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Breathtaking Phillips Auction Of The Tiffany & Co Double-Signed Patek Philippe Nautilus Ref. 5711 / 1A-018: Some deep thoughts and wider implications, plus an auction video


Confession: I’ve come to a point in my watchmaking journey where every time I read an auction catalog of Phillips watches, a Britney Spears song starts playing – on repeat – in my mind. It would be fairer to say that I hear a riff on one of his songs and he says “Oops, they did it again! However, the events surrounding Phillips watch auctions are certainly not accidental, so forget the “oops.”

Time and time again, Phillips’ senior consultants Aurel Bacs and Livia Russo, alongside their global team, manage to select several outstanding timepieces from some of the world’s most important collections and present them for sale to the public. watch buyers. Of particular note are the “blanket packages” entrusted to them by shippers, which arouse passions and attract the attention of countless enthusiasts and buyers. Once the hammer falls, it almost always means results that grab the headlines and break records.

New York 2021 Watch Auction First Session on December 11 was the same, but also different. The exact process that took place is difficult to determine, but there are some facts that no one would deny.

Tiffany & Co double-signed Patek Philippe Nautilus Reference 5711 / 1A-018

Patek Philippe Nautilus Reference 5711 / 1A-018, double signed “Tiffany & Co”

When Bacs stepped onto the podium in New York on Saturday, December 11, he announced that 20 days earlier, Phillips had agreed to auction off a timepiece delivered by a nonprofit called Nature conservation. The watch was just announced Patek Philippe Nautilus Rreference 5711 / 1A-018 in steel, double signed “Tiffany & Co. The dial is shown in a ‘Tiffany Blue’ colourway. My personal nickname for this watch is the ‘Nauti Tiffy’.

Patek Philippe CEO Thierry Stern has announced that the Nautilus is about to drop from the company’s catalog. Many believe that the 170 copies – one for each year of Tiffany’s existence – of the Nauti Tiffy are swansong to Gerald Genta’s decades-old design. What’s interesting is that the auction of the Nauti Tiffy piece presented by The Nature Conservancy was perfectly choreographed with the release of the same watch through retail channels. I noted on my blog Watchmaking that this is part of a developing model in which a brand is auctioning off an example of a particularly new watch design in its global debut.

The first example to my knowledge took place earlier in 2021, when Audemars Piguet auctioned off a special version of its new Black Panther Royal Oak concept in a live YouTube broadcast featuring a cavalcade of stars in April 2021. This unique piece sold for over $ 5 million. After the auction, the “standard” Black Panther Royal Oak sold for a six-figure retail price.

Tiffany & Co double-signed Patek Philippe Nautilus Reference 5711 / 1A-018

I wasn’t sure how the Nauti Tiffy auction would go as the watch was new to the market in many ways. Over time, however, it became clear that the attention of the watch community was focused on this auction lot.

I was fortunate enough to see the watch in metal at Phillips in New York one evening earlier in auction week. As I made my way through the crowd, I recognized several prominent watch journalists and collectors. In conversations about the auction, I would periodically find the Instagram handle of the person I was speaking with and be like, “Oh yeah, their account is awesome! The enthusiasts were definitely excited to discover the Nauti Tiffy.

When I launched the auction livestream on Saturday morning, a curious note greeted me even before the auction began: lot 1T, the Nauti Tiffy lot, was on screen with text indicating that an opening bid of $ 4.2 million would lead the way. At this point, all residual doubts about the desirability of this timepiece have been extinguished. Oddly enough, the auctions did not start at this value, but Bacs eventually did.

Inevitably, the number of bidders decreased as the bids increased in amazing increments. In the end, only one bidder remained. Identified as a New York online shopper, the hammer fell to a price of $ 5.35 million. The buyer’s premium on the sale was an additional $ 1.153 million. Phillips will donate this amount to The Nature Conservancy.

Curious about New York State Sales Tax on the purchase? An additional $ 475,000 (approximately), although the buyer may not have to pay this under New York law.

Tiffany & Co double-signed Patek Philippe Nautilus Reference 5711 / 1A-018

Wider implications of the sale of the Patek Philippe Nautilus Reference 5711 / 1A-018

First, an environmental charity with a Charity Navigator rating of 93/100 for accountability and transparency will receive a very large donation. In fact, this one-time watch sale accounted for 8.5% of the total cash reported by The Nature Conservatory in 2020. It’s a pretty amazing result, and I think we can agree that our environment needs all the help it can get. .

