LEGO NINJAGO: Are the Spinners Investment Winners?

From the most recent LEGO Press Release:

"LEGO Ninjago, launched in 2011, maintained its success in all markets in 2012, with the ninja theme selling significantly better than expected."

This is a statement that confounds many adult LEGO collectors and investors. Ninjas? Dragons? Snakes? Spinners? Trading Cards? What is this, Dungeons and Dragons??? Well, whatever you want to call it, the LEGO Ninjago theme is taking the LEGO world by storm. The Ninjago theme, along with another unconventional LEGO theme, the Friends theme, are producing sales that far exceed The LEGO Group's expectations. Well, that is great news for The LEGO Group, but what does that mean for the average LEGO collector and investor? Let's take a look at the Ninjago theme.

For those of you who are unfamiliar with the Ninjago theme, it is a theme based on Ninja warriors. The theme has an Asian flavor, with the Ninjago buildings and structures replicating old Japanese temples and shrines. There is a touch of fantasy mixed in, with dragons and large serpents, four armed characters and snake men minifigures. Also thrown into the mix, is a modern twist, with jet airplanes and helicopters, trucks and motorcycles. You can see why children would be interested in this theme. What makes it even more interesting to kids is activity and playability level of these sets. The LEGO designers were very intuitive incorporating a game element to this theme. The basic models use conventional LEGO pieces and building techniques, unlike Bionicle, Hero Factory and Technic themes, which use special pieces and methods of building, but there are special pieces called 'spinners' added to several sets. These spinners enable LEGO fans to battle one another in LEGO brick 'arenas.' Various minifigures and weapon combinations can be used to battle friends and family.

Not only do some Ninjago sets have action-packed spinner pieces, these same sets offer the LEGO fans 'Battle Cards.' Some people call them 'trading' or 'playing' cards, but whatever you call them, the Ninjago Spinner sets offer another gaming-like option from a LEGO set. The Battle Cards are utilized in coordination with the spinners and enable the players to employ special weapons when their minifigures are pitted against other minifigure/spinner combos. The Battle Cards are reminiscent of the old Yu-Gi-Oh or Dungeons and Dragons cards in my opinion and everybody knows how popular those cards were. They even add an element of collecting to the Spinner sets in that children will want to collect all the cards in addition to the sets and minifigures. Along with the Spinner sets, the Ninjago theme also consists of more traditional LEGO building sets. As stated earlier, they are based on ninja themes, with a touch of fantasy and modern ideas mixed together. For our purposes here, we will break down the Ninjago theme into three major categories: Ninjago Spinners, Structures/Buildings and Creatures/Vehicles. Let's take a look at the Ninjago Spinners first...

The basic Ninjago Spinner set consists of around 20-25 pieces, which include one minifigure, a spinner, several weapons and some Battle Cards. All the Spinners, with the exception of the Spinjitzu Starter set(2257/$19.99), listed at $9.99(US). These Ninjago characters are based on a TV show called The Masters of Spinjitzu, which can be found on the LEGO TV channel. It is a very entertaining show and basically looks like a LEGO video game. But what is nice about the TV show is that it promotes the LEGO brand among the young and creates new LEGO collectors on a daily basis. As with the entire Ninjago theme, the Spinners were launched back in 2011. That's right. 2011. If you take a look at the below chart, you will see some extraordinary returns for a theme that is so new:

* Average LEGO set CAGR: 10.64%

There are some Spinners that show the typical LEGO “new set” decrease in value from discounting from primary retailers, yet the majority are showing very positive returns for two years or less on the market, a few have been around a year or less. Kai(2111), Cole(2112) and Zane(2113) all have CAGRs over 60%. The CAGR, or Compound Annual Growth Rate, can be thought of as the growth rate statistic that gets you from the initial investment value to the ending investment value if you assume that the investment has been compounding over the time period. It simplifies years of different growth percentages and gives you a single number that represents compounded growth percentage of an investment, in this case, a LEGO set. The typical LEGO set yields about 10.64%, so at 60%+ in less than two years' time, that is exceptional. Even more exceptional is the return of Spinner set 2172, Nya. This set appreciated 126% in less than two years. Wow. That's impressive. Overall, the Ninjago Spinners have yielded on average almost 27% in less than two years. The Spinners are indeed investment winners. But what about the non-Spinner Ninjago LEGO sets? Let's take a look...

