Goldin Auctions took its first irrevocable bid Tuesday, sources said, which caused a jump in bidding for a Kobe Bryant game-worn jersey from $435,000 to $1.22 million.
It’s a sign of the times for the maturing collectibles market.
An irrevocable bid guarantees the consignor a certain amount, which gives the consignor confidence to bring the item to auction.
The auction house also benefits because it guarantees there won’t be embarrassment on marquee items.
As for the irrevocable bidder, he or she guarantees that should his or her bid be the only bid that they will pay for the item.
However, if the item gets more bids, and the bidder doesn’t bid more, he or she will get a piece of the upside. This usually manifests itself by taking a 15 to 25 percent of the delta between the irrevocable bid and the final price before buyer’s premium.
Sources confirmed to cllct that the auction house took an irrevocable bid for the first time in the company’s 12-year history. The game-worn jersey is from the April 2013 game when Bryant tore his Achilles, but sank two free throws before leaving the court.
Founder Ken Goldin publicly declined comment, citing confidentiality.
Sources said the actual irrevocable bid on the jersey was $1 million, with $220,000 in buyer’s premium.
If the irrevocable bidder in the auction doesn’t bid again, and for example, the jersey goes for $3.3 million, before the 20 percent buyer’s premium ($660,000) — the irrevocable bidder will come away with 15 to 25 percent of the $2.3 million difference ($345,000 to $575,000).
Sotheby’s is most known for this practice. In 2008, as auction houses tired of financing their own guarantees, they came up with the irrevocable bid as a way to farm it out to a third party.
In November 2008, an irrevocable bidder guaranteed he or she would bid $60 million for Kazimir Malevich’s Suprematist Composition, 1916. It was the only bid, and the painting sold to the bidder, who took home the work.
Sources said many of Sotheby’s recent high-profile sports items, including the Kobe “jersey pop” jersey that sold for $5.8 million last year, the Maradona Hand of God jersey that sold for $9.2 million and the Michael Jordan 1998 NBA Finals Game 1 jersey, which sold for $10.1 million in Sept. 22, had irrevocable bidders. In some cases, irrevocable bidders can make more than $1 million without putting down $1.
Sotheby’s is known to have a stable of wealthy bidders who make it their business to make irrevocable bids.
In a way, it’s a new form of gambling on the rise of memorabilia as an alternative asset.
Darren Rovell is the founder of cllct.com and one of the country's leading reporters on the collectible market. He previously worked for ESPN, CNBC and The Action Network.