Back To The Future - The B-Wing Redux

"Marty, we need to go back! Back to the Future!" - Doc Brown In 1985, the first movie of the blockbuster trilogy Back to the Future was released to accolades. It quickly became an 80's classic movie with kids and adults alike routinely quoting famous lines from the movie. From Bif bellowing "McFly!" to Doc stammering about flux capacitors, this movie quickly worked its way into pop culture, and today it stands as an all-time great.

Imagine for a moment that we were actually able to time travel. As a Lego investor, the first set I would travel forward in time to learn about would be 10227 B-Wing Starfighter, the single most debated set on Brickpicker over the last six months. The B-Wing is a Lego Star Wars Ultimate Collector Series model of one of the lesser known Star Wars starships of the Original Trilogy. This model has created so much controversy because of its perceived unpopularity prior to an unprecedented 50% off sale that resulted in a dramatic run on this set. An unheard of discount, a short sales duration, and a relatively fragile build of an unknown starship has conspired to create a flumoxing mix of competing positive and negative secondary market characteristics. I want so badly to see how this set performs because it really has the potential to explain so much about the secondary market, and what characteristics are important to secondary buyers. If there is a Rosetta Stone of Lego investing, this very well may be it!

To make an educated guess where the B-Wing is going, we need to remember where the B-Wing has been. Let's hop into our ugly CUUSOO Delorean and set the clock to July 6, 2012, the day Lego officially announced the B-Wing's release. Apparently, TLG was particularly successful keeping the lid on the B-Wing's development, so there was little indication this starship was in development among the Lego community. It's announcement and subsequent unveiling the following day at Brick Fiesta in Houston, Texas caught many fans by surprise. Soon after it's announcement, information began to leak out about the B-Wing to Lego fan sites and the first comments began to surface about the B-Wing. Unfortunately, a chorus of disappoinment in the set's MSRP and the absence of an exclusive minifig was heard, so the B-Wing was off to a rocky start. For reference, here are the initial MSRPs by region according to TLG's official press release and their respective price per piece, one of the oft cited metrics from the B-Wing's initial complaints:

$200 USD, $0.13 per piece
$250 CAN, ($255 usd), $0.17 per piece, 27.5% over US price
€200 ($246 usd), $0.17 per piece, 22.9%
170£ ($263 usd), $0.18 per piece, 31.5%
1700 DKK ($281 usd), $0.19 per piece, 40.5%

Back into the Delorean, we fast forward to B-Wing's release October 1, 2012. The buzz around the set was largely muted: a few still complained about the price point, but the few reviews coming in were largely positive, especially from Star Wars fans. It didn't appear there was a lot of excitement about this new UCS set, and with Death Star, Super Star Destroyer, Imperial Shuttle and the R2-D2 models crowding it out, the B-Wing perhaps got lost in the shuffle of a strong group of Ultimate Collector Series "large scale" models.

Then came May 4, and the epic B-Wing promotion from Lego. On the evening of May 3, the night before the TLG's yearly Lego Star Wars promotion day, Brickpicker officially announced at 8:00 PM EST that Lego would be discounting 10227 B-Wing by 50% in the United States. This set off a deluge of anticipation within the Brickpicker community, and on midnight of May 4, 2013, TLG posted the B-Wing for $100, a full $100 less than MSRP. Within forty-five minutes, the B-Wing was sold out and a torrent of posts flooded Brickpicker's forum containing a spectrum of responses. From one member who bragged about purchasing 11 B-Wings to others who castigated the BP community for not allowing children the opportunity to have their very own, most of the responses were intense. It seemed no one had anything less than visceral reaction to TLG's discount.

The obligatory eBay postings arrived the morning of May 4, with the typical listing anywhere from $100 to $300, atlhough there were a few 'Buy it Now' prices that listed 10227 for four figures. During the entire month of May, eBay Lego listings were dominated by this previously quiet set, with a total of nearly 300 sets sold, a 1,000% increase in listings from the previous month. Yet, as the calendar flipped to June, the listings have slowed again, and Lego resellers have largely moved on to other sets. As of June 24, 68 NISB B-Wings had sold in June, a fraction of May's total, and only 39 more than were sold the month prior to TLG's B-Wing's discounting.

A few short days ago, Brickpicker members saw that 10227 B-Wing was listed as "Call for Availability". This tag is, at times, a precursor to full blown retirement. Later, Lego updated their listing to include some stock, yet the retirement speculation had begun. Was B-Wing gone? Today, a look at Brickset's B-Wing listing shows a June 17 retirement date for the US and Canada, with the set still available in the United Kingdom. The US Lego S@H listing shows the B-Wing completely sold out with no restocking date. Brickpickers take note: these are some strong signs that indicate B-Wing's official retirement is now on the horizon.

