Robb Read: When Money’s Not Enough

How scarcity informs luxury beyond cost.

By Lucy Alexander 30/09/2020

About a decade ago, with the world economy beginning to recover following the global financial meltdown, a budding art collector flew from New York to the Art Basel Miami Beach fair to buy a painting. “In my head I was the dream person, the up-and-coming collector that they want,” he recalls. “I was a decent-sized collector but not well-known. Not a banker who wants to flip. Someone who would buy as a long-term investment.”

An admirer of the hyper-realist artist Karel Funk, the collector, armed with a budget of approx. $583,000, inquired at the 303 Gallery booth about buying one of Funk’s paintings, then priced around $58,000, “but of course there was no price on display,” he says. The gallerist’s curt response: “There are some in the Whitney you can go and look at.” Recalling the dismissal today, he says, “I now know that most of the art is spoken for before the fair and that it’s a game that it’s open to the public to buy.”

The gatekeepers of the high-powered contemporary art scene are an elite unit whose mission, it seems, is to deter the general public. Of course, this zealous exclusivity is not confined to the world of art. Across many categories of luxury objects or experiences, access to the most hotly contested trophies is restricted to a select few, and the conditions of entry are about more than money. You cannot walk into a Rolex dealership, a New York power gallery or an Hermès boutique, ask for a Daytona, a Jeff Koons or a Birkin and expect to be allowed to buy it.

The shop where nothing is for sale is a well-established marketing strategy. “The notion of scarcity is a really fundamental principle in psychology,” says Kit Yarrow, PhD, a consumer psychologist and professor emerita at Golden Gate University, San Francisco. “We want what we can’t have. When we are denied, it feels like a challenge to overcome and we are more psychologically invested.” For the affluent, the desire provoked by denial is acute, says Yarrow, “because it’s boring to have anything you want. We all look for ways to bolster our egos, and for some, it is the acquisition of the unobtainable, the love of a person or a product, and in some ways products are easier.”

That rejection—and the challenge to reverse it—is part of what drives the desire. “Luxury goods resolve people’s insecurities about their place in society,” says Luca Solca, a luxury analyst at Sanford C. Bernstein. “I have, therefore I am. These things set us apart from the crowd and make us special, in our eyes, and our peers’ eyes.”

The aforementioned would-be Art Basel Miami Beach buyer, rather than giving up in the intervening years, says, “I have since spent millions of dollars on art, but I had a similar experience with Hauser & Wirth only last year. I went in and asked about Mark Bradford, and they laughed and said, ‘Before we’ll even consider you, send us a list of the artists you collect.’ I humoured them and sent it in, and they were like, ‘Okay, come in tomorrow.’”

From the gallerists’ perspective, this tactic is meant not as a brush-off but as a method of safeguarding their artists’ reputations. “If a collector walks in who we don’t know, yes, they need to introduce themselves [and tell us] what they have done and why,” says Marc Payot, a co-president of Hauser & Wirth. The Swiss multinational gallery, which represents Louise Bourgeois and Glenn Ligon, among other superstars, is not “a shop where you buy art like a commodity, first come first served”. Instead, the gallery is merely “the business card”. It aims to place art ultimately not with members of the public but with prestigious museums, because “the long-term success of an artist is directly dependent on the presence in institutions.” The gallery’s role, says Payot, is not so much to sell as to “put the artists we represent into the context of art history”.

In the face of this ambition, novice collectors often turn to art advisers. “We are a bridge between client and gallery,” says Suzanne Modica, cofounder of Modica Carr Art Advisory. Gallerists “are looking for an intellectual curiosity” in would-be buyers. “They want to know that the client is seeing the artist as more than just a bunch of dollar bills that are attached to the wall.”

Illustration: Ben Wiseman

Brett Gorvy, cofounder of the Lévy Gorvy gallery and a former international head of postwar and contemporary art at Christie’s, explains the pecking order
for art placement: “There is definitely a hierarchy—museums, private foundations, collectors with strong affiliations to museums, then prestigious collectors who lend to museums.” Only after this illustrious roll call will more quotidian collectors be considered.

