Barrett-Jackson Auction Company L.L.C.

views updated

Barrett-Jackson Auction Company L.L.C.

3020 North Scottsdale Road
Scottsdale, Arizona 85251
U.S.A.
Telephone: (480) 421-6694
Fax: (480) 421-6697
Web site: http://www.barrett-jackson.com

Private Company
Incorporated: 1971
Employees: 75 (est.)
NAIC: 453998 Miscellaneous Retail Stores, Not Elsewhere Classified

Privately owned in Scottsdale, Arizona, Barrett-Jackson Auction Company L.L.C. is an automotive lifestyle event producer and one of the world’s leading auction houses for classic cars. The company’s primary business activity focuses on auto auctions held each year in Scottsdale and Palm Beach, Florida, both of which are covered live on “Speed,” a cable television sports channel. Other events created by Barrett-Jackson in connection with these primary auctions are collector car displays, automotive memorabilia auctions, opening night and charity black-tie galas, and designer fashion shows. The company has also become involved in the auction of rock-and-roll and other pop cultural memorabilia. Other ventures include the publishing of a magazine (the Barrett-Jackson Experience ), licensing, merchandising, collector car seminars, and a reality television program about classic car collecting.

FOUNDERS MEET: 1960

Barrett-Jackson was founded in Scottsdale, Arizona, by Thomas W. Barrett and Russell Jackson. The son of a Chicago federal judge, Barrett grew up fascinated with automobiles despite his father’s disapproval. When he was just 12 years old Barrett allegedly bought and sold his first car. He began collecting cars at 19 and as a young man became a successful car lot manager in Oak Park, Illinois, where he was born. In 1960, when he was 32, he moved his family to Arizona to work as a real estate broker, and made use of his classic auto hobby to forge business contacts around the country for his real estate ventures, which in turn financed his growing collection of rare and expensive automobiles. His home became a destination for classic car enthusiasts from around the world, who came to marvel at Barrett’s collection and perhaps do a little trading. Barrett’s future business partner, Russ Jackson, also moved to Arizona in 1960. He had been visiting the area since childhood when his father, a Michigan pharmacist, took the family to a Scottsdale area dude ranch for family vacations. His involvement with car collecting had begun just two years earlier when, on a return trip from a vacation in northern Michigan, he and his wife Nellie decided to buy a 1934 Cadillac they spotted in the front of a junkyard. Classic cars, especially Cadillacs, would become a passion for the couple and eventually for their sons Brian and Craig, as well. Jackson bought a Scottsdale carwash that became a natural spot for car enthusiasts to meet and eventually he opened a restoration shop to serve their needs. This is where his sons learned how to restore cars. Shortly after he moved to Arizona, Jackson answered an ad that Barrett had placed to sell a 1933 Cadillac V16 Town Car. Although they failed to agree on a price, they struck up an enduring friendship.

In 1967 Barrett and Jackson teamed up to organize a car show fundraiser for the Scottsdale library and other local charities called “Fiesta del los Auto Elegance,” held at Scottsdale Stadium. Two years later they held another car show, this one held at the football field of Scottsdale High School. The success of these shows led Barrett to also include Jackson in a commercial venture.

By 1971 Barrett needed to reduce his collection, which numbered about 80 cars. He decided to auction off some of the cars, inspired by the success of Dean Kruse—founder of Kruse International, another major car auction firm—who had enjoyed a tremendous hit earlier in the year with a collector car consignment auction held in Auburn, Indiana. Barrett brought in Leo Gephart, a Phoenix used-car dealer who dealt in both used and rare cars, and together they summoned Kruse in late 1971 to meet with them to discuss a possible Arizona auction. The three men agreed to accept consignments in order to conduct a major auction at the Safari Hotel in Scottsdale, hoping to attract the attendance of car collectors from around the world. Needing local help, Barrett introduced Kruse and Gephart to Jackson, who was brought into the partnership.

The two-day event was conducted in January 1972 in a dirt lot next to the Safari Resort, attracting some 3,000 people and achieving a sales volume of nearly $600,000. The headliner of the sale was Barrett’s bulletproof Mercedes-Benz 770 Phaeton once owned by Adolph Hitler, which sold for $153,000, more than triple the previous auction record. The auction was so successful that it became an annual event at the same location for another five years before being moved to another spot, at Indian School and Scottsdale Road in downtown Scottsdale. Barrett and Jackson continued to work through Kruse International but in the mid-1970s split off, forming Barrett-Jackson to establish their own annual sale, the Barrett-Jackson Classic Car Auction. Kruse continued to conduct his sale as well and the addition of further auctions turned the entire month of January in Scottsdale into a classic car fantasy world.

