Heritage Live Auction -- Black Swamp debacle
 

Estimated to go for $1 million -- it went for about 240K instead. Perhaps if Heritage hadn't had the entire find graded at once, thereby increasing the population of E98s exponentially and lowering the value of all the E98s, it might have gotten to $1 million. Instead, all big bidders apparently felt they could buy high graded E98s at another time. And now the remainder of the Black Swamp find is hugely devalued and a $3 million+ haul is an impossibility.

Well, at least Heritage received a huge amount of international and national publicity and that surely triggered dozens of cold calls and new finds. And this helped the consigners of the Black Swamp find how?

It was definitely a dumb move to have those cards all available at once. Good for HA but bad for the consignors' family.

When I spoke with the executor of the estate one of his main concerns was for transparency with this find. He made it very clear to me that he didn't want hobbyists to get burnt by releasing some cards very slowly. I thought that was very classy of him and it was indicative of our conversation and the way the family is. I believe they were happy with the bidding where it was when the live bidding opened. Sure, everyone hopes to get more for the valuables but there are actually some kind and good people in this world. I wish our hobby was so nice sometimes. Sometimes it's not about going for the jugular it's about doing the right thing.

The family was very happy when the live bidding opened? What does that mean? Were they very happy when the live bidding closed after being told that the $1 million estimate was 760K too high?

But if the family insisted upon releasing the full extent of the find instead of selling the cards a bit at the time then the fault lies with them -- assuming they were given good advice.

It means they were happy with where the prices were when the Live bidding opened. Sorry if I didn't make myself clear.

If somebody in the hobby found these they would have done this much differently. This family was outside the hobby and likely didn't understand the nuances the way we would.

That said, if the cards went for 25% of their estimated value then clearly something didn't work out. The family may be happy because they have nothing into them and didn't even know they had them until a few months ago. I guess there are going to be some bargains down the road.

If cows shi* butter we wouldn't have to churn.

If my uncle had boobs he would be my aunt.

LOL!


It really is hard to complain about finding cards in an attic and walking away with $250,000..

The shrewd move would have been to sell these suckers periodically. I understand it's in the best interest of the hobby not to "sneak" in these cards, but as an auction house your best interest should always be getting the best possible (legal) price.

To me, the shrewd move is to give the consignor all possible information and then do as they ask, within your boundaries. I think most auctioneers would agree. Otherwise, the consignor can take their wares elsewhere.

I feel sorry to the owner's family if they planned to use the money for college funds of their grandkids.... now the funds are only enough to buy a few stationaries from Walmart til they graduate from high school.

No one can possibly believe this family is happy after last night.

It would have been fraudulent not to disclose the material fact of other high grade E98s in their possession when trying to sell purportedly "low pop" cards.

My guess is they were wary of the indictments of the Legendary principals, and just wanted to make sure they weren't going to stand in front of a federal jury.

:D

Really? So if they only had 1 or 2 graded...the pop would still be very low...probably unique. Technically they don't know how the others will eventually grade. This would be fraudulent?

Does this have anything to do with that whole "prudent" man stuff?

I would think they went with Heritage because of reputation they have and how big and experienced they are and if they told me I could get close to a million for these cards and only got 250,000 I think I would be a little disappointed even though it was money i didn't have. Would have made me think I should have gone elswhere. I would have trusted there knowledge of the market when they told me I could get a million. Always factors that dictate what something will sell for but the gap between a million and 250 is not even close. Still a nice chunk of money they never had

Estimate a little fanciful?
 

The estimate I saw in the paper (a national press release) was that the lots had an estimate of about $500,000 total, and that the bidding on these lots reached $566,000. One million seems an out of line estimate to me. In the long run I think the family did good, as long as they time the release of future lots/singles in a way that will maintain interest in this incredible find.

Brian

My smiley face was intended to connote sarcasm. Maybe I should've used the winky eye!