There are tricks of the trade to get your foot in the door, according to one well-connected art adviser: “If you are extremely well-off you can become a trustee at a museum, which gives you cachet.” Sitting on a museum committee also enables connections to curators. At an art fair, “if you’re seen within proximity of curators, that can have a positive impact on your access.” But museum relationships are generally predicated on the expectation that, in addition to monetary donations, at least some of the works you acquire will eventually find their way to the museum in question, as a gift or bequest.

Many serious galleries—along with some sports-car marques—include language in sales agreements prohibiting buyers from flipping the objects at auction. Watch companies do not put such bans in writing but nevertheless keep careful track. Those who disobey in any of these categories risk being blacklisted. But new pieces by in-demand artists are often priced well below the sums they could fetch under the hammer, making the practice all too tempting for some. “When there is a big gap [in price] between the primary and secondary markets, we ask clients to give us a right of first refusal,” says Payot. “We have never sued, but access will be difficult in the future. The strongest protection is the relationship, but you can’t put a relationship in a contract.”

When it comes to art, there’s only so much an artist can produce, but even in the case of manufactured luxury goods, a tight supply translates to a ranking of buyers. Sports-car marques, including Ferrari, Lamborghini and Bugatti, reward their most loyal clients with first dibs on invite-only releases of special models. David Lee, a Ferrari collector who has appeared on Jay Leno’s Garage, says that access used to be “down to who you knew at the factory,” but a new tracking system tells Ferrari “exactly what cars you have, so they know whether you’re passionate or playing the game.

I have bought every car they released in the last few years, including ones that were not so popular. That data determines that I am a top client.”

Yet even favoured clients can have their privileges taken away. In 2017, Lee, who owns 30 Ferraris, was denied the chance to buy a LaFerrari Aperta, which had a run of only 210 models. His mistake, he believes, was discussing Ferrari’s secretive selection process with the Los Angeles Times. “Ferrari had told me I was in the running, but they had not yet decided,” he explains, so he told the newspaper he had not been offered one. The way Lee tells it, the resulting headline—basically, he owns a dozen Ferraris and has loads of cash, why can’t he buy the elusive $3.1-million LaFerrari Aperta?—didn’t go down well at Ferrari HQ.

“They read it over in Italy and thought I was using the media to pressure them to give me a car,” Lee says. “So for a few months we were on shaky ground. My relationship with Ferrari is very important, so it was really upsetting to me. They did not offer me a car.”

Quest for the Rolex Daytona: A Cautionary Tale

The hunt for a Rolex Daytona is the watch collector’s equivalent of the quest to find the Holy Grail. Despite their presence at major auctions, Daytonas remain near-impossible to find outside the secondary market. Though they’re relatively inexpensive by the standards of luxury watches—an entry-level steel-and-gold version retails for approx. $25,000—the Daytona’s mystique remains baffling.

I embarked on a mission to a Rolex boutique on Manhattan’s Fifth Avenue to see what the brush-off would be when I tried to buy the elusive model.

“I’m here to buy a Rolex,” I proclaimed to the doorman, who ushered me into a side room and into the care of a sales associate. I’ll call him James.

“I need to buy a birthday present for my husband, and I don’t know what to get,” I confided in James, who directed me toward a case containing Submariner watches. A steel-and-gold model would cost about $24,000, he said.

“I hear the Daytona is a good one,” I ventured. James looked a little sceptical. “We don’t have any in the store,” he said. “They’re very rare, and they all go to special clients.”

“Wow, do you have to go all the way to Switzerland to get one?”

“It’s even worse there,” he said. “You can’t just let anyone walk in and buy one. And that’s the right way to do things. Imagine if you saw someone wearing one and you asked where they got it and they said they walked in here and just picked one up. How would that make you feel if you’d been buying watches from us for years and had never got one?”


“You need to put blood, sweat and tears into forming a relationship with the brand. You need to be a really loyal customer, and then we see it as a reward. So I can get you whatever you want, but it has to be realistic and not a Daytona.”

I left empty-handed but pleasingly reassured that money, liberally and strategically deployed, would do. LA marque’s signature red and has 1.1 million followers—says the relationship has since been repaired, and he is expecting delivery on five Ferraris this year.

