One Shining Moment

Welcome to the new-look Alts & Ends, your lively guide to collectible market happenings. In this edition, we examine the findings from an eventful year in the art market and explore the market for March Madness memorabilia.

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Graphic: Art Basel & UBS

Dust on the Trophy Shelves

In a few short weeks, college basketball’s top teams will cut down the nets, jubilantly basking in the glory of accomplishment as they receive their trophies. Celebration generally accompanies a trophy, as the stresses of striving to attain it fade into the background. However, while trophy assets carried the art market and other collectible categories through 2022, there was no net-cutting at the end. As far as we know, the crew over at Christie’s didn’t sport commemorative “Largest Single-Owner Sale in History” hats and t-shirts after selling the $1.6 billion Paul Allen Collection.

The celebratory confetti from those trophy asset sales could not mask the softening markets lying wounded underneath. This year's edition of The Art Market Report, released last week by Art Basel and UBS, describes a market in which the highest-end activity screeched to a halt, sending sales volumes plunging. The annual report is worthwhile reading for those interested in collectible markets, but if you lack the bandwidth to traverse 256 pages of insights, fear not - we've compiled the most notable takeaways. 

The report estimates that art market sales fell 4% in aggregate to $65 billion, just narrowly eclipsing the pre-pandemic level achieved in 2019. While that decline may appear modest, the underlying drivers of sales activity paint a bleaker picture. A 9% increase in sales volume in China supported the aggregate figure, as pent-up supply and demand fueled growth in the region after continued lockdowns in 2022. However, by the end of the year, China, like the rest of the world, experienced the challenges of a market facing economic uncertainty and dwindling confidence.

Overall sales volume in the United States was down 10%, with auction volume falling 23% year-over-year. The market acutely felt the absence of the Allen sale and other big-ticket collections, as the sales volume of works sold for over $10 million at auction fell an astonishing 40% from 2022. If 2022 was the year of trophy assets, then 2023 was the year of the participation medal, with big trophies withheld for fear of disappointment.

In the dealer market, dealers with annual turnover less than $500,000 saw sales increase 11%, while those with annual turnover greater than $10 million saw sales decline 7% on average. At auction, works that sold for less than $50,000 actually grew in sales volume by 3%, drawing a sharp contrast to the $10 million-plus segment.

The reversal in trend was perhaps due. The ultra-high-end of the market has led the post-pandemic recovery, and sales volume in the $10 million-plus segment is up 380% since 2009. Sales volume of works priced under $50,000 is up only 16% over the same period, and that figure quickly turns negative when accounting for inflation. 

Nonetheless, many dealers and auction houses experienced a broad humbling in 2023, evidenced by growing costs, longer sales cycles, and stiff competition. 40% of surveyed dealers reported less profitability in 2023 than in 2022, as the costs associated with attending pivotal fairs increased considerably without always paying commensurate dividends. Dealers also reported an increase in the size of discounts from 16% to 18%, and, at the highest end of the dealer market, the average inventory cycle extended from 12 months to 15 months.   

Rating their 2023 performance relative to their peers, only 43% of dealers thought they fared “very well” or “well," down from 50% the year prior. Asked for the same evaluation, just 20% of mid-tier auction houses reported that they performed "very well," down from 30% in 2022. Only 36% of surveyed houses expected that their sales would increase in 2024, down from 48% last year, a figure which they outperformed handily (59% ultimately reported an increase in sales). 

While 2023 was challenging, there is reason for optimism in 2024: only 6% of dealers and 5% of auction houses expected that their employment levels would decline. 

The report included findings from a mid-year survey of high-net-worth collectors. Despite fine art's reputation for insulation from economic uncertainty and inflation, the average allocation to art among HNW collectors fell to 19% from 24% a year prior. In this case, uncertainty and wavering consumer sentiment contributed to trepidation, triumphing over the perceived allure of real assets in such moments. Realistically, art is not (yet) an asset class that collectors add to tactically to optimize an allocation for economic circumstances. Moreover, the category is incrementally unlikely to gain allocation when liquidity is a priority.

As an aside, the report seemingly contested that conclusion as it pertains to China, with one feature suggesting liquidity concerns in Chinese real estate pushed money into art; we find the pent-up supply and demand explanation easier to digest.

