and lose large amounts of money. The position of people who support breaks is that they are just a modern variation of opening a pack of cards and hoping for a player, something that’s always been the case with cards since we were children. They also emphasize the interaction with the breaker and the breaking community and maintain that buyers of breaks do not seek feelings of winning or losing but participate merely to find out what card they receive, akin to opening a present.
When it becomes an addiction
But for some, there is no escaping the financial cost or compensating for it with non-financial benefits. In January, a man posted on Facebook that he spent $244,000 on breaks.
“You’ll never get 20 percent of your money even if you are the luckiest human in the world,” he wrote. “It was a problem. Kinda funny not one person I was spending all that money on hit me up asking how my day was after I stopped getting in breaks. 98 percent of the relationships in the breaker/consumer community are transactional; don’t lie to yourself, they aren’t your homie. Never had an issue with the casino or the book. I’m a junkie and I have been sober for almost 10 years so I know it’s there but I had to see the data on paper to understand the magnitude of what was happening. It’s okay to acknowledge a problem and it’s okay to do something about it.”
If your participation in breaks has exceeded your budget and you find it’s difficult to rein it in, help is available. Birches Health, a gambling addiction specialist that accepts major insurance, says: “Sports card addiction is similar to sports betting addiction and gambling addiction. However, it’s not recognized by the DSM-5. The book only lists gambling disorder, which doesn’t include sports card trading. Birches recommends cognitive behavior therapy that focuses on thinking rationally about behavioral problems and the benefits of behaving differently.
“Sports card collecting is a harmless hobby for some individuals. But it can develop into a serious addiction when the collector is at risk of losing everything. This compulsive behavior motivates the individual to keep collecting more despite the financial and personal outcomes. Treatment for sports card addiction is the same as for gambling addiction.”
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