Coin-Op Bubble Discusion

[nick]

Moderator's note: The "He" that is being referred to is John Johnston. A lot of (perhaps all) of his collection is going to be auctioned off on 9/23/05 and 9/24/05 in Pennsylvania.
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Guys don't you understand why he is selling? The fact is right in front of your noses and you can't figure it out. He is selling because the market prices on coin op is so outrageous right now and record prices are being set left and right. Johnston comes to the show every year and I talked to him last show. The prices will only stay high for so long. Not to say they won't increase even more. But, haven't you guys noticed for the most part heavy bidding competition on E-bay. Have you also noticed people don't like to buy from dealers but, non dealers. And this factor is because they think if it is in the dealers hands it isn't worth as much or doctored up. Why do you think so many good coin op pieces have been going up for sale lately. Slots may not be super strong right now but, they are getting good money. But, vending and trade and arcade prices have went through the roof. What is going to end up happening is the market is going to slowly change and soon a lot of dealers will sell their collections because you can't buy it anymore and you can't sell it. I wrote the Book Pocket Guide to Vending and have been collecting for 17 years and am going to quit soon because of all the bs in this hobby. I can't buy anything anymore and the few pieces I have left with good prices I can't sell them. I get backstabbed by other fellow coin opers left and right and everyone is always asking for a hand out. Everybody wants to play stupid they can do it with the rest of you. I am done because of all this bs. I never thought it would come to this and I am sure Johnston lost the joy of collecting as well because of all the bs. Many guys I know are fed up and frustrated but, until most of these people wake up and smell the coffee nothing will change. It is just right in front of everyones face and they don't see it. Coin op has changed for the major worst. I am not writing a second book and unless things can turn around I am done with all the bs loops.[/i]

[Marc Hess]

Nick

I think there is truth to much of what you say. However, thanks to e-bay our hobby has become much more accessible to the masses and therefor I don't think the bubble will burst anytime soon. E-bay has drastically affected the coin op hobby's supply and demand. It has given so many with the financial means but not the time to travel to Chicago and the likes the opportunity to bid on and own machines they otherwise never would have come across. Same number of machines x more buyers = higher price. Add to the equation disshonest dealers, honest dealers, dishonest buyers, and honest buyers and now you have a triganometry equation and . . . well, I don't do math in public.

[atac]

It's not just the bs--I think he's getting older and is smart enough to sell when things are high--prices are high and are sure to come down--watch housing--as it starts to unravel, the stock market will follow and when that happens coin op will follow along with all collectables. It's a sure sign of a peak when you see the frenzy that's been going on.

[Marc Hess]

Dave

How about another poll? Do you think there is a coin op price bubble? If yes will it burst within ???????? mos., years etc.

As I noted above, I don't think there is a bubble. I think its the e-bay effect of supply and demand.

Marc

[atac]

Marc--you're absolutely correct--it's a matter of supply/demand driven by extremely high liquidity & the housing atm--of course things will revert--the good stuff will stay good (relatively), but I'll bet within a year or less it will be a long time before a roulette sells for a quarter mil. Everything is bubbled right now.

[nick]

