It was a sight to make a rev-head salivate and a merchant banker weep.
Last Monday night, car aficionados and bargain hunters filled the Royal Hall of Industries at Sydney’s Moore Park to watch 90 luxury cars – including Ferraris, Porsches and a host of Mercedes Benz vehicles – go under the auctioneer’s hammer.
More than 70% of the vehicles had been repossessed after their unfortunate owners had been unable to keep meeting their repayment plans. We can only guess at the former owners’ identities and occupations, but it’s a fair bet there are a few former investment bankers and property developers riding the bus at the moment.
(It’s also a fair bet that the finance companies that lent to these wealthy drivers have lost a bundle. One of the premier lots of the evening, a 2007 Ferrari 599 Fiorano, went for $420,000, well under the sticker price of $650,000.)
Auctions like these are occurring over the world. Last week in Auckland, a farmer bought two Ferraris worth just over $1 million for $330,000. “We were just going to go to the movies or something but then I read about the auction,” the farmer, Chris Gibbs, told a reporter. “We used to have a yellow Ferrari but it got written off, so when I saw the yellow one there I thought ‘Why not?’.”
Why not indeed? Many wealthy entrepreneurs are desperate to turn their toys into cash, and if you’ve still got a few dollars to spare, then there are some huge bargains to be had.
And it’s not just cars. Art, wine, corporate jets, luxury yachts and prestige homes are all on the sale block, or have been used as collateral to secure cash to pay off debts.
Let’s have a look at some of the rich and famous who are feeling the pinch.
The casino boss has lost around $4 billion in the last 12 months, and has several toys on the market. The biggest is perhaps the Z Ellerston, a 164-foot luxury yacht, which is moored in the Mediterranean. The asking price is around $50 million.
But if sailing is a bit slow for you, perhaps you’d like to buy Packer’s second-hand Corporate Express jet, which is reportedly up for sale for about $60 million. It has also been reported Packer is selling a three level flat in the exclusive London suburb of Mayfair.
You may not have heard the sad story of Aubrey McClendon. He founded a gas company called Chesapeake Energy and built up a giant stake in the business over more than two decades. But when US markets tanked in early October 2008, McClendon received a margin call and was forced to sell the bulk of his stake – a stake that had been worth $US2.2 billion in July last year. In recent weeks he has been auctioning his wine collection. The first half of the collection sold for $US2.2 million, while the second half will be sold in Honk Kong in April.
Rupert Mudoch’s newspaper The Australian took great delight in revealing the patriarch of the Fairfax family had taken a mortgage out on “Elaine”, a 6800 square metre waterfront estate at Double Bay believed to be worth between $30 million and $40 million. According to the paper, John Fairfax used a $170 million CommSec margin loan to take over his family’s entire stake in Fairfax Media, only to see the company’s share price drop by around 70%.
The fortune of former Icelandic billionaire Björgólfur Gudmundsson has been decimated by the collapse of Icelandic company Landsbanki, which was nationalised in October. To pay off debts, he put his English soccer team West Ham United on the market last October. Gudmundsson bought the club in 2006 for $US165 million, but it now appears he’ll be lucky to get back $US70 million.
Tim Blixseth and his wife Edra set up the Yellowstone Club, an exclusive community that was designed for the rich and famous; the world’s richest man, Bill Gates, was a member. But Yellowstone Club is now bankrupt and Tim and Edra are divorced and desperately trying to sell off assets.
According to Forbes, Tim is flogging a private Caribbean island, which comes complete with a nine-bedroom house, for around $US75 million. Over in France, Edra is trying to sell a medieval French castle, called Chateau de Farcheville, for $US57 million.
Annie Leibovitz, arguably the most famous photographer in the world, was essentially forced the sell the copyright to her life’s work in order to pay debts. Under the arrangement, Leibovitz signed away copyright, negatives and contract rights to every photograph she has ever taken or will take in future as collateral for a $US15.5 million loan. A number of museums in the US have also used artworks for loans to pay debts and operational expenses.
Russian oligarch Sergei Polonsky is the man behind Russian property company Mirax Group. In January he announced on his blog that he would sell his luxury Turkish hotel the Sungate Port Royal, his yachts and his villa on the Côte d’Azur to help fund Mirax’s construction projects. Polonsky paid $US340 million for the five-star hotel in 2007, but Forbes magazine says the asking price is a paltry $US200 million.
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
