“In terms of value, watchmaking is half a century late compared to art”
On the auction market, 2020 showed mixed results. Led by the charismatic Aurel Bacs, the house Phillips in Association with Bacs & Russo is however holding its own, with a record year in the watch sector. A performance that contrasts with a struggling watchmaking industry.
By Cristina D’Agostino04 mars 2021
133 M $
The 2020 turnover of Phillips in Association with Bacs & Russo
Phillips in Association with Bacs & Russo turnover 2020 compared to 2019
4,9 M CHF
The online sale record for a watch (Patek Philippe Ref. 2523/1)
Facing the crisis that is shaking the auction world, not all have played their cards in the same way. While big auction showed contrasted results depending on sectors, Philipps in association with Bacs and Russo performed well in 2020, recording its best year ever with a 133 million-dollar turnover, a 20% increase vs 2019. To this day, the best performance by a watch auction house. While Aurel Bacs, its auctioneer and senior consultant, benefits from a pristine reputation with many record biddings – among which the highest result ever reached for a vintage bracelet-watch sold at auction, the "Paul Newman" Daytona Rolex, reference 6239 at 17,709,894 Swiss francs – the way the watchmaking department is structured at Philips also seems to be playing its cards. Cross interview between Alexandre Ghotbi, Director of the watch department, continental Europe and Middle East, and Aurel Bacs.
Aurel Bacs, what made the difference for Phillips in Association with Bacs & Russo in 2020?
We have played the cards of dynamism and creativity. But that is only possible on one condition: the almost full independence of the watch department at Philips, a freedom that our colleagues don’t have. As long as the financial statements are healthy and our clients satisfied, headquarters lets us take action freely, in terms of locations and auction dates, themes, digital investments, recruitments. A quick execution that has made the difference, since some decisions are made in 24 hours. We are not legally independent from Philips, but the freedom we have allows us to work as if we were.
When reading the Phillips website, there seems to be a wish to develop a visionary spirit. How so?
Aurel Bacs. I wouldn’t have the pretention to say I am a visionary. But I dream. I dream that one day, watches will be considered on the same level as impressionist paintings or pop art. To get there, one needs to be innovative, not a visionary.
So, what is this innovative spirit?
A.B. I decided in 2015 to never hire traditional technocrats of our sector but watch lovers instead. Alexandre Ghotbi had a career in law before joining Philips. Paul Boutros in New York was a defence engineer, James Marks in London was working in hedge funds. These are interesting profiles leading to innovative vision. We dream and we breath watchmaking day and night. Does this make us visionaries? No. But authentic, close to the client, yes. We feel the client’s appetite, as we share it too. This is our advantage and you can notice it in our financial statements.
Where is the threat today?
A.B. Those who copy us are not the ones worrying us. Even if some Chinese auction houses, including one in Hong Kong, produce practically the same auction catalogue as ours. These copies are not threatening. The threat comes from actors that are as dynamic as we are, offline and online, who have an excellent close relationship to clients and investors in order to buy and negotiate stock. Our competitors are these private individuals.
Alexandre Ghotbi. Someone selling their watch on Instagram can be a competitor, but only on one sale that requires neither expertise nor intellectual consideration, for example an almost new Rolex changing hands. However, it becomes much more complicated to describe the benefits and details of a Rolex model from the 1950s. Knowledge is valuable.
A.B. Indeed, today all the information is accessible online, but you still need to tell right from wrong. That is our added value. Along my career, I have sold more than 60,000 watches and have examined more than a million. This has provided me with some knowledge of the field.
How do you attract young generations towards vintage pieces?
A.G. The younger generation finds vintage romantic. And this trend is not only found on social media. We are not looking for a generation but for passionate individuals.
Who makes the market of tomorrow: you or them?
A.G. I learned in finance to never work against the market. We offer what people seek: the rarest and most difficult to acquire.
In the vintage car sector, tastes evolve with generations, is it not the case with watches?
A.B. It’s not possible to generalise the desires of this new generation. Today, watchmaking has become so vast, there are more than 600 brands. There isn’t another industry that can offer this amount of choice. Therefore, there really isn’t one trend.
How did the online sale of the Patek Philippe (ref. 2523/1) happen, auctioned at 4,991,000 Swiss francs, a record for Phillips across all sectors?
A.B. The bids were transmitted by the German client via our online platform. To be precise, the auction was led by an auctioneer on the phone, at La Réserve in Geneva. It’s a hybrid auction and not an online auction like Amazon. The client would have been able to access the watch, even if they didn’t ask for it, by relying on our reputation. On the contrary to big competing auction houses, we did not give up on the human aspect, meaning the auctioneer, the phone bids, the paper catalogue and the physical exhibitions that give access to the products, even during the pandemic. Our competitors quickly transformed into the Amazon of art. And in the end, they under-performed compared to us.
So, the pandemic did not radically change the business?
A.B. It changed our way of working. We don’t share the same office everyday anymore and I don’t meet with one tenth of our clients physically vs 2019. Other than that, nothing has changed. We examine watches, in our lab, with our watchmakers and we always spend hundreds of thousands of francs for our exhibitions.
Soon, in May, you will be presenting this incredible four-watch Patek Philippe collection. How did you manage this coup?
A.B. The 2499 Patek Philippe reference is the most legendary reference of the most prestigious brand in the world. It is comparable to a Ferrari 250 GTO. It’s the dream of every aficionado. This series of Pateks belongs to the same collector, a man with incomparable taste. I was thrilled to meet him at his place. His refinement and sense of quality are fascinating. We established a trustful relationship a long time ago. He was able to evaluate the quality of the May 2020 auction with comparable pieces that belonged to Jean-Claude Biver. Slowly, the idea of this auction made its way. I sold him the most important piece of this collection in 2008. To see this piece again was quite moving.
What are your ambitions today?
A.B. To open subsidiaries in other cities is not useful if you can’t find talents to work there. And having our name in Beijing is useless if the raw material is missing. A rare watch is by definition, rare. The number of vintage watches isn’t extendable. We can grow if the value of watches grows as well. Everything is based on offer and demand. At the moment, it is growing. We simply need to make sure the private individual that wants to acquire a beautiful watch goes through Philipps. We get about 10,000 watches a year around the world. We only keep 1,200 (about 12%), half as much as our competitors. But the strict quality of choice is here.
A.G. Collections are made to evolve. Watchmaking is based on tastes and they can change. Let me remind you that watch collectors started off with pocket watches, and today, that is not what’s working.
A.B. Personally I have never guaranteed anyone that value of a Nautilus or a Royal Oak could increase by 10% every year. It is impossible. But if one asks for my opinion on the question of future value, I am very optimistic. Here is an example. I was recently speaking with a client that owns four Basquiat paintings. They each are worth more than 40 million dollars, but he had bought them between 40,000 and 80,000 pounds a few years ago. Will a Phillipe Dufour watch one day be worth 40 million? Why not= What defines the value of a painting? the number of hours the artist spent painting them? No. The value of the materials. No. The number of known copies? There isn’t a rational reason, there is just offer and demand on a field for which many have found their passion. I am certain that in terms of value, watchmaking is half a century late.
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