Analysis of current AH's rules regarding shill/internal/sketchy bidding practices

[buymycards]

Well, let me see if I have this straight:

1. I am bidding against the other bidders.

2. I am bidding against the employees of the auction house, some of whom are bidding on their own items.

3. I am bidding against the auction house, who is scooping up any good deals.

4. Items that I consign are competing for a limited amount of dollars with the auction house consigments and the employee consignments.

5. Heritage only charges me a 25% buyers fee for the privilege of of buying from them.

Sounds like a good deal to me. Where do I sign up?

[Peter_Spaeth]

I have a vision (relayed to me by a friend) of Bill Mastro back in the day at one of his own auctions, with a bid paddle.

When the house wins an auction, and of course doesn't pay a premium, how is the price reported to the community?

[Flintboy]

I give credit to Heritage, they came on here and said they bid on their own auctions. I guess my definition of shill bidding is different than theirs.

[ValKehl]

Chris, I applaud you for posting the clarifications to Heritage's T&C #21, and I have assumed that you have been completely candid with us. But, as you can see, your damage-control effort and "only post on the matter" was one post too many, for it has backfired on you. IMHO, not that you are likely to care about my HO, what Heritage should at least do is completely revise T&C #21 to include the essence your clarifications. Regardless, you have not changed or even dented my intention to NEVER leave a max bid in a Heritage auction as long as T&C #21 remains (or with any other auction house that has a similar T&C).

[JollyElm]

Wow...I mean WOW. You really thought your post was a good thing, Chris 'Poison' Ivy??????????????? My gawd!!!!!

[ValKehl]

Originally Posted by JollyElm

Wow...I mean WOW. You really thought your post was a good thing, Chris 'Poison' Ivy??????????????? My gawd!!!!!

Darren, obviously you don't think so. But, I said what i meant, and I meant what I said. Throughout my life, I have striven to "do the right thing." IMHO, what Heritage is doing regarding their T&C #21 is not the right thing (for any auction house). Simple as that.

[Peter_Spaeth]

Concerning Chris' claim to be "well within the bounds of hobby ethics," does any other auction house openly bid on items in its own auction -- I am not talking about individual employees bidding for their collections, but the house itself?

[JollyElm]

Originally Posted by ValKehl

Darren, obviously you don't think so. But, I said what i meant, and I meant what I said. Throughout my life, I have striven to "do the right thing." IMHO, what Heritage is doing regarding their T&C #21 is not the right thing (for any auction house). Simple as that.

I'm confused. My post wasn't in any way about you. It had nothing to do with what you wrote. I read what the auction guy posted and couldn't believe he thought it was a good/proper thing. The arrogance. Clearly a case of him thinking everyone else on the planet is stupid. And buymycards' post says it all. Two thumbs up!

[benjulmag]

Originally Posted by Peter_Spaeth

When the house wins an auction, and of course doesn't pay a premium, how is the price reported to the community?

From an economic perspective, inasmuch as by winning the item the AH has forgone the right to collect the BP from the underbidder, I would characterize that forgone revenue as an opportunity cost "paid" by the AH to win the item, and add it to the hammer price when reporting the realized price.

Whether in fact AHs do this I don't know, but IMO if they did they would not be mispresenting the realized price.

[Peter_Spaeth]

Originally Posted by benjulmag

From an economic perspective, inasmuch as by winning the item the AH has forgone the right to collect the BP from the underbidder, I would characterize that forgone revenue as an opportunity cost "paid" by the AH to win the item, and add it to the hammer price when reporting the realized price.

Whether in fact AHs do this I don't know, but IMO if they did they would not be mispresenting the realized price.

Maybe it comes to the same thing, but I think the accurate price would be the highest "real" bid plus the BP.

[Fuddjcal]

Originally Posted by buymycards

Well, let me see if I have this straight:

1. I am bidding against the other bidders.

2. I am bidding against the employees of the auction house, some of whom are bidding on their own items.

3. I am bidding against the auction house, who is scooping up any good deals.

4. Items that I consign are competing for a limited amount of dollars with the auction house consigments and the employee consignments.

5. Heritage only charges me a 25% buyers fee for the privilege of of buying from them.

Sounds like a good deal to me. Where do I sign up?

