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I never knew that show promoters got a piece of the auction action. Should Heritage enter the show
Longacre
Posts: 16,717 ✭✭✭
I read on another thread that show promoters “get a piece of the action” from auctions that are held during their shows. I am not sure whether this is just a flat fee that the auction firms pay to the promoters for the privilege of holding an auction onsite, or whether the promoters get a percentage of the sales of the auction. Does anyone know?
Regardless, if I ran an auction firm, I would not want to share my profits with anyone who is not sharing in the risk. Let’s take Heritage as an example. For better or for worse, Heritage is THE dominant firm in numismatics. It also has tremendous financial clout. Rather than paying some show promoter a fee to hold an auction onsite, does anyone think that Heritage should just start to hold its own shows, with it being the exclusive auctioneer?
For example, Heritage can start with the weaker shows that are on the circuit, and start to have its own show during the same timeframe, but in a city that is next door to, or very close to the weak show. In order to do this, Heritage will need to provide an incentive to dealers to abandon the weak show and attend the Official Heritage™ show. Here is where Heritage can take advantage of its financial muscle. I don’t want to say that dealers are fickle, but if Heritage offers free bourse tables, a transportation voucher up to $x for each dealer, and a subsidy on the dealer’s hotel room and meals, the Official Heritage™ shows will quickly gain in prominence. If Heritage runs the numbers, it is possible that even after incurring these costs, it may still come out ahead rather than sharing a piece of its auction action with the promoter. Heritage can offer even greater incentives to “prominent dealers” to attend its shows rather than the other show, which will add some glamour to its shows, and potentially leave the weak show with just the wannabe dealers.
After a year or two, the weak shows will not be able to compete, will not have the additional funds from their auction vig, and will whither and die. Then Heritage can focus on attacking the stronger shows (such as Baltimore, etc.), or it can be satisfied that it controls around 80%+ of the show circuit, and may leave the stronger shows alone. This domination of the show circuit can be used as a means to put some of the weaker auction firms out of business as well, especially if Heritage schedules its auctions at the same time that the weaker firms schedule their off-site auctions.
What do you think?
Regardless, if I ran an auction firm, I would not want to share my profits with anyone who is not sharing in the risk. Let’s take Heritage as an example. For better or for worse, Heritage is THE dominant firm in numismatics. It also has tremendous financial clout. Rather than paying some show promoter a fee to hold an auction onsite, does anyone think that Heritage should just start to hold its own shows, with it being the exclusive auctioneer?
For example, Heritage can start with the weaker shows that are on the circuit, and start to have its own show during the same timeframe, but in a city that is next door to, or very close to the weak show. In order to do this, Heritage will need to provide an incentive to dealers to abandon the weak show and attend the Official Heritage™ show. Here is where Heritage can take advantage of its financial muscle. I don’t want to say that dealers are fickle, but if Heritage offers free bourse tables, a transportation voucher up to $x for each dealer, and a subsidy on the dealer’s hotel room and meals, the Official Heritage™ shows will quickly gain in prominence. If Heritage runs the numbers, it is possible that even after incurring these costs, it may still come out ahead rather than sharing a piece of its auction action with the promoter. Heritage can offer even greater incentives to “prominent dealers” to attend its shows rather than the other show, which will add some glamour to its shows, and potentially leave the weak show with just the wannabe dealers.
After a year or two, the weak shows will not be able to compete, will not have the additional funds from their auction vig, and will whither and die. Then Heritage can focus on attacking the stronger shows (such as Baltimore, etc.), or it can be satisfied that it controls around 80%+ of the show circuit, and may leave the stronger shows alone. This domination of the show circuit can be used as a means to put some of the weaker auction firms out of business as well, especially if Heritage schedules its auctions at the same time that the weaker firms schedule their off-site auctions.
What do you think?
Always took candy from strangers
Didn't wanna get me no trade
Never want to be like papa
Working for the boss every night and day
--"Happy", by the Rolling Stones (1972)
Didn't wanna get me no trade
Never want to be like papa
Working for the boss every night and day
--"Happy", by the Rolling Stones (1972)
0
Comments
It seems to me that the show promoter is providing a service (putting on a show to attract coin buyers), and Heritage bids against other auction companies for the privilege of holding their auction at the show. If Heritage's financial package is more attractive than the other bids, they get awarded that honor.
There are some very smart people running Heritage. I would be very surprised if they decided to get into the show promotion business. It is a completely different skill set from what they are very, very good at.
Coin Rarities Online
P.S. How come the giant still takes lousy pictures?
Because they can.
PS: a lot of man power is needed to run a show...
<< <i>.
What do you think? >>
I think it's called the free market.
-- What did you think that was free!!
2 - The single biggest reason the auction companies associate themselves with the major shows is to solicit consignments and/or buy coins outright. Not for the auction. You would be amazed at what walks up to their table!!
Because of the Internet, Heritage, or any auction company, could hold every auction in their offices and save a ton of money. Heritage already does this a couple of times a year with their 'Dallas auctions'.
If Heritage decided to drop any of the major shows someone else would step up in 2 seconds. It's a major moneymaker!
Premium Numismatics, Inc.
myurl
800-596-COIN
Yes, but the show would take an extra hour to open and the lights would go out and have to be turned back on a couple of times a day!!!
Premium Numismatics, Inc.
myurl
800-596-COIN
<< <i>Heritage should buy PCGS, run their own shows, then change their name to Microsoft.
Yes, but the show would take an extra hour to open and the lights would go out and have to be turned back on a couple of times a day!!! >>
And we would need to think of a companion oxymoron to "Microsoft Works".
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