MOVE TO PHOENIX: 1979

Barrett-Jackson moved the annual auction to Phoenix Municipal Stadium in 1979 and a year later expanded from a two-day to a four-day event. The operation was very much a family affair. Barrett conducted worldwide searches for rare cars; meanwhile, Jackson and his sons focused on restoration and his wife took care of day-today responsibilities.

The basic elements of a Barrett-Jackson auction also took shape. Cars to be sold on consignment were either listed as “Reserve,” requiring a minimum bid the seller was willing to accept, or “No Reserve,” which meant the car would go to the highest bidder. By offering lower registration fees and commissions, Barrett-Jackson encouraged the latter type of sale, which generated excitement that often created an auction fever and resulted in higher sales prices. Eventually Barrett-Jackson adopted a “No Reserve–only” policy.

A 2005 Auto Week profile revealed how the auctioning system grew to include a team of 22 people who worked in shifts. When on duty, a lead auctioneer made the call over the microphone while bidding assistants worked the room spotting bidders (and egging them on) and bringing them to the attention of either the lead auctioneer or the second auctioneer, who was at his side. This person was also in touch with a backup auctioneer located in the luxury suit where telephone and online bidders were monitored.

COMPANY PERSPECTIVES

Established in 1971, Barrett-Jackson specializes in providing products and services to classic and collector car owners, astute collectors and automotive enthusiasts worldwide. The company produces the “World’s Greatest Collector Car Auction” in Scottsdale, Arizona, and the “World’s Fastest Growing Collector Car Auction” in Palm Beach, Florida.

The classic car auction business emerged in the 1980s and was further spurred by the stock market crash of 1987. Wary of putting money in the market, many investors decided to buy classic cars, art work, and other collectibles. In 1987 Barrett-Jackson sold its first $1 million car, a Duesenberg Derham Tourister. In 1989 Barrett-Jackson was lured back to Scottsdale by Mayor Herb Drinkwater who convinced the Barretts and Jacksons to hold the annual event at Horseworld, later known as WestWorld, where it could develop synergy with the Tournament Players Club across the street, which hosted the Phoenix Open golf tournament. Indeed, the 1989 auction at WestWorld drew a record 50,000 people and realized a sales volume of $29 million.

The Scottsdale auction continued to grow in 1990, when attendance reached 60,000 spectators, and a pair of cars, a 1932 Hispano-Suiza J12 Binder and a 1938 Bugatti Type 57S Atalante, each sold for a record $2 million. The recession that enveloped the country the following year put a damper on the classic car industry, however. Values plummeted and it took several years to regain losses. The Barrett-Jackson auction, as a result, endured a rough patch through much of the 1990s. To make matters worse, Russ Jackson died from colon cancer soon after the 1993 auction and a year later Barrett retired. Jackson’s oldest son Brian took over, while his brother Craig, 13 years his junior, served as his chief lieutenant. Barrett’s son, Thomas W. Barrett IV, pitched in to a lesser degree, mostly around auction time. More changes were soon in store. In 1995 Brian Jackson died of color cancer as well.

At the age of 36 Craig Jackson took charge of Barrett-Jackson, bringing a new energy and perspective to the auction. His brash manner ruffled some feathers in the small fraternity of class car auction houses. For example, Rob Myers, owner of RM Auctions, told USA Today, “I’ve known Craig a long time, and I don’t want to bash him. But I don’t care to be friends with him, either.” Asked for his opinion of Jackson by the Meza, Arizona, Tribune, Dean Kruse said, “Craig is, ah—I guess I won’t comment on Craig.” To help him run the business, Craig Jackson brought in another Type A personality in 1996, Steve Davis, who would become the company’s president. His relationship with Barrett-Jackson had begun in the later 1970s as a customer; he was the owner of Valley Oak Auto in California, which bought and sold collector cars.

