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Silly money

As prices for Rolex and Patek Philippe timepieces reach astronomical levels, Ken Kessler explains what’s behind the overheated market – and why it won’t be cooling any time soon

When the Rolex and Patek Philippe madness began I can’t say, but I knew it was a ‘thing’ when the brand manager of a rival house uttered two words:

“purchase history”. I was attending a press event in March, when, for some reason, the Rolex/Patek frenzy had ramped up another level.

It was probably in the wake of the Tiffany blue-dialled Nautiluses changing hands for five (or more) times retail price, while some Rolex or other had been flipped for a similar multiple. What was happening? Were watches the new Bitcoin?

It was another horological perfect storm (see Loupe 25) with Covid-19 causing both slow-downs at factories and thus supply issues, added to (always welcomed) exponential increases in demand, followed by both Rolex and Patek Philippe making as many watches as they could without compromising quality. Hell, even if they wanted to, they couldn't ramp up production. Hiring and training watchmakers is not the same as staffing a car wash. No offence to car wash attendees, but the skill sets are quite different.

There’s a book, or even a documentary for one of the luxury channels about the madness because this phenomenon is as interesting to the hoi polloi as any of reality shows which give viewers a glimpse into the lives of the filthy-rich-if-not-necessarily-famous.

Along with all of those dreadful shows about S&F* wives in Beverly Hills or New Jersey and their wardrobes or the ‘work they’ve had done’; behind-the-scenes series about hotels which few can afford; and more relevant, upscale pawn shops wherein said spoiled wives dump their jewels and furs, this has all the ingredients of something which should be narrated by Jeremy Irons.

Look at the various elements. First – and I am a militant free-market type, not a socialist – there’s good oldfashioned capitalism at work. While I prefer an enlightened form of greed, with some limits and social conscience at play, the law of supply-and-demand currently enables

some of the most venal toe-rags on earth to exploit the lust for watches that is so absurd it saw the recent launch of the Swatch/Omega collaboration, the MoonSwatch, inspiring some idiot to pay £3,000 for a £210 watch which isn’t a limited edition. Although the scale is vastly smaller, I think this putz will find – when he comes to sell it – that the return will be as diminutive as when the greatest schmuck of all paid millions for the first-ever tweet as an NFT and then tried to sell it. I heard the bids were a middling four figures.

Not so Pateks and Rolexes. There is simply no end in sight, the prices climbing so rapidly that last year’s nowdiscontinued 41mm Rolex Oyster with the Tiffany-blue (yes, them again) dial commands £25,000-£30,000 after an initial retail price of around six grand. So ask yourself this: if you craved, say, a Rolex Submariner with a price circa £8,000, and after a few years of waiting you managed to acquire one at list, would you say “No” to a quick £10,000 profit… or £20,000 if you bought an all-green ‘Hulk’? Unless your pockets are as deep as the Mariana Trench, and you genuinely don't need the money, the odds are you’d jump at the deal.

But it’s messy out there. If you want any Rolex or one of the hard-to-get Pateks, you need to get on the waiting list. Which brings us back to ‘purchase history’. Judging by what friends have told me of their personal experiences trying to buy Rolexes, coupled with discussions with Authorised Dealers (‘ADs’ for short), it’s a troubling situation in which the retailers try to regulate sales. Their method is to satisfy regular, repeat customers, although one major retailer told me they absolutely want to encourage new clients, who haven’t yet made a major purchase. It’s like those ultra-limited-edition Ferraris. You don't get a shot at a car aimed at Jay Leno or Jay Kay or Chris Evans if you don’t already have

Would you a garage full of ’em. How this works in practice is one enters the AD, asks spend $400,000 about Rolexes or Pateks, puts up with the shrugs, tales of two- or threewith a guy in a year waiting lists and ultimately being informed that “Sir/Madam too-tight T-shirt? might like to consider X”, when the salesperson points to a duller model than is desired: say, a base Oyster with silver dial or any Patek which isn’t a Nautilus nor an Aquanaut. A friend of mine suffered this in Scotland, got ticked off, walked out of the shop and bought an Omega Speedmaster Professional instead of the Submariner he wanted. A few months later, the AD called and said they might be able to add him to the list. By the end of the day, he owned an Oyster he’ll never wear, but it got him on the list for a Sub. This is why those desperate to own a Rolex or Patek are driven to the ‘secondary market’. Consumer law prevents

retailers from refusing sales, so they depend on lack of stock as a way to put a lid on things, while Rolex and Patek (nor the retailers) have no way of controlling what happens to a watch once it’s sold. The only thing they can do, if they recognise an habitual ‘flipper’, is to find a way not to sell to him in future.

Retailers, too, have to be extracareful as no shop wants to lose AD status. Any profiteering, selling pieces for more than recommended retail would terminate their relationship, and thus cost them their most profitable lines. Still, it must be galling for both of the brands and their ADs to see the money which changes hands within days of a sale.

So ask yourself another question: are you so desperate and/or impatient to play the waiting game to get your GMT-Master II or Aquanaut at retail, such that you will deal with unsavoury types who look like Eastenders’ Mitchell Brothers on a bad day? You know the ones, the smug, oily, sub-Arthur Daley types raving about horological inflation on Instagram, as they wave handfuls of Submariners and Nautiluses (and, of late, Audemars Piguet Royal Oaks) with telephone-number prices popping up on screen to show you how fast they’ve inflated? Would you spend $400,000 with a guy in a tootight T-shirt, a baseball cap and designer stubble, flaunting a Pelican case full of Hulks and Smurfs?

All of this explains a new breed of con artist: women thieves, dressed up as staff with clipboards, taking surveys, who target golf courses. They flatter and scam old farts with Rolex Day-Dates, finessing them off the golfers’ wrists as they rub up against them. You know the picture: 60-year-old silver-haired rich dude flattered by a twentysomething with a vaguely eastern European accent in a tootight T-shirt. Which seems to be the uniform for horological opportunists. A friend bought Of course, this new, salacious ring of distaff Rolex thieves might a Speedmaster be a deep fake – as I hope applies to some of the watches they’ve instead of the purloined – but it seems as plausible as the little bastards on motorcycles Submariner he grabbing watches off wrists as they speed down Bond Street. Be careful wanted out there, as they used to say on Hill Street Blues. As for this hack as a target? Though I am old fart who would be easy to rob or scam, who loves Rolex and Patek Philippe, who has five of the former and one of the latter, I’m safe because all are non-blingy vintage, and all are intended for the heir to my debts so – sadly – I don’t wear them much anymore, certainly not in London. But most of all, I don’t play golf.