Three seemingly unrelated things that I think we can weave together:
- Microsoft billionaire Steve Ballmer pays something like four times the franchise’s estimated value to become the new owner of the Los Angeles Clippers, a professional basketball team;
- Ron Pratte, who may be a mere multi-millionaire but who has become well-known, even a celebrity, within the classic car world for his record high bids and abundant philanthropy, is selling off his entire collection of vehicles and automobilia;
- Don Thompson, who may not have made nearly as much money as Ballmer or Pratte but who knows a lot about economics, having been an econ professor who has taught at the Harvard Business School and the London School of Economics, has just published his 11th book. This one is entitled The Supermodel and the Brillo Box, though the book apparently has nothing to do with supermodels or boxes containing scouring products.
So how are these three things related? Well, they are primarily linked by my initial thoughts about each of them. For example, when I heard the news about Ballmer, my first thoughts were (a) that professional sports franchises are the new collectibles of choice for the world’s billionaires and (b) the prices for all collectibles — sports teams, works of art or rolling metallic sculptures — have just taken a dramatic increase.
I’m not predicting that we’re about to see a four-fold increase in the value of classic and collectible cars, but I do think Ballmer’s eagerness to own regardless of price is much more than predictive. Ballmer’s buy is no harbinger. It is take-it-to-court evidence that we’re entering a new era of I want it, I can afford it and therefore price is no obstacle in the world of high-end collecting. And yes, there is going to be a trickle-down effect, though I also think it’s going to be more of a waterfall than a slow trickle.
What does it mean for the classic car community? It means we’re going to hear a succession of shockingly and increasingly high-figure bids coming from the high-dollar auctions of August on the Monterey Peninsula. I’ll see your seven figures and raise you to eight. (And don’t be shocked to hear that someone is paying nine figures in a private deal to buy the next available Ferrari 250 GTO.)
Now, having written that, I’m seemingly contradicting myself as I share another first thought, this one upon the confirmation from Barrett-Jackson that Ron Pratte will sell his entire collection next January at Scottsdale: For the most part, I believe, Pratte will get back less than he paid for his star cars, and in many cases, much less.
Why do I think so? Because he overpaid for many of those vehicles, some because of his generosity when it came to bidding on charity vehicles, others because he simply had more money to spend than anyone else in the building.
While people watching television coverage of Barrett-Jackson auctions saw Pratte as something of a celebrity sitting up there in the front row among bidders, I think many car-collecting veterans saw him as an overspending newbie, perhaps even a poseur who, after selling his company for a reported $800 million, suddenly had the deepest pockets and was pouring a nice percent of his profit into building his car collection.
More than once I heard unhappy words to the effect that, “There’s no reason to bid if Ron Pratte wants the car.”
While what you may have just read might make you think I’m being critical of Pratte, I’m not. His is the Great American Success Story — from high school student working as a part-time laborer to hard-working, self-made head of a hugely successful home-building business that he sells at just the right time. First, he assures his family’s future and then he pursues his new hobby, and in the process generously donates to a succession of worthy charities.
For whatever his reasons may be — though sitting conspicuously in front of the television cameras at Barett-Jackson, Ron Pratte has been very private and reluctant to share his thoughts with the media — he has the right to buy what he can afford and also the right to sell what he owns, and to move on to whatever the next chapter in his life might be.
And he has the right to keep his reasons secret, which brings me to Professor Don Thompson’s book, The Supermodel and the Brillo Box, which carries the subtitle, Back Stories and Peculiar Economics from the World of Contemporary Art.
I heard an NPR interview with Prof. Thompson a few days ago when the book was published. He explained that the contemporary art market is basically a battlefield on which the Christie’s and Sotheby’s auction houses do battle and that he wanted to unveil some of the before-the-auction-block deals and doings he’s uncovered.
I’ve always seen an interesting parallel between the world of art and automobile auctions, and have heard some intriguing stories about what happens behind the curtain. For example, an executive with one of the major classic car auction companies told me how, long before cars from a major collection reach the auction block, the auction houses themselves are bidding against each other for the right to include those cars in their catalog.
Though Thompson focuses on art and those who sell it, I’m sure what he reports also applies to automobile auctions. Amazon promises my copy of his book should arrive just about the time you’re reading this commentary. I’m intrigued, and I hope you are as well.