The $4 Million Fee Nobody Thought About
In the world of investment banking, the deal fee is sacred. You structure the transaction, you get paid. The rate is set, the invoice is issued, and everyone moves on. John Chachas took a different approach.
Writing in the San Francisco Post, the founder of Methuselah Advisors and CEO of Inyo Broadcast Holdings recounts one of the more unusual compensation arrangements in recent business history. In 2005, Chachas arranged the sale of Gump’s, the iconic San Francisco luxury retailer, to a group of investors for $8.5 million. For his role in the deal, he was owed a $250,000 fee. Instead, he asked for the Buddha.
Specifically, a nearly eight-foot gilded Qing dynasty Buddha that had stood on the ground floor of Gump’s since the store’s 1957 buying trip to Kyoto. The store had paid approximately $800 for it at the time. A 2007 appraisal put its value at roughly $240,000, close to the fee Chachas would have received in cash. The Gump’s president who signed off on the arrangement later recalled it as an afterthought. Nobody, he said, realized how fine a thing the Buddha actually was.
Chachas had a clearer sense. The broader context matters. Gump’s had been a San Francisco institution since 1861. Franklin D. Roosevelt shopped there. Sarah Bernhardt found a bronze snake for her Cleopatra role in its collections. Items from its buying trips ended up at William Randolph Hearst’s San Simeon estate. When Chachas made his childhood Christmas visits from Ely, Nevada, the Buddha on the ground floor was the landmark he remembered most.
In 2018, after further ownership changes and economic pressure from e-commerce, Gump’s filed Chapter 11 bankruptcy. The store closed two days before Christmas after 157 years on Post Street. The Buddha, per Chachas’s original agreement, was not for sale. He arranged a $25,000 replica from a company in Utah, made the swap, and took the original home.
In May 2019, he consigned it to Christie’s in Hong Kong. The auction house described it as an “important and monumental” piece of religious statuary, the largest known of its type. An undisclosed buyer paid 31.3 million Hong Kong dollars, roughly $4 million. Nearly eighteen times the cash fee he had originally been offered.
He used the proceeds to buy Gump’s intellectual property, brand name, trademarks, and customer list out of bankruptcy for $650,000, then relaunched the store in October 2019. Sometimes patience and knowing what something is really worth is the whole investment thesis. Chachas had a thirty-year window to prove it.