There are more traditional Ninjago building sets. These sets include the buildings and structures of the theme. They all have an Asian flair and look like old shrines and temples. Some of these sets do contain a spinner or two, but the primary idea of these sets is that they are some sort of non-movable building. If you examine the chart below, you will see the smaller sets of the group that have gone EOL have the best returns so far:

* Average LEGO set CAGR: 10.64%

Ninja Ambush(2258) and Ninja Training Outpost(2516) have appreciated 118% and 173% respectively. Sometimes the smaller sets do very well when they are relatively new, especially when they are already retired like these two sets. Another newer small set, the Venomari Shrine(9440) has appreciated well so far to a clip of 53%. As for the larger sets, Garmadon's Dark Fortress(2505) stands out with a ~40% return from retail. The Fire Temple(2507) is a set to watch in my opinion. It is the largest of all Ninjago sets and I believe it will explode in value when it is finally retired. Overall, the Ninjago structures and buildings appreciated over 38% from retail as a group so far. That is even better than the spinners, which, as we all know, are investment winners.

This leads us to our last classification of LEGO Ninjago sets and the most interesting in my opinion, the creatures and vehicles of the Ninjago theme. These sets are damn cool in my opinion. Dragons, snake trucks and helicopters, skull trucks, jet fighters, motorcycles, boats and mechanized monsters. Cool beans. Each one of these sets can do well after EOL, but four stand out in my opinion...the Dragon sets which include the Ice Dragon Attack(2260), Earth Dragon Defense(2509), Lightning Dragon Battle(2521) and Epic Dragon Battle(9450) sets. Take a quick glance at the chart below:

  * Average LEGO set CAGR: 10.64%

With the exception of the newest set, Epic Dragon Battle(9450), the remaining dragon Ninjago sets have gone EOL. The Lightning Dragon Battle(2521) has appreciated over 78% in less than two years and the Earth Dragon Defense(2509) has appreciated over 122%. The Ice Dragon Attack(2260) has appreciated a whopping 223% in less than two years. That is some of the best gains I have ever seen when discussing a LEGO set...or any investment for that matter. Although these three dragon Ninjago sets have gone EOL, they have gone EOL very recently and there is still room to grow in my opinion. What is even better news is that the best of the dragon bunch, the Epic Dragon Battle(9450) is still available from primary sources for $119.99 and figures to be discounted at some point before it gets retired. This set is close to 1000 pieces and has some very unique minifigures and models. I really like the potential for that set. As for the other sets in this category, Destiny's Bounty(9446), the Rattlecopter(9443), the Ultra Sonic Raider(9450), both Mechs(9448/9455) and the Fangpyre Wrecking Ball(9497) all look very promising. Overall, as with the Ninjago structures and buildings, the Ninjago creatures and vehicles category appreciated over 38% from retail as a group so far. But the overall 38% appreciation was largely due to the Dragon sets, with only moderate increases from other sets in the category. This is not to say that these sets are poor investments. Quite the contrary. Most Ninjago sets are relatively new and still available through primary retail sources like LEGO, Amazon and Toys R' Us and some are being discounted or will be discounted, so their numbers are flat. Most of the sets I've mentioned as big gainers are recently retired sets, so it is not out of the realm of possibility that similar high returns will be seen with other Ninjago sets when they are retired.

In conclusion, I have to say that not only are the Ninjago Spinners “investment” winners, that all the Ninjago sets are potential winners. The Ninjago theme has been ignored by the adult LEGO collectors and investors, like myself, for too long...but no more. I am here to tell you that dragons and snake men make for big-time profits in the LEGO world of investment. It is OK to buy a Spinner set and look at another adult in the face. You can explain to them that it is an investment(Good luck with that...LOL). On a serious note, these sets are just very creative and cool and I can see why kids love them. These are the types of sets a future AFOL might buy, thinking back to their youth and wishing they could have bought an Epic Dragon Battle, but couldn't at the age of 10, but can at the age of 30. What is great for the LEGO collector and investor, is that these sets are still readily available and are going up in value at the same time. That is rarely seen in the LEGO investment world. Another very important point that should be addressed is the possible retirement of the entire Ninjago theme after the 2013 calender year. Rumors are circulating through the LEGO world of the Ninjago theme heading off into the sunset in a year or so. Whether that is true or not, it will make investing in these sets a very intriguing proposition. Why? Because if the theme remains as popular as it is currently, why would The LEGO Group discontinue it and if they do choose to discontinue the Ninjago theme, how will that affect the prices of Ninjago sets on the secondary market? Prices could explode from lack of sets and too many buyers, or they could head south because of the lack of new LEGO Ninjago sets and fans losing interest and moving on to the next hot LEGO theme. Whatever the future holds, the possible end of the Ninjago theme is a year or two away and will bring much riveting debate in the meantime, but for today's LEGO investment and collecting purposes, the Ninjago theme is a winner in my book and a must buy for any LEGO fan out there...

LEGO Press Release: http://aboutus.lego.com/en-us/news-room/2012/august/half-year-result_2012/