I think they did it the right way. It was honest. For what it is worth, the three lots sold for about a half a million. The Wagner was $238k with juice, the set was over $280k with juice, and the other lot went for over 40k with juice. Those numbers were about what I expected given what is lined up behind them. Still impressive! The other factor is Heritage got a ton of press due to the enormity of the find which would not have happened if they slowly leaked them. It is hard to know how that will impact all this in the short and long term. The bottom line in my book is that it was the honest way to do it.
JimB

I'm now looking at the auction pages of the Black Swamp cards and unless this is an error of some sort, those cards are already up for sale again. Each auction has a "Make Offer to the Owner" option. Then is states:

You now have the opportunity to acquire very rare items that may not be auctioned again for some time by making an anonymous offer that will make the owner sell. The owner of this item has indicated that they are entertaining offers on this item.

Could this mean Heritage themselves won the cards and are now selling them again? Something stinks here or am I missing something? If these items are up for sale, then it appears the winners weren't very serious about owning the cards.

http://sports.ha.com/c/item.zx?saleNo=7057&lotNo=80001

http://sports.ha.com/c/item.zx?saleNo=7057&lotNo=80002

ha ha...I'm a little slow this morning...too many celebratory gin and tonics last night!!!!

Well, given what I read in that other thread about Heritage that seems possible.

The consignors must be disappointed. I think this entire thing seems to have benefited Heritage much more than the consignors.

Had they spaced these out over time they could have gotten more money IMHO.

But there is no denying that anytime you take a set that is collected by probably 100-200 people and dump a ton more material on the market prices will be tough to keep high.

Great point Leon the consignor is in charge as an auctioneer you can only advise.

Disclosure
 

I don't think any seller of baseball cards has a duty to disclose all the other cards he or she has and the grades or condition when selling. As long as there are no untruthful statements made - like this is the only high grade example - then there is no fraud.

Easy for you to say -- you weren't told the cards would fetch $3 million. And it wouldn't have been dishonest to sell them slower without getting them all graded at once -- unless a material misrepresentation was made.

Correct me if I am wrong, but Heritage is offering this on every past lot they have ever sold. They become the messenger between you and the buyer to negotiate a sale on anything sold in the past. This is not exclusive to the Black Swamp find. It in no way means Heritage owns the cards it would be more of an agent situation between the buyer and seller.

And if Heritage, with the consignors' permission, had not disclosed the size of the find and not graded all the cards at once, there would have been a thread attacking them for fraud and misrepresentation. Seems like Heritage should have just told the consignors to take their crumby cards elsewhere. Boy, an auction house cannot win with Jeff around. :D Now cards cards selling for "too little" is a problem. YIKES!!!

I also do not think the printed estimates for the 3 lots totaled 1 million. Don't have the catalog any longer. I recall the Wagner stated 200K and up. That said I thought the cards would sell for more, not that they underperformed. The E98s were not the only items which did not command top dollar last night.

OK. I now see that they do it on more then those two auctions, but they do bid on their own auctions, so its still possible they are the winners any of those auctions.

Not to get off topic, but how about some of the other ridiculous prices? Ruth ball $388k, Ruth bat $388k, 1912 Sox Trophy $239k, 69/70 Topps basketball set $209k, Ruth signed certificate $101k, Ali trunks, Cap Anson bat, etc, etc...all six figure items. Incredible prices. The hobby looks very strong to me.

As I said, as long as a material misrepresentation wasn't made Heritage would be fine. This is more of a sales strategy issue than an ethical one obviously. And I agree the auction as a whole didn't do well. I suspect the same of Legendary's auction.

"fraudulent not to disclose the material fact of other high grade E98s in their possession when trying to sell purportedly "low pop" cards."???

That's a fraudulent act??? yeah right! Come on!!!!

If u have three Honus Wagner signed t206 and want to sell one, I am 100% certain u wouldn't want to tell people u have two more to sell later.

The pre-auction estimate I saw was $ 200k for the Wagner, not $ 1million. They only auctioned off I think 37 cards last night . They will be auctioning the others over a period I believe of a couple of years, many 9's of Cobb etc

They still have 100's of cards to auction off and they will in the end be in the millions range, already over 1/2 million with just 37 cards.

Wow... There's still 670 more cards, roughly the same condition as the 28 that sold last night. Herritage estimate was waaayyy high, even if they had only found one set IMO. You're talking 37k per card and a couple were in fair condition. Compare this set to the pirate set that sold. I can't even imagine this set being worth 1/4 that. It's just condition rarity and hype. I'm sure Leon's right, I'm sure the family is super happy. Don't forget they're regular people. They probably still can't believe some rich guy is willing to pay so much for something grandpa forgot to throw away 100 years ago.