The year before Lee’s dust-up, Preston Henn, an American flea-market mogul and two-time 24 Hours of Daytona winner, went so far as to sue Ferrari for damages, alleging the marque told his friends he was rejected because he was “not qualified” to buy a limited-release LaFerrari Spider. His qualifications were, according to court papers, the 18 Ferraris he had owned and the $1.46 million cheques he had mailed to Ferrari’s then-chairman, Sergio Marchionne (who had returned it). Henn accused the marque of “harming [his] reputation in the universe of Ferrari aficionados” but dropped the suit shortly before his death in April 2017.

Ferrari, which declined to comment about its specific allocation policies or criteria, is perhaps the best example of a company that successfully inspires in its devotees feelings not only of admiration but of identity. Lee, who is chairman of Hing Wa Lee, a watch-and-jewellery business outside Los Angeles, recognises the status anxiety in his Rolex customers: “For the client, it becomes an identity crisis. Where do they fit? How do they compare in this world? If they are able to get these very limited products, it shows they are considered to be at a certain level.”

Ferrari does not hide the fact that it deliberately keeps its production low to ensure demand is never satisfied. “The company was founded on one simple principle,” Marchionne told CNBC in 2015. “You only produce one car less than the demand for the vehicle.” To meet demand, he said, would “destroy the exclusivity of the brand”.

Yet Ferrari’s honesty about its artificially induced scarcity has not diminished the brand’s allure to its collectors, such as Barry Beck, cofounder of Bluemercury, the luxury beauty retailer. “With Ferrari, it has never been about money,” says Beck, who owns three Ferraris and collects Patek Philippe watches. “Many who have had the privilege to drive these cars or wear these timepieces have become devout, evangelical disciples and the brands’ best marketers.”

Similarly, even though the fabled waiting list for Hermès Birkin bags was exposed as a fiction by Michael Tonello in his 2008 memoir, Bringing Home the Birkin, the ardor of the brand’s fans has not dimmed. Tonello would ask for Birkin bags while shopping for scarves to flip on eBay and says the Hermès sales associates would tell him, “There’s a list, and there might even be a waiting list to get on the waiting list.”

Yet one day, after spending a large amount in an Hermès store, Tonello was offered a Birkin. “I realised that there was no waiting list,” Tonello tells Robb Report. He promptly switched to flipping Birkins. “They all have Birkin bags in the back. A Birkin is a reward for being a good customer. They don’t care who you are. You just have to spend money, and you have to know the formula.”

The same is true, he says, of watches: “Rolex won’t sell you a Daytona until you’ve spent a certain amount on other watches. Then you qualify for the private sales. It’s all a game.” Patek Philippe adds another layer, requiring clients to submit a formal application for special models. Beck recalls being told that a certain watch was “an application piece” (he initially thought this term had something to do with applied enamel). He included a Forbes profile to “grease the wheels” which, he says, ensured “near-immediate approval”.

Michael Hickcox, an avid watch collector and CEO of executive search company Expedition Partners, says that Patek Philippe allocates lesser models to new customers. “They want to hook you,” Hickcox explains. “People who try to go to the top straight away, they tend to be the ones who exit the hobby soon afterwards. They got what they want. They don’t spend 15 years saying, ‘I can’t wait until I have this one thing.’ Patek Philippe is going for the person who spends millions on watches.”

Illustration: Ben Wiseman

The flipping ban is an additional burden, particularly when sought-after watches from several prestigious makers can command twice their original prices. “I knew a dealer who sold a special watch [for a client] and that brand found out,” says Hickcox, adding that the dealer told him how the brand, in an apparent attempt to uncover the culprit, invited everyone who had bought the watch to a dinner. “The client had to call the dealer and ask to borrow it back. He did and wore it to the dinner, and the folks from the watch company never knew.”

Inside the inner circle, competitiveness does not diminish; it just becomes less purely financial and more about connections. At the dinners held by watch brands, executives toast their clients, who in turn make their cases for yet more coveted purchases. According to one watch-industry insider, the North American president of a renowned watch brand told the insider that at one such dinner he turned down a well-known entrepreneur’s plea to buy a special piece, even though the man had bought several other models in order to qualify. Only after the entrepreneur offered to speak at the graduation of the executive’s son did he relent.

