Program Chairs:
  Kevin Badkoubehi
March 15, 2007   

March 22
Daviann Mitchell
"Being Elected as a Judge"

April 12
Susan M. Allen
"Toward an International
Art Library"

April 26
Michael Flood
LA Regional Food Bank

Program for...
March 22
"Being Elected as a Judge"
Daviann Mitchell, Superior Court Judge


Upcoming Programs Calendar...

March 29 - "Tax Horrors at the State Board of Equalization"

April 5 - Bonham's and Butterfield's - Collecting watches

April 12 - Susan M. Allen - Toward an International Art Library: the Growth of the Research Library at the Getty

April 19 - Douglas Achtemeier - Outgoing president of the CFA Society of LA

April 26 - Michael Flood - President/CEO of the Los Angeles Regional Food Bank

May 3 - Rosey Miller (commercial real estate broker) - Southern California and US Commercial Real Estate Market Conditionss

Investing in Wine, WVRC on March 15th
MARK BLOCK (and more on this lucky member in a minute) led the Pledge. PP JIM DOWNIE and LENNY FRIEDMAN escorted us through Oh Beautiful For Spacious Skies – and it does help to have a piano!

RALPH BEASOM had some prior thoughts before his Invocation: He quoted our Four Precepts, Is it the truth, Is it fair to all concerned, Will it bring goodwill and better friendships, and will it be beneficial to all concerned? In these recent days when so many people are operating with low ethics, it appears that we have great need for our Fellow Rotarians to follow the Four Way Test – and it’s up to us to encourage one another. A poet once wrote, “For everyone there opens a way, and a way, and a way. The high soul chooses the high way, and the low soul chooses the low way — but in between, on the misty flat, the rest grope to and fro”. Heavenly Father, we ask for your blessing on this food, and your guidance so that we may choose the high way, so that Rotary may lead the way in our world today. Well done, RALPH, but we would expect that from you.

There was one guest, Tom Barron, who visited us once before with PP DON NELSON. At this point PP STEVE SCHERER wanted it known that MARK BLOCK was, indeed, a lucky man. Not only was he having a colostomy tomorrow morning, but following that, an upper GI checkup!  In an attempt to get back on track, Prexy MIKE called for announcements. He had to announce that the Japan Student Exchange for this summer has been cancelled. Our host District in Japan had not received the necessary permission from R.I., so after 46 straight years, it won’t happen this year. There is some possibility that those who were planning to go this year may be granted an extra year of eligibility, so stay tuned, please.

PEGGY BLOOMFIELD reminded us that the next District Breakfast will be on April 10th, at 0700 in the Crowne Plaza – she can take your reservation.  There will be a Walk for Parkinson’s on April 28th – again, PEGGY can sign you up.

ED GAULD came forward with a cautionary report on our Tijuana House building project, set for Saturday March 24th. We have six Rotarians signed up, and they expect the same number of Rotaractors – but that leaves us short of the minimum needed to complete the build – probably 15 altogether. Please call ED for details.

With St. Patrick’s Day so close, it was time for our annual ritual. PP TOM LEHEHEN was up first:

An Irish lady was at the cemetery, and she observed a funeral procession. There were two hearses, followed by almost 200 women marching behind. Her curiosity piqued, she went to the first hearse, which was occupied by a lady and a dog. Asking what happened, she was told that the dog had attacked and killed her husband. “Oh, that’s terrible”, said the Irish lady.  “But why are there two hearses here?”  Well, after that, the dog turned and killed the lady’s Mother-in-Law. “Oh, that’s dreadful. I’m so sorry. “ Then an idea came to her, and she asked, “Could I borrow your dog?”  “Well, you’ll have to get in line behind all those other women”.

And sure enough, the War Horse spirit prevailed, and JACK HARRIS came forward to tell HIS Irish story:

It was 11 am, and Clancy was standing in front of O’Malleys saloon, desperately thirsty but dead broke. Then local horse-drawn hearse turned the corner, and as it passed in front of the Saloon, it hit a bump and Clancy’s old friend Sean fell out into the street. Thinking quickly, Clancy wrestled Sean to his feet and hauled him into the saloon. He wedged him into a seat, and called out to O’Malley, “Two whiskies. My friend, Sean, will pay”. O’Malley brought the two drinks, which Clancy soon downed. “Another two whiskies” called out Clancy. When O’Malley brought the second lot, he said, “That’ll be eight pounds for the whiskies” At this point, Clancy left to go to the toilet. O’Malley, getting no response from Sean, reached across the bar and grabbed him by the lapels, lifting him off his seat. ”I’ll have my eight pounds NOW” Then Sean slipped out of his grasp, and fell to the floor. At this moment Clancy came out of the toilet, and rushed over to the fallen Sean, searching for a pulse. Finding none, Clancy shouted “You’ve killed him!”  “I had to – he pulled a knife on me”.

SHERRY DEWANE stepped in for SHANE WAARBROEK, to introduce our Speaker, Frank Martell. Frank is the Global Director of Fine & Rare Wines, Bonhams and Butterfield. While he didn’t spend much time on his background, he certainly got our attention with the prices of some of the wines his firm sells at auction.