I talked to a HA personnel last night, he said they have been getting low ball offers for those "lesser" grade Black Swamp find cards after the auction. One offer was $5k for a PSA-9 Wagner and the consignor actually accepted the offer after the auction ends last nite. I guess the consignor learnt his lesson and try to dump those cards to the market before they crash become trash.

I don't think the consignor family would waste their time for those endless interviews if they know they would get ~$1M for the whole collection.

in agreement, when the doyle error came out, the first guy to find it didnt tell everyone to make it fair for everyone in the hobby to sell them to him at a fair price, he tried to buy up other doyles at the regular price. was that dishonest? no, he used info he had to his own betterment.

heritage dropped the ball on this one, fuuuuumble!

to do it this way,they would have been better off to burn all the wagner's except for the one graded 10, and put a million dollar price tag on it. what is the difference between that, and only disclosing the 10 wagner, putting a million dollar price tag on it, until it sells, then put out a 9 wagner, etc, then another 9, the prices will be less for each subsequent one, but the buyer has paid for FOB, (first on block).

something tells me if any auction house would have made the find themselves and owned it themselves, it would have been sold differently because in this instance the auction house looked out for the buyers as much as the sellers by disclosing the pop number and grades of all the cards beforehand, but an auction house that owned the cards outright, would have only looked out for one entity, THEMSELVES, which is fine, but let's do the same thing for the consignor then in this instance that they would have done for themselves. heritage or not, any auction house would have used the cards to their own advantage had they owned them outright.

How is "this is the only high grade example" truthful here? There were 700 high grade examples found. They could've stretched the truth by saying "This is the only highly graded example" if they only graded one in the find. Thankfully, since they weren't "in" the hobby, the odds of them being scumbags was lower then we're used too.

I understand why the "Black Swamp Find" was publicized: to get publicity for this auction and Heritage. But can anyone say with a straight face that if Heritage had simply announced that in its upcoming live auction that they would have a Wagner 10 and a Cobb 9 in it they both wouldn't have gone for well more than 100K apiece -- without Heritage being in every newspaper in the country? It's not like news of these cards wouldn't have made the rounds to every collector in the hobby in a minute flat. I just can't see the logic in how this was handled except to think that Heritage's interests and handling of the auction were inconsistent with the consigners' interests and bottom line.

these multiple wagners at very high grade were so far better than any previous ones, that it made little difference to sell them slowly, or fast, because anyone who wants one, now knows they exist in these quantity, and they can't get any anywhere else, but they know the seller is going to sell, so they will just wait for the next auction and pick up a 9, or the next auction, next, etc.

so flooding the market all at once, or "flooding" it slowly over a period of a year or two isn't going to make much of a difference.

since the family had the market cornered on these high grade wagners, they should have put a high price on the 10, and refuse to sell any 9's until the 10 sells first at their price, then anyone that wants a high grade wagner for that set, can't get one unless they sell for the familys price. There would be no where else to go, they had a bottleneck but they blew it. an opportunity squandered on a terrific chance to cash in on a cornered market. but heritage knows what they are doing. fail.

Well, this is not entirely true - I believe this family could be happy after last night. There is such a thing as not being consumed by greed. There are families, and there are people, that still have this type of character and perspective.

Just my opinion of course.

.

One is not "consumed by greed" if they're led to believe their cards are worth a million bucks and they only see 240K, comeon. You can't possibly blame them for being unhappy about the auction.

I'm going to have to disbelieve this statement for now, since you didnt accidentally rip the back of your jeans off reaching for your wallet when you heard 5k. The "gem mint" version just sold for 40x that number.

Also, Heritage is too money grubby (signed, Matt Hall) to accept that kind of low ball offer. They could get more then that on eBay.

They'd have to average close to 4k per card to hit around the 3mil estimate mark. That estimate was too high. In another thread, a board member estimated 25k for each Cobb. That seems like a more reasonable number.

Umm...

could it be investors (not collectors) who buy high end material might be a little gun shy of auction houses right now as well? (b/c of the mastro fiasco)

Joshua

then they could have just given the cards away then, i would have taken one.


there were 20 members of this family. their cadillac turned into a used hundai.

