(The following article appears in the latest issue of Collectible Guitar | Then and Now magazine. For subscription information, check out www.http://collectibleguitar.com/)
By Gabriel J. Hernandez
It was supposed to be the mother of all guitar auctions. One of the world’s most respected auction houses assembled 265 of the most desirable guitars ever offered for sale. They hyped it with a public relations’ campaign that rivaled that of any presidential candidate’s, all of which bolstered both anticipation and expectations for the “shot-in-the-arm” the guitar market had waited so long for.
Remarkably, and considering all variables, from the very first guitar offered for sale – an elaborately decorated 1928 Gibson Nick Lucas Special, with a pre-auction estimate of $35,000-to-$45,000, that didn’t garner one bid – those lofty expectations very quickly turned into harsh realities for Guernsey’s Auctioneers & Brokers and its founder and president Arlan Ettinger, who hosted the company’s first guitar-only auction this past April at New York City’s Bohemian National Hall.
Appropriately dubbed “Artistry Of The Guitar,” the auction featured hand-picked instruments from one of the world’s most extraordinary collections of stringed instruments. Well-known – and somewhat notorious – guitar collector and business executive Hank Risan consigned 265 of his most prized guitars (not including his most desirable: an 1835 Martin 2½-17 model owned by Mark Twain) to Ettinger and his team of experts for an auction anticipated to break all previous guitar auction records. In fact, Ettinger in several national interviews prior to the start of the auction told the world he expected at least one or possibly two of the guitars to eclipse the seven-figure mark, which is considered rarefied air for any guitar. And with Guernsey’s – and Ettinger’s – solid reputation for having conducted numerous honorable and highly successful auctions over the company’s 40-year history, there wasn’t any clear reason to doubt whether him or the company could pull it off.
Unfortunately, that’s not how it played out. Not even close. And though many guitar industry gurus and watchers alike have speculated and held numerous water cooler discussions about why the auction didn’t live up to expectations, Ettinger himself has never addressed the issue on the record … until now.
But before we get to Ettinger, let’s first take a look at some actual auction results. According to Guernsey’s, 179 of the 265 guitars “officially” sold for $2.14 million. The highest price paid for any one guitar was $366,000 for a very rare 1930 Martin OM-45 Deluxe (only 11 ever made). It was purchased by the C.F. Martin guitar company for its museum at the company’s headquarters in Nazareth, Pennsylvania. Pre-auction hype pegged this guitar as the most likely to exceed the highly coveted $1 million mark, with an overly ambitious sales estimate of $1.75-to-$2 million.
Other guitars with equally bold estimates met the same fate. Among them, a 1941 Gibson SJ-200 formerly owned by Rock and Roll Hall of Famer Stephen Stills sold for $50,000 (pre-auction estimate was $500,000-to-$600,000); a 1936 Gibson Advanced Jumbo sold for $48,800 (pre-auction estimate was $135,000-to-$150,000); a stunningly rare 1935 Gibson Super 400 Flattop Custom sold for $46,875 (pre-auction estimate was $525,000-to-$575,000); an exceptionally rare and desirable 1934 D’Angelico Excel – possibly the very first Excel model made by the legendary luthier – sold for just $43,750 (pre-auction estimate was $450,000-to-$475,000); and another very rare and desirable 1928 Martin 00-45 sold for $42,700 (pre-auction estimate was $240,000-to-$270,000).
So what happened? Were the estimates and expectations too high? Were there issues with the authenticity and condition of some of the guitars? And probably the most important question: was the auction an accurate reflection of the current vintage guitar market?
Representing Martin at the auction was Dick Boak, the company’s long-time director of museum, archives and special projects. In addition to the 1935 OM-45 Deluxe, Martin and Boak also took home a 1969 D-45 with Brazilian Rosewood ($30,500), a 1904 0-42 ($12,200), and an absolutely stunning 1914 000-28 with a 20-fret neck and Brazilian Rosewood ($14,640). Overall, Boak was quite pleased with Martin’s new additions to its museum, and the prices paid for the guitars.
“We honestly didn’t think we were going to get the OM-45 Deluxe,” Boak said. “We were willing to go as high as $400,000 to $450,000 for it, but obviously we didn’t have to. We’d been looking for one of these guitars for a long time, and now it hangs in our museum. I’ve played it a few times and it’s truly a magnificent instrument.”
Martin’s seemingly “cheap” acquisition of the OM-45 was typical of the bidding that occurred for many of the auction’s 265 guitars. When the OM-45 took center stage, the auctioneer announced the bidding would start at $850,000. When no one raised their hand the opening bid was lowered to $750,000, and then to $650,000, and so on, etc. Not until the opening bid was lowered all the way to $300,000 did Boak finally raise his hand to start the bidding. Fortunately for Boak and Martin, theirs’ was the only bid on the guitar (the additional $66,000 was Guernsey’s 22 percent hammer fee).