Sometimes the dinners and events become as coveted, maybe even more so, than the items themselves. Lionel Geneste, a luxury-goods consultant, says the world of high jewellery is now dominated by an arms race of ever-ritzier events. “At the Paris shows Chanel did a dinner, Dior was at Versailles, Dolce & Gabbana now bring clients twice a year to Milan and Capri, Bulgari flies everyone to Rome and Van Cleef goes to the South of France,” he says. “It’s not that people are competing to be allowed to buy jewellery—they buy in order to be invited to these events.”

Jewellery produced by fashion houses is easy to acquire because it does not hold its value, says Fiona Druckenmiller, founder of FD Gallery, a Manhattan jewellery boutique. The same is true of contemporary pieces by Van Cleef & Arpels, Bulgari and Cartier, she says. Since they were acquired by large public companies, “you can get anything if you can afford it.”

Druckenmiller specialises in work by prestigious independent designers such as Hemmerle, Viren Bhagat and Joel Arthur Rosenthal, known as JAR, whose unique creations are much more difficult to obtain. To buy from these designers, she says, “it makes a difference if they like you.

This is a relationship in the true sense of the word, not just one based on money spent on collecting.”

With JAR, the only living jeweller to have had a solo show at New York’s Metropolitan Museum of Art (in 2013), “it’s hard to get in the door to begin with. You need an introduction,” Druckenmiller says. “And even then, if he feels like the woman is not a good ambassador for his pieces, he will say, ‘Nothing is available.’”

Independent watchmakers are similarly discriminating, selling only to collectors they deem worthy. “It’s somewhat a snob thing,” says Michael Hickcox, citing Philippe Dufour, Kari Voutilainen and Roger W. Smith, the latter of whom makes only 12 pieces a year. “You have to pay a £3,000 (AU$5,400) deposit to have the option to get on the waiting list. Several years later you get an e-mail saying, ‘Congratulations, you’re now in our production queue.’ You are not told what the price will be.”

Such treatment is bound to unnerve people unaccustomed to feeling powerless. A similar sensation has struck countless souls forced to face Manhattan’s most fastidious co-op boards, whose probing can be invasive and whose decision-making is shrouded in secrecy. Although the rise of Billionaire’s Row interview-free apartments has tempered some of the pickiness, for “old-school fancy buildings” a buyer has to have the right sort of money, says Lisa Chajet, a second-generation broker at New York’s Warburg Realty. Boards will want to know, “Did they make their money at Goldman or in casinos?” she says. Most favoured is “old money, a family trust that’s reputable and solid”. And if you come with a trail of paparazzi (Madonna) or a whiff of scandal (Richard Nixon), you’re probably better off bidding on a new apartment or a single-family townhouse. Once a co-op contract has been signed, Chajet’s approach is to get hold of the board list and call anyone who might have a connection with her buyer: “Maybe they both went to Yale, or they’re partners at law firms.” The most popular applicants? Doctors. “They don’t have the money that hedge-fund people have,” says Chajet, “but they have prestige.”

The preference for old money—and a WASPy family tree—is also alive and kicking in the notoriously exclusive world of private clubs in the Hamptons. While no one talks on the record for fear of being blackballed, insiders say the membership of several high-profile clubs in the enclave is largely comprised of elderly representatives of formerly illustrious Protestant families, who want to keep it that way. Membership is hereditary, according to those in the know; non-WASP new members are admitted rarely, and only in return for large donations to the upkeep of the club in question.

For many people, the effort required to obtain a supposedly exclusive object, be it an apartment or a wristwatch, is worth it, says Tonello, because it signifies success. “If you keep hearing about how hard something is to get, and how even famous people can’t get it, and then you get it, you feel like you are a master of the universe. I was in an elevator with a woman carrying a Birkin, and all these other women got in and saw her Birkin, and I could see them wonder who she was. She must be someone, a VIP? With guys, it’s the same with a watch. They send secret subliminal messages to others in the know. It says, I have arrived.”

Remember that art collector on a quest for a Karel Funk painting? The same gallery that rebuffed him at Art Basel Miami Beach finally offered him one several years later, for approx. $80,000. “I bought it,” he says. “Begrudgingly.”

This piece is from our new Design Issue – on sale now. Get your copy or subscribe here, or stay up to speed with the Robb Report weekly newsletter.


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