Voices
If I asked you how much you were willing to pay for a dinosaur skull, would your answer be closer to $100 or $1,000,000? You might think “I have no space for a dinosaur in my living room, so next to nothing”, which is a fair point. So, let me ask instead – how much would a dinosaur collector be willing to pay for a dinosaur skull?
There is absolutely no better way to learn about an asset class than through the high drama of an auction house, and in Part II of my Jurassic Park special, I decided to do just that. British auction house Christie’s recently announced its Singapore office would be auctioning off a T-rex skull, with much anticipation. However, just a few days before the auction (and in the middle of me trying to record a podcast for this column with the auctioneer) the whole $20 million affair was called off. Scandal!
If you’ve been following my columns over the last year, you’ll know that peak economic insanity has created an investment bubble within alternative asset classes such as art, wine, watches, and vintage cars . Well, it turns out that dinosaur bones have also been impacted by way too much money sloshing throughout the economy! Dinosaurs, an extremely niche collector’s item, are in high demand.
But the supply and demand dynamics of this asset class are… Indescribable. Literally, because they are quite unknown to say the least. If you thought the art market was shrouded in secrecy, the Dali Salvador has nothing on the Dicraeosaurus (a Tanzanian long-necked herbivore). Where do they come from? How many of them are there? Who owns them? Where are they? Are they even real? These unknowns, with billions of dollars and high egos thrown into the mix, could create a gossip column that would leave US Weekly embarrassed.
Welcome to Hell Creek
I came across my first dinosaur collector in 2018. We were at a golf tournament in the US when a mutual friend introduced us. “You two do similar things, bones and space and stuff”. Indeed, it turned out Collector X, as we’ll call him, also owned some moon rock. Some of which he had loaned to our golfer friend as a wedding gift. This guy simply loves collectables. Although I have not been to his house, I can only imagine it’s more interesting than the British Museum. (And certainly, his personal collections have filled museums all over the world).
So Collector X owns a lot of this land at Hell Creek, Montana and invites his cool palaeontology friends over for long-term sleepovers and dino-digs. Palaeontologists love this because they know there’s a lot to be discovered there, and without the invitation, that discovery will go to somebody else. And as it happens, whatever you find is yours. Or at least is Collector X’s. I’m completely unsure of how the economics works between Collector X and the palaeontologists and I haven’t been able to find out. I mean, if I were to visit him and find a Velociraptor tibia, would I get any of the proceeds? My assumption is that the better the palaeontologist, perhaps the better their negotiating power to get a percentage of the fee because it lends more legitimacy to the fossil (I’ll discuss fraud later!). But like everything in this asset class, who knows? A big question mark.
Ownership of fossils from public lands, on the other hand, is very different. In 2009, US Congress passed the Paleontological Resources Preservation Act, a law that states that most fossil digging on federal lands requires a permit, and those permits can only be obtained by qualified scientists. Any specimens that are found on those lands belong to the public. Scientists at accredited museums and research centres get first dibs.
However, most fossils are not found on public lands by institutions, a fact that skews the dinosaur market considerably and one that I’ll discuss in more detail later.
Jurassic Park created a T-rex bubble that exists to this day.
Once fossils are found, they are classified. Individual bones are cool, of course. Like a leg or something. Likewise for teeth. Moving up the food chain you then have skulls, for obvious reasons. In 2019 the price tag for a Triceratops’s skull was anything from $170,000 to $400,000, and a Diplodocus was $570,000 to $1.1 million. This is not chump change!
And then, the crème de la crème. The skeleton. This is where the economics of the nearly fully formed dinosaur asset starts to mirror the economics of art. Intuitively, which do you think is worth more: a skeleton of a T-rex or the skeleton of a Saurischia? Let me rephrase; which is worth more: a Picasso or a Conor O’Leary? Like art, the marketing and knowledge of the dinosaur in mainstream culture are extremely important. Jurassic Park created a T-rex bubble that exists to this day. James Hyslop, who heads up Christie’s Science and Natural Science department, recently commented that “T-rex is a brand name in a way that no other dinosaur is. It sits very naturally against a Picasso, a Jeff Koons or an Andy Warhol.”
Of course, like art, other things matter too. What is the quality of the piece? And how big is it? A huge dinosaur skeleton you haven’t heard of before could technically fetch a higher price than a tiny T-rex. Further, adult dinosaurs are worth more than adolescents because they are bigger and better formed. Anything with obvious war injuries is a huge bonus.
Gossip column central
So back to Collector X and his fossil farm. What does he actually do with these findings? There are two big areas of uncertainty in dinosauronomics. The first is: What happens to the fossils once they have been discovered? We have no idea. And the second is: What happens to the fossils once they have been sold? This is gossip column central.
Let’s imagine Collector X does a lot of private sales to friends and other collectors. He might gift a few bones. Keep a couple of T-rexs on his mantlepiece. And for something really big, he will likely auction it.