Second, the buyer will almost certainly end up paying less than $ 5.35 million, or even the $ 6.5 million with buyer’s premium that will be widely reported in the press. We will probably never know exactly how much this buyer is paying once we consider the tax implications. From the US Internal Revenue Service (IRS): “Donors who purchase items at a charity auction can claim a charitable contribution deduction for the excess of the purchase price paid for an item in its fair market value. The donor must however be able to demonstrate that he knew that the value of the object was less than the amount paid.. “

For example, a U.S. buyer in the top tax bracket can most likely deduct 37% of a significant portion of that purchase from their taxes. This deduction could be worth about $ 1.98 million to the buyer, for a net cost of about $ 4.5 million.

It is still a large sum of money. The retail price of the Nauti Tiffy is approximately $ 53,000. Even after tax deduction, the buyer paid almost 85 times the retail price for this watch. An analogy would be paying $ 425 for a $ 5 Starbucks coffee.

At this point the scratching of the head begins. Right before the Phillips auction, gray market dealer Jomashop put up a Nauti Tiffy for sale for $ 2.5 million. It was still available at this price soon after the hammer fell at Phillips. This is one of the most bizarre scenarios I have witnessed when it comes to the watch market. We know that there has been at least one sub-bidder priced at $ 5 million, which raises concerns that a middleman could buy the Nauti Tiffy from Jomashop, sell it to the sub-bidder for $ 5 million, and pocket $ 2.5 million. The plot has definitely thickened.

Double Tiffany & Co movement signed Patek Philippe Nautilus Reference 5711 / 1A-018

But wait, there is more! We know brands like Patek Philippe don’t like the turnaround, the scenario where someone buys a watch at retail and then quickly resells it at the aftermarket rate. i did the update on my blog this reversal is the consequence of a too low selling price and of the fact that the watches do not go to those who appreciate them the most.

For example, in the case of the Nauti Tiffy sold at Phillips, we know that the retail price was about 85 times what someone in the world was willing to pay (at least willing to pay when a charity particular was involved). In an alternate universe where the auction was not taking place, if the winning bidder had not received an award, he would very easily have convinced someone else to sell him his Nauti Tiffy for the price of 4, $ 5 million. At least one flip would have taken place.

I don’t believe this bad pricing for luxury watches will persist. Patek Philippe, and a number of other brands, are simply leaving too much money on the table. For example, suppose Patek Philippe sold the Series of 170 Nauti Tiffy to Tiffany’s for $ 26,500, which is half the retail price (this would allow Tiffany’s to profit from the watch at retail price as well). This means that Patek Philippe’s total income on the 170-watch series would have been around $ 4.5 million, roughly the price paid for that one Nauti Tiffy at Phillips today (after deducting the buyer’s tax benefit).

It is certainly generous to leave that kind of money on the table when selling watches, but I don’t know how long a brand will be willing to forgo so much revenue.

Tiffany & Co double-signed Patek Philippe Nautilus Reference 5711 / 1A-018

If the market fundamentals of the luxury watch industry remain unchanged, I think it will become more and more likely that there will be a seismic shift in a certain direction. If allowances were auctioned rather than too low a fixed retail price, brands would earn more revenue and the turnaround would ease.

I don’t know if there is a brand willing to resist going in that direction. While the dramatically higher prices for timepieces from Patek Philippe, Audemars Piguet or others may seem unbearable, when you compare today’s prices of the “Holy Trinity»To those claimed by brands like Richard Mille or Jacob & Co, they are starting to appear more credible.

The other possibility is that market fundamentals change and buyers become reluctant to pay six or seven figure prices for luxury watches. It’s certainly worth looking for signs that this is happening, but I myself haven’t seen any yet.

One thing is clear: 2022 is likely to be a very interesting year for the luxury watch industry.

Quick Facts Patek Philippe Nautilus Reference 5711 / 1A-014
Case: 40 x 8.3mm, stainless steel
Movement: automatic Caliber 26-330 SC, frequency 28,800 vph / 4 Hz; Power reserve of 35 to 45 hours, Gyromax balance, Spiromax hairspring, Patek Philippe seal
Functions: hours, minutes, seconds; Dated
Limit: 170 pieces
Public price: approx. $ 53,000
Auction estimate: “over $ 50,000”
Realized auction price incl. buyer’s premium: $ 6,503,500

Brendan M. Cunningham, PhD has an upcoming book on the history of Rolex. You can find out more by visiting www.sellingthecrown.com and sign up to receive email updates on the project.

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