Like most youths who grew up with a basketball in their hands for at least six months out of each scholastic year, I’ve always considered Michael Jordan a true sports icon, perhaps THE sports icon. A man who, using God-given talent combined with an uncanny inner drive and competitive spirit, elevated his sport to a new level forever.
This personal admiration, combined with the fact that I own and operate an auction company that services clients like Mr. Jordan, caused me to be tremendously interested when I learned that his Chicago residence would be offered for sale without a reserve price in a November 2013 auction. My interest was piqued further when it turned out that the planned auction date of November 22 was postponed due to “interest stronger than anticipated.” Further, when the newly scheduled auction date was announced for December 16, it came along with a reserve price of $13 million, a far cry from an auction without a reserve. Ultimately, the property failed to sell…
Whenever there is a high profile real estate auction such as this one, I receive a tremendous amount of inquiries on the who/what/why from folks in the real estate industry. This is in fact why I wrote my first blog post about the Versace Mansion auction. (And of course, the inquiries always increase in volume when such an auction is perceived to have gone awry, as was the situation with Mr. Jordan’s estate).
In this case, most questions I received were related to how an auction marketed without a reserve price – which means the property would sell for the highest bid, regardless of the amount of that bid – would be: 1) Rescheduled at the last minute due to “strong interest,” and 2) Converted to an auction with a reserve price for the newly scheduled date. For most folks, the situation did not align with common sense. That is, a protective reserve should not be needed for the rescheduled auction if there was already such “strong interest” from the first auction attempt, right?
The matter was compounded by the fact that some inquirers also recalled how the firm that handled Mr. Jordan’s auction also failed to sell another massive Chicago property in 2011 that was clearly marketed as an absolute auction (which is another term for an auction without a reserve price, and wherein the property will sell to the highest bidder regardless of price). At the time, a spokesperson for the auction company was actually quoted as saying the sellers “decided not to confirm the high bid,” which directly and entirely conflicts with the definition of how an absolute auction works. As to what happened in that instance, this author does not know, but it certainly adds to the intrigue regarding the failed Jordan sale(s).
The confusion shared amongst the inquirers was certainly not mitigated by the mass media. Rather than asking pointed questions (something the media usually does well, if not excessively) about the nature of the attempted sales, the major news outlets instead gobbled up and regurgitated whatever publicity sound bytes they were fed by the folks handling the sale (and boy, did the media pick up the story!). Eventually, however, a few journalists and bloggers did remark on the unusual nature of the postponement and the change in terms, including TMZ.com and ChicagoNow bloggerGary Lucido. TMZ perhaps said it best when they commented on the unusual dips and turns of the process by simply stating, “yeah, we didn’t get the strategy either.”
So, in the voice of so many of the inquirers, what did happen? How did a beautiful estate located in an upscale community in one of the nation’s most vibrant cities – and, a’ hem, that was owned by Michael Jordan and offered for sale at ANY price – fail to sell? (They asked).
The short and fair answer is that it’s hard to say what really happened unless you are a party who was specifically involved in the transaction. Further, I am sure that more than one attorney will come calling if this author ventures into the gray area to speculate as to why this sale was a failure (twice), so there will not be any such speculation here.
A very simple and plausible answer is that Mr. Jordan did initially sign up for an auction without a reserve, hoping for the best. When the given bidding audience then presented itself to register in advance for the November 22nd auction, that audience was likely not impressive enough for Mr. Jordan that he was confident in presenting his property to those bidders at any price. Distilled even further, he likely feared the price would be “too low,” whatever his perception of “low” may be.
Now, is this type of pre-auction evaluation and decision-making by the seller a legitimate component of a true auction without a reserve? Typically, no, and I’m sure many of the prospective bidders were not counting on this either. A true auction without reserve means that as long as the bidders have complied with the terms of sale, they can proceed to bid on the property without restriction or rejection, and the highest bidder shall prevail. But again, only the parties involved in the sale have the complete story on that matter.
Of course, any good auction company works as hard as it can to produce a sale, so the rescheduled date was the auction firm’s attempt to do just that, and to give His Airness another chance to perhaps find the right bidding audience. Generally speaking, this makes good business sense. (The choice of the parties to couple the rescheduling with such “strong interest” was the heavy dose of spin that caused most folks to furrow their brow. Understandably so).
Mr. Jordan was obviously patient enough to give the auction a second chance, but this time he elected to have the pricing protection of the $13 million reserve price. (Given that he ultimately relisted his property for $16 million, we can consider the new reserve to be pretty darn conservative, and likely not perceived as much of a “deal price” by the prospective bidders).
So in essence, one would likely be best served to conceptualize this as a case of two separate auctions for the same property, each auction having different terms. The auctions were simply so close together, and drenched in such a heavy dose of publicity spin, that it was difficult to view the process in this regard (that is, rather than as one elongated, confusing process). Keep in mind this is merely the opinion of the author. The facts will likely remain under lock and key amongst the parties involved in the sale.
In any event, Mr. Jordan has re-listed the property for $16 million. I sincerely wish him the best of luck.
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