So again, why wasn’t there a bidding war on such a rare, coveted Martin? And why did this scenario play out again and again during what was supposed to be the guitar auction of the new millennium? The answers are somewhat complicated, but Boak offered perhaps the most diplomatic response of all.
“The collection really was a truly remarkable collection, especially in the huge number of amazing guitars available for purchase,” Boak said. “But I think one of the problems that just about everyone interested in these guitars had was that the initial estimates were extremely high. And second, there was the thought that such a huge influx of guitars into the marketplace at one time would actually devalue the prices for the guitars. Letting go of so many vintage pieces at one time was not seen as a good thing. If they would have come out one or two at a time then maybe it would have been a different story. But the sheer number of guitars available I think hurt the auction.”
So why would Risan offer up so many guitars at one time? We tried to reach Risan several times to get an answer to this and other important questions, and left numerous messages for him at his California office. Unfortunately, he never returned our calls. However, Guernsey spokesperson Lindsay Heller, who handled most of the sales and bidding that took place after the “official” end of the auction, shed some light on the subject. According to Heller, there was a little, lesser known fact about the auction that Guernsey’s, or Risan, did not publicize – that the auction was supposed to raise money for Risan’s alleged tax debt to the Internal Revenue Service. And since the initial auction didn’t quite raise enough money to satisfy Risan’s alleged debt to the IRS, post-auction sales were on-going for at least two weeks after the final gavel fell on April 3.
“Yes, the IRS is involved and that’s the main reason that the timeline for this auction is somewhat blurry at this moment,” Heller said when first contacted back in April. “I’ve been told that we’re allowed to be frank about this whole situation, so the reality is that the consignor owes a debt to the IRS, and that this auction was supposed to fulfill his obligation to the IRS. Although [Hank Risan] does have a ruling voice on what offers to accept or decline, I think at some point – because the IRS is involved – the IRS can physically come in and seize any lots that are unsold and sell it themselves, and they can then decide whether or not to sell it to the people that have previously placed bids or made offers on any of the unsold guitars.”
Heller also mentioned that Guernsey’s 22 percent buyer’s premium was still in effect for any post-auction sales, but added that depending on how antsy the IRS agents got, there may have actually come a time when the IRS simply stepped in to take over the entire auction altogether, thus ending Guernsey’s association with it.
“The IRS has been very good to us throughout this whole process, and they know how much work we put into this auction, with the printing of the catalog and the hosting of the auction itself,” Heller said. “But if [Hank Risan] doesn’t act in due time then the IRS will, in fact, become the defacto consignor for all of these unsold guitars, and they would then decide when and to whom they will be sold.”
Risan’s allege debt to the IRS was at least one of the reasons behind the sale of so many of his prized guitars. But what about the other lingering questions regarding the auction? Were there issues with the authenticity and condition of the guitars? And – most importantly – was the auction an accurate assessment of the current vintage guitar market? According to a few experts, the answers to those questions are a bit more interesting than the IRS’s involvement.
“My business partner and I were hired by Guernsey’s as a consultant for this auction, and to inspect and tune the instruments. So we got a pretty good look at all of them and it was definitely a very nice collection of acoustics and archtops,” said Alex Whitman, one of the owners of New York City’s famed TR Crandall Guitars. “But there was also a lot of discussion about the consignor’s reputation in general, and rumors of some shady dealings, though let me also say there was nothing that we or anyone else could verify. Personally, I think the biggest issue was that no one really knew the motivation behind his selling of so many guitars. I heard it was an IRS auction to pay off some debt, so the initial price estimates were high. In some cases the estimates were three to four times above reasonable prices for these guitars, and some were even higher than that.”
Whitman continued, “And then there were the questions about the originality of some of the pieces. We had people asking our opinion on many of the guitars; whether they had been refinished, or whether some had had work done to them, etc. There were many people that flew in for this auction from faraway places and they were very frustrated when they got to the preview. I think a lot of people were turned off by everything that was going on around it.”
As Whitman pointed out, many people assumed Guernsey’s – and Ettinger – had done their due diligence prior to signing on to host the auction. After all, alongside Sotheby’s and Christie’s, Guernsey’s Auction House is considered one of the most respected names in the auction business. So what, if anything, went wrong?
