Articles

Michael Sheehan's Ferraris-online.com Article

The Bottom Line in Scottsdale

The ex–VanKregten Cal Spyder sold for $4.95m, even though there were several phone bidders apparently willing to go higher—but they were too slow

As appeared in:

Sports Car Market—April 2009 issue

Sheehan Speaks

by Michael Sheehan

$4.95m 250 GT SWB Cal Spyder sold at Gooding
$4.95m 250 GT SWB Cal Spyder sold at Gooding

Last summer’s Monterey auctions defined the top of the collector car market, and Scottsdale has delivered a new bottom line. It’s pretty hard to argue the collector car market isn’t on solid ground when collector cars generate $133m in Scottsdale in one week.

Barrett-Jackson did nearly $61m, Gooding just over $32m, while RM sold $18m and Russo and Steele $17.5m. In all, 2,343 cars were offered and 1,726 sold, a 73% sales rate. A variety of buyers attended the sales of these four major auction houses, and each presented its wares with widely different marketing philosophies.

The greatest show on earth

While Barrett-Jackson dollar volume was down from $108m in 2007 to $84m in 2008 to just under $61m in 2009, this was, in large part, a strategic move in the declining muscle car market. Craig Jackson changed the consignment choices to match the expectations of the Speed TV auction audience, morphing from an auction to a “collector car event.”

A large part of the revenue stream is a claimed 200,000 pair of feet through the door (although many were repeat-feet coming through for multiple days) at $35 to $55 per day, and about 300 vendors paying $1,500 or more each. Add in 3,000-plus bidders each paying $500, plus clothing sales, sponsorship, and miscellaneous other, and you’ve got a lot of tire-kicking visitors paying serious money to go to the Big Top. The action was fast and the bidding in the low-euphoria range.

1,075 of 1,075 cars were sold

Because Barrett-Jackson is a “no-reserve” auction, 1,075 cars were offered and 1,075 cars were sold. While some auctions are “buyer’s auctions” and some are “seller’s auctions,” B-J manages to be both. With an average sales price of about $56k per car, B-J had plenty of cars for entry level buyers, while the B-J/Speed TV model is the perfect venue for those who want their ten seconds of fame buying unique and unusual muscle cars and American iron on live TV.

One example was the one-off 1989 Corvette DR-1 convertible, a part of the GM Heritage group, which was sold on a scrap title at a staggering $286,000. If you’re a Ferrari aficionado, you were there for the show, not for the cars.

American sports and GT cars at RM

Since RM first set up a rival auction at the Biltmore, it has used its international clout to pull in the best-of-the-best collector cars with a leaning toward American sports and GT racers. With 127 cars on offer and 106 cars sold, RM hammered down just over $18m, down from over $26m in 2008, and $30m sold in 2007. While down, those numbers are skewed by the dollar value of some of the cars on offer; the nonsale of the Grand Sport Corvette and Bugatti T57 Atalante took over $5m away from the total sales number. The average sale per car was $171k, more than triple the B-J average. RM is the place for the mid-range to upper-end Ferraris, and the sale of 250 PF Series II Cab s/n 1865GT for $375k established the new market price. Indeed, the sale of 275 GTB/4 s/n 10045 for $918k, 250 GTL Lusso s/n 5475GT for $550k, 275 GTS s/n 7007 for $385k, and F40 s/n 93139 for $429k clearly show that the new price structure for these cars—and virtually all Ferraris—is off about 25% from the August 2008 peak.

The place to go for high-end Ferraris

At least during this week, Gooding was the place to go for high-end Ferraris. Overall sales were up from $21m in 2008 to $32k in 2009, with the star of the show being the ex-Ron VanKregten 250 GT SWB California Spyder, s/n 1963GT, which sold for $4.95m. The car went to a Northwest collector, even though there were several phone bidders apparently willing to go higher—but they were too slow. Indeed, David Gooding remarked several times to his crew on the phones that the phone bidders had to react quickly or run the risk of being shut out, and he was as good as his word on several occasions.

The sale of 250 PF Cab II s/n 3093 at a nearly identical-to-RM price of $385k confirmed that new market floor, while the sale of 365 GTB/4 s/n 16953 in a sale-proof refrigerator white at $286k confirmed that Daytonas, like many Ferraris, are also 25% off the August 2008 market high.

At the higher end of the Ferrari food chain, the $4.95m sale of the unrestored Cal Spyder established that the top end of the market is strong, although off the $6m–$7m it likely would have brought last year. A pleasant surprise was the sale of 250 GTL Lusso s/n 5215 (which I had sold with a nice older restoration in July 2007 for $450k). Here it brought $704k, thanks to a fresh $200k restoration.

David Gooding has established his niche as a boutique auction, with only 101 cars on offer. With 84 cars sold, he picked the right ones for the weekend at an average of $386k per car in just one day, proving that smaller can be bigger. His fast-paced bidding has made his auction the destination point for an interesting combination of high-end Ferraris and pre-war European exotica. Buyers will buy from the place with the cars, and this year Gooding had the cars Ferrari fans want to see.

1959 250 GT Series II Cabriolet sold by RM for $375k
1959 250 GT Series II Cabriolet sold by RM for $375k

Entry-level exotica

Russo and Steele handles entry-level muscle cars and exotica, and this year had 597 cars on offer, almost all with reserve prices. Over four days, 262 cars (or 44%) sold, with an average price of $67k. Owner Drew Alcazar likes to get the bidding going with the car’s owner on hand, while Marty Hill rushes from bidder to bidder until Drew can holler into his microphone, “The reserve is OFF!” as they try to get each seller that extra 10% over reserve.

Just as David Gooding’s last stop before opening his own show was RM, Russo & Steele’s Alcazar was the main man at Barrett-Jackson from 1996 to 2000, and he offers an auction style similar to that of B-J, pre-Speed TV. The cars are offered on an “Auction in the Round” format, with each machine driven through the crowd. This has the effect of getting the crowd, the seller, and the buyer emotionally involved so that the cars and the people are the show, rather than the show being a tailored-for-TV event. Russo seems to do well with entry-level Ferraris, selling 512 BB s/n 32837 for $138,600, about $40k more than Gooding and RM did with similar cars.

Better than real estate or the stock market

Scottsdale showed that good cars bring serious money, and there is no lack of buyers with an eye for quality. While the bottom end brought bottom-end money, there was still a market, which may be the most surprising fact of all. At Scottsdale, one can focus on over 2,300 cars for sale, and many spectators happily took something home.

If one accepts that the Ferrari market has had a 25% overall correction, that’s a heck of a lot better than real estate or the stock market in the last eight months. And, unlike some portions of the real estate market, people are actually still buying Ferraris; the cars that sold were real sales, to real people, for real money. Many investors have pulled their money out of the stock market, and Ferraris are still a great place to park some spare cash. Besides, I’d much rather go to my garage and fire up my Daytona than paper my bathroom wall with a pile of nearly worthless stock certificates.