Aubrey McClendon Selling Off His Prized Wine?

Is Aubrey McClendon
Selling Off His Prized Wine?

Even though the market for collectible wines is slumping, Sotheby’s recently announced it will sell off 9,000 bottles in two auctions in March and April. The sale is titled “Classic Cellar from a Great American Collector.”

It is large by any standard. But what really caught my eye was the statement in Sotheby’s news release that the sale is a “single owner collection,” meaning that it is all coming from one seller’s cellar.

Who is this “Great American Collector?” And why would he or she try to unload 9,000 bottles at a time when wine prices are collapsing?

Sotheby’s won’t say. Jamie Ritchie, head of Sotheby’s North American wine department, was uncharacteristically silent when I asked about the seller. “Sorry, I just can’t comment,” he said.

According to three people familiar with the auction, the seller is Aubrey McClendon, chief executive of Chesapeake Energy. These people say at least one other broker kicked the tires on Mr. McClendon’s collection before it went to Sotheby’s.

McClendon is one of the top wine collectors in the country, known for his love of Burgundy and Bordeaux. He also is known for his cash crunch. Last fall, he was forced to sell 94% of his stake in Chesapeake to pay back margin loans. Mr. McClendon’s stake once was valued at more than $2 billion. So it wouldn’t be surprising if he were to want to liquidate some of his, er, liquid assets.

Mr. McClendon, through a spokesman, didn’t respond to a request for comment.

Sotheby’s says it expects the sale to fetch at least $5 million–not much for a former billionaire, but these days every little million helps.

It also remains to be seen whether the auction will be a success. An article in the San Francisco Chronicle quotes experts saying that lot prices for wines at auction have fallen as much as 30% since the summer. Some bottles, like 1986 Leoville-Las-Cases, averaged around $360 a bottle in the past two years but are now trading closer to $200. (For those interested in current wine prices, Steve Bachmann of Vinfolio has an informative blog analyzing auctions, valuations and advice for sellers and buyers).

The McClendon collection may fare better than others. It features more than 1,500 bottles of Domaine de la Romanee Conti–a favorite Chateaux of the nouveaux that has held up relatively well in price. The collection also has plenty of Mouton Rothschild, Margaux and Lafite, also blue-chip names.

What is more, Sotheby’s is hedging its bets by splitting the auction in two, with half being offered in New York and half in Hong Kong. While U.S. collectors are pulling back, Hong Kong collectors have proven more resilient, with recent auctions there posting healthy results. (Sotheby’s is shipping 4,000 or more of the bottles in temperature-controlled containers to Hong Kong, something it has never done before).

Mr. McClendon may be the biggest wine seller so far in the financial crisis, but he most certainly won’t be the last. With many collectors running light on cash, I suspect more and more will turn to their wine cellars in search of real liquidity.