TELEVISION COVERAGE BEGINS: 1997

In 1995 Barrett-Jackson began offering Internet coverage of its annual auction. The company’s forward thinking under Craig Jackson’s leadership became even more evident in 1997 when he brokered a deal with the Speedvision Network to provide live coverage of the annual auction, the first collector car auction to ever receive such treatment. The exposure the auction achieved through television would mark a turning point in Barrett-Jackson’s history. Two months after the auction, in March 1997, Craig Jackson and his mother bought out Thomas Barrett and his son for $1.5 million. Two years later the Barretts would experience a case of sellers’ remorse, as the auction enjoyed a strong resurgence. Attendance grew to 100,000 in 1998 and 125,000 in 1999, while sales grew to $17 million in 1998 and $22 million in 1999. The Barretts sued the Jacksons in August 1999 claiming that they had been deceived by Craig Jackson, who they maintained had withheld information about the auction’s value. They also sued their own attorneys for malpractice in negotiating the deal. Jackson insisted that the deal was made to take care of the elderly Barrett and that he had simply agreed to a deal worked out by the attorneys for both parties. Moreover, no one from the Barrett family had ever complained about the deal. “And what if the market had tanked?” Jackson told the Arizona Republic. “That was three years ago. I took the risks. I’ve worked hard at this.” Nothing came of the suit, the Jacksons retained control of the business, and in 2004 Thomas Barrett died of a heart attack.

In keeping with its success, Barrett-Jackson moved into a new headquarters and showroom facility at the start of the new century, occupying Scottsdale’s former Max of Switzerland Rolls-Royce dealership. The company also branched out beyond Arizona in 2000, teaming up with Coy’s of Kensington, a United Kingdom-based car dealer and auctioneer, to hold a classic car auction during the Monaco Historic Grand Prix. Also in 2000 Barrett-Jackson began hosting an annual auction at the Petersen Automotive Museum in Los Angeles.

KEY DATES

1972:: Thomas Barrett and Russell Jackson hold first classic car auction in Scottsdale Arizona.
1979:: Auction moves to Phoenix.
1989:: Auction returns to Scottsdale.
1993:: Brian Jackson takes charge following father’s death.
1995:: Brian Jackson dies, Leaving Craig Jackson as CEO.
1997:: SPEED channel begins television annual auction.
2003:: Palm Beach, Florida auction added.
2007:: Rock ’n’ Roll Memorabilia auction added to Scottsdale event.

No longer was it just traditional wealthy car collectors purchasing classic Duesenbergs and Mercedes-Benz who were driving Barrett-Jackson’s growth. It was baby boom–generation males who had disposable wealth, had seen the television coverage of the auction, and were in the market to capture some of the glory that had once eluded them—the muscle cars of the 1950s, 1960s, and 1970s that, as adolescents, they had dreamed of owning but could not afford.

Attendance at the annual Scottsdale event grew to 150,000 in 2001. The following year Speedvision, renamed the Speed Channel, increased its live coverage to 10 hours, spurring further interest. Despite an economy that had lapsed into recession, the auction’s sales volume approached $27 million. In April 2003 Barrett-Jackson added a Palm Beach, Florida, auction, producing $6 million in sales. The annual Petersen Automotive Museum event racked up another $4.2 million.

Increased Speed Channel coverage helped to fuel record sales for the Scottsdale event. In 2004 Thursday night of the auction was added to the television coverage, which increased to 15 hours, as sales improved to $38.5 million and attendance reached 185,000. The second Palm Beach auction doubled sales to $11.8 million in 2004. Barrett-Jackson received further television publicity in 2004 with the debut of a 26-episode reality show, “Barrett-Jackson Car Search,” on the Speed Channel, in which three teams of experts were furnished with $100,000 each to buy cars in four categories to be auctioned off for charity by Barrett-Jackson. Television coverage of the 2005 Scottsdale auction increased to 24 hours over five days, and sales increased to $61.7 million. The following year the Speed Channel provided 33 hours of live coverage and 225,000 people attended live as the auction topped the $100 million sales mark. That amount would grow to $112 million in 2006 and attendance reached 250,000, while televised coverage increased to forty hours. Barrett-Jackson also added a Rock ’n’ Roll Memorabilia Auction to the festivities, which generated another $1.7 million in sales. The 2007 Palm Beach auction, which was also covered on the Speed Channel, continued to show strong growth, attracting 65,000 spectators and generating more than $32 million in sales.

The annual auction was contributing close to $100 million to the Scottsdale economy, but Jackson was not pleased with the accommodations at WestWorld and pressured the city to make some improvements. While there was some fear that he might relocate the auction, Jackson made it clear that he was willing to sign a 20-to 30-year agreement with the city if long-term parking and a permanent venue were developed. His commitment to his hometown was evident in 2007 when he bought a new 17,000-square-foot building in Scottsdale to house about 50 employees. The showroom remained in the city for the time being, but Jackson indicated he was interested in buying several acres from Scottsdale to supplement the land Barrett-Jackson already owned near WestWorld in order to build a new headquarters that would also include a showroom and a car museum, and perhaps its own auction house.

Ed Dinger