Sports Market Report

Doug Allen’s wife, Amy, has a ready answer whenever she is asked what her husband does for a living. “Doug doesn’t have a job,” she says with a wink. “He has a hobby.”

“That’s the truth,” says Doug. “I turned my hobby into a job. I know that sports cards and collectibles can be burdensome to many spouses, but that was never the case with us. My wife knows that I have transformed my hobby into a great job and that my work is something I really love. She gets it. She sees that I make a good living and thoroughly enjoy what I do – not everyone can say that.”

Doug has delved deeply into learning every nuance of the material he is passionate about.

The title Doug Allen holds in his hobby-turned-job is that of President and Chief Operating Officer of MastroNet and Mastro Auctions, the Oak Brook, IL company that holds the distinction of being the country’s largest auction house of sports memorabilia. MastroNet is a company familiar to anyone who collects sports cards or memorabilia, and is also well-known outside of the sports hobby for having been the company who handled the world renowned Honus Wagner T-206 tobacco card that sold for $1.3 million, and the $492,000 sale of the Montgomery Alabama bus on which, in 1955, Rosa Parks refused to give up her seat.

Born and raised on the South Side of Chicago, Doug received his Bachelor of Arts degree in Finance from Purdue University and is also a Certified Public Accountant. Having worked as the Vice President of Finance at Platinum Technology, a billion dollar software company, he went on to serve as a managing partner of a venture capital firm and also as an active member of several corporate boards.

Doug Allen’s wife, Amy, says “Doug doesn’t have a job. He has a hobby.”

An avid collector of pre-war cards and vintage Chicago Cubs memorabilia for well over a decade, Doug has delved deeply into learning and understanding every nuance of the material he is passionate about. “Over the years, I have developed a broad knowledge of collectibles, and an expertise in pre-war card issues and game used bats,” says Doug. “It was through my collecting that I first met Bill Mastro. We became friends through a high-end client I introduced him to. Eventually, I became more involved in the company, working with Mastro Fine Sports to acquire Ron Oser Enterprises and Robert Edward Auctions to form MastroNet.”

In 1997, Doug became an integral part of Mastro by first serving as a consultant. By 2000, he had been invited to serve on the company’s board of directors and, within a year, was brought onboard to participate in the development and implementation of growth and operational strategies designed to aggressively steer Mastro’s future course. Today, living in a suburban area of Chicago, he has been married for 23 years and has three children. Professionally, he has gone from being a full-time employee, to President and, in 2004, he became the principal factor in Mastro Auctions when he and Bill Mastro, the company’s founder, negotiated a successful buyout.

When asked to expound on his feelings on the changing of the guard at Mastro, Doug says it has been a positive experience for both him and the company’s legendary founder. “Bill Mastro will always be an icon in our hobby,” lauds Doug. “He is still around, and will be for about five more years. This transition has been seamless and we have worked extremely well together to spur the growth of our business. Bill has been a pioneer and leader in the collectibles business for 35 years. He is universally regarded as one of the foremost experts in the field of baseball cards and memorabilia.”

Doug is the President and Chief Operating Officer of Mastro Auctions, the country’s largest auction house of sports memorabilia.

Bill Mastro is widely recognized as having been the man who introduced the concept of conducting high-end sports memorabilia auctions when he handled the James Copeland Collection through Sotheby’s in 1991. By the mid-1990s, Mastro elevated his concept to the next level by creating an auction house specifically committed to high-end sports memorabilia. With the formation of Mastro Auctions, Bill incorporated the services, expertise, promotion and quality that had long been a part of fine art auctions and established them within the sports collectibles industry. According to Doug, Mastro knew that the key to success in auctioning high-end sports memorabilia was to have a staff of the world’s most knowledgeable experts. “Bill put together an unprecedented team of experts,” says Doug. “And he also embraced technology by developing an online element for the auction process that remains unequaled in the hobby.”

In 2001, believing there was both a need, and an opportunity in the collecting industry at large, MastroNet launched its Americana division. This endeavor was the master plan of Bill Mastro who envisioned Mastro Auctions expanding into all genres of high-end collectables. Today, as President and COO, Doug Allen continues that commitment by employing innovative ideas and bold initiatives. These actions have seen the company chalk-up record revenues and realize the founding father’s dream of expanding into new markets. Known within the company as “The Road Warrior”, Doug has logged thousands of miles and closed numerous million dollar plus deals including the representation of the prestigious John Branca Collection; the Duke Hott Collection; a bat that was game-used by Babe Ruth to hit the first home run in Yankee Stadium, and a 1914 Cracker Jack card set that shattered all price records for a sports card set.

