The Barrett-Jackson Collector Car Auction
Every year the Barrett-Jackson auction company seems to get bigger – and exponentially. What began as one of any number of car auctions of mostly full classics decades ago has been groomed, promoted, and grown to at least 4 huge auctions a year. The first of these is held in Scottsdale, Arizona each year and is closely watched my motor mavens all over the world as an indicator of the health of the collector car market.
With my peculiar slant on reality, I’m not that interested in the total number of cars nor the individual or average sale prices. Very few of the 1,300 cars auctioned this year are cars I would actually want to purchase myself, and of that small number, lets say a dozen, all are outside my financial reach unless I choose to strip my retirement accounts bare in a bold stride toward financial suicide. What interests me is how the cars, event, and company are marketed, especially in comparison to competitors.
Years ago Barrett-Jackson aligned itself with the SPEED channel, which now broadcasts all four of the B-J auctions. Each broadcast seems to increase the percentage of the entire event on the air. For last week’s 2012 extravaganza, SPEED broadcast a whopping 40 hours of television. Furthermore, by chopping and splicing the coverage into collections of vehicles by type such as race cars, cars owned by the famous, customs, classics, etc., SPEED has assured themselves of probably 60 or more hours of programs that can all be run repeatedly at all hours of any day, and will be for the remainder of this year.
Since I actually do have something of a life, I prefer to tape each day’s coverage and play it back later. With judicious use of the “fast forward” button, I watched, more or less, all 40 hours of the coverage. With this in depth research fresh in my mind, trends and techniques become clear.
To begin with, it has to be said that B-J has become an enormously profitable enterprise. If you sell a car and charge an 8% fee to the seller and a 10% fee to the buyer, you have a return of 18% on product you do not manufacture or own. Those moneys pay for the vast arena, which is temporary and set up and taken down each year, and a lot of marketing all over the world, all year long. If you sell 1300 cars for an average of $50,000 each, and I am sure the real number is MUCH higher than that, you clear $9,000 per car, and that totals $11,700.000. That is, however, only the visible tip of a vast iceberg of money that floats over, under, and all around the event. There are the sponsor fees B-J charges ESPN, as well as hundreds of exhibitors. There are the ticket sales for spectators and bidders, as well as concession sales, clothing sales, and on and on. In addition, the vehicles are only one of the auctions. There are also auctions all week of automobilia, much of which commands eye-watering prices. Craig Jackson, who took over the B-J business from his father and an original partner, has done most of this with his own ideas and vision, ably assisted by top assistants who have been with him for years. In many ways they are the most powerful people in the collector car business.
B-J has become famous in recent years for setting trends. Each year some type of car, or a specific model, surprises with a whopping sales price, and this draws other examples out of the woodwork, barn, collection, junk car pile – to appear in subsequent auctions.
The first of these that I recall was an Amphicar that sold for well over 100k a few years ago. An Amphicar is, as you can guess, capable of being driven on land or on water through a combination of good door seals and a lever to switch from normal drive to twin propellers under the rear bumper. I have had the pleasure of a ride in an Amphicar, both on the road and in the water, and it is a fun curiosity, but not really all that impressive on land or water. Sort of a cute curiosity. There has been an Amphicar featured in every auction of note since, as people who own them sense an opportunity to cash in.
A few years ago restored pick-ups became the fashion item of the moment for people who can indulge themselves, and now they’re everywhere. Some are restored as totally stock, and some are “improved” with later engines, better brakes, and so forth.
Last year a humble VW van soared well past $200,000, plus 10% buyer’s premium. That particular van was restored to far past the excellence of a brand new vehicle, and had a particularly alluring paint scheme. Now there are VW vans at every auction, and some bring good money, but less than 50% of the van that started the craze.
