$5.7 million in one week

Three Nights of Game-Worn

Total Sales: $5,677,157.

Not a bad week for the game-worn memorabilia market.

If you exclude the Dynasty Collection, which sold for $8 million, the cumulative total for the next 25 most-expensive pieces of sports memorabilia sold in Q1 was under $5.2 million.

Sotheby’s just sold that...and then another $500K worth of sports memorabilia... in three days.

Last week, between April 10^th – 12^th, Sotheby’s closed four different sports and sneaker-centric auctions that each accumulated at least $750,000 in total sales with the most lucrative event realizing $2.5 million. While we’ve tracked single sports auctions that realized more in total sales, the important caveat here is that not a single sports card was included in any of the events.

Speaking of game-worn and game-used, now would be a good time to plug our 1Q24 Sports Collectibles Market Report – where you can find facts and figures relevant to the world of sports memorabilia across all major sports and auction houses.

The first quarter of 2024 saw a decline in high-end value across memorabilia as the total handle for the top 25 sales closed just above $13 million, down from $16.7 million in 2023. There was a single million-dollar sale in 1Q24, the Dynasty Collection, which is down from three in 1Q23. In addition to declines within the seven-figure side of the market, there were 25 different pieces of sports memorabilia which sold between $100K - $750K in Q1 last year, compared to only 17 in the first three months of 2024. 

The combined total of the top 25 game-worn/used sales in 1Q24 was actually the lowest that we’ve tracked since the fourth quarter of 2022. In 4Q22, there were four seven-figure sales but no multi-million-dollar result which led to a top 25 sum of $10.3 million while the next four quarters all saw totals of at least $15 million. But with the huge assortment of memorabilia on offer last week, it was clear that some of Q1’s weakness was simply Q2’s gain.

Despite the impressive numbers during last week’s sales, there were plenty of missed estimates and reserve shortcomings to raise a question or two about 1) the accuracy of sports memorabilia pre-sale estimates, and 2) how much oversaturation risk there might be for a market seeing a surge in volume.

During the auction titled ZENITH: Sports Artifacts, the most expensive lot was Michael Jordan’s Stefanel Trieste “Shattered Backboard” jersey which sold for $571,500 but hammered below its estimate of $500,000 - $700,000. With pre-sale estimates being used more frequently in sports memorabilia, it’s important to note that, just as in the art world, estimates are based on the hammer price, not the price with buyer’s premium.

At ZENITH, two other lots had estimates of at least $500,000. One, a 1995-96 Wayne Gretzky St. Louis Blues jersey, went unsold while the other, a 1970 Ernie Banks jersey, sold for $406,400. There was diversity across sports represented, as a pair of rackets, one used by Novak Djokovic during the 2015 US Open and the other used by Rafael Nadal in the 2018 French Open and Wimbledon Semifinals, sold for $53,340 and $33,020 respectively.

The second seven-figure sports memorabilia sale of 2024 came by way of a 2009 Kobe Bryant NBA Finals jersey which tallied $1.75 million after fees against a pre-sale estimate between $1.5 million - $2.5 million. The argument could be made that certain lots underperformed last week, but in the case of the Kobe jersey, the estimate might’ve been a little too ambitious. It was only last month at Goldin when the jersey worn by Kobe in Game 3 of those 2009 NBA Finals for sold for $915,000.

We’d be remiss if we ignored the sneaker sales, which featured 50 pairs of sneakers that realized a combined total of $750,189. Although multiple lots went unsold, the event was led by an iconic pair of Air Jordan XIs worn by the man himself during the 1996 NBA Finals. The sneakers had previously sold in 2015 for $34,160 but closed for $482,600, good for a 14x multiple in less than a decade.

As with any market, there were ups and downs last week at Sotheby’s, but the volume was unprecedented for sports memorabilia. Considering we tracked 19 total sales above $100K over the 91 days in Q1, it’s fair to say that ten six and seven-figure sales in three days is nothing to ignore.

The Paint is Dry, But the Work is Liquid

The gears of the art market machine, famous for churning out multi-billion-dollar auction seasons and hordes of eight-figure works, have slowed over the last eighteen months. So, what do you do when things aren’t moving as smoothly as they once did? You reach for the WD-40 and start spraying, of course! Grease those skids!

In the art market's case, though, the fix-all solution isn’t as reliable and harmless as WD-40 (fumes aside). The solution we’re referring to is financial leverage. As the art market slows, its leading auction houses are getting creative with lending to keep the wheels of liquidity turning.