They also might know that there are 20 more similar sets available.

And on the other side of the coin.....


http://news.yahoo.com/rare-baseball-...063544522.html

"A sampling of the treasure trove that had been untouched for 100 years was sold Thursday night during the National Sports Collectors Convention in Baltimore, Md. The 37 baseball cards featuring the likes of Hall of Famers Ty Cobb, Cy Young and Honus Wagner fetched a combined $566,132 in brisk online and live bidding. They were expected to bring about $500,000."

Um, what?

That's what I thought. The auction exceeded expectations. They (the family) are happy. The hobby is healthy. Millions of $$$$ were spent last night. A lot of good press for the hobby.

Does Calvindog think all the cards were auctioned last night ? Only 37 of them !!!

As a side question, Jeff, were you able to pick up that Azora Cobb panel?

"It is nothing short of the most startling and significant find in baseball card collecting history: a near complete set (27/30) of 1910 E98 baseball cards – #1 on the PSA Set Registry – and it is the unquestioned headline in Heritage Auctions’ Aug. 2 Vintage Sports Collectibles Platinum Night Signature® Auction, taking place as part of the National Sports Collectors Convention at Baltimore, MD’s famed Camden Yards. The three lots from the find are estimated to bring $600,000+."

And no, did not bid on the La Azora PCs....

I thought it was 28 cards.

I think it was 27 in one set, the Wagner in another lot and then 9 in the last lot.

NM

Ok, forgot about the green lot... Anyone know what that went for?

If one is to believe the internet. Initial press releases had the Black Swamp E98 near set estimated at $500,000. As per an associated press article....

"The best of the bunch -- 37 cards -- are expected to bring a total of $500,000 when they are sold at auction in August during the National Sports Collectors Convention in Baltimore. There are about 700 cards in all that could be worth up to $3 million, experts say. They include such legends as Christy Mathewson and Connie Mack."


I didn't see any press releases from Heritage promising a million for the E98 Wagner PSA 10 card.

"Recently discovered in a Defiance, Ohio house attic with over 700 other well-preserved 1910 era E98 series baseball cards, this card of Hall of Fame player Honus ("Hans") Wagner has been certified PSA Gem Mint 10 and is expected to sell for $200,000 or more in an auction conducted by Heritage Auctions on August 2, 2012."



Heritage predicted a 3 million dollar windfall for the entire enchilada. They probably won't make it to the three million dollar mark, but with a bunch more cards to sell......................well, I will go out on a limb and say that the consignors are happy people at the moment and the grand kids college trust fund is saved (as long as it's not for an ivy league school.......have you seen the tuition rates?......wicked!).



Lovely Day.

So now Heritage is being criticized for being transparent and upfront?! Talk about being between a rock and a hard place...I can only imagine the blistering comments on this board had they chosen to sell the cards piecemeal. In addition, EVEN IF they wanted to sell them piecemeal, how then were they supposed to respond to the inevitable question an experienced collector was apt to ask as to whether there were more cards in the find? Lie? If not, then wouldn't they have ended up right back to where they were by disclosing all material info at the start?

As to the point that they had no legal obligation to disclose the extent of the find, perhaps so. But isn't that why business ethics is taught in business school...to encourage businesses to take the business high road, even at the expense of SHORT-TERM profits?

I for one applaud both Heritage and the family that consigned the cards for the manner in which they have offered to the market this spectacular find.

well said Corey.

So it's ok for Heritage and its employees to bid on lots against other bidders but not ok for them to seek to legally maximize the profits made for their consigners? Do they teach that in business school too?

Is it ethical to withhold material information?

Depends what is material in this case. I don't think it's ethical or legal to do so.

To Corey's point, I'm not so sure there is no legal duty to disclose. I know material information that directly affects the value of the card and that is not otherwise knowable -- that I have 25 more in the pipeline. It's just as much fraud to omit a material fact as to misrepresent a fact. Why isn't that fraud? At the very least, it's dubious ethically.

It bears directly, and substantially, on the market value. How is that not material?

Jeff are you seriously saying it would not have been deceptive for Heritage just to say here's a Wagner 10 and a Cobb 9, knowing what it did about the extent of the find? If that's your position I disagree. Sure, Heritage has an obligation to maximize return for its consignor, but not if that means committing fraud or acting unethically -- thus your opposition to shill bidding.