Marc, honestly to say I have followed the pattern for years. Since about 2001 and here is what I noticed. Not blaming the President or anything but, since he has gotten in everything has gotten worse. I noticed coin op getting hard was starting in 2001 prices were a little higher than usual and then Chicago show started to become higher priced. Then in about 2003-2004 a lot more people were losing jobs and turing to other side business which included coin operated antiques. The growth was very substantial and continued to climb. This year there are boat loads more than last year. Another thing I noticed before 2003 when I attended public auctions for coin-op I would win at a good price 50% of the time. Now in 2004-2005 I have won about 1 machine total and I am winning about 1% of the time and paying a lot to win. There is a lot of competition now at auctions everywhere and the number of dealers is probably 3X greater than in 2001. Which affects everything. But, now to another point I deal in antique toys as well. The market was affected but, much differently in perspective. Toys still remain buyable at decent profit margins. I sell more toys than I do coin-op and there are plenty to go around. My central aim for my part of the post is something seriously wrong happened somewhere and coinop especially the vending and arcade area has gone nuts over the past 2 years. And some people may say the new people coming in paying heavy cash for collection purposes. But, something weird happened I was getting outbid at auctions left and right and I heard people talking when they won a coin op piece saying I will make a mint on this. And they had actually paid 100% for it. Stupid people don't know what they are buying drive the prices up. Dirks live auction listen to this. A person who sells new fixtures paid $7200 with the BP for a rex he knew nothing about and didn't even deal in antiques. And tried to sell it for double. That is a kicker and that is something I never expected to see. And actually to tell you I haven't seen much high end on ebay but, mid range is flooding ebay but, is still going very high. I have seen hundreds of masters in the past year but, all of them go past buying point for me and usually far past it. Now on to the bubble part. Unless the economy changes significantly and a lot more better paying jobs come up available there will be heavy bidding and competition in the antique world from people who don't know much trying to make an extra living. Unless everything spruces up and things come back to normal the coin op bubble won't burst and the prices may continue to climb. Before 2001 I was selling nearly a hundred machines a year and buying probably 200-300 decent machines a year. Now in the year 2005 I sell maybe 10 tops and that is tough and I buy maybe a half a dozen tops unless a mircale happens. When it goes from that to that fast something is seriously wrong. And the prices from half the vendors at the Chicago show is rediculous. They are pricing things out of the market. I have seen some scary prices there. I am just saying until things get better and we concentrate on things at home in the U.S. and concentrate on making our Country a better place. Nothing is going to change without that concentration. Things will continue to get worse or just not come back. And if this continues coin op remain seriously messed up and an unpredictable market. Just my 2 cents. The only reason I am going on about this stuff is I can't do it anymore like this. Losing money, pissed off, can't do another book because prices are 2 unpredictable to say. I am just saying I am probably going to liquadate what I have left and not deal much more at all. I can't collect either because the other machines have gotten out of line. I think I will be back to doing a little bit of the antique toys and being a light seller again. Unless things change. I just wish they were like they were back before 2001. I loved those times and enjoyed coin op so much back then. Now it is just getting to be a nasty bug bite and is making me hate it. Gas has gone up significantly but, auction prices remain very high and it is very puzzeling. I just don't know what to say anymore. This will probably be the last time I set up at Chicago show in the Fall. I really enjoyed it but, no longer can do it because of what has happened.

[tradestimulators]

The secret is out!!! More people like to collect coin-op. The good deals are gone. Everybody knows what everything is worth and all the good stuff is gone. If your in it for a business, try collecting something new that is not quite yet to be discovered and enjoyed. In the coin-op area its over, done with, face the facts. Buy a 1978 Z-28 for 5K it will appreciate much more then coin-op will. I have a wurlitzer 1015 that i bought 12 years ago for $5500, guess what, I would have been better off putting it in a CD, but I enjoy using it. If you bought your coin-op years ago you'll make out great some day. You have maybe 2 major heavily advertised auctions for coin-op each year, the prices are high. These are the best buying opportunities for the big boys with loads of dough, they care about price less then their need to acquire. Bubble? Who cares.

[Dave]

This has been a very interesting discussion and I hope we can keep it up.

As most of you know, I am not a dealer but really consider myself a collector (but not one of the big boys). The only time I sell machines is when I run out of room or when I get duplicates.

In my opinion, I don't think the common slot machines (Castle Front, High Top, etc.) machines RETAIL value have really moved much in the last 10 years.

