Sotheby's June 2, 2019 "Masterworks of Time" Auction

Discussion in 'European & Other Pocket Watches' started by Ethan Lipsig, Jul 2, 2019.

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  1. Ethan Lipsig

    Ethan Lipsig Registered User
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    #1 Ethan Lipsig, Jul 2, 2019
    Last edited: Jul 2, 2019
    If you haven't reviewed the offerings in this just-concluded auction, you probably should. Almost every watch offered for sale was very interesting (as probably almost every clock offering was too, but I don't collect clocks). https://www.sothebys.com/en/auctions/2019/masterworks-of-time-l19077.html

    The lots generally were offered in chronological order, earliest first. The 143 lots sold for an average of 44,056 pounds each (not including the 25% buyer's premium), although the first two lots described below brought in 2/3ds of the total sales amount. Many lots went unsold.

    Among the most expensive pocket watch lots were:
    • Lot 143, which sold for an astounding 3,615,000 pounds, plus buyer's premium. This was a circa 1982 George Daniels, gold double wheel escapement watch, with mean solar and sidereal time, annual calendar, age and phase of the moon, and equation of time
    • Lot 67, a circa 1778 gold and enamel George Margetts pair case cylinder with a tidal dial, annual calendar, and astronomical indications, which sold for 615,000 pounds, plus buyer's premium
    • Lot 132, a circa 1903 gold S. Smith grande and petite sonnerie, trip minute repeater with perpetual calendar and rattrapante, which sold for 218,750 pounds, plus buyer's premium
    I only bid on one item, Lot 141, a V&C "chronoscope," but I was significantly outbid. It went for 11,000 pounds plus buyer's premium.

    I would appreciate your views on any of the watches offered for sale, the prices any fetched, and the watches that failed to sell.
     
  2. PatH

    PatH National Program Chair
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    Thanks for sharing the link, Ethan. Amazing clock and watch offerings, not to mention the watch keys and chatelaines. The technology and craftsmanship of each piece in the sale is almost inconceivable.
     
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  3. musicguy

    musicguy Moderator
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    I scanned through the auction listings and as PatH said above there were some
    spectacular watches and clocks for sale!

    Some sold for more than I would expect and some for much less.
    Also it's interesting that 22 didn't sell.

    Thanks for sharing this Ethan.


    Rob
     
  4. Keith R...

    Keith R... Registered User
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    Margett's chronometer 1797 was a bargain!!!

    Nice watches Ethan.

    Keith R...
     
  5. Ethan Lipsig

    Ethan Lipsig Registered User
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    The George Daniels watch sold in the Sotheby's auction apparently was the most complicated pocket watch he ever made. He called it the Space Traveller. – The Space Traveller
     
  6. novicetimekeeper

    novicetimekeeper Registered User

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    I know, and know of, some of the clock buyers there, but no watch people.
     
  7. Allan C. Purcell

    Allan C. Purcell Registered User
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    I know, and know of, some people there who buy both.
     
  8. novicetimekeeper

    novicetimekeeper Registered User

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    I'd expect nothing else, but I'm hoping one will make an appearance on the forum. The others I should get to see at least. I would have liked the time to go to the Bonham's sale, apparently the King's clock was there as well as the Queen's clock, but not in the auction.
     
  9. Ethan Lipsig

    Ethan Lipsig Registered User
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    I am looking forward to the three remaining auctions in this Sotheby's series of auctions. The catalog for the June 2 auction said "Sotheby's has the honour and privilege to present the first of the four-part series The Masterworks of Time."
     
  10. Dr. Jon

    Dr. Jon Registered User
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    A very interesting sale with equally interesting fine print.

    Buyer's premium is 25% up to 300K pounds, 20% up to 3million and 13.9% above that. That means that when an item goes over 3M it is potentially possible that a few bids actually reduce what the buyer pays. For example a 2.9 million the premium is 20% so the total price is 3.48M while a bid at 3.05 million obligate the buyer to 3.47M. If the increment is 100K that bid raises what the buyer pay by only about 5K. so I doubt the auctioneer is going to take a 50K increment on 3M Also there is a sliding scale of royalty fees paid to the artist or their estate so the Daniels watch probably had an added 0.5% tacked on for that (or 12,500 max).

    The terms and conditions also allow the auctioneer to place bids on behalf of the seller (i.e. fake bids ) up to the the reserve. It also mentioned irrevocable bids which may be placed by third parties who may received compensation by Sotheby's. Perhaps someone can explain that.

    I see the the 1970 vintage 8 day Mercer chronometer got a very high price.
     
  11. Ethan Lipsig

    Ethan Lipsig Registered User
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    Jon, are you sure that the BP isn't 25% on the first 300k pounds of hammer price, 20% on the next 2.7 million pounds, and 13.9% on the hammer price in excess of 3 million pounds? Imposing the BP in the way you described would make no sense,
     
  12. Dr. Jon

    Dr. Jon Registered User
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    You may be correct but when I ran the math with likely bids the house share still grows unless they take very small percentage increments and I think the publicity associated with getting over 3M may be worth more than the slight loss. To date I have yet to bid that high and get an invoice.
     
  13. MartyR

    MartyR Moderator
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    Cheapskate :excited:
     
  14. zedric

    zedric Registered User

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    Why not take one for the team and find out?
     
