Iconic Watches: The Gauge Of The Market
I received a message a few days ago from our friendly watch collector, The Watch Whisperer. The message about an auction that took place on December 12, 2020, in New York. He noted that there were a few particularly interesting iconic watches. But also of particular note was the auction as a whole. It was most striking because of the prices that most of the watches sold for.
This auction was titled “Racing Pulse” as it featured two iconic watches. One was worn by Steve McQueen and the other by Paul Newman. But more on those later. Let’s start at the beginning and have a look at the auction from the beginning. And then we’ll make a few observations of the results.
The Catalog, A Joy For Every Watch Enthusiast
As with every watch auction, the catalog is a masterfully produced document. It’s something that I really enjoyed leafing through (virtually), especially for the trends of what is valued. If you are interested in it, check it out HERE (includes iconic watches). Breaking down the sections a little bit, there were a total of 31 different watchmakers represented in the auction. The most well-represented being Patek Philippe with 43 auction lots and Rolex with 32 auction lots. There were a total of 137 auction lots, so these two makers accounted for over half of all the auction lots. But it was not the prominence of these two brands that caught the eye of our favorite watch collector. Most surprising was the prices at which the vast majority of the watches in the auction were sold.
I did a quick analysis of the prices at which the Rolex watches were sold. This was only to simplify the analysis for me! The numbers are quite striking. Of the 32 lots, only one did not meet its reserve. When this is excluded, the rest of the watches sold for 169% of their high estimated catalog price. Two watches were of particular interest. Lot 63 sold for 567% of its high estimate, and Lot 38 sold for 548% of its valuation. It’s worth spending some time looking into these two watches to understand what is going on.
Iconic Watch? Not An Iconic Description!
Lot 63 was indicated as, “A fine and attractive stainless steel chronograph wristwatch with red strap, bracelet, guarantee, original invoice, presentation box and signed letter, donated by Kevin O’Leary to benefit the missions of One Drop and the Prince Albert II of Monaco Foundation.” The description of the watch does not really excite me. In fact, Philipps had put an estimate on this watch of between US$8,000 and US$12,000. From this estimate, they clearly did not expect too much from this piece. Yet on a percentage basis, it was the best performing watch in the whole auction. We use the multiple of the auction hammer price to the high estimate placed on it by the auction house as the key metric.
The key aspect to note is that this watch was the personal watch of Kevin O’Leary, the Mr. Wonderful of Shark Tank Fame. In fact, this watch was named in the auction as “Mr. Wonderful`s Shark Tank Red Band Rolex Daytona.” We can only assume that what helped to inflate the price was this personal endorsement. Other considerations include the personal letter from the shark himself and the fact that the proceeds were going to charity.
Iconic: having the characteristics of an icon
Lot 38 was at a completely different price range in the catalog. Philipps indicated the guide price of this Rolex Cosmograph Daytona “Big Red” as, “In excess of US$1,000,000.” Again, this appears to be because of the original owner. Paul Newman was gifted this watch by his wife, Joanne. It features the injunction “Drive slowly. Joanne” engraved on the case back. It sold for US$5,475,000 and came with a letter from Paul Newman’s youngest daughter Clea Newman. As a comparison, a similar Rolex 6263 Daytona without film star pedigree can be purchased for approximately US$80,000. That is quite a premium for the historical piece. Keep in mind, though, that Paul Newman’s other Daytona sold for US$17.8m in 2017. This is not so surprising, but perhaps we are beginning to see a trend developing here.
The Unsuspecting Icon
The final auction piece that was pointed out by TWW was Lot 20. This was a Heuer Monaco 1133B gifted to mechanic Haig Alltounian by Steve McQueen. It was a gift of appreciation for looking after McQueen’s race car during the filming of Le Mans. If you have been reading any of the interviews that we’ve conducted with The Watch Whisperer, you will understand something. He especially likes chronograph watches that are linked to sports, and in particular motor racing. This particular auction lot ticks all the boxes on that front.
