Why Is A Watch Worth $17,752,500?
Since the auction at Phillips in New York last month of the Joanne Woodward/Paul Newman Rolex Daytona, many people have asked me how can a watch be worth $17,752,500?
As of last week my answer became: ‘For pretty much the same reason that a painting by Leonardo da Vinci is worth $450,312,500.’
The market is the ultimate determiner of price. An object, any object is worth what the market will pay for it.
Both the painting and the watch were sold at an auction. For several reasons, auctions are efficient markets.
During auctions the buyer is supreme. The seller does not announce a price and say take it or leave it. Buyers decide if and how much they want to bid.
Auctions are open to everyone. There are no barriers to bidding – you don’t have to belong to a club, pay a fee or be part of some old boys network. If you have the money your in. This applies to any auction whether you’re bidding for an object that cost millions or a few dollars.
Auction buyers are well informed. Anyone interested in owning a painting by Leonardo or the Joanne Woodward/Paul Newman Daytona will be aware of the sale and able to learn everything they might possibly want to know about either object.
My final point about buyers is that both auctions brought together in one place (whether in the saleroom or on the phone) everyone interested in purchasing either the painting or the watch. This concentration of buyers ensures maximum competition – another characteristic of efficient markets.
Markets determine prices and with auctions, buyers constitute the market. What we are now absolutely certain of is what the market will pay for the watch and the painting.
Intrinsic value and subjective value
Let’s look at the question this way. The da Vinci painting is a piece of wood covered in oil paint. The intrinsic value of the parts of the painting – the total worth of the paint and the wood – is probably a few hundred dollars or less. After all, you can’t reuse the paint. Scrape the paint off the wood and you’re left with a useless pile of paint chips and a five-hundred-year-old piece of wood. Maybe the bare wood is beautifully aged but the size, 25⅞ x 18 in., sets limits on possible reincarnations – a small tabletop or a big tray?
Now consider the subjective value of the painting. Leonardo da Vinci is regarded as a true genius of Western Civilization someone whose skills, range of interests and imagination are unequalled. He lived during the Italian Renaissance one of the most creative periods of history that saw a sea change in the way people thought about, well, everything. His paintings are rated among the best ever, often described as divine, sublime, and mesmerizing. They are also rare only 15 extant paintings are attributed to Leonardo. All these factors contribute to the subjective value of the painting.
Considering the subjective value of the painting there should be no surprise about the price paid especially in a world where the numbers of super-mega-rich people are increasing.
What about the intrinsic value of the watch? The movement is a Valjoux 72 manual-wind, a mass-produced movement that powered chronographs from other brands. Certainly, the movement is not rare. The case is forged stainless steel – like millions of other watch cases. The dial is also mass-produced and with variations appeared on watches from other brands.
The intrinsic value of these things is perhaps a few hundred dollars – maybe more than the value of Leonardo’s piece of wood.
As for the subjective value of the watch – no I am not about to claim the Rolex is watch world equivalent of Leonardo da Vinci. (Assigning watch brands artist equivalents could be a fun game. Which brand is Michelangelo, Rembrandt, Raphael, Picasso, Matisse, Pollock, Basquiat, Banksy?) But, Rolex is an important watch brand that has produced era-defining designs.
The design of the Woodward/Newman Daytona is for me simply beautiful. For many others, the watch is regarded as the most important vintage watch, the one that started the whole vintage collecting phenomenon.
While the watch is not unique in the sense of being the only one produced it is the only Rolex Daytona with an exotic dial that Joanne Woodward gifted to Paul Newman. There is also the extraordinary story of how the watch came to market as told in WSJ. Magazine in June: https://twitter.com/WSJMag/status/870265553310679041
All of these factors contribute to the subjective value of the watch and to that eye-watering final price.
A few paragraphs back I said Rolex is not the watch world equivalent of Leonardo. I don’t think the watch world has an equivalent of Leonardo but it does have a few people who are more than a brand – independent watchmakers.
Every time I hear a great independent watchmaker referred to as a brand my reaction is that we are missing the point. McDonald’s is a brand. Why is the same word applied to a hamburger joint and Vianney Halter or Roger Smith or Konstantin Chaykin? Surely these watchmakers are more than brands or what we normally mean by brand. Aren’t such people really watchmakers or if you prefer artists with a style?
These thoughts are relevant because I wonder if the ‘more than a brand’ stature of many independents is already adding to the subjective value of their watches.
In September Sotheby’s in London sold the George Daniels Space Traveller II for US$4,324,526 – the highest price ever paid for a watch by an independent.
In the same Phillips auction as the Woodward/Newman Daytona was a Philippe Dufour Duality that sold for US$915,000.
Earlier this month during the Only Watch auction at Christie’s Geneva two lots broke the million Swiss francs mark – the Patek and a watch from Francois-Paul Journe a major independent.
Watches from MB&F, Konstantin Chaykin, Urwerk and Laurent Ferrier, Kari Voutilainen and Svend Andersen also racked up high prices. Are these prices an indication that subjective value means watches from independents will become more expensive in the future? I think the answer is yes.
I also think the higher price indicates something else. You’ll often hear people say that watches are the acceptable form of jewellery for men, a fashion accessory, a status symbol or simply a utilitarian object. All those statements are correct but are becoming a smaller part of the story.
The perception, appreciation and significance of mechanical watches – whether from a big brand or an independent, vintage or new – is shifting towards something new. I am not sure where this shift will lead but I do believe it is happening.
Another proof of the shift comes from the opposite end of the price spectrum.
Microbrands, which Adam Craniotes founder of the RedBar group has called the start-ups of the watch industry, offer watches for as little as $500. Some microbrands such as Autodromo, Martenero, Oak & Oscar and many more are successfully selling their watches but that is not the only reason they are included in my thoughts about the shift. Microbrands are proof that people feel the need to create mechanical watches. The need to create proves that mechanical watches exert some kind of hold on the human spirit and imagination.
End of digression
One more thing…
I hope whoever bought the Woodward/Newman Daytona wears the watch because I like thinking about the possibility of a chance encounter with the owner.
I hope whoever bought the Leonardo loans it to a museum because we should all get to see it.
I know that’s actually two more things.