For a killer find, an auction feels like a better way to sell a piece than a private sale for one reason. The marketing that auction houses engage in is second to none. For example, I am not necessarily looped into the dinosaur trade to any great extent, but I do keep a very close watch on Christie’s and Sotheby’s alternative auctions. And this, not through my close dinosaur friends, is how I found out about the auction that is no more. Marketing increases the price of the sale. And marketing brings more bidders, raising the price further.
Like venture capital or the music industry, dinosauronomics relies on “big hits” and power law returns instead of incremental margin gains to make it worthwhile. Does Collector X do this for the money? No. Does he try to make it profitable? Not really; the people, equipment, and logistics is expensive. Could he break even one day? If he found several of the next $50 million skeletons, perhaps. In fact, large dinosaur auctions happen more frequently than you might think. But rarely from the same collector.
In 2018 alone, Sotheby’s sold a Gorgosaurus partial skeleton for over $6 million, a Triceratops skull for over $600,000, and an Allosaurus leg and foot for $160,000. Dirt and fossils aside, the Allosaurus was auctioned inside the actual Eiffel Tower. Famous dinosaurs recently auctioned off include Big John (Triceratops) for $8 million, Hector (Deinonychus) for $12 million, and Stan (T-rex) for $32 million. Sue, the largest, best preserved, and most famous T-rex ever found, which was discovered by the infamous explorer and collector Susan Hendrickson, sold for $8.3 million in 1997.
Doing the quick maths, we can see that the best T-rex ever found (Sue) was priced at $14 million in today’s money. Meanwhile, a less prolific T-rex (Stan) sold for $32 million. Is Stan worth more than double the price of Sue? Palaeontologists disagree. This is the value of marketing. And this is the dinosaur bubble we’re in!
A dinosaur called Stan
So who are the people who buy these assets? This is mystery number two, and a topic that is so gossip-worthy because speculation runs rife amidst multi-million dollar deal secrecy. The private-market nature of fossils means that when Collector X finds something we don’t hear about it, and when they sell something, we have no idea to whom or for how much.
Through the grape vines, we know that there is a $5 million T-rex skull sitting in the lobby of a Californian software firm. A near-complete mammoth skeleton, uncovered from the Siberian permafrost, now belongs to a French waterproofing company with a mammoth for a logo. (Side note: Imagine sitting in that marketing meeting the morning after a night out. “Guys, hear me out… there’s this permafrost mammoth the company needs to buy!”) And in 2013, Nicholas Cage managed to out-bid Leonardo DiCaprio for a T-rex skull that had been smuggled into California from Mongolia. The stolen fossil was returned to its country of origin, eventually. But not without obvious and necessary controversy.
Public auctions make it easier to know the price, but often we don’t know the buyer’s identity. Stan, the $32 million T-rex, was sold in 2020. It wasn’t until two years later and after a lot of speculation that we learned the owner was the Natural History Museum Abu Dhabi. National Geographic, in journalistic superstardom, managed to follow Stan’s tracks using US trade records to determine that a 5.6-ton shipment worth Stan’s exact sale price was exported from New York to the UAE. From there, Abu Dhabi’s Department of Culture and Tourism confirmed that Stan was, in fact, in its possession.
In the absence of an oil-producing nation that wants to buy its way to cultural and scientific legitimacy at any cost, would Stan have sold for a price so high? Potentially, as there would have been at least one counterbidder to push the price up (assuming a clean auction, which isn’t always the case). But I, like many who have looked at this auction, have concluded that Stan’s sale is not a particularly useful data point when trying to understand the real value of the T-rex market.
Priced out
The unregulated, private nature of dinosaur collecting means that it’s impossible for palaeontologists to know or understand what has been found, in what condition, and where it is now. Repeatability is one of the biggest issues for scientists, who need to be able to re-do or re-examine the same dinosaur many times over. Once fossils change hands, move museums or simply vanish from public records, this becomes impossible. With any auction, there is the inevitable debate and condemnation within the science community.
This feels legitimate; palaeontologists that I’ve spoken to feel very strongly that these scientific ornaments, which can be up to 70 million years old (!!!) should belong to institutions that can steward their conservation and help us to advance science and human understanding of where we’ve come from. Indeed, even if institutions were willing to buy the fossils to protect them, the Dinosaur Bubble is making it impossible for a university or museum to compete with private billionaires or oil-backed treasuries. Perhaps a university could have paid $8 million for Sue, but it could not compete with $32 million for Stan. The science community is, by any metric, being priced out of the market.
What about Collector X; Where does he fit into all of this? The other side of this argument is also relatively simple. There are very few institutions that can afford to dig the fossils in the way that private collectors can. In fact, it is the private collectors that are paying for these science assets to make their way into the world. After all, isn’t it better that fossils can be displayed in museums in-between private storage, than being left permanently in the ground? Isn’t it a bit crazy to expect billionaires to spend altruistically on these fossils?
