Collecting December 1, 2009, 3:09PM EST

The Day That Changed Watch Collecting

A decade ago, an anonymous buyer paid $11 million for a legendary Swiss watch. Horology has never been the same—and has held up even through the downturn

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On an unseasonably warm December afternoon 10 years ago tomorrow, everyone who was anyone in the obsessive world of watch collecting—formally known as horology—packed Sotheby's seventh-floor, wood-paneled auction gallery in New York. The group of collectors gathered there from around the globe as well as by telephone included the seasoned, the novice, and the merely curious. And they were all present for a single purpose: the "Masterpieces of the Time Museum," an unprecedented dispersal of 81 lots that included some of the most significant timepieces ever crafted.

When the hammer fell, though, it was the sale's centerpiece, Lot 7, that made history. An 18-karat gold pocket watch crafted in 1933 by the famed Swiss watchmaker Patek Philippe for New York banker Henry Graves Jr., fetched an astonishing price of $11,002,500. An anonymous collector won the fevered bidding, pushing the watch's price to more than double its presale estimate and shattering all world records. Ten years later, its record price has yet to be broken. And the sale helped touch off a race among a new generation of collectors.

The Graves Supercomplication

Known as the Graves Supercomplication, the unique timepiece possessed 24 complications—or mechanical features in addition to timekeeping—including a different chronological function for each hour of the day, a chart of the nighttime sky over New York City complete with the magnitudes of the stars and the Milky Way, and a minute repeater that played the same melody heard in London's Big Ben.

The storied watch was the most ingeniously complicated mechanical watch ever created and required five years to design and build. Off the market for 66 years, it was also the ultimate prize in a 30-year collecting duel between Graves and the American automaker James Ward Packard, who spent a good part of the early 20th century attempting to acquire the most extraordinary timepiece with the greatest possible number of complications ever made. Both men wanted the best—and for that they chose Patek Philippe.

"The Supercomplication changed the market," says Daryn Schnipper, director of Worldwide Watches at Sotheby's (BID) who oversaw the auction. "Back then, if a watch sold for $100,000 it was something. This set up the market for where it has gone in the past 10 years. Now it is not surprising to see a watch sell for $2 million or $3 million."

By the time the Supercomplication surfaced at Sotheby's, it had become one of the most coveted timepieces in history. And in the decade since it was auctioned off, the vintage mechanical watch market has been propelled into the same league of luxury collecting once reserved for Old Masters' paintings, fine wine, and jewelry. Following the auction, the victorious bidder—who still owns the watch but whose identity has never been revealed—agreed to display the Supercomplication at the Patek Philippe Museum in Geneva.

Recession-Proof Vintage Market

Historically, such timepieces were prized objects of status and luxury. Over time, ownership has shifted from royalty and aristocracy, to wealthy industrialists and businessmen, to serious collectors with deep pockets. More recently, newly minted moguls and speculative buyers have joined the ranks of horological collectors. While America remains a strong market, the top buyers' demographic has broadened to include Asia, the Middle East, and Russia.

A year ago, as the economic downturn took hold, the watch market—like the art market—suddenly cratered. Sales of luxury items like Swiss watches that can start at $1,000 and quickly move exponentially higher, began to slip. According to the Federation of the Swiss Watch Industry, although 2008 saw record sales of $16.7 billion, an increase of 6.7%, Swiss watch exports declined in the fourth quarter after 19 consecutive quarters of growth.