Prize pools are out. It’s only for the transition phase and things may look different from August, but let’s take a look at things through a cost benefit analysis. In recent weeks I’ve seen and heard people talk more about EV and at least with in-season we can somewhat make a stab at a reasonable guesstimate of EVs. All of a sudden, it seems like a lot more emphasis is being placed on these metrics, it’s all getting a bit more technical-analysis-y, for good or for bad. Don’t forget to have fun — we can’t put a price on that, right?
I want to look at it in a slightly different way, in the sense of allowing us to make a better guesstimate of where price levels *should be* for various scarcities and competitions. I’ve often spoken about demand and supply being the biggest impacting factors towards price levels, but this approach actually inverts that in a way. Some readers might remember I spoke a few weeks ago about the possibility of us caring less about supply and utility, allowing Sorare to mint more cards, and giving us a wider gallery of players to choose from each week. In this version, the most skilled managers would win more often, rather than simply those with the biggest wallets having the best chances.
I’ll touch on the paradox of aggregation a bit later too, and how that could be impacting things currently. For those who might be unfamiliar with the concept, a good analogy could be when you’re at a football match and your team mount a dangerous counter-attack or have a good chance on goal. What do we do as humans, sitting in our seats, at that point in time? We stand up in excitement, and as a result the row behind us has to stand to see the action, and the row behind them, and the row behind them. As a result, we’re all seeing the same thing but not getting what we paid for — a seat. Nobody is winning. What is good for the individual is not always good for the collective. We’ve witnessed this in the Sorare market over the past while too. A user cutting back on spending because they’ve got the cards they need to compete is good for that user in isolation. As a result however, as more and more users do the same, demand falls, pulling average price levels with it and if no-one is spending, who can earn anything?
Bear in mind, my type of calculations are more back-of-the-cigarette-packet style with some rationale and basic economic theories thrown in. If you’re not shy from some slightly more complex math and prefer the more analytical, formula based work-out, I highly recommend you take a look at Peter’s work here.
Premier League Unique Cards
For this example, I want to start at the top — taking Unique Premier League cards as an example. They’re eligible for PL & Champ. If we take those prize pools over 38 weeks and look at the max potential winnings from the maximum three line-ups, e.g. placing 1st, 2nd & 3rd in both competitions every week for 38 weeks, this would pay $505,400.
Now of course, cards can still be used in future in-season tournaments to earn more cash, and they can also continue to yield cards via classic competitions in the years to come. There will also be special weeklies where these cards can be used, they can even be used in scarcity competitions below etc., but for this we’re just looking at a 1-year timeframe and the in-season cash competitions as a barometer. I always suggest users to not focus on ROI, but let’s be honest users playing unique aren’t doing it for fun. You could argue there may well be other “unique to unique scarcity” reasons too: status, HNW spending habits, belief/bet on collectability in the future etc., but let’s put all those aside for a moment.
Pranksy, as of yesterday, 7th March, holds 29 unique PL 2023/24 season cards. We can see a spend of at least $315,000 for these, plus three of which are trades (including Salah) so without being exact, we can place that number to roughly $350k. That’s 29 cards out of a potential (~22 players x 20 clubs) 440, or ~6.5% of the supply.
Of course, Pranksy is in it to compete and has some of the best Unique cards available in the likes of Rodri, Saka, KDB and Son who are multiples more expensive than the average, as they should be. So it’s not as simple to say $350,000/29*440 = spend/value of PL Uniques.
So far to date, 165 PL Unique cards have been auctioned (~37.5% of total supply). Meaning Pranksy’s share is 17.5% of PL Uniques as of today. Remember Sorare’s rule of 60% allocation to sell, if that is the case for Unique, they have minted 62.5% of their allocation while we are 71% of the way through the PL season. If we assume consistent mint rate, we’re likely to see 59 more PL Uniques at auction up to season end, however I wouldn’t be surprised to see a few more than that. If Pranksy is to hold their share, that’d be at least another 10 Uniques propping up their gallery between now and mid-May but is there a need, or have they overspent to date? Of course, I’m looking at this in isolation, and someone in Pranksy’s positions’ rebuttal may be that the sums spent are from profit elsewhere, card rewards aren’t factored in etc., but the principle remains.