However, thanks to the Internet and E-Bay, the wholesale value has increased dramatically. Therefore, the margins have significantly decreased. I agree with Nick in that I don't see how a dealer can really survive these days. There is not enough margin in the low end stuff and the high end stuff is too hard to find. With the price of gas and hotels these days why even bother going to a show if, from a buyer's perspective, all you are going to see is overpriced common machines or a bunch of reproductions, or from a seller's perspective not many buyers? I have not been to Chicagoland for several years. If I do go, it will be mainly to keep in touch with the dealers that I know. I really won't expect to buy anything.

Before E-Bay, people sold their machines by placing them in the for-sale section of the paper and pickers could find them pretty cheap and they would then sell them to the dealers. I think those days are long gone. Now all a person has to do is get on Google and he/she immediately has access to several dealers & collectors. Ten years ago I picked up a lot of good machines by reading the ads in the newspaper and Penny Saver type publications. Today, I don't even bother looking.

Now the more desirable and rare stuff is a totally different story.
I think people are of the opinion that the good & rare stuff has all been pretty much found. In addition, most of this stuff is buried in a collection and will probably stay there for a very long time. Therefore, when a desirable/rare piece does come up it will bring a premium price. Once it brings a premium price all the other people who own one will know about it and they will not sell their piece for much below that. For the most part, people who own the rare/desirable stuff are not hurting for money and probably don't care that much if they sell it or not. Therefore, the only way to get it is to pay the going price or have something that they want and you are willing to do a trade for it.

A good example of this is the Buckley Bones dice machine. For years, these sold for less than $5,000. However, a couple of years ago one sold for, I think, around $18,000 at a major auction house. A little later, another one sold on E-Bay for around $16,000. The new price had been set and everyone who heard about these auctions and had a Bones machine would not part with it for under $14,000. Dealers now know that they can get in excess of $12,000 for one so when one does show up on E-Bay a dealer can become very agressive. I don't think Bones machines will ever fall back to under $13,000 simply because those who own them will refuse to sell them for less.

The same thing happened with the Caille Aristocrat. One sold at auction last February for $29,000 (+ 10%). One showed up on E-Bay a few months ago and it did not hit reserve at the $20,000 level. I talked to the owner and he wanted $25,000 for it. He knew that one had just sold for $29K + 10% and he thought $25K was a bargain. My personal feeling is that the one in PA will bring $25K - $30K. If in fact it does, I don't think anyone will be able to buy one from an existing collection for under $22K.

Actually, if you think about it. If the Caille floor model Roulettes are going for say $175,000 then an Aristocrast should bring about $25,000 since in the past they typically brought about 15% of what the full size model brought. 15% of $175,000 is $26,250. 15% of $225,000 is $33,750 which is almost exactly what the Aristocrat sold for last February at the Julia auction.

It will be interesting to see what the Caille floor model Roulette will bring at the LV auction. I don't think it will bring $225,000 like the last one did. The last one, from what I hear, was probably one of the nicest quarters ones ever seen. However, if the one in Vegas is in good shape I would not be surprised to see it bring in excess of $175,000. If that does occur, I don't think you will ever be able to buy one (from a dealer or collector) for less than $170,000. Your only hope of getting one for a lot less is to hope someone finds one in a basement, contacts you, and no one else. I think you have better odds in winning the lottery.

I think the rare/desirable stuff will always bring premium prices. I don't think prices on the common stuff will move very much at all.

[Marc Hess]

Nice job Dave you absolutely nailed it. I agree with you 100%, good analysis and well written. I give you an A+.

[Dave]

Well, with another couple of auctions behind us since this thread started, I thought I would post a few additional thoughts.

It looks like prices continue to rise at incredible rates. We saw a Futurity sell for more than $12,000 and a CastleFront, a VERY common machine, sell for more than $6,000 (anyone want to buy my CastleFront ?).

In addition, new records were set for the rare stuff.

So, what do you think, are prices going to continue to rise?

The next VC auction is in October and it is filled with 3 reel machines. It will be interesting to see what an auction full of 3 reelers does.

Dave