Did Harrisburg get hornswoggled?
I know what you’re thinking. Not another auction story. But before you pass by: it turns out the supposedly final figures reported yesterday may not be so final after all. There’s a hole in the story, and it may mean Harrisburg is being shortchanged by nearly $100,000.
Observers of the auction may have noticed something peculiar about the reporting of numbers since Sunday afternoon, when the auction closed. They kept on changing. Specifically, the amount that Guernsey’s made on commission, taken as a percentage of sales, seemed to fluctuate.
On a Tuesday morning appearance on WITF’s Radio Smart Talk, Guernsey’s president Arlan Ettinger, when asked about the auction house’s commission, waffled. He estimated it would be “about 16 percent,” and promised firm figures at a press conference later that afternoon.
At the press conference, the mayor gave the final figures: total sales of $3,143,795, with a net for Harrisburg of $2,577,911.
The difference—Guernsey’s commission—was $565,884, or 18 percent.
I was at that press conference, and I asked Ettinger whether a fixed rate of commission had been agreed to in the contract with the city. He looked at me like I’d asked whether auctions still involved bidding. “Of course,” he said.
The contract between Guernsey’s and the city of Harrisburg, signed on Feb. 16, 2012, and obtained by TheBurg this afternoon, does indeed have a pre-agreed rate of commission. According to the contract, Guernsey’s is to receive 18 percent—of the first $1,000,000 in sales. For the second million, the rate shrinks to 15 percent, and for any amount above $2,000,000, the rate is 12.5 percent.
Applying these numbers to the total sales, the commission should break down as follows:
$1,000,000 at 18 percent = $180,000
$1,000,000 at 15 percent = $150,000
$1,143,795 at 12.5 percent = $142,974
Added together, Guernsey’s total commission should have been $472,974—or $92,910 less than what Guernsey’s reportedly made.
The only place this difference could be made up, according to the contract, is in the commission assessed on items sold exclusively online, at a rate of 19 percent.
The only problem? None of the items in this auction were sold exclusively online.
Guernsey’s did not return calls by the end of the day Wednesday. But this afternoon, presented with the discrepancy, city COO Bob Philbin explained that the figures were not, strictly speaking, final. Indeed, as the 2012 contract explains, Guernsey’s will wire Harrisburg the proceeds in 30 days, after payments are collected from bidders and rescinded sales are reconciled. That means the “final” numbers presented yesterday will likely face more refining.
Let’s hope, then, that before the final accounting, Mayor Thompson puts up a fight for the city’s money. It’s a formidable task: the president of an auction house is apt to be a skilled haggler. But 30 days ought to be plenty of time.
In comparison with the nearly $2.6 million the city netted, $92,910 may not seem like much. But it’s an amount that could fix a couple of lights. Or fill a couple of holes.
