Pokémon Cards, Kids Game or Profit Machine?

Buying and selling Pokémon Cards has had a meteoric rise over the past 5 years, with success stories popping up all over the internet. From finding old cards, getting cards graded for profit and even whole businesses starting up to flip sets, making money from Pokémon cards has never been easier. But what is the most effective way to profit from this collectors’ card game?

To understand how to make a profit on these colourful cards, its first worthwhile understanding how they have turned into a viable investment. Pokémon was first introduced in 1996 as a card game featuring an assortment of cartoon style monsters. With the success of the art style and the popularity of the Nintendo games, Pokémon has turned into a cultural icon, branching into electronic games, TV and film. Pokémon's brand value has now exceeded $105 Billion, making it the highest grossing media franchise of all time. Pokémon cards have now entered their nostalgia years, with adults spending more and more money to relive the joy of their youth.

The increase in the value and popularity of cards in recent years is partly down to Famous Youtubers often spending exuberant amounts to get the cards of their childhood. For example, a base set Charizard (the most popular card of the first set ever produced) graded by a specialist company to be in perfect condition sold for $369,000 in December 2020. In fact the rapper Logic actually bought a base set Charizard for $225,000, a card originally valued at $50,000 in July 2020. That's quite a profit when you consider that you could have bought it for a couple of dollars back in 1999!

So what are the main ways of making money from Pokémon? Without setting a company up to either grade or facilitating trading, you have 3 viable options.

Option 1: Buying Packs and Opening Them

This is the most popular and the most risky option. Buying and opening packs in theory can give you the biggest rewards, as some cards immediately can offset all the money you spent on the pack, putting you into profit. An average pack of 10 cards in the UK costs around £5, but can give you cards worth hundreds. Let's use the Champions Path release as an example. A Shiny Charizard V Secret Rare (79/73) ungraded are being sold for around £125 on eBay at the moment. In this case, with a £5 spend the total profit would be £120. However, the ‘pull rate’ (the chance of opening a pack and finding a specific card) of this Charizard is at around 0.37% (Data taken from https://cardzard.com/blogs/news/champions-path-pull-rate-data-2020) which means that on average you'd have to spend £1351 to almost guarantee getting this card (This is of course working off a hypothetical 100% chance of pulling this card). After taking £125 from £1351, this leaves you with a deficit of £1226.

So, clearly to profit from this method is a form of gambling, but with each card having a unique market value the chances will vary massively. And of course, from each pack you open can ‘pull’ other cards as well, each of which can be sold while hunting for the most valuable ones.

Let's use another example of a fan favourite pack that is currently being produced. ‘Battle Styles’ most popular card Tyranitar V Alternate Art (155/163) Is currently selling for around £50 and with a pull rate of around 0.12%, this equates to spending £4167 to get a hypothetical 100% pull chance. This leaves you with a deficit of £4117.

YouTube and other multimedia platforms are seeing an increase of channels being set up dedicated to opening packs, and that in turn, is increasing the appeal of opening packs. But profiting from opening packs may be more difficult than these channels suggest, seeing as they are seeking to profit from running the channels themselves.

Option 2: Flipping Sets

This is the option I am trying at the moment. The principle is that you buy packs, hold them for a period of time without opening, and sell them when they have been retired (ceased production). This process is more like investing in other assets, and relies less on luck to make a profit. Base Set packs (The first packs ever produced) are now incredibly expensive with people hunting for old boxes in warehouses in the hope of claiming these valuable assets. Even recently retired packs can bring home good money; for example, Darkness Ablaze ETBs (released in August 2020) which were once around £45 are now going for around £100.

Option 3: Buying Into Specific Cards

Buying and selling singular cards is a very particular skill. Product knowledge is vital if you want to be successful, and if you get it wrong, you could get stuck with something that may as well be used as a coaster. You will need to have an innate understanding of the fan base as a whole as well as looking into contributing factors such as errors, sales reports and specific set information. Understanding the supply and demand behind each card is also very important, as some popular cards can be over printed and therefore are less valuable, even if they are a popular card.

If you are going to pursue this course, condition is a critical consideration in buying the right cards. Graded cards (cards examined by an external company, given a ranking on their condition and then sealed) have been growing at a faster rate than un-graded. Getting a highly graded popular card or a lower-graded fan favourite could be a great long term investment. But it's very very hard to spot a good card on the most popular websites such as eBay. When determining if a card will be graded highly, you’ll need to focus on the quality of the surface, the corners are even and not whitening, that there are no creases or damage and finally if the cards graphics are centred well. Buying into specific cards can also be paired well with grading cards yourself, as this can be a great way to add value too. Unfortunately at the moment, the most popular grading companies now have massive backlogs, so this can take a long time.

A word of warning! The increasing popularity of Pokémon has meant that scams are on the rise. Firstly, shill bidding is becoming popular, which is placing fake bids on cards and never paying when it's finally sold. This artificially inflates the price of certain cards meaning you are paying a fake valuation. The next thing to look out for is fake cards. Keep your eyes peeled, these can be very convincing, but most can be spotted with a little product knowledge and due care. Finally, resealing packs is also becoming popular, so look out for wrinkled looking or uneven seams. If you are unsure, it might be worth checking the vendor's reputation on websites such as eBay, as reviews can be a dead giveaway.

Now here's the kicker, collecting Pokémon cards can be addictive, and it's hard not to fall in love with them. As with other physical assets, you can make all the right decisions and still lose money because you end up keeping the cards you love. The whole premise of not knowing what you are going to get and buying to chase those winning highs can get you into a lot of trouble too; it’s a form of gambling and may be addictive. So, it’s very important to set a budget and stick to it, as well as tracking your progress. In my opinion, if you're hunting for cards because you love them, you may as well spend the money on buying them outright.

I see a bright future for Pokémon card investing as the market and value of the brand continues to grow. More recent games are reintroducing old Pokémon, allowing the current young generation to still be able to relate and enjoy the older cards, as well as holding more recent favourites to higher standards. While there will always be some people who lose money on Pokémon, they seem most likely to be those who get addicted to opening. Buyers, if you do your research, take your time, and go the extra mile, there is definitely money to be made.