It's a close call and a good point. I don't think it would be ethically wrong (certainly not legally wrong) to say nothing -- unless asked if they were part of a larger find. Real slippery slope should that loose thread be pulled.

Well we can agree to disagree; I agree with what Greg and Corey said earlier. I think it's highly material information and it's deceptive not to disclose it, at least in a civil case.

So to my point earlier, why is HA being called out in the first place? Makes no sense. Hobby is turning to a good old fashioned witch hunt.

Partial witch hunt.

All the more reason to applaud them for taking the high road with this find. Seems to me hypocritical to blast them for it.

As to Peter's point that they might have had a legal duty to disclose it as it was material info as to value of the cards and was in their exclusive possession, at the very least I don't see how an auction house can be criticized for taking that as a credible legal argument.

So the Mastro indictments are a witch hunt?

Honestly, I'd love to hear their thinking (if there was any) on the determination of whether or not to grade the whole find at once. Surely they had to know it would lower the prices realized of the consignment. I would find it dubious that the decision to grade them all at once was rooted solely in a legal determination and not, at least in part, to the publicity garnered from the "Black Swamp Find."

Can someone please help me with this.

The family had 700 high grade cards. Auctioned off 37 of them for over $500K. And they still have 640+ cards left. Is this correct?

I'd be pretty stinking ecstatic if I were them if this is the case.

So Jeff, your approach would have been to withhold material information from the initial round of bidders about the true card population, let them bid it up to levels reflecting a 1 pop, and when faced later with the inevitable charge that you manipulated the winning bidder into overpaying by many multiples, say tough luck?

I think first I would have been mostly concerned with maximizing the profit for my consigner rather than using the Find as free publicity to garner future consignments.

And I don't think I would have auctioned them off in the chronology of how Heritage handled it. Considering how Heritage handled announcing that it bids on its own lots I suspect they have plenty of lawyers who give them legal opinions on how to run their auctions. I don't think the determination on how to announce the Black Swamp Find was based solely on a legal determination.

Jeff, you are sort of side-stepping the question by saying what you would not have done. What would you have auctioned first, and what would you have disclosed, if anything, about the rest of the cards from the find at that point.

Haha - I got my MBA before business started pretending to have ethics so I'll have to take a guess as to what you're talking about:

Business Ethics = maximizing profit without doing anything so illegal that you can't get out of it.

This is simple math: just have the remaining 640+ re-graded until the new estimated value covers what was lost from selling the first 37.

Honestly it's hard to say without researching whether or not facts withheld are material. But considering Heritage bids on their own lots and buried it in paragraph 21 of its rules, I suspect they have some pretty aggressive lawyers. Of course I'm not suggesting that their paragraph 21 is illegal.

LOL basically. I like the pipe dream, however, that business ethics and baseball card auction houses are not mutually exclusive. Considering Corey's history he's clearly an optimist.

I don't know about the legal arguments. However, I'm sure the family wanted to receive money from these cards now rather than later. All of the family members look to be a bit older. It would take a considerable amount of time for them to slowly sell off 600+ cards over multiple auctions. It seems it would have made more sense for them to offer the cards as a group to the auction house for say $1.5 million. Since they had estimated the value of the collection at around $3 million they would still be getting a deal. Let the auction house take the risk and do the work of slowly selling these off over the next 5 years while the family divides up the money and gets on with their lives.

SCP did the same thing with the 42 red Hindus and 2 t210 Jackson's, not on the same scale but I'd think they could have easily kept the find quiet and auctioned them off slowly over a few years. I'm sure the publicity and bragging rights had a big part of it.

that is awesome to hear.
very cool perspective they had - and nice of them to want transparency.

500K Doesn't include the green ones auctioned today, just the first two lots.

I think the only obvious mistake here is Heritage thinking they could get a million dollars for a partial set of e98's. I'd like to know their logic behind that estimate.

When certain people are targeted to the intentional exclusion of others, it just seems like a witch hunt. Obviously I am in the minority of those who feel this way.

As an aside, I am not dismissing shill bidding as a problem but the more rampant and detrimental issue facing the hobby has always been the sliced up, recolored cards in high grade holders and the grading companies who have decided to look the other way.