We here at SMR recently had the opportunity to sit down with Doug Allen and get to better know the man who now reigns over the most important auction company in the sports hobby. Affable and the consummate family man, Doug spoke candidly about himself, his company, and those whom he serves.

This past March, Mastro Auctions has expanded to better accommodate their staff and their clients.

SMR: Doug, Mastro Auctions has proven to be an invaluable source for sports collectors. How do you personally view where the company is today?

Doug Allen:. We made a decision a few years ago that our auctions are really a business process for us – the process of taking high value sports collectibles and photographing them; promoting them; creating a mechanism for people to bid on them, and creating a level of confidence in the way we present things and oversee the items we sell that they would not get anywhere else. We are now also replicating this model with other high-end collectibles. We are doing that for one simple reason – because it works.

You can take those who collect paintings, or coins, or historical documents, and you will find there is a proclivity with those collectors to be diverse in what they collect. Take me for instance, I collect sports memorabilia, but I also collect presidential autographs. We have found there is a lot of cross-over with collectors. Knowing that, it was logical that our growth would not just come from sports collectibles. We have decided that we have perhaps peaked with the market share we handle in sports, being as that we are already doing five times more than any one else.

SMR: What do you attribute the success of Mastro Auctions to?

Doug Allen: Back in 1997, when Bill started this business, it was with the concept that a collector did not have to sit with a paddle in a room and use the traditional auction house method for buying or selling high-end collectibles. Bill instinctively knew that people would prefer to have an item properly described in a catalog with great pictures that they could look over in their homes. That was the methodology that Bill brought to the market through MastroNet in the beginning. Using that as a cornerstone, we decided to get into Internet bidding, and to be honest, I don’t think anyone of us ever really realized the impact that decision would have on our business.

Mastro’s new building is a state-of-the-art facility with a professional photo studio, and an expanded shipping and receiving area.

Overnight, we went from zero bids being taken on the Internet to over eighty percent of our bids being taken on line. Today, that has grown to over ninety percent of our bids. In our last auction, we received over forty thousand bids on the Internet. I have no idea how many people I would have had to have to man phones if we were doing that as a phone auction. We have always been at the forefront of incorporating technology into the hobby and it is why we are where we are today.

SMR: How has Mastro changed over the years?

Doug Allen: When Bill started the company, it was based on high value collectibles – lots valued at four or five thousand dollars. We would do two or three auctions a year and it was by all means a profitable business. The problem was that we were allowing our competitors to completely dominate the low-end segment of the hobby. If someone had a collection of items that were valued at say six hundred to a thousand dollars, we would pass. A couple years ago, I suggested that we add an auction that has become our Classic Collector Auction.

Now we do three big premium auctions per year that do over ten million dollars, but we also do Classic Collector Auctions based on the collector base that is not going to spend four or five thousand dollars for a signed baseball. It is geared toward the collector who is operating in the thousand dollar price range. This has done three things for us. First, it has created another revenue stream. Secondly, it has starved our competitors out of that share of the market that they used to get. And the third thing it has done is to create a more even workflow within our organization. If we had continued to just do our three premium auctions we would have peaks and valleys in which our writers and photographers would be sitting on their hands. Now, because we have something going on every two months, our staff is more productive. So that has had a big impact on our company over the past few years.

SMR: What about the future of your company. What can collectors expect from Mastro in the years to come?

Doug Allen: The biggest thing we need to do is to remain competitive. If you went out today and polled serious sports card and memorabilia collectors as to who are the top guys in the hobby, they would tell you who they are and that most of them are associated with us. We have established ourselves as having the top people in the auction business running our auctions. That gives collectors great confidence.

“…my fiduciary responsibility is to oversee the business and to make sure we are profitable. But I cannot separate the hobbyist in me from the businessman,” says Doug.

