Auction Action by Altan Insights: The Games Auction by Sotheby's

Today, we're breaking down The Games Auction from Sotheby's, which featured an assortment of memorabilia directly and tangentially linked to the Olympics. The majority of assets on offer were sneakers: deadstock, game-worn, player editions, and samples. Key items included Michael Jordan game-worn sneakers from the '84 Olympic Trials and Bill Bowerman prototype Nike track spikes (in addition to a handful of other Bowerman creations). Unfortunately, results in the auction were relatively soft, with many lots going unsold and others falling below estimates. Of course, that weakness can also present opportunity for long-term collectors and investors, but we will be watching closely to see if this softness is becoming a more troublesome trend, particularly after the Christie's Original Air Takes Flight auction saw similar struggles in June.

Still, some of the offerings were too fascinating not to explore further, and there are key implications for fractional investors here as well. Come for the auction comps, stay for background on the standard bearer for decades of Nike innovation to come.

Bowerman, Moon Shoes, and a Legacy of Nike Innovation

It's no secret that key and early pieces of innovation from Apple have risen in both seekers and value in recent years. Today, it's almost unfathomable to consider a world before Apple - so ubiquitous is the company in our every day lives. We cherish the early creations and belongings of the Steves - Jobs and Wozniak - because those grails mark the beginning of the enormity of what was to come. Well, that being the case, it should really be no different for Nike. Imagining high-level athletic competition, or weekend warriors on the move, without the Swoosh is near impossible. Many of our lasting images of our athletic icons have them cloaked in Nike gear and armed with the latest innovation. But that innovation started in earnest with one man, Bill Bowerman, who I suppose is more Woz and Phil Knight more Jobs if we're keeping up with that analogy.

Bowerman became head track coach at Oregon, his alma-mater, in 1948, serving for decades before retiring in 1973. During that time, Bowerman's "Men of Oregon" won four NCAA crowns and 24 NCAA individual titles, and he also coached 33 Olympians along the way. He is additionally credited with helping to launch jogging as a hobby in the United States; his book Jogging sold over a million copies. Yeah, that's right, the Ron Burgundy joke in Anchorman about just running for an extended period of time - you might not get that laugh without Bowerman. But perhaps most importantly, in the mid 1960s, Bowerman was approached by his former runner, Phil Knight, a frequent guinea pig of Bill's creations, to form Blue Ribbon Sports. This is a good time for a Shoe Dog plug, Knight's book on Nike, which is a must read. While Knight charged forward with the business side of BRS, soon to be Nike, Bowerman was tasked with innovation; tinkering with shoes to enable better performance had been a tremendous passion, and really, obsession.

The Nike Cortez, you know the shoe that powered Forrest Gump across the country (another movie reference, wow not like there aren't countless actual athletic achievements to choose from)? That came from Bowerman's design ideas in the 60s. He got a patent for a cushioned midsole spanning from heel to ball of the foot for that creation - an incredible landmark in sneaker history. But his tireless push for performance-enhancing innovation reached a new level when he absolutely wrecked his wife's waffle iron making lightweight, rubber outsoles that would also provide traction. It should be said that much of Bowerman's work was done very manually, from scratch, in a poorly ventilated space. In fact, the fumes from glues he used to adhere soles to uppers eventually caused him nerve damage that reduced his mobility. Needless to say, Bowerman was the real freaking deal, and his obsession with making runners faster sparked a quest for innovation that persists today. Make shoes lighter, make them fit better, make them grip the ground better - all were dearly held pursuits.

Photo: Sotheby's

Those rubber waffle soles were quickly rushed together with nylon uppers imported from Japan to become the Moon Shoe, created for a handful (it was previously estimated to be a dozen) of competitors to wear in training or on the infield at and before the 1972 Olympic Trials. The crude, early version of the Moon Shoe does not feature a Nike logo on the tongue, has Swooshes sewed on with fishing line, and has waffle soles both glued and sewn to the upper. It was one of these, a never-worn racing flat version, that was briefly the most expensive sneaker of all time, selling for $437,500 two years ago in July of 2019. And it was another early Moon Shoe prototype, this one featuring midsole cushioning, the likes of which Bowerman championed on the Cortez, that Rally purchased and offered fractionally in the fall of 2020. Rally purchased their pair from the Sotheby's Buy-It-Now program for $150,000 and offered them at an IPO value of $180,000 in November. The shoes have since traded down to $126,000, off 30%, with a 20% down day in March and another 12.5% leg down in early June. Sotheby's offered a pair in what appeared to be lesser condition for $100k this fall, though it's unclear if that example was indeed purchased.

