Barrett-Jackson insulated against weak economy - East Valley Tribune: News

Barrett-Jackson insulated against weak economy

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Posted: Saturday, September 27, 2008 2:59 pm | Updated: 10:58 pm, Fri Oct 7, 2011.

Scottsdale-based collector car czar Craig Jackson is still smiling despite a weak economy that has devastated just about every U.S. industry from housing to hotels.

That's because, with his first Las Vegas car auction still weeks away, Jackson already has 521 ultra-expensive automobiles lined up to sell, and hundreds of people who can afford to buy the venerable vehicles have signed up to eye and buy them.

"The economy has on a certain level hit everybody, even in Las Vegas, but not that tier," Jackson said.

The U.S. economy is in critical condition, but collector car sales have barely caught a cold, industry experts said.

And that's good news for Barrett-Jackson, the superstar of collector car sales, good news for Scottsdale, where the company built its reputation and its luxurious headquarters, and good news for local tourism leaders who tout Barrett-Jackson's annual Scottsdale auction as among the most lucrative draws for the world's biggest-spending travelers.

Scottsdale estimates, based on a 2006 survey, that Barrett-Jackson annually brings in well-heeled visitors from around the world who leave nearly $100 million behind at local hotels, shops and restaurants, and in city and state tax coffers, said Kathy O'Connor, Scottsdale's tourism development manager.

"Clearly, Barrett-Jackson is one of our premier events," she said. "It's important for tourism, and it's important to the city."

At a time when many Americans' discretionary income is drying up, and hotels are hurting with room rates and occupancies falling, having a flourishing collector car industry and having it flourish in Scottsdale is hugely important, said Rachel Sacco, president of the Scottsdale Convention & Visitors Bureau.

SALES HEALTHY

Collector car sales have experienced only a slight blip since the economy started to weaken, said McKeel Hagerty, who just returned from Monterey, Calif., which hosts half a dozen upscale car auctions each August.

"Things looked pretty darn good. Few records, but good strong sales across the board," said Hagerty, president of Hagerty Insurance, which insures the vintage autos.

Some collectors may be sitting out a few cycles because of the economic upheaval, he said, but there are still plenty of active buyers and sellers.

And the top cars are still fetching top prices, he said.

In the flush years, every car could find a buyer and almost always with a double-digit price increase each time it crossed a block, Hagerty said. In the leaner times, the best cars still fetch premium prices, but the less coveted cars may have to wait till the economy improves to bag a good price, he said.

Jackson agreed that the glut of cars, consignors and collectors has contracted slightly this year.

In January in Scottsdale, he sold 1,163 cars for more than $88 million. That's about 100 fewer cars than he sold in January 2007 for more than $110 million.

At his Palm Beach, Fla., auction in April he sold more than $23 million worth of cars, compared with $32 million in April 2007.

But Jackson said his business is better than other auctions because he gets the best cars available and therefore the best collectors.

And with the addition of a third show - the upcoming Las Vegas event - he's expecting to have a great 2008.

Most of the people who have been buying and selling cars at Barrett-Jackson for nearly four decades are "above the economy," he said.

And besides being rich, Barrett-Jackson's core customers have another common trait, Jackson said.

They love cars and they are not willing to give them up just because their other investments are faltering.

"During difficult economic times, people may cut back on ancillary activities, but not their passions," Jackson said. "And these are people who reached a point in their lives when they can pursue their passions."

Early indications for Las Vegas and proven results from the Scottsdale and Palm Beach shows earlier this year seem to confirm to Jackson's assessment of the market.

Holly Moeller, who handles Barrett-Jackson's VIP bidder services, said 100 of the super-rich car lovers signed up for the company's April show in Palm Beach, Fla., and she has just as many who already RSVP'd for the Vegas bash.

The well-heeled bidders have come to the earlier Barrett-Jackson events with combined credit lines topping $1 billion, she said. Moeller is expecting the same for Las Vegas.

And Jackson is betting the gambling capital will produce even more high rollers.

GOOD FOR SCOTTSDALE

So what does that mean for Scottsdale, where some leaders have fretted that a successful Las Vegas show will steal cars and customers who now might skip Scottsdale in January?

For the short term, at least, Jackson expects just the opposite.

"I think the Las Vegas show will bring a lot of new people to the hobby," he said. "And the good thing for Scottsdale is if they have a great experience, hopefully they'll come to Scottsdale in January."

Barrett-Jackson, which is as much a lifestyle event as a car auction, is difficult to describe to anybody who hasn't attended one of the extravaganzas, Jackson said.

Barrett-Jackson added the Palm Beach event in 2003, and it has attracted a lot of walk-ins who then turned into collector car aficionados, and many of them now show up at the Scottsdale show as well, Jackson said.

Barrett-Jackson Las Vegas is even closer geographically and on the calendar to the Scottsdale auction, and it could help fill Barrett-Jackson Scottsdale with even more collector newcomers, Jackson said.

Sacco agreed the Las Vegas event is more likely to be complementary to Scottsdale tourism rather than competitive.

And she is sending bureau representatives to Las Vegas to sell the Scottsdale event.

"It's an opportunity for us to cross-promote Scottsdale," Sacco said. "Scottsdale is still the signature show and much different. We need to leverage the other Barrett-Jackson locations to our benefit."

That's the short-term good news. The long-term outlook for Scottsdale is hazier.

OPULENCE VS. MUD

Jackson said he's already concerned that new customers picked up in the opulent casino digs in Las Vegas will not take to the chilly tents, muddy fields and portable johns at the Scottsdale show, which is held at WestWorld of Scottsdale, a mostly equestrian-focused venue.

"My hope is our level of service and their expectations are met," Jackson said.

He admits the Las Vegas show could get much bigger and the Scottsdale show smaller in future years.

In three years Mandalay Bay Hotel & Casino will double his auction space to use the full 1.5-million-square-foot convention center,

"Will Las Vegas overtake Scottsdale? I honestly don't know," Jackson said. "My main challenge is affording to stay in Scottsdale. Scottsdale is more of a challenge to me than the economy."

Costs keep rising to stage the show at WestWorld, he said. That's because he has to rent tents, import power to heat and cool them, and truck in all the equipment and haul it back out again, he said.

Last year he used 80,000 gallons of diesel fuel to power the systems, he said.

"The cost of the infrastructure at WestWorld is 10 times the cost in Las Vegas," he said.

Jackson said he has already bought a condo in the gambling capital, but he said he probably wouldn't move there while he still has young children. His youngest is 9 years old.

In the future, he's not ruling out moving the whole business.

"I will grow where it makes sense," he said. "Tax-wise (Las Vegas) makes a lot of sense."

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