Charlotte Hornets owner and Hall of Fame member Michael Jordan reacts during the first half of their game against the New York Knicks at the Spectrum Center on November 12, 2021 in Charlotte, North Carolina.
Jared C. Tilton | Getty Images
Michael Jordan has six NBA championship rings. He also likes watches.
The NBA’s five-time most valuable player, who now owns the Charlotte Hornets, has joined a list of athletes to invest in WatchBox, a site that allows people to buy, sell and trade luxury watches. Brands include Richard Mille, a favorite among NBA players.
WatchBox said on Tuesday it raised $ 165 million in its most recent fundraising round. Milwaukee Bucks star and reigning Championship MVP Giannis Antetokounmpo, Bucks owner Marc Lasry, Phoenix Suns stars Chris Paul and Devin Booker and Wall Street investor Bill Ackman, among others, have joined Jordan.
WatchBox, based outside of Philadelphia, has raised $ 260 million since its inception in 2017. Although the company has not disclosed its latest valuation, people with knowledge of the matter have told CNBC it is nearing one billion. of dollars. Individuals asked not to be named because the review is private.
In an interview with CNBC on Monday, WatchBox CEO Justin Reis said the company is on track to generate $ 300 million in net revenue this year and may apply for an IPO in the future. .
WatchBox has an inventory valued at $ 150 million. Rather than serving as a marketplace for peer-to-peer transactions, the company buys and trades luxury watches from sellers. It then authenticates the products and resells them to collectors and other buyers, capturing transaction fees in the process.
“It’s no different from dealing with Goldman Sachs,” Reis said of the platform. “We have customer advisers you talk to and also manage your watch portfolio.”
Luxury watches in high demand
The luxury watch secondary market is booming as major manufacturers like Rolex and Richard Mille avoid increasing supply to protect the scarcity around collections. This allows luxury lines to retain their value in the secondary market, especially as demand increases.
Morgan Stanley reported that Rolex sold 810,000 watches last year, while Patek sold 53,000. Audemars sold 40,000 watches and Richard Mille only sold 4,300.
Consulting firm McKinsey estimates that used watch sales reached $ 18 billion in 2019 and could reach $ 32 billion by 2025. According to the firm, used watch sales will account for about half of the size of the new retail watch market by 2025, up from around a third today.
WatchBox is not alone in trying to capitalize on demand. Competitors like Watchfinder, Watchmaster and New York-based Hodinkee are also expanding to position themselves in the secondary market.
Hodinkee raised $ 40 million in December from investors, including NFL quarterback Tom Brady. The company launched its pre-owned watch store in October to buy and sell watches produced after 1990.
“In terms of size and scale, if you look at us in the market, we’re probably the biggest platform in terms of revenue,” Reis said, adding that WatchBox has exceeded $ 1 billion in total revenue since. his creation.
WatchBox plans to use the money to expand its digital platform and open collector lounges in New York, Los Angeles, Miami, Houston and Dallas. WatchBox’s international locations include Dubai, Hong Kong and Switzerland, and Reis said the company aims to reach 40 markets over the next three years.
Courtesy: The Watch Box
WatchBox looking for an IPO?
Reis said teaming up with Jordan and Antetokounmpo will help the WatchBox brand compete with other platforms.
Antetokounmpo just led the Milwaukee Bucks to their first NBA Championship in 50 years. He also owns stakes in companies such as the sports drink start-up Ready Nutrition.
Jordan, 58, is a sports icon and one of the richest athletes in the world, with a net worth of $ 1.6 billion, according to Forbes.
Jordan owns a stake in the sports betting company DraftKings. He became the first black majority owner of a full-time racing team in the NASCAR series after purchasing the team charter from Germain Racing last September.
Reis said WatchBox attracted Jordan through its business partner, Curtis Polk. WatchBox’s fundraising round also included former NFL stars Michael Strahan and Larry Fitzgerald.
“A lot of the guys on this list are our clients, so they have genuine relationships,” Reis said. “They will help us market ourselves as we build the business. “
But even teaming up with renowned athletes will not be enough.
Watch platforms like WatchBox are benefiting from a boom in the luxury watch market that accelerated during the pandemic. Eventually the market will correct itself and only a few platforms may survive.
At this point, WatchBox could ask for public aid to maintain itself. Reis said the company could possibly pursue an IPO.
“I think our goal is to really evolve and grow,” he said. “If that means putting in place an IPO strategy in the next couple of years to help us facilitate this, then we will definitely consider it.”
With the new tranche of private capital, “we have the funds to execute our short-term plans,” Reis said.
CNBC’s Robert Frank contributed to this article.
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