Let’s start with the watch itself. Our own Daniel Blunschi made us aware of the fact that the early ’70s was tumultuous for the Swiss watch industry. Rocked by the rise of the quartz watch and relentless competition from Japanese watch manufacturers the Swiss watch industry was looking for a way back. The challenge was on, and Swiss manufacturers needed to revive declining sales. Watchmakers needed to be creative. And the release of the Heuer Monaco was an indication of what was to come.
Two Icons Collide?
Technically advanced, it was one of the world’s first automatic chronograph wristwatches featuring Heuer’s iconic Caliber11 movement. If that was not enough, it was also the world’s first water-resistant watch with a square case. For these reasons, the Monaco 1133 is a particular favorite amongst chronograph aficionados today. There are excellent examples to regularly sell for prices over US$15,000.
It is hard to imagine today, but this watch was basically a failure when it was launched. There is only one reason it ended up being used in the Le Mans movie. And thus, there’s only one reason it was worn by Steve McQueen, hence how it became an icon. That reason was simply its lack of initial sales. Jack Heuer was asked to send a few watches to Le Mans to be worn by the actors and drivers. The reason he sent more Monaco’s than anything else was simply because they were not selling. There was an excess of them in stock. And the more popular, more traditional round chronographs like the Autavia were in short supply at the time.
It is All In The Story
There is a fact that has been stressed time and time again by TWW. In the watch collecting world, and with any collectible asset, it is not always the best design that is pursued. Nor are the most popular or perfectly executed selections that become the most sought after. Often it’s the rarities. Many are rare because they were not popular at the time. Or, as we often see in the vintage Rolex world, rare watches are those that were technically faulty. Some of the most sought-after Rolex’s are those with “tropical” or color change dials. This was a fault in the manufacturing process that resulted in poor durability and was later rectified. At the time, many of these watches would have been fixed under warranty with new dials fitted. As a result, these are worth a fraction of the price of the originals that now display their distinctive patina.
The Monaco, now one of Tag Heuers best-selling watches, was not faulty as such. However, it was just not attractive to the traditional watch buyer. Nor was it modern or advanced enough for those looking for the next thing. They were more interested in the “cool” square-cased digital watches instead.
An Iconic Film Star Make An Iconic Watch?
But this one is special. It’s one of only six that was used in the movie and one of the few with unquestionable provenance. It is its history and star quality that trumps everything else when it comes to pricing. We have seen many times in the past that these quirky, avant-garde pieces having been sought after in their own right. Yet, when you combine the power of a Hollywood movie star, his association with the most famous motor race company, and a cool vintage piece, you really have the perfect storm for valuation. The result of this storm can clearly be seen when the hammer falls.
What Should We Understand?
What are we to make of this auction? First of all, it seems like classic watches are very well bid across the board. All the watches that sold collected a 69% premium to the auction house’s high estimate. There is a more important point to understand. It is the story behind each watch that is the real driver of value for watch collectors. This is a point that TWW has reinforced in his interviews. Understanding the story behind each iconic watch is very important, and, as always, there are a few “golden rules”…
Above all, buy what you love, even if you are in the minority. Also, for any serious investor, provenance is everything. Additionally, the condition of the item must be considered. The point is, rarity alone is not a reliable indication of future value.
The Future of Iconic Watches?
In the current economic environment, it is clear that those with money to spend are continuing to look for alternative places to store their wealth. Prices of watches, cars, art, and property continue to be very well supported. Perhaps an overriding lack of confidence in stock markets, currencies, global economies, and governments is behind this. For the moment, it certainly is a trend that TWW does not expect to reverse anytime soon.
The three examples that I have highlighted here may seem to be exceptional. However, for collectors, these are the added aspects that enhance value — sometimes to the extreme. It is the characters that matter. A watch owned by a film star sold for over five times the reserve price. And it was over 150 times the cost of a mechanically equivalent piece. An iconic watch used by a film star and gifted to someone he appreciated sold for 150 times an equivalent piece. A reality show host mega-star can sell a watch for five times its intrinsic value. It’s all about the story.
And what’s the takeaway? The story is everything, especially when the auction room is filled with watches.