A recent trend that has actually altered the collector car landscape considerably are “retro-mods” and mild customs. This year’s B-J featured at least a dozen retro-modded 1969 Camaros – which I pay attention to because a retro-mod ’69 Camaro is a permanent resident of my “lottery buy” list. Another rising star in this galaxy are retro mod versions of 58-62 Corvettes, which is also of interest as we once owned a 1958 Corvette. Ours was purchased for $800 (it had some needs, let us say) and sold three years later for $2,800 – about what we had into it. The ones that sold at B-J last week were exponentially better than ours ever was, by several times, but also sold for $120,000 to a whopping $375,000. Only a few years ago such cars were considered sacred, and restoring them to anything other than bone stock was heresy. Today there seems to be a more rationale point of view that there are enough “perfect” versions of these cars to provide a historical record, so retro-mods do not harm and allow more of these machines to be seen more often on real streets. However, the cynic in me urges the mind to follow the money – people will become rabid adherents of whichever rationale profits them the most.
A trend that is actually a company decision to go back to the past was the installation of a special 5 hour “Salon” period on Saturday of extremely valuable cars, many of them classics from the 1930s, and most of them sold at “reserve.” Most of sold for more than a million dollars – and often more than two million dollars. Keep in mind that B-J is getting 10% from the buyer and 8% from the seller for each car, unless they have negotiated a lower seller’s fee prior to the sale, which in the case of many of these “salon” cars seems likely.
If you’re not an auction habitué, selling a car at reserve means that the seller sets a price with the auction company ahead of time that is not disclosed. If the bidding does not reach that level the car is not sold. For years B-J marketed their auctions as the only ones that were 100% no reserve. In other words, the car will be sold for the top bid at that time, and the seller takes the gamble.
Over time B-J realized that people with extremely valuable cars (over one million dollars, let’s say) were not willing to take that gamble. They first experimented with a few cars at reserve last year, and this year put almost all of them into the special “Salon” section, where I think all but one sold at breathtaking prices.
This year’s hot new trend seemed to be an amalgam of some old ones. I was alarmed when an “Eleanor” custom Mustang retro-mod sold for $220,000 fairly early in the week. Usually the cost and quality of the cars rises each day to a pinnacle from Friday night prime time to Saturday evening, and then slacks off before the auction closes Sunday. An “Eleanor” is a late 1960’s Mustang styled after the movie “character” of the same name in Nicholas Cage remake of the “Gone in 60 Seconds” movie of a few years ago. Here is a car that is not an original, not a one of a kind or even all that rare, not a car with any provenance of fame at all. You can purchase an “Eleanor” for 90-150k all year – there are several for sale at any one time. This one was very nice, but at $220,000 plus buyer’s 10% fee plus local sales tax and license fees, you are spending $260,000. I could not see how it was worth roughly double other similar cars and wondered if there was some sort of money laundering operation going on.
Still not sure, but for the rest of the week virtually any late 1960’s Mustang that had been modified for greater performance sold for far more than I would have guessed, so perhaps this is the new hot trend.
Trends live by their own rules, and are totally free from logic and reason.
It’s fascinating to compare the approach of Barrett-Jackson to the Mecum auction company. Mecum has also grown exponentially in recent years. Their TV partner is the “Velocity” channel, which has re-branded itself a couple of times in the past three years. Mecum will have at least 6 auctions on TV this year, and possibly more. Their first auction of the year is being aired this week from Florida. Compared to B-J’s Scottsdale effort of auctioning 1300 cars in 6 days, Mecum will auction an amazing 2,000 cars in 4 days. B-J offered 40 hours of air time, whereas Mecum will show 32.
Mecum experiments a lot more. They have introduced classic motorboats into their auctions, for one thing. There is the occasional tractor, or plane, or oddball promo vehicle. B-J does some of the same thing, but usually only with extremely famous (and expansive) examples. The Mecum Monterery auction last year featured one entire evening devoted solely to motorcycles, which had never been done on TV before. Some of their ideas have worked well, to where they now have an auction for classic restored farm machinery, which I think would be really fun to watch. Alas, it is not yet scheduled to be shown.
