When the price is not right: Why is a $50m record collection unable to sell for even a fraction of its value?

Sometimes unique items aren't worth what we think, discovers Phil Boucher

It's the summer of 1951 and 12-year-old Paul Mawhinney is walking out of the National Record Mart on 5th Avenue, Pittsburgh, clutching a 79 cent copy of "Jezebel" by Frankie Laine. It is his first record – a purchase that very few of us ever forget.

Fast forward 60 years and Mawhinney is still proud of his "Jezebel". But it has gained a few friends: around two million singles and one million albums to be more precise, plus an array of posters, books and other music memorabilia in a vinyl heap that's widely regarded as the largest record collection in the world. An appraisal from Andersen Consulting in 1999 estimated it to be worth $50.5m (£31.2m).

But here's the rub: Mawhinney turns 72 in September and is legally blind. While he continues to catalogue his vast collection on a daily basis, it is proving increasingly difficult (he still has 750,000 records to add to his database). So he's looking for a buyer. Any buyer. In fact, Mawhinney's been looking to offload his collection for the best part of 12 years. "I have shown it to potential owners many times, but the minute they see the size of my collection, they say 'I'd love to have it, but how the hell could I take on all this work?'" he explains.

The nearest Mawhinney has come to selling his records was in 1999, when the online music store CD Now offered to buy the entire collection for $28.5m (£17.6m). Sadly, CD Now went bankrupt 12 days before the deal was completed and Mawhinney has since been looking to sell for the cut-price figure of $3m (£1.85m).

Yet, until recently, he has had no interest. The reason, quite simply, is that Mawhinney has fallen foul of the age-old problem of supply and demand, which dictates that an item is worth only what another will pay for it.

"If that is zero, then it is zero; and if it's an awful lot, then it's an awful lot, and it has no direct reflection on an item's usefulness or its use to society or its value in the future or anything else," explains Dr Rupert Gatti from the University of Cambridge.

In Mawhinney's case, this is exacerbated by the fact that, according to the US Library of Congress, 83 per cent of his collection is unique. While this represents a huge historical and artistic reservoir, it means that just 17 per cent of his records have ever been listened to – he openly admits, "most people don't even know they exist".

So regardless of the fact that Mawhinney owns such rarities as a one-off Beatles tour poster, a Beach Boys single released under the name of The Survivors, and a little-known disc called "The Bugler Theme" made for Theodore Roosevelt, the brutal fact is that there is virtually no commercial demand for the bulk of his collection. Which, by extrapolation, renders the vast majority of his collection financially worthless. Or does it?

"You have to take it on a commodity by commodity basis, as there isn't a hard and fast rule," explains Stephanie Connell, head of collectors' sales at auction house Bonhams."Often, rarity defines the value, but it also has to be considered to have a degree of importance.

"We see people who have large record collections. Some records within those collections may be valuable but in the majority of cases records aren't hugely valuable; most are worth under £20. But you might find that you have a record that is worth £3,000 – it all depends on the rarity and the fact there are numerous collectors.

"The Who is a good case in point: they released some records when they were known as The High Numbers, which are far more valuable than, say, a copy of The Who Live At Leeds, because they are much, much rarer."

Yet this is only part of the conundrum. In July, baseball superstar Derek Jeter made his 3,000th hit (ie, making it safely to first base). Jeter reached the landmark by thwacking a home run to left field into the stands of Yankee Stadium, New York.

According to financial experts, Jeter's ball was worth up to $250,000 (£150,000) to collectors, yet Christian Lopez, who caught it, simply handed it back in return for some signed memorabilia and Yankee match tickets worth an estimated $70,000 (£43,000). So does this mean that Lopez threw away $180,000 (£110,000)? Well, not exactly. For one thing, Bloomberg later reported that the ball may have been worth between only $75,000 (£46,000) and $100,000 (£61,000) as Jeter is the 28th player to achieve the feat, which – though rare and achieved by legends such as Hank Aaron and Ty Cobbs – has also been accomplished by lesser lights, and it's by no means unique. Then there is the matter that, to attain $250,000 at an auction, the room would have to be crammed full of Yankees' fans with money to burn and an obsession with Derek Jeter. As the chances of that are slim, the reality is that Lopez did pretty well out of the deal.

As Freakonomics' editor Matthew Phillips wrote at the time: "Considering Lopez and his girlfriend paid only $65 a piece for the seats to Saturday's game, walking out with $70,000 worth of Yankees swag strikes me as doing just fine." (Incidentally, when Mark McGwire broke Roger Maris's home runs in a season record in 1998, the ball for his record-breaking 70th run sold for $3m. Thanks to a subsequent steroids scandal and Barry Bonds breaking the record in 2001, it's now estimated to be worth $150k.)

"In cricket, if a ball was hit on Bradman's final century, then it is pretty special. But if it is Joe Blog average then it is not," explains Gatti.

The object itself is pretty immaterial – it is its provenance that lifts it to a different financial level.

But even this cannot ensure an item has value. In 2007, an auction of Michael Jackson memorabilia was held at the Hard Rock Café, Las Vegas. Whereas this would once have drawn hordes of screaming fans, journalist Jacques Peretti encountered a near-empty room that he described as "like a car boot sale" where "mounds of Jackson junk – smelly old stage outfits, gold discs, creepy dolls and toys, intimate notes from Jackson on serviettes – were embarrassingly withdrawn due to lack of interest."

The reason was that Jackson had been charged with child molestation by a California court. While he had been acquitted, it had besmirched the provenance of his belongings, rendering his memorabilia worthless – at least until he died in June 2009. In contrast, Jackson's jacket from the "Thriller" video was sold this June, two years after his death, for $1.8m.

Amazingly at the 2007 auction, Peretti plucked out the legal documents to Jackson's fair ground-themed Neverland ranch.

"It is not purely a question of scarcity or age but how much someone desires something," explains British collector Robert Opie, whose collection is housed in the Museum of Brands, Packaging and Advertising in London's Notting Hill. "You can have the only copy of a certain object in existence, but if nobody thinks it's worth anything then it won't go for anything."

In an amazing turnabout, Paul Mawhinney may finally be able to sell his collection. He has recently been contacted by two buyers wanting to take on his collection. By the end of August he hopes to have wrapped up the deal and finally handed over his records "lock, stock and barrel".

Yet, fittingly, even now, after 60 years of collecting, he remains clueless about how much his lifelong obsession is actually worth."I have no idea how much they will offer. I just gave them my asking price of $3m," he explains. "To be honest, I just want enough to take care of my family. I just figured out what it would take to look after all my children and that was $3m. It didn't have anything to do with the records.

"I will be 72 in September, so I wouldn't know what to do with $50m anyway!"