As I have been told several times, despite popular belief, it is not the dinosaur fossils that are rare, it is the people and the money to dig them that are rare.
Collector X is not only a prolific collector, he is also a prolific donator to famous museums. This is similar to many other private collectors. And, as I pointed out in my explainer on art markets, donating and/or showing your fossils in museums and with universities is a great way for the value of that piece to increase in value. Thus, being philanthropic with your fossil collection is good for your bottom line and for the science community. After all, buying a T-rex skull that has been on exhibition in the Natural History Museum is worth more than a T-rex that nobody has ever seen before.
The unregulated nature of dinosauronomics has another huge downside. And, like the art markets, that is Fraud. With a Capital F. While you don’t hear about it very often (I mean, it’s not like anything dinosaur-related makes the front page of the New York Times), it happens. From dinosaur smuggling to thievery to plain “I made this skeleton in my basement”, the auction houses have seen it all. Remember the Nicholas Cage and Leo DiCaprio shenanigans? They were unlucky enough to get caught up with a prolific thief who is now famous himself. Kanye West may not have made Taylor Swift famous, but Nicholas Cage did make Eric Prokopi hit the mainstream news for at least a week.
And just like in art, the fakes are hard to find. But – and this is purely my own speculation – I get the feeling that the auction houses aren’t incentivised to make sure they’re not selling some lego-turned-T-rex. When discussing this with a friend, they immediately said “Surely that’s impossible, you can just carbon date these fossils, no?” – and that certainly does seem to make sense. Why don’t they just do that? But perhaps the auctions create such great marketing and revenue that they would prefer to not know where these bones came from.
And this is where the real stars of the show – the palaeontology scientists who actually know their dinosaurs – come in. Meet Paul Barrett of the Natural History Museum’s Vertebrates and Anthropology Palaeobiology department. His research interests, “the evolution of Mesozoic terrestrial ecosystems and potential biases in the fossil record” make him public enemy number one for the auction houses.
In London, circa 2013, he halted the auction of a Tarbosaurus leg at Christie’s that was scheduled around the same time as the Nicholas Cage controversy. Barrett had noticed the leg in the window of the South Kensington auction house (as you do) and contacted Christie’s, as just by looking at it, he could see that the specimen was questionable. The auction was cancelled.
Fast forward to November 2022 (yes, just a few days ago), and Paul’s fellow palaeontologist Pete Larson, president of the Black Hills Institute of Geological Research in South Dakota, noticed something a bit fishy about “Shen”, the upcoming T-rex on the market for an eye-watering $20 million.
Shen, it seemed, bore an unmistakable resemblance to the $32 million T-rex Stan. As Pete noted, Shen skeleton’s skull had holes in its lower jaw that were unique to Stan. Was Shen a direct replica of Stan? It’s hard to know. I certainly know nothing more than some gossip I’ve heard through the dinosaur hallways. But Christie’s immediately pulled the auction, offering no reason for the sudden change of mind. Who was the seller of this fake? And what are the repercussions? Or a bigger question we should all be asking – what if Paul and Pete hadn’t decided to look at these fossils? Would we ever have known?
Like Sam Bankman-Fried and the FTX scandal, maybe the exchange doesn’t care that it’s trading on something that doesn’t really exist as long as the trade is completed. At the end of the day, isn’t everything a bit of a grift?
Weird and wonderful
The underground and self-contained world of the supply and demand of dinosaurs is full of more interesting and unique characters than Alice in Wonderland. Like any asset class that is rarely traded, it’s hard to get enough information about the pieces to understand their true value. And in such circumstances, the economic quip of “its price is what someone is willing to pay for it” rings true – just look at Stan’s transaction for evidence of this.
What is the future of this asset class? I suspect that, given the increasingly loud objection to these types of sales by auction by the scientific community, these deals may disappear into private sales. This would in fact exacerbate the problem of not knowing what is being discovered and where it is going, or for what price. Private sales would, on the other hand, allow pieces to move faster without the watchful eye of institutions that can quickly detect fakes and deter nefarious activity. There are clearly many stakeholders who would welcome this and declare it progress, against better collective judgment.
For people like Collector X, however, the mood is more optimistic. “Sure, there are a ton of bad actors that have moved into the space during the massive valuation bubble. But we take the scientific approach to this industry extremely seriously; these people will be driven out as quickly as they have come into it. And the science is only getting better with every excavation we are able to do!”
*****
For readers who want to play a fun game, David on Twitter sent me this tweet of a dinosaur skull for sale in a London gallery (David Aaron’s). We are running an over/under on the benchmark price for the skull. David’s guess is at $400,000 and I’m at $160,000. Feel free to let me know your guess and I’m going to visit the gallery in person this week to get a ballpark!