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  15. Dr. Jon

    Dr. Jon Registered User
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    Ethan is correct and the Premium works like income tax. For a UK or Eu buyer the Premium would be very near to 700,000 which includes 20% VAT which is charged on the premium only. The total premium with VAT works out to 19.4% If exported outside the UK and or EU the VAT part of the Premium is refundable or $140,000. A VAT payer would thu s have paid 4.3million pounds. Export takes 140K from this. This is a good example of how the VAt is a very regressive tax. On a 4.2 million pound luxury item the tax take is 140K or about 3.3%.

    This does not mean that the sale was a tax non event.

    Unless the buyer is a non profit, he or she had to take about 4.2 million pounds as after tax income which is going to be taxed at something North of 15% if US capital gains or more if in the EU or UK something like 30% If an American buyer the US goernment got at least 15% of the total. That is, the US buyer had to take an extra 15% out or about 600K pounds. The seller has to pay a gains tax on the item which last sold for well under one million. Depending on where they live it could be at least 25% (US arts appreciation rate) of their profit which is at least 2.5 million or another 625K pounds. While the VAT is smal,l various governments collected something like 1.2 million pounds which is probably why they are willing to settle for such a small VAT. Now if the buyer and sellers are non profits this may be a lot different and if the buyer is a head of state he probably paid no tax on the funds used for the purchase.

    To further explore this I'll set up a go fund me page and we can all do this together.
     
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  16. novicetimekeeper

    novicetimekeeper Registered User

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    The seller could be an executor, in which case there is no capital gains (but there is estate tax), or a beneficiary, in which case there is no capital gains once probate is granted the value is settled (this is assuming in the UK). As you say an EU purchaser would pay VAT on the premium. I'm not sure it is helpful to consider what the buyer paid in tax on amassing the funds to buy the lot, there are far too many variables and unknown situations.
     
  17. Dr. Jon

    Dr. Jon Registered User
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    What do you mean "helpful?".

    I estimate the implicit tax on what I buy because I buy for myself and buy with the last money I earn, so I treat it is taxed at the highest rate.

    I have such funds in various accounts and now that i am retired most is in accounts where tax accrues only on withdrawal. I believe it very likely that most collectors treat assets that way and have to pay tax when they convert to pay for such an item. More detail on this might be another thread. 4+ million pounds is likely more than even very wealthy people keep liquid. Whether you buy with employment or investment income most of us pay tax on this. Those with assets who take income only as needed, pay the least taxes and that is what I tried to estimate,

    Now, as to an executor., the tax the estate pays depends on national and local law to determine where estate tax starts. In the US the first 11 million or so is exempt so the estate may not pay the gain but those who get the income probably do owe tax. The US has no federal inheritance tax but many states do, with rates as high as 18%. In teh US even low tax states like to tax "unearned" income.

    The essential fact is that despite very low VAT collection, high end auction houses are highly desired in financial centers, suggesting that one way or another they produce high taxes for the local and national governments.
     
  18. jboger

    jboger Registered User

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    May I back up and respond to an earlier comment about "fake bids"? I am aware that many of the major auction houses practice this, but I find it a morally and ethically challenged practice. I know the pros and cons. For example, one might argue it is an act of free will on the part of the bidder if she raises her paddle wether she is bidding against a real person or not. Supposedly she has set her limit, and if she exceeds the hidden reserve,fine; if not, so be it. But why the need for a hidden reserve at all? it creates an illusion of demand that is not real. That may be good for business, but these auction houses are not known for their business ethics, for example, I think it was Sotheby's that smuggled a Renaissance painting out of Italy because the London market would bring a better price. Well, I guess all this does not really affect me. People who bid in this bracket have resources above my pay grade. In the words of Bob Dylan, money doesn't talk, it swears.
     
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  19. Dr. Jon

    Dr. Jon Registered User
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    I have known about this and know of a few instances in which it has bitten the house, but I was astonished to see it specifically called out a practice in the terms and conditions. I too dislike the misleading aspect although there is some benefit to me of having very wealthy but not too careful people get skiinned.
     
  20. novicetimekeeper

    novicetimekeeper Registered User

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    When I watch auctions on line where I have left a commission bid I sometimes win even though the hammer price would suggest I was the underbidder. I have always assumed the bid above mine was the auctioneer, and nobody took the bait.
     
  21. MartyR

    MartyR Moderator
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    You may be right, but that would be strictly illegal, unless your commission bid was below the reserve, but it was the highest bid made, and the auctioneer approached the seller after the auction and asked if he would accept a bid below reserve, and the seller agreed.
     
  22. novicetimekeeper

    novicetimekeeper Registered User

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    Never been enough time for anybody to ask. It may have been below the reserve with auctioneer's discretion though.
     
  23. rmarkowitz1_cee4a1

    rmarkowitz1_cee4a1 Registered User
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    What wonderful objects!

    Just have to comment on your first listed item, lot 143, the George Daniels "Space Traveller" watch. Apparently Mr. Daniels was fascinated by astronauts and space travel. I can't help but thinking that this was an auspicious year to sell that watch as July 16 is the 50th anniversary of the first human, Astronaut Neil Armstrong, setting foot on the Moon. Let's not forget # 2, Edwin "Buzz" Aldrin. And yes, I can remember being glued to the TV to see it live.

    RM
     

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