The results in this auction for a set of two pairs of Moon Shoes, one from the early iteration, another a later 1972 edition featuring the Nike logo on the tongue, are a bit troublesome. The set did exceed the upper bound of the estimate range ($75,000 - $100,000) at $107,100, but given the strong condition of the early pair, it's not a tremendously encouraging result for the fractionally trading pair, particularly as the lot did sell and exceed its estimate unlike so many others in the auction. It does merit noting that the early iteration here is of the flat variety, like the deadstock, record-setting pair, whereas the Rally pair features the midsole cushioning.

It wasn't just the Moon Shoe that failed to make headlines in the Games Auction though. In fact, there were six Bowerman-linked lots on offer. Two failed to sell, one sold towards the low end of its estimate range, and one ended up at a price less than half of the low end of its estimate range. The last is the most concerning. One of the marquee lots in the auction was a pair of track spike prototypes made by Bowerman beginning in the '60s and iterated on into the '70s. The spikes featured Waffle soles, as well as four prototype logos, which closely resemble the Swoosh. Bowerman spikes are particularly rare, and given all of the aforementioned features, Sotheby's estimated that these would sell for between $800,000 and $1,200,000. They sold for $315,000...

"How it started." Photo: Sotheby's

Rally has a similar pair coming to market soon. That pair is handmade from scratch by Bowerman, features a waffle sole on one of the shoes, and features no logos. It was made and iterated on for John Mays, and the handwritten letter from Bowerman to Mays with instructions for testing is included. Those sold with Sotheby's for $162,500 a little over a year ago in June of 2020. Perhaps, then, the result in the Games Auction is a reasonable step up given how the market has developed since, but surely the amount below estimate, even if the estimate was ambitious, comes as a disappointment, particularly given the early and crude appearance of a Swoosh forebearer. The Rally pair will be offered at $225,000.

Photo: Rally

Taking a step back, just consider where the innovation embraced by Bowerman has led. We're talking today about a Nike track spike, the Air Zoom Maxfly (pictured below), that is so incredibly technologically advanced, rival brands have allowed their athletes to wear them so as to not be disadvantaged in competition. Usain Bolt has called the advances in spikes "weird", "unfair", and "laughable". Nike doesn't become the giant it is today without a track record of unmatched innovation that has allowed world class athletes to perform at their best. And that track record never gets off the ground without Bill Bowerman. His creations should be embraced as key, landmark achievements in athletic equipment and frankly, athletic history. Whether that makes for a good asset is up to each investor to decide, but if you believe key pieces of history and key pieces of innovation will hold value and attract further investor demand in the future, it's hard to ignore the importance of creations forged at the hands of a man using toxic glue, waffle irons, and obsessive attention to detail to launch one of the world's most well-known and iconic brands.

"How it's going." Photo: Nike

Some Interesting and Differentiated Fractional Prospects

One of the most notable and most previewed lots in the auction went unsold: a dual-signed pair of Converse Fastbreaks worn by Michael Jordan in Olympic Trials in 1984. Before he took Nike to new heights with the Air Jordan, MJ wore Converse at UNC and Adidas in his spare time. In fact, he was pictured at the Trials wearing Adidas Forums, which have seen a resurgence this year. In case any sneaker-sneakers are wondering whether Forums merit consideration next to Jordan 1s and Nike Dunks, remember they were a favorite of the GOAT himself. But I digress...

The 84 Trials were held at Indiana University under the watchful eye of Bobby Knight, and Jordan quickly took center stage in a star studded field of 72 candidates for the 12 man squad. The camp took place in the days leading up to and following the NBA Draft. So impressed was Knight that he implored NBA teams not to make a decision they would forever regret in passing on Jordan. Portland GM, Stu Inman insisted the Blazers needed a center. Knight's response?

"Sh--, take Jordan and play him at center."

Needless to say, Jordan made the Olympic team and delivered gold to the United States. Jordan led the team in scoring with 17.1 points a game. Among those at the camp who didn't make the team: Karl Malone, John Stockton, Charles Barkley, and Joe Dumars. Of course, Jordan was no slouch in college, but the Olympic campaign provided a platform for him to reach new heights and prove that his game was a perfect fit for the league before setting foot on an NBA court. Already, his slide to pick 3 looked foolish.

Photo: Sotheby's

Still, the Olympic Trials worn Fastbreaks, estimated at $80,000 -$100,000 failed to garner the necessary minimum bid. That....feels like a mistake, but may one day end up somebody else's gain. Viewed against an unworn pair of Jordan XIs made for Space Jam but not actually worn in the film, which recently sold for $176k with Sotheby's, it's hard not to feel like these are an even more scarce and interesting piece of Jordan lore. Oh, by the way, another pair of signed Fastbreaks, worn in the gold medal game in '84, sold for $190k in June of 2017. I think either pair would be welcomed by fractional markets.