The marketing of the cars comes down to who does the talking on TV, and how much time you spend on each sale. ESPN at the B-J auctions spends a lot of time on the bidding war over each car, which does not appeal at all. Once I’ve learned as much about the car as I can, I don’t care who buys it and the ultimate cost is of little interest. Watching two guys who have more money than I will ever see duke it out over a $350,000 or more car is more likely to cause resentment and envy than generate viewer interest. At least in this viewer.
Mecum, by contrast, sells many more cars in much less time. Rather than focus on the bidding, they start closer to whatever the reserve is –and most of the cars have a reserve. As the numbers get close to what the buyer wanted, principal Dana Mecum or one of his top assistants will work with (or on) the buyer, urging that the reserve dropped. On occasion you can tell that Mecum is offering to cut his company’s commission to get the car sold. Even if agreement is not reached, Mecum has introduced an “it’s never over until it is over” approach with “the bid goes on.” Cars that fail to reach their reserve are moved to a special area where Mecum staff attempt to put buyer and seller together for a deal during the remaining days of the auction. In this fashion they can go through many more cars than B-J can, and everyone seems happier.
The biggest difference is in the presentation by the announcers and the “feeling tone” of the event. Both programs use a basis of 4 announcers, and they fulfill similar roles. There is a “generalist” who keeps the show moving and introduces each vehicle. The commentary is then picked up by an industry expert who describes the car and the era and circumstances of its production. This person, on both shows, seems to love every vehicle ever made anywhere by any company for any purpose. Then the commentary load is tossed to two experts who are actually standing next to the car and who provide further details and comment on aspects of the restoration.
Although the speaking roles sound identical, in reality the shows are much different. I think the reason for this comes down to focus. All of the B-J announcers are well known in the industry. One is the editor of a car mag. One is an author, and two are ESPN racing announcers. Alas, they are continually reminding the audience of what they are selling, or where they can be seen next. They are marketing the show, the cars, but also themselves. The Mecum crew members are also experts, but they tout their own accomplishments and toot their own horns (what a pun!) so much less. Their focus is much more on the cars.
The greatest difference between the two, and the only place where I have a strong criticism of Barrett-Jackson, is in what teachers call “feeling tone.” B-J is the most important collector car auction in the world, but I wish they did not need to remind the audience of it so often. They spend an enormous amount of time and energy hyping the event itself, and the result sometimes appears a little desperate. This seems to transfer across to the bidders, who at B-J often seem to me to be trying desperately to impress everyone. I think this may have been one factor in the high price of the Eleanor Mustang, as they have admitted in the past that some people get a real thrill out of being seen on national TV spending a lot of money. At the end of the day there is a whiff of the cheap about B-J, for all the money spent. It is the sad odor of desperation of people trying too hard to impress other people.
At Mecum the four hosts clearly enjoy each other’s company, and are allowed and/or encouraged to use humor. I end up using the fast forward much less with Mecum, as I enjoy the banter of the 4 announcers so much I often listen through vehicles being auctioned that I do not care about. I cannot imagine higher praise than that. Dana Mecum has a bit of the laughing pirate air about him and this seems also to extend to his crew. Ring men are men (and women) work at auctions helping the auctioneer see where the bids are. At B-J they are attired in dark blue sport coats with white shirt and red tie. At Mecum they are wearing an untucked black loose shirt and slacks, and maybe a baseball hat on backwards. The Mecum ring men laugh often, as do the customers, and everyone seems to be having a lot more fun.
Barrett-Jackson is very important, and has helped the car collector hobby immensely by raising the profile of all sorts of vehicles of interest. They deserve the respect and thanks of any enthusiast. They take the auction business seriously, and take themselves seriously.
Mecum started with muscle cars, and as his business has grown and expanded he has chosen a far wiser path (to me) in taking what he and his staff do very seriously, but taking themselves not very seriously at all.
I’m sure B-J is racking up greater profits, but Mecum is certainly earning huge profits as well and seems to be having so much more fun. That would be my preference.
Copyright 2012 David Preston