“When Mr. Risan first contacted us, I immediately flew out to California to see his instruments,” Ettinger said. “Now, I’m not a guitar expert and I certainly don’t try to pass myself off as one. But I have sold some very nice guitars over the years, including the two guitars most used by the late Jerry Garcia of the Grateful Dead. And you didn’t need to be a genius to see that [Hank Risan’s] collection was a great collection. So he consigned his collection to us, and once the word got out that we were going to sell his guitars, that’s when people started to call us and tell us about their own personal experiences with Hank.
“But as our consignor, we worked with him as best we could. However it soon became clear that his expectations were very high and not in line with those of other notable guitar experts and independent appraisers,” Ettinger said. “Basically we were dealing with an overly optimistic consignor, and that’s something I have experienced in the past. For [Hank Risan], having to sell these guitars was like having to sell his own children. And how do you put a price on your own children? Bottom line is that we were told by many people that his expectations were very unrealistic.”
Nonetheless, Ettinger – being the ultimate professional that he is – kept a very positive face and continued to encourage anyone that would listen to participate in the auction, “…because you never know what will happen in any auction,” he said.
So did the auction satisfy Risan’s alleged debt to the IRS? I guess we’ll never know for sure because Risan isn’t talking. But one thing we do know is that Guernsey’s is not deterred by one bad guitar auction. In fact, a recent email blast from the auction house received just prior to deadline revealed Guernsey’s is currently taking consignments for its next guitar auction, though no definitive date has been set. Ettinger’s company has held several prominent auctions over its 40-plus-year history, including the sale of rare items belonging to John F. Kennedy, Franklin Roosevelt, Princess Diana, Elvis Presley, Mickey Mantle, and a host of other very notable historical figures. He’s quite confident he can add historical and rare guitars to his company’s impressive resume, and probably won’t stop until he does.
“It would be somewhat inappropriate to talk about the sales of our consignors, because ultimately we do have to be respectful,” Ettinger said rather politely when asked what lessons – if any – he took away from this past guitar auction. “It’s not that I ‘learned’ something, or that I never encountered this situation before. But in our enthusiasm to be accommodating to this consignor, will I maybe be tougher in some areas in the future? I guess you can read between the lines, if you want.”
Ettinger continued, “When it was all said and done, I had many people call me and tell me they wish they would have participated, and that overall it was a great event and that we should be very proud of what we did for this auction. And ultimately I am. There were many independent collectors of high-end guitars and even dealers that came up to me and said they would love to see us do more guitar auctions. Bottom line is we shoot to do things that people have never done before, and I would encourage anyone that’s reading this to give us a call and give us a chance. This past auction was OK. It definitely could have been better, but overall it as OK. I’m still very delighted with the event itself and with the beautiful catalog we produced for it. From here, we’re moving forward with our heads held very high.”
As for the current state of the guitar market and possible success – or failure – of any future guitar auctions, the consensus of opinion among industry experts seems to suggest that everyone should sit back and take a big deep breath and exhale … slowly. Because as Bob Marley so eloquently professes in arguably his most enduring song, “Don’t worry ‘bout a thing, ‘Cause every little thing gonna be alright!”
“Considering the state of our current economy, there certainly have been some price adjustments within the industry,” said longtime New York City guitar guru and industry expert Laurence Wexer, who attended both nights of the Guernsey’s guitar auction. “However, I see a moderate state of recovery as well. The desirable models and rare models are still bringing top dollar, and overall I believe there is still very strong interest in this market if the guitars are priced fairly.”
And regarding any future guitar auctions hosted by Guernsey’s, Ettinger can probably take a deep breath and exhale as well.
“We did very well on the guitars we purchased from [Guernsey’s],” said Whitman of TR Crandall Guitars. “I know for a fact we’ll be paying attention to any of their future auctions, and would be happy to assist them again, if asked. Mr. Ettinger and everybody that works there are really great people, and they tried very hard to make this last auction a success. Personally, I believe they’re going to hit a homerun with their next one.”
Let’s all hope they hit it out of the park.
Gabriel J. Hernandez is the owner of Blues Vintage Guitars, Inc., a shop in Nashville, Tennessee, specializing in the buying and selling of vintage and newer high-end guitars and gear. He is also an accomplished writer, having earned a B.S. in Journalism from The University of Florida in 1988. Over a 25-year career he has worked as an investigative journalist for several news organizations and publishing companies, as a staff sports writer for The Palm Beach Post, and most recently as the Web Editor for Gibson Guitars at the company’s worldwide headquarters in Nashville. Hernandez has played guitar since the age of six, and been fascinated (some say obsessed) by the instrument – and music in general – ever since. You can reach him any time at 1-615-613-1389, or visit his company’s Facebook page at www.facebook.com/bluesvintageguitars.