Photo: Sotheby's

From one MJ to another - Michael Jordan to Michael Johnson. Johnson has become one of the more underrated athletes in Nike fable in recent years, but the four-time gold medalist was a quintessential figure for the brand in the 90s. In fact, the track at Nike HQ is named the Michael Johnson Track. The lasting image of Johnson's athletic career, though, is his double victory in the 200m and 400m in Atlanta in 1996, all while wearing golden shoes. In the process, he set an Olympic Record in the 400 and a World Record in the 200; he was also the first man to win gold in both of those events at the same Games. The shoes were very specifically engineered for Johnson, with asymmetrical, mismatched soles. It's another feat of engineering innovation in Nike's long and rich legacy, begun of course by Bill Bowerman, but the golden flair speaks to the company's marketing prowess; one can only imagine the commercial impact of "the man with the golden shoes" tearing up the track in Nikes. A critical piece of Olympic history and a critical piece of Nike history.

Photo: Sotheby's

Finally, while perhaps not a fit for US-based fractional markets, I would be remiss not to mention the unsold Nike Air Delta Forces with hand-painted Adidas stripes worn by Dražen Petrović, as they may be a candidate for the burgeoning fractional space across the pond. Petrović didn't arrive in the NBA until his mid 20s, but had an incredibly decorated career both in Europe and in his short time in the NBA before his tragic death at age 28. His list of accomplishments includes FIBA EuroBasket MVP, FIBA's 50 Greatest Players, 2x EuroLeague Champion, EuroLeague Finals Top Scorer, Spanish League Top Scorer, FIBA World Championship MVP, 2x Olympic SIlver Medalist, Olympic Bronze Medalist, and FIBA World Cup Gold Medalist. He also was the leading scorer in the 1992 Final against the Dream Team. Yeah, leading scorer...against that team. The pair of sneakers on offer was from the 1990 FIBA World Cup, which he won with the Yugoslavian national team. Under contract with Adidas but preferring to play in Nikes, he painted Adidas stripes on a pair of Nike Air Delta Forces and painted over the Nike branding. It's easy to see how such a unique piece of memorabilia might be a big hit with a European audience that better understands the height of Petrović's powers. They were estimated to sell for between $7,000 and $10,000. It feels like the audience missed a gem here at that price level.

Fleer Jordan  Rookie Finds a Decent Result Amidst the Chaos

Photo: Sotheby's

If you had a sports-related auction in the last 12 months and you didn't offer a PSA 10 Fleer Jordan Rookie, did you even have an auction at all? Many have scoffed at consignors as copy after copy comes to auction, particularly as prices continued to leg lower and lower. The endless proliferation of supply no doubt contributed to the sharp descent in value this spring, but with many holders having a cost basis in the tens of thousands rather than the hundreds of thousands, large gains are still on offer. So, while it seems like the steady stream of consignments could be slowing, a consistent trickle remains. And one brave consignor was comfortable offering his gem amongst a large and diverse array of memorabilia - in fact, it was the only card on offer. Given the tepid results across the auction, the outcome here feels relatively strong. Of course, $315,000 doesn't even begin to approach the PWCC result ($840,000), but so strong and spontaneous was that result that we likely shouldn't expect many/any to come close in the very short term, and this particular example is little match for the PWCC card on almost every metric. Still, $315,000 is yet another sign of stabilization and a potentially sustained turn upwards, which against the backdrop of a relentless march lower, is a welcome data point. Less encouraging was the failure to sell of a Jordan 1 Salesman Sample from 1985. The pair was estimated to sell for between $15-20k.

No Love for Olympic Melo....or Player Exclusives

Beyond the previously discussed assets, there weren't many lots in this auction of sufficient value to be fractional market candidates. There were three lots, however, with Carmelo Anthony Player Exclusive Jordans that each had estimates in the tens of thousands of dollars. Unfortunately....none of them sold. Sadly, buyers weren't moved by the allure of "Olympic Melo". Anthony is the first USA men's basketball player to win four Olympic medals, as he featured on the '04 team that took bronze in Athens, as well as the gold medal-winning efforts in Beijing, London, and Rio. Until just recently, he was also the leading US men's scorer in the Olympics, supplanted by Kevin Durant in these Games. The deficient demand wasn't limited to Melo, though, as vastly more unworn player exclusives and samples finished below their estimate or unsold than in or above their estimate range. While the Carmelo PEs were desirable silhouettes like the Jordan IV and to a lesser extent the Jordan 7, there price tags ultimately made them a tough pill to swallow, whereas some of the lower value PEs, though associated with great players like LeBron, Steph, Wade, and Ray Allen, came from a less cherished sneaker era (mid-to-late 2000s and early 2010s).

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