So what does this long, strange trip mean for secondary sales of the B-Wing? First, if the B-Wing is officially retired, we can confirm earlier speculation that Lego's discount was in fact a clearance sale intended to eliminate B-Wing stock. This is potentially valuable information that could establish a precedent for future large discounts by TLG. It's probably a pretty good indication that if a given set is discounted 50% in the future, it's likely the beginning of the end for this set.

That said, we still need to estimate how this set will perform from here on forward. For reference, let's once again show how well the UCS have performed:

This subtheme's performance has been rehashed time and again, yet the numbers don't lie. Apart from 10215 Obi-Wan's Jedi Starfighter, these sets have all performed really well after retirement. However, when you look at 10215, there is a concerning similarity between it and B-Wing: it's price per gram is VERY similar. Fortunately, the table also shows us another strong earner, 10026 Naboo Starfighter, that sports an even higher price per gram so I don't believe there is any correlation between price per gram and secondary performance for UCS secondary market performance.

Remember that secondary performance is typically the result of retail popularity and retail availability. While sales are the ultimate measure of set popularity, Lego doesn't release sales statistics to the public so it's difficult to get compare the B-Wing's popularity to other UCS sets. However, to gauge retail availability, we can take a look at the number of months these sets have been released. Per Brickset's release/retirement dates, here are the sales durations for UCS sets they have on file:

10221 Imperial Star Destroyer - 22 months (and counting)
10212 Imperial Shuttle - 27 months
10186 General Grievous - 12 months
10179 Millennium Falcon - 30 months
10174 Imperial AT-ST - 17 months
10175 Vader's Tie Advanced - 15 months
10143 Death Star II - 16 months

Assuming a quick retirement like Brickset anticipates:
10227 B-Wing - 8.5 months

That's a really short sales duration for any set, and almost half the duration of every set on the list above except 10188. As a comparison, the explosively popular 9465 The Zombies was out for just over 4 months. Even though B-Wing has been around twice as long, it's still within 4+ months of The Zombies sales cycle. If it's true B-Wing is retiring, it will have the shortest sales cycle of any UCS set.

The natural response to B-Wing's short sales cycle is that it wasn't popular, so it didn't sell at MSRP, and will therefore not garner very good secondary sales. While this may turn out to be true, most people that invested in B-Wings did so during the May the Fourth promotion when retail was $100. Everyone in this camp should be poised to make a nice return on their investment. Here is a table with the B-Wing's ROIs at specific secondary sales points assuming a $100 purchase price and a $200 purchase price:

If you review recently sold eBay listings, the typical sales price (without shipping) is anywhere from $135-150. So, the first sales price I included was $150. As you can see, for those that bought at $100, you are almost guaranteed to make money, and could be poised for big profits if B-Wing performs like the rest of the theme. Unfortunately, the other side of the coin is those buyers that bought B-Wing prior to The Sale. As the the table shows, a B-Wing purchased at anything close to MSRP is in danger of breaking even, or possibly losing money.

Where will B-Wing eventually end up? I think the 10212 Imperial Shuttle is an adequate comparable to assemble the B-Wing's return model: both sets sold at roughly the same rate on eBay while they were available at retail, fluctuating between 25-50 sales per month, both sets are similar in size and cost, and both are Ultimate Collector Series models. While B-Wing is probably less iconic that the Imperial Shuttle, neither ship was a true Original Trilogy icon. While IS is probably slightly more popular, B-Wing has a lower MSRP, so if these aspects balance they should provide similar ROI. Assuming IS's value climbs $10 per month for the foreseeable future, 10212's secondary market value is likely to reach $400 before the end of the year, pegging it's first year ROI at roughly 50%. A similar gain by B-Wing would peg its value at around $300 on or about July 1, 2014. Since this seems a little high to me, let's back off a 50% return over MSRP and forecast a 50% return over it's ideal sale price of $150-175. That would bring secondary market buyers at a $100 purchase price a return of 30-50% after transaction costs.

10227 B-Wing did not take the traditional path to EOL, and because of this it could become a very illustrative set for secondary market investors. The eventual plateau value of the B-Wing should provide some insight to the following:

• How do significant (50%) discounts by TLG affect post-retirement performance?
• Will the Ultimate Collector Series subtheme continue to show across-the-board success, or could future subtheme sets be invesment failures?
• Is there any correlation between strong set launches and future secondary performance, or more importantly, weak model launches and corresponding secondary failure? More broadly, what is the effect of momentum, or lack thereof, on the secondary market value of a Lego set?

Unfortunately, my sports almanac doesn't contain any Lego secondary market values, so I will have to get to work on my own Mr. Fusion flux capacitor. Or, perhaps I will just wait to see, along with everyone else, how the future unfolds.

And as always, invest accordingly.