So, as we now move into handling other things such as Americana and fine art, we will be attracting the leaders in those fields. We have people who can write excellent descriptions, people who can do great photos, and people who can authenticate items. We have great infrastructure and, using those things as a base, we must now branch out to bring on leading experts in other areas. It is clear to me that our growth from here on comes from outside the sports market.

SMR: And in fact you are growing in size…literally?

Doug Allen: Yes, we have expanded into a much larger facility, to better accommodate our staff and our clients. At our old facility, people were tucked in like sardines. With our new building, people can get to things easier. A couple of years ago, we moved into a six thousand square foot facility and due to the growth of our business, we quickly outgrew it.

Shortly after we had moved in we went from doing three events and six thousand auction lots annually to doing six events and over twelve thousand auction lots annually. We are just growing by leaps and bounds so, this past March, we moved again, into an eighteen thousand square foot facility. Our new place is truly a state-of-the-art facility with a professional photo studio, an expanded shipping and receiving area – you name it, we got it.

SMR: Doug, what have you learned about high-end collectors by closely working with them over the years? Have you identified areas in which they are both similar and different?

Doug Allen: With card collectors, you have ones that are true hobbyists who really don’t care about condition. They care about completion and rarities. They’re excited by the search. They tend to be into turn-of-the-century and pre-war issues. I have found there’s a huge dichotomy between them and collectors who work on sets and the PSA Set Registry – the Marshall Fogels, the Charlie Merkels and the John Brancas of the world – the guys who spend significant amounts of money on their collections. They are of course greatly passionate about what they do, but they will also admit to getting caught up in the numbers game, which is probably a bit ego driven, to get the highest graded set on the registry.

The one item Doug says he will never sell is a 1921 Cubs Jersey from Johnny Evers, that was a gift from his family.

So, when it comes to cards, I think you can really categorize collectors. Then, with just about every other collectible you will find those who have more of an eye towards investment and those who don’t give much, if any, thought to investment at all. The latter knows that their things are worth money, and that they are going to appreciate. But they don’t care much about that. They collect for the pure love of what they collect. The ones who are more investment driven tend to collect things that are more in the mainstream – things such as Babe Ruth signed baseball, a Babe Ruth used bat, something that would have a fairly predictable appreciative value.

The other side is those who don’t care if an item is mainstream or not. People are paying top dollar right now for some of the rare pre-war cards. However, the people who collected those cards in the past just collected because they loved them, back when they didn’t cost a lot of money, they put those rarities away just out of passion, and now, they have a goldmine.

The last category of collectors I have identified are those who are a cross section of the others. Most of us don’t have an unlimited source of income when it comes to our collections. Some people start out broad, and then, when they realize they can’t afford to continue going broad they start narrowing the focus of what they collect. In my business we love people like that – and I use myself as an example of that type of collector. I collected turn-of-the-century Chicago Cubs material from when they won the World Series in 1908 and memorabilia from the 1930s. I also collect pre-war cards and tobacco cards.

About five years ago, when I was building a house, I wanted to take one component of my collection and liquidate it to put it into my house. It had appreciated considerably in value. I consider myself to be a smart buyer. So I turned around and sold my card collection. I kept some things, but I never looked back. I didn’t have unending disposable income so, at some point, when my priorities changed, I narrowed my focus and sold off a portion of my collection.

There are some guys out there of course who have never sold a thing that they own. They are the ones who don’t seem to give much thought to the economic value of the things they own. I think that today’s collector, however, tends to have more of an eye towards investment potential and the fact that it is something that will appreciate in value. Now, that said, (laughs) perhaps that is just a way for them to convince their significant other that what they are doing is a sound, prudent investment.

Vintage Chicago Cubs memorabilia is the prime focus of Doug’s personal collection.

SMR: What are your feelings about what PSA and PSA/DNA have brought to the sports collecting hobby?

Doug Allen: PSA and PSA/DNA have had a tremendous impact on our business, and foundationally, on the entire sports memorabilia hobby. We had customers who spent six, seven and eight thousand dollars in our last auction, and believe me, I constantly ask myself if they would have done that if it wasn’t for PSA. By independently grading cards they have given collectors confidence. They have created a very definitive differentiator in value – which is a tremendous thing in our hobby and my business.