No, I'm not. When I was in hot and heavy acquire mode, I would never pay 25% vig to anyone anytime to buy from them EVER for anything PERIOD what a total JOKE.

[robertsmithnocure]

Originally Posted by Fuddjcal

No, I'm not. When I was in hot and heavy acquire mode, I would never pay 25% vig to anyone anytime to buy from them EVER for anything PERIOD what a total JOKE.

I do not understand what difference the buyer’s premium would make to the buyer. Whether it is 10% or 25%, I would assume that a buyer takes that into consideration and if he wants to bid a total of $100 all in, he would bid $91 with the one auction house and $80 with the second to come up with that number.

If anything, the buyer’s premium should matter more to the seller since his proceeds are calculated on the hammer price. I think that when buyer’s premiums are high that the seller is receiving part of it.

[sports-rings]

Originally Posted by robertsmithnocure

I think that when buyer’s premiums are high that the seller is receiving part of it.

As far as I know, it's almost impossible for a consignor to get a crack at some of the BP.

In very rare circumstances, perhaps a Mantle Rookie Card (8, 9 or 10) or a T206 Wagner card consignment could bring an opportunity for an AH to offer a percentage of the BP.

[sports-rings]

On another note, heritage has vintage and collectible guitar auctions.

That market has gone way down in the last 10 years. I keep track of those sales, and unlike sports memorabilia, most of the guitar consignments do very poorly in the Heritage auctions.

This is not a reflection on Heritage, but more so the state of that market place.

So these Heritage Guitar auctions are a great place for buyers and not great for consignors. I guess sports memorabilia is way too hot a collectible segment and it's a shame for sports collectors that buyers compete with so many others and the AH's and their employees.

[benjulmag]

Didn't PSA say in regard to the outed PWCC cards that the card owners should look to PWCC for restitution and return the cards to PWCC? If that is what PSA said, I suspect their rationale is their viewpoint that PWCC was complicit in the fraud (by working hand in hand with the card doctor(s)) and therefore should bear responsibility before PSA.

In the case of the outed Bobby Hull 8 recently sold by Heritage, I doubt anyone could credibly argue Heritage was complicit in the doctoring/regrading of the card. Accordingly, because the Hull case on its facts appears to differ significantly from the outed PWCC cards, I wonder what PSA's position will be if/when the card is returned to them? In such an instance, the card owner should have no problem establishing damages, as selling an outed "8" is a lot different than selling a non-outed "8". To go even further, IMO the owner when trying to sell the card will have a duty to disclose to any prospective purchasers the card has been outed. Good luck trying to get your 78 grand back in that instance.

So what will PSA do? I would think the dumbest thing would be to try to pin the mess on Heritage. Putting aside the legal creativity needed to come up with a theory that could even survive pretrial motions, from a purely business perspective IMO it would be insanity. The value of the PSA brand hinges directly on the cards' marketability. Think of the impact on this marketability if PSA by trying to shift liability to the AHs make AHs worry about their legal exposure if PSA cards they sell are subsequently outed. What might happen? Probably something along the lines of AHs putting in large red print in their terms and conditions that they make no opinion as to the accuracy of PSA grading and that such cards are sold "as is" at the sole risk and expense of the winning bidder. (As an aside, IMO AHs current terms and conditions almost certainly suffice to shield them from liability. But that will not help them in the court of public opinion, and that likely will be their main concern.)

So let's suppose AHs do respond along such lines. Talk about giving a poison pill to the marketability of the PSA brand. After all, how many authenticators get singled out in bold red print in AHs' terms and conditions?

This situation with outed cards and the current questions swirling around PSA is very fluid, and I wonder how carefully PSA has thought about where it could lead. By their public statements, they are trying to give the impression they are not worried. But as I try to show by discussing the 8 Hull, there are a lot of moving pieces. If/when the 8 Hull is returned to PSA, I think the smartest move for PSA is to not look to involve Heritage and instead promptly and without hassle refund the owner the $78k he paid for the card. And if the card owner comes first to Heritage, if I was them I would on behalf of their customer return the card to PSA and put their muscle behind the demand that PSA make full restitution.