Collectable Flips Institutional Trading Idea Into Card Auction Service
Collectable, a sports and memorabilia platform, will soon roll out a new form of auction borrowed from the institutional trading market. The advantages, it says, will be price discovery without an obligation to sell for asset holders, while buyers should see less common items.
The system, called Bids Wanted in Competition (BWIC), is taken from the capital markets, where banks and other holders of bonds, currencies and securities use a broker as an intermediary to solicit bids on assets that may be too large to sell in the open market or that they want to shield from certain competitors.
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“It’s another opportunity for collectibles to be established and legitimized in an institutional-quality, alternative assets way,” said Collectable CEO Ezra Levine, in a phone call. “[It’s] a new competitive bidding process for collectibles that has some characteristics of a traditional auction.”
In Collectable’s version of BWIC, a seller submits an item, with or without indicating a price they’d accept, and two rounds of bidding occur. The first round lasts five-days and accepts one binding bid from every individual bidder, with the top three advancing to a second, final bidding round. At that point, potential buyers have two days to submit a final bid.
Through the full seven days fractional buyers can participate in a group effort with other fractional collectors to submit a bid, which can include an option for the seller to retain equity. “You have a little David versus Goliath—the individual bidders versus the group,” Levine said.
In particular, he thinks BWIC can help improve liquidity and pricing for secondary sales of fractional assets, which tend to trade at a 20% discount. The seller then can accept the individual high bidder or the group bid but isn’t obligated to sell.
Collectable’s BWIC system will likely launch the last week of January with some $8 million in memorabilia, including a pristine 1952 Mickey Mantle Bowman baseball card and the first comics of both Superman and Batman. According to Levine, the Bowman is the type of collectible that should benefit from the structure, because it is a less common item in auctions, whereas the 1952 Topps Mantle card has a much more developed market.
“We’ve been able to take in pieces like that because the seller is interested to see what the market can bear, but they don’t want to necessarily be under any obligation to sell,” said Levine. “It’s actually been very, very well received by the ultra-high-end collector and consigner, because it gives them a level of a price protection discretion.”
Such flexibility comes with a cost. In exchange for the price discovery, owners who receive bids that exceed their expected sale price, but then don’t sell, pay Collectable a fee of 5% on the bid. That’s on top of a 1% listing fee that will commence in July, according to the company. Successful buyers pay a 20% premium to Collectable, which it splits with the seller. BWIC auctions likely will occur quarterly, according to the company.
Collectable was launched in September 2020 as a registered broker-dealer in shares of assets such as sports cards. It’s backed by a series of venture capital investors including Bain Capital, Evolution VC and newsletter writer Joe Pompliano.
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