In order to provide some context, I need to go back to my early involvement with SCDA and the historic Mastro Auction of August 2004. This was the one that featured the Roger Maris jersey. This was the first time I had done “auction house work” and it was also the first time I saw the SCDA billing concept for auction work. At that time, SCDA would bill an auction house on “flat day rate” with travel and per diem expenses. The day rate at that time was somewhere between $1000-$1500. At first blush, this might seem like a lot of money for days work and it is if a day is all it took. The other thing to consider is that a 1/3rd of all revenues went back to the parent company, SCD. When you look at the number of items/lots SCDA did for this auction and then divide that number by the fee charged, it come out to around $11.00 per item. When you consider that the Roger Maris jersey the price realized for this item and assume a 15% fee from both the buyer and consigner, this jersey brought roughly $90,000 back to the house. Not a bad return for $11.00.
For the first year of MEARS, I advocated that auction house work no longer be done a “day rate” which remains the hobby norm outside of MEARS. My position was that it should be done on a percentage of the retail price, with consideration made for volume. In every case this meant that the cost of our services was going to be significantly higher, especially on the lower tier pieces. However, in most cases, an auction had a least one premium item that produced a significant return and offset for the fees charged. What we saw is that for these items, many potential bidders would not even consider the piece unless MEARS had done the evaluation. This is not a hollow self-serving remark without substance when you consider that Michael O’Keeffe of the NY Daily News conveyed to me that “Bushing and MEARS are the biggest authenticators in your business. It is difficult to sell a high-value piece without a letter from Mears. It is impossible to get top dollar without it. That is why you get so much attention from me and others.”
I have never begrudged any organization for keeping a focus on their “bottom line” as MEARS has been no different. For the first year, we poured the vast majority of our revenues back into the company in the form of reference material, labor, and the web site in order to improve the quality of our services. This proved over time to be the right decision, but it made the offering of price breaks to auction house companies based on volume untenable from a fiscal perspective. This had the effect of causing MEARS to lose volume business with auction houses choosing to only to have us evaluate those items that had potential for the higher prices realized. Once again, this was probably the most effective option for any number of auction houses looking to focus on their bottom line.
I apologize for taking so long to get to the point of this editorial, but I felt a certain amount of background was necessary to ensure this did not come across as a “sour grapes” piece about diminishing auction work. We now find ourselves where higher consignments fees are being charged. I have no problem with this until the justification being offered is that this is a function of auction houses having to absorbed higher authentication fees. With MEARS charging the highest fees in the industry, many have wanted to lay this problem for collectors and consigners at the feet of MEARS. Here is where I take issue with this issue. Consider these points:
The auction houses who have raised fees have forgone MEARS for less costly individuals and organizations who still operate under the “day rate system.” MEARS was still retained for any number of higher end items where the return on investment of evaluation fees was more certain.
The only auction house that has made a commitment to have all of their game used items evaluated by MEARS is Robert Edwards Auction. Yet in spite of the espoused forcing function of authentication fees driving consignment costs, REA has the lowest fees in the industry at 10%. REA President, Rob Lifson is a graduate of the Wharton Business School so I can only assume that his business model is designed to produce a profit.
As I stated earlier, I have no problem with what any auction house charges in order to remain profitable. Catalogs are expensive to produce, operating costs have to be factored in and they are entitled to make a profit based on the risk they assume in this form of commerce. What I find a bit disingenuous is the notion that the fees they are incurring for evaluation, driven largely by the MEARS pricing structure, is even a tangential root cause that must be absorbed by the consigner.
MEARS Auth, LLC
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