Lending against works of art is not a new concept. Auction houses, banks, and specialty lenders alike have been at it for decades, turning the treasured works of their wealthy clientele into valuable sources of additional liquidity. Collectors can use that liquidity to purchase more works or reinvest elsewhere. Hanging a Warhol on your wall is great, but isn’t it even better if you can borrow against it to create more wealth to buy more Warhols?

A 2023 survey of high-net-worth collectors by Arts Economics revealed the prevalence of borrowing in the art world. 43% of HNW collectors reported that they used credit to finance art purchases at some point. UHNW collectors who borrow reported that 39% of their collections were financed through credit. The point is: fine art and leverage go together like peanut butter and banana - they’re not always used collaboratively, but the combination is far from out of the norm, and those that like it really like it.

Though the art loans themselves aren't new, their repackaging as an investment product is a relatively nascent venture. In recent years, Yieldstreet and Athena Art Finance have partnered to introduce the concept of art loans as investment offerings to larger masses of accredited investors. Yieldstreet reports four of those funds have been fully repaid to the tune of nearly $48 million in principal and interest, each generating an internal rate of return (an annualized figure) higher than 10%. However, securitization of art loans is now mainstream financial news, as Sotheby’s seeks to borrow $500 million over a term of three years, offering securities backed by the loans it makes to collectors.

A presale report from Canadian ratings agency DBRS shows that the top five collectors (or borrowers) account for approximately 43% of the loan portfolio, which is approximately the same proportion of the portfolio backed by Contemporary art. In order, Rembrandt, Warhol, Picasso, Basquiat, and Kahlo are the top artists by volume of receivables, meaning their works supply the greatest amount of collateral in the portfolio; each one accounts for more than $100,000,000.

A successful offering would provide a financially engineered Sotheby’s with considerable newfound liquidity, and more liquidity for Sotheby’s likely means more liquidity for collectors. Moreover, it would further cement art’s status as a financial asset and an emerging cog in the financial system.

At the collector level, Christie’s is also ensuring greater ease of transaction through lending. Art Money, a company Christie’s Ventures invested in last year, will partner with the house to offer “interest-free” loans, repayable in up to ten installments. We place “interest-free” in quotes because Art Money instead charges a flat fee of up to 10% of the purchase price. So, a $100,000 artwork purchase financed with Art Money may ultimately require $110,000 in payments. In other words, it’s buy-now-pay-later for the auction world.

On the one hand, it’s another tool that can potentially release the jammed gears of a liquidity squeeze, preventing a long-pursued item from eluding a willing but temporarily incapable buyer. On the other hand, are any of these items the type that must be purchased even when a buyer is unable to buy them? They’re generally objects of desire, not of requirement. But when there’s liquidity to be had, borrowers will take advantage of it, even if it only means reducing the psychological burden of a $100,000 purchase into ten $11,000 chunks.

Lending became a more oft-used tool across a variety of categories during and after the early 2020s collectibles boom. It wasn’t just art anymore, though. This time, it was the likes of trading cards and comic books. Rumors suggested PWCC’s acquisition by Fanatics materialized in part from a liquidity crunch caused by PWCC’s lending program, in which many cards staked as collateral plummeted in value, perhaps encouraging defaults. PWCC was not alone in its lending pursuits, though; for example, Alt similarly lends against cards held in its vault.

The interest rate environment has changed dramatically in recent years, though, and borrowing is no longer as tempting a proposition as it was in a near-zero rate environment. But that same economic shift has also coincided with slowing collectible markets, and so long as lending can grease the gears to keep them moving smoothly, it will be tapped to do so. Like WD-40, only with a penchant for occasionally making the problem worse once it dries.

While risk in the Sotheby's loan book ultimately lies in the borrowers' ability to repay, financial markets will still soon consider the risk-reward proposition offered by art as collateral. Their conclusion could shape the future of collectible lending.  

With the exception of a few bright spots, 2023 was a challenging year in the sports collectibles market. Did the first quarter of 2024 offer more of the same, or is a reversal in fortunes underway? If there aren’t signs of a turning tide...perhaps at least there are calmer seas.

Is the mix-shift towards vintage and away from modern at the high end of the market complete, or is it still ongoing? Is game-worn faltering under the weight of massive expectations? All will be answered.

Inside, you'll find:

• A detailed analysis of auction activity and the types of assets selling best

• Card market performance and commentary, with subcategory nuance thoroughly explained

• An update on the headline-making game-worn memorabilia market

• Fascinating and relevant market trends in each sport

• Records, grading population updates, ticket market analysis, digital collectible details, and much more!

• NEW this quarter: an analysis of the emerging Type I photograph market

Whether you work in the industry, collect assets, or invest, the information needed to keep your finger on the pulse of the sports collectibles market is here, captured and made digestible.

Click the link below to receive your free copy of the report today!