For the in-season Unique tournaments, a user needs at least three cards to compete. Up to three line ups per competition and two competitions means a minimum of nine cards required, plus six more from previous seasons. (Pranksy currently holds fourteen previous season PL unique cards at the time of writing).
Competing Competing, but at what cost?
To compete compete, you want the best cards and you probably want more than what is required for a line-up to rotate for match-ups and injuries. So let’s assume the 29 in-season + 14 classic cards Pranksy holds is enough for them to compete compete. For sure, we see their name atop the leaderboards very often and bringing home the bacon frequently. However, to simply break even on these cards, they would need to place first in both the Premier League competition and the Champions competition every week, for 38 weeks ($361k). Is that realistic? I’m not sure, there are of course other users competing. I’m basing 2023 card purchases for future prize pools I’m aware, but the principle still remains. We can say there are plenty of other opportunities coming from owning these cards of course, VIP treatment at matches, some priceless opportunities no doubt. But is it realistic to maintain this level of spend for that? Have Pranksy and co. potentially overspent? That may not be a big concern for those users with deep, deep pockets, but it impacts the rest of the market.
Circling back to the paradox of aggregation but taking it in the opposite direction, Pranksy seems to be ploughing on in their own way, irrespective of other factors. Pranksy and co. are currently standing from their front row seat and blocking the view of the users behind them, and the users behind them. Now, of course, Sorare don’t mind this initially — it’s good for the books, but at what cost long-term?
Should we be happy?
I’ve seen a number of people express that they’re somewhat underwhelmed with the new prize pools, however I believe whether intentional or just lucky, what the Sorare team have done is actually address this paradox of aggregation. Peter (Peter Stojanov) made a good point in his most recent piece regarding distribution between D1 and D5 within the Limited Scarcity not being as wide as he initially expected, but what this is actually doing is giving more users an opportunity at a slice of the pie. There are still elements of “jackpots” but maybe not to the level we might have expected.
Take Limited Champion for example and compare it to the existing model for this upcoming GW457.
Across all five in-season divisions and including the $ payout for podium in D1 Classic champion, Sorare will be distributing $15,260 amongst 953 entries. If we take Champ Europe and All Star together (where of course other cards can be used) for this weekend, the total distributed is $7,250 across 280 users. That’s more than double going into just Champion. If we want to take it further, I estimate the last couple of weekend GWs Cap 240 payouts within the Limited division were around $20k. That’s with the new beat-the-game target selection format of course, but even still, adding that on top only slightly exceeds the total distributed solely in Champion Limited from March onwards, don’t forget the other leagues in play.
So in a way now, this comes full circle back to my original point of where we place value in cards. The impetus has shifted from trading in and out based on supply & demand factors, to focusing on which cards can perform best, and we can, in a way, put a price on that. Demand will always be a leading factor and we see this through auctions but if Sorare were to go down the route I suggested of transfer windows and utilizing instant-buy in an innovative manner, we could well see better balanced and healthier market dynamics. Referring back to earlier points I’ve made, if we get away from utility being the main driving factor behind our purchases, do we have more fun and is the platform ultimately healthier as a whole? Certainly, it has an impact on price levels.
Bear in mind, prize pools may look different from August, there will no longer be All Star competitions and as we understand it now, Cap 240 Thresholds will go away. Will there be any element of beat-the game in the future? People are perhaps expecting an increase in prize pools at that stage, however don’t forget we don’t currently see the La Liga or Bundesliga competitions in this transition phase, and I would expect they will be close to, if not equal to the Premier League Prize Pools. As I mentioned above, while it might not look like it on first glance, prize pools have received a significant boost, albeit threshold payouts have decreased significantly to allow for that.
It’s a chicken and egg scenario for Sorare, and I’m sure they’ll monitor activity over the coming months to determine how prize pools should look from August onwards. It’s still a cost on their balance sheet and they need to ensure it remains within certain limits. Many users might say that if prize pools were bigger they might be inclined to spend more, however this seems like a risk Sorare are unwilling to take at this moment in time, and I agree on that front. If they however begin to see overall revenue increase due to the paradox of aggregation being less of an impeding factor (or user growth ramping up), they may well be in a position to loosen the purse strings some more.
Looking back since the announcement last month, I think Sorare have done a good job in addressing two out of their three key focus areas: rewarding and progression-based. I do feel the simplicity element is still lacking, and in order to remain robust and scale, they need to crack this pretty quickly.
