They were if you count the amount they claimed to be putting in from their award:

“The total value of The Onion’s bid was $7 million, including $1.75 million in cash put up by Global Tetrahedron, with the rest coming from the families of the Sandy Hook shooting victims, who essentially opted to put a portion of their potential earnings from a defamation judgment against Mr. Jones toward The Onion’s bid.”

Their bid was essentially "something that economically feels like $100k more than the next highest bidder to people who aren't us" which is a clever contractual construction but not an auction bid.