Believe me, when I have people who want to upgrade they are willing to spend more money. When I find people who find low population cards to complete their sets, they will spend more money. When I have a person who needs a PSA 8 to fill out their set and there are only two of them on the face of the earth, they are prepared to spend more money. I want people to get value, but it is also my job to see our company generate more sales. Cards are the foundation of our business. They always have been and I think they always will be.

What PSA has done is they have created a significant increase in value, and brought a lot of new people into the hobby that were scared to get into it prior to PSA. As for PSA/DNA – it’s really a crapshoot out there when you are buying autographs or game-used bats, so the fact the PSA/DNA has independent experts who examine items has provided another level of consumer confidence. Now that they are grading signed balls it has taken collectors from other areas that are now crossing over and saying ‘this is what I’ve been waiting for’. They themselves know they are not knowledgeable enough to know if their Dizzy Dean signed ball would grade as an 8, 9 or 10. But we recently saw a collector pay a record price for a Dean signed ball because PSA/DNA graded it a 10. I just sold a Ty Cobb signed ball for over $50,000 because it had been graded a PSA 10. I would hate to think where my business would be today if it were not for PSA and PSA/DNA.

SMR: You have seen and represented so many incredible pieces of legendary sports memorabilia over the years. Have you gotten jaded to the things you handle or are you just as jazzed as you were at the beginning?

Doug Allen: Despite all my years in this business, I can assure you I am just as jazzed by the things we handle today as I have ever been. At the end of the day, my fiduciary responsibility is to oversee the business and to make sure we are profitable. But I cannot separate the hobbyist in me from the businessman. I still get psyched about items we handle, especially if its something in the genre of what I collect, or if it is something with incredible historical significance. Remember, in our business we do a lot of reselling. We see the same items come up many times, over and over in the marketplace. The stuff keeps appreciating in value, and the individuals that buy have ever changing interests in what they are collecting. Taking that into consideration, what I really love is when we get fresh stuff.

Doug and Amy Allen join their children, Spencer, Jada and Jannae in riding and caring for their horses, Rumor and Zip.

SMR: What about your own collection. Do you have any things that are special to you?

Doug Allen: The one item in my collection that I will never sell is a 1921 Cubs Jersey worn by Johnny Evers when he was the manager of the Cubs. It’s not the best item in my collection by far. I have a complete Frank Chance uniform, which has a lot more value. But my wife and my kids gave me the Evers jersey as a gift for my 40th birthday. My wife knew how perfectly it would fit into my collection and sought out the person who owned it. My family thought long and hard about that, and for me, it was the most special gift I have ever received. It really means a lot to me.

SMR: Do you now have everything you could ever want?

Doug Allen: (Laughing) NO! I still have pieces that I want in my collection. I don’t make as much money as some of our clients you know, so I have to be careful and control myself.

SMR: While it’s crystal clear that your work is your passion, what are your passions outside of the collectibles business?

Doug Allen: My passion is my family. I dropped golf years ago because I prefer to spend times with my kids. We love to ride horses together as a family. Every year, as a family, we go to a ranch in Colorado to ride. Everyone makes fun of me and says we’re like City Slickers. But it’s a place that I can’t get cell phone reception, and I think that’s why my kids like it the most. More than my passion, it’s a family passion. We have two-quarter horses – Rumor and Zip. Riding them is what we really enjoy doing as a family. My son, Spencer, is 13, my daughter, Jada, is 10, and my youngest daughter, Jannae, is 9. Spencer loves baseball, and he appreciates what I collect, but the kids themselves are not collectors, at least not yet.

I think Jannae also appreciates and understands the value of my things. That understanding came about one day when she came into my office and asked me if she could take a Babe Ruth signed baseball into school for Show and Tell. So I went into my case and got out a Ruth signed ball and, as I was preparing it for her, my wife came in and said that there was no way Jannae would be taking a valuable piece like that to school. So, instead of the signed ball, we found a picture of Babe Ruth she could take. That brought about a discussion between my wife and Jannae about the stuff in my collection and the value of it. The following day, Jannae came in to my office again. She looked around for a while in a very different way then she had ever done before. She finally sat down, looked at me and said: ‘Mom says this room is my wedding and college education’.

For further information on Mastro Auctions you can log on to www.mastronet.com

You can also contact Doug Allen by mail at Mastro Auctions Inc., 7900 S. Madison St., Burr Ridge, IL 60527, by phone at (630) 472-1200.

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