As the downturn saps fans' buying power, Mastro Auctions will start selling art and antiques
On a sweltering night last August, more than 300 sports fans packed the House of Blues in Cleveland—partly to party, but mainly to bid on 83 pieces of sports history offered at Mastro Auctions' first live sale. The opening item, a nearly complete set of Pirate Cigarettes baseball cards from 1912, sold for $960,000, an all-time high for such a collection. Douglas Allen, Mastro's president and COO, was pleased but not surprised. After all, the company had been breaking price records on sports memorabilia through online auctions pretty much since it began.
The trick for Mastro will be to keep generating ever-higher sales figures even as the economy's downturn saps many collectors' buying power. A second live auction—this year's will be held in August at Chicago's ESPN Zone restaurant—could be one way. Mastro is also expanding into several non?sports markets: Americana, fine arts, and comics. Former Sotheby's (BID) auctioneer Nicholas Dawes, who conducts Mastro's live auctions, has added antiques, such as Lalique glass, to the auction house's portfolio.
Demand for sports items has been softening for the past couple of years, and that's likely to worsen now. "People are more picky with the stuff they buy in recessions," notes Chairman and Chief Executive William Mastro. But vintage goods, which account for roughly a 10th of the $1 billion sports memorabilia market, are holding their value. And the Mastro auction house, owned by private investment firm SilkRoad Equity, should get a pop when Sotheby's scales back its New York-based collectibles unit this year, after concluding it was too small to maintain.
Mastro, a baseball-card expert who got into collectibles in the early 1970s, founded the business in 1996. His Burr Ridge (Ill.) company, which bills itself as the largest auction house in sports memorabilia, had done just fine selling rarities through Web auctions. Among Mastro's high-interest sales: a Honus Wagner baseball card at $1.27 million, the bat Babe Ruth used to hit his first professional home run at $1.27 million, and a Ruth uniform at $1 million.
But Allen decided to get into live auctions in 2006, after a smaller competitor, Exton (Pa.)-based Hunt Auctions, got the rights to 600 items belonging to baseball's Joe DiMaggio. Hunt's live auction in New York raised $5 million over two days. "Mastro is constantly evolving," says Mastro, 55. Indeed, nonsports items accounted for 20% of Mastro's $45 million in 2007 revenue.
To drum up interest among deep-pocketed collectors—lawyers, doctors, retired athletes, and entertainers—Mastro spends $500,000 a year on marketing. The 40-person company employs an in-house designer and two full-time photographers to produce high-quality listings of its offerings. "Mastro's catalogs and books have transformed the hobby into an investment by telling people what's valuable and the stories behind the memorabilia," says John Cohen, president of Memory Lane, a Tustin (Calif.)-based baseball-card auctioneer. Mastro's 18,000 sq. ft. showroom/warehouse is another lure: It is filled with artifacts from President Theodore Roosevelt's autographs to Babe Ruth's family photos.
The company takes pains to authenticate its goods. But its auctions, says Mastro, should be nothing but fun. The company's largest individual customer, Marshall Fogel, agrees. Fogel, an attorney whose collection of baseball memorabilia has been exhibited in the Denver Art Museum, compares last summer's live auction to "a Rolling Stones concert." Like many concertgoers, Fogel brought home a souvenir from his night at the House of Blues: a $25,200 Lou Gehrig rookie card.