Still, when wealthy collectors nurture a passion for art, the allocations can be sizable. UHNW collectors reported an allocation to art nearing 30% of their wealth on average. Those collectors aren't shy about using leverage to enhance their collections; they reported that, on average, they financed 39% of the value of their collections. Given the rising rate environment in 2023, the prevalence of art-based borrowing likely weighed on activity. 

One last tidbit on collectors: 42% of surveyed HNW collectors reported also purchasing luxury wine & spirits, 40% purchased collectible handbags, and 38% purchased collectible sneakers. All these categories are increasingly converging with fine art, for better or worse, and auction house strategies continue to emphasize this convergence. Some opinions of those interviewed for the report express concern about the resulting commodification of art, with it becoming just another luxury "thing" as the education component of collecting fades into the background. In our view, those concerns ring pretentious alarms, needlessly deflating the cultural value of the emerging categories in favor of art, which has always played host to pockets of the collecting community concerned principally with image.

Like those emerging categories, China is an area of prospective growth in the collecting community. Total art sales volume in the country increased by 9% year-over-year, bolstered by a 70% increase in auction volume in mainland China during the first six months of the year. Once the pent-up activity cleared, the region returned to a more challenged environment.

Artron estimated the bought-in rate (the percentage of works unsold) across Chinese auction houses was 61%, up from 52% the year prior. More jarringly, data from the Chinese Auctioneers Association suggested only 54% of the value of goods sold at Chinese auction houses was fully settled, meaning 46% of sales had not yet been fully paid for. That result actually represented improvement! While the Chinese market may represent significant opportunity, it's clear such opportunity won't materialize without growing pains, operational challenges, and regulatory friction. 

Economic uncertainty paused the exchange of trophy assets in 2023, but optimism springs eternal across the art market. Only 16% of dealers and 4% of mid-tier auction houses expect their sales to fall in 2024. After years of whipsaw action, stability might be a victory worthy of net-cutting and commemorative hats. We'll see just how prescient their projections prove to be this time next year.   

Memorabilia Madness

Rich traditions and thrilling games encapsulate the spirit of March Madness. 

In the three weeks between the opening round and Final Four, nearly $2 billion in TV/ad revenue will be generated, while more than 1 million people will attend at least one game of the men’s or women’s tournament in person.

Of course, we can’t talk March without talking about the money. The American Gaming Association estimates that 70 million brackets are completed each year with at least $2 billion waged on pools alone.

So, how does all this attention translate to prices within the college basketball collectible world?

To understand just how much the market for NCAA basketball memorabilia has appreciated, we need to turn back the clock to 2014. 

It’s the shot that spelled heartbreak for those in the Bluegrass State. In the 1992 Elite Eight, Grant Hill threw a football-style pass to teammate Christian Laettner, who proceeded to make a turnaround jump shot as time expired, giving the Duke Blue Devils a 104-103 win over the Kentucky Wildcats. Duke would go on to beat Michigan for the national title, securing the shot as arguably the most recognizable moment in March Madness history.

In 2014, the jersey worn by Laettner for “The Shot”, sold at Leland’s for $119,500.

At the time, that was the most expensive piece of college basketball memorabilia ever sold at auction and the second-most expensive basketball jersey ever sold.

Oh, how far we’ve come.

That college basketball record would stand for three years, until SCP actioned a game-worn Lew Alcindor jersey. Before he was winning NBA titles in Los Angeles as Kareem Abdul-Jabbar, Alcindor was leading the UCLA Bruins to three consecutive NCAA Championships and an 88-2 record during his time in college. The jersey, sold by SCP in 2017 for $137,849, came from Alcindor’s 1966-67 season, his first at UCLA, where he led the school during an undefeated campaign and a national title. 

The price of college basketball jerseys has continued to ascend. In 2018, Heritage Auctions sold a Purdue Boilermakers jersey worn by John Wooden, who happened to be Alcindor’s coach at UCLA, for $264,000. Then, three years later, the college basketball record was shattered in a single sale. At the height of the most recent collectibles boom, Heritage presented a photomatched jersey worn by Michael Jordan during his 1982-83 season at the University of North Carolina. The iconic “Carolina Blue” threads were matched to an image of Jordan that had graced the cover of The Sporting News. With the added provenance plus the tailwinds of The Last Dance, Heritage sold the Jordan jersey for $1.38 million to establish a new king of college collectibles.