Bonhams and Butterfield currently operates two auctions, in LA and San Francisco, and they are planning to move into Chicago, New York, and Hong Kong. The wine auction market is extremely volatile right now. Prices has gone up 80 to 90% over where they were just six months ago. There are several reasons for this, but obviously you have to be a real player to get into the game at this point. The futures market in 1995, for instance, had prices ranging up to $750 per bottle – today, some of those would be priced at $2000!

It used to be that by buying futures, you were guaranteed delivery of the wine.  Not so, today. In 2000, as an example, some French wines were selling at $3500 per case (I have to introduce a mea culpa here, please. I didn’t get the names of the vintages he mentioned, in most cases, so rather then screw them up, I’ll only report on trends) From the standpoint of the auctioneers, wines at this stage were not even bottled – they were still in barrels. This seemed to mark the real beginning of the intensely volatile wine market. The next ‘benchmark’ was 2005, which followed a poor year in 2004.

There are now millions of people, Frank says, who want to participate in buying wines at auction. This is the result of globalization, and the huge increase in income enjoyed by the new young clients. The weakness of the dollar increases the volatility, also. Some of the disadvantages of wine as an investment include the fact that it is fragile, it is perishable, and it’s cosumerable, all of which adds to the paradox of trying to figure out how it will go.

Burgundy has been a relative late-comer into the high-end auction field. An example, in 1995, a case might have sold for $750.  By 2000, it was between $4500 and $5000, and in 2005, it sells for $10,000 per case. Going back to the 1950s, good burgundy cost perhaps $5, while Bordeaux was $11 or $12.  In the 90s, burgundy was priced in the $80s, and in 2005, it had gone to perhaps $350.

Frank defines investing as spending money to make money. In wines, a very small percentage of the population can afford to invest, mainly because the resources needed to ‘play’ are so huge. He mentioned a client who his firm was helping to sell some of his wine, and his annual budget for this aspect of his financial life was eight million dollars. Wines now are costing four times what they did when this client started investing in 2000. At this point, who else but PP ERIC LOBERG asked, “What does a bottle of Ripple cost?” Frank answered by making the obvious point that investing in wine was quite risky, but could also be quite profitable.

Since no one is going to sell at a loss, buying must be on a long-term basis. Frank was asked by a friend what he could buy for $50 a bottle as a gift to the newborn son of another friend. The reply, “Nothing” – you can’t get anything at that price that will appreciate in any reasonable amount of time in order to make it a great gift. In 1998, the amount of wine sold at auction was about forty million dollars. This year it will be over 150 million dollars.

There are some rules that may help. First, a solid case is much more valuable than a case picked up bottle by bottle. Second, wines coming out of a cellar with an established provenance will cost a lot more. So if you just concentrate on these two conditions, you can start to hedge your bet. As an example of a wine costing $10,000 a case, plus $2000 in taxes, etc, you can buy individual bottles for perhaps $650 – the solid case is worth a lot more. Let’s say you have a collection that you value at $500K and you decide to sell it. Its real value is probably closer to $400 or $425K, but when it comes on the market, new investors will be temped to buy in. There is a wine psychology that can cause investors to rationalize their purchase – but the one big thing they are ignoring is the lead-time before whatever they buy will sell for more than they paid. Frank mentioned that there are counterfitters out there, of course.

Remember that, as a wine investor, the return on your money is a waiting game. If you buy 2005 Bordeaux futures, you will have to wait fifteen years to see any real appreciation. You must work with someone who understands the market place and who can advise you on a reliable basis.

A brief Q&A – ED GAULD asked what the shelf life of a wine might be. That depends on a lot of things – there are wines bottled in the 1700s which are still wonderful, and of course the conditions of storage make a great difference.  There are wines from 1900 that are still young, and there are wines from the 70s that will be ready in another twenty years. The chemistry of the wine itself determines how it will age. PP STEVE SCHERER, What are the carrying costs, and what percentage do you charge on entering the market, and when you want to sell? The most cost efficient storage is to build a wine cellar in your home – this can be done for as little as $5,000, and your only cost thereafter is the electricity to control the temperature and humidity. Buying cost is around 15 to 17%, and selling costs average 7 to 9%. I think it was RAY ZICKFELD who wanted to know which was healthier, red or white. And the answer was indeed from Solomon – “It depends on what you like!” Frank Martell, thanks for your insights into a complicated investment.

—YOE, Ernie Wolfe


Michael Gintz

President Elect
Christopher Bradford

Vice President
Sean M. McMillan

Gordon A. Fell

Peggy Bloomfield

Executive Secretary
Ernie Wolfe

Past President
Don A. Nelson

Community Service Chair
Shane Waarbroek

International Service Chair
Edwin S. Gauld

Membership Chair
Tony Marrone

Vocational Service Chair
Elliot Turner

Youth Service Chair
Ann Samson



William B. Boyd

    Scot Clifford

Monday, Beverly Hills, BH Hotel, 9641 Sunset
Tuesday, WLA/Brentwood, Chez Mimi, 246 26th St, Santa Monica
Wednesday, Century City, Century Plaza Hotel, or
    Culver City, Wyndham Hotel, 6333 Bristol Parkway, CC, or
    Wilshire, The Ebell, 743 S. Lucerne Blvd, LA
Friday, Santa Monica, Riviera Country Club, 1250 Capri Dr, Pacific Palisades