From $119,500 to $1.38 million in less than a decade.

The market for college basketball collectibles is far more diverse than just jerseys. For example, the 1967-69 UCLA Bruins championship ring presented to Lew Alcindor sold for $156,000 in 2020. In 2021, in the same Heritage auction that delivered the million-dollar Jordan sale, a ticket stub from the 1982 NCAA Finals sold for $90,000. One year later, Heritage also sold a pair of Converse sneakers worn by Jordan during his time playing for the Tar Heels for $120,000.

Speaking of sneakers, there’s a pair from recent March Madness history that will hit the auction block in the coming weeks. Goldin announced that the sneakers worn by former Villanova Wildcat Kris Jenkins, who sank a three-pointer at the buzzer in the 2016 championship game, will sell as part of their upcoming Goldin 100. 

This year, it’s Caitlin Clark who is making headlines not only on the court, but also within the sports collectibles market. Clark, who recently signed an exclusive partnership with Panini, will enter the women’s tournament as the NCAA’s all-time leading scorer. In January, PWCC sold a Caitlin Clark 1/1 Superfractor for $78,000, the most paid for a women’s sports card since June 2022.

This historic season has already produced one collectible grail: The jersey worn by Clark when she set the NCAA scoring record. While the current whereabouts of the jersey, and whether or not it will ever appear at auction, remain a mystery, the record-breaking threads would appraise for low six-figures and likely establish a new high for any game-worn women’s sports memorabilia.

After each of the 70 million brackets have been filled out and we turn our undivided attention to the hardwood, we can only wonder if one shining moment in the 2024 edition of March Madness might yield the next million-dollar college basketball collectible.

Results Round-Up

• Oppenheimer cleaned up at the Oscars, and a piece of memorabilia just drew auction acclaim of its own. A 1945 report on the development of the atomic bomb, signed by 24 Manhattan Project contributors including Oppenheimer himself, sold for $53,594 at RR Auction.

• Lelands sold Roberto Clemente’s jersey from the 1960 season for $256,714, while a Ted Williams jersey from his 1942 Triple Crown season sold for $191,563.

• Also at Lelands, a 1997 Metal Universe PMG Michael Jordan card, graded PSA 8, sold for $232,847. The last time a like-graded example sold was in December of 2020 when one sold for $133,480.80.

• The top sale from the last two days of Propstore’s Los Angeles event was Emilia Clarke’s elf costume with lights from Last Christmas, which sold for $23,750 against an estimate range of $1,000 - $2,000. Huh. Can’t say we saw that one coming.

• Christie’s sold Hokusai’s Thirty-six views of Mount Fuji for $3,559,000, hammering below a $3,000,000 low estimate. However, a single Great Wave print sold for $693,000 against an estimate range of $150,000 - $200,000.

There aren’t many collectibles selling for more than they did in May of 2022. Surely, there are exceptions to the rule, and Detective Comics #27, graded CGC 6.5, is one of them. Batman’s first appearance sold at Goldin two years ago for $1,760,000, a superheroic result that was only confirmed by a lower-graded CGC 6.0 achieving the same price in April of 2023.

Owing to the rarity of the issue and the grade, it seems the reappearance of this copy at auction so soon after its last sale didn't deter bidders. It sold at ComicConnect last night for $1,825,088, eking out a 4% gain. While the appreciation is slim, it’s demonstrative of the continued demand for trophy comic book assets. That demand is further underscored by the already record-setting Action Comics #1 at Heritage, which has crossed $5 million with 15 days remaining.

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Also on the slate:

• Closing 3/20 - Sotheby’s Prints & Multiples

• Closing 3/20 - 3/22 - ComicConnect Event Auction #57

• Closing 3/21 - PWCC March Premier Auction

• Closing 3/21 - aShareEx Contemporary Artists - Series 1

• Closing 3/24 - REA March 2024 Encore

• Closing 3/24 - LCG 2024 Spring Premier Auction

• Closing 3/26 - Sotheby’s Important Sneakers and Modern Collectibles

• Closing 3/26 - Sotheby’s Handbags & Accessories

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