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Auction Wars: Christie’s, Sotheby’s, and The Art of Competition

visionsart — Mon, 22 Jun 2015 08:24:00 +0000

The two houses will do almost anything to outmaneuver each other, and the friction between them will likely only increase under new CEOs.

by Stephanie Baker and Katya Kazakina

Illustration: Greg Kletsel/Bloomberg Markets

This May, after billionaires had outbid billionaires in New York’s contemporary art auctions, something became immediately clear: Christie’s had just clobbered Sotheby’s with a gavel.

Over four days, Christie’s sales totaled $1.7 billion, its biggest week ever. On one of those evenings, frantic bidding inside its Rockefeller Center salesroom enabled the auction house to sell $706 million of art spanning the 20th century in less than two hours. An anonymous bidder even plunked down $179.4 million for Pablo Picasso’s Les Femmes d’Alger, smashing the record for the most expensive work ever sold at auction. “We’re in a fantasyland,” proclaimed collector Michael Ovitz, the former president of Walt Disney Co., as he left the room.

In contrast, Sotheby’s moved just $890 million of art in two weeks—a little more than half of Christie’s tally—underscoring just how far it had fallen behind its nemesis.

Together, Sotheby’s and Christie’s control 42 percent of the world’s art auction market. The storied houses—both of which recently named new CEOs (more on that in a moment)—have one of the longest-running rivalries in business history going back to when they were established in London in the 18th century.

And there’s even been some good scandal. In the 1990s, the U.S. Justice Department charged the two houses with colluding to fix sales commissions. They eventually paid a total of $512 million to settle claims by buyers and sellers that they’d been cheated, and Sotheby’s chairman at the time, A. Alfred Taubman, spent 10 months in jail.

The competition has become cutthroat: There’s simply never been so much money at stake. Sales of art worldwide surged last year to an all-time high of €51 billion ($57 billion), according to the European Fine Art Foundation. Both auction houses also saw record sales—$7.9 billion for Christie’s (privately owned by French billionaire François Pinault) and $6.7 billion for Sotheby’s. Because Sotheby’s is publicly owned, however, its missteps are harder to hide. Profit fell 9 percent to $117.8 million because of increased expenses.

Sotheby’s has also endured a bruising proxy battle led by hedge fund manager Daniel Loeb of Third Point, who accused the company of being “asleep at the switch” and falling behind Christie’s in Asia and online. “Sotheby’s is like an old master painting in desperate need of restoration,” Loeb fumed in a 2013 letter to then-CEO William Ruprecht.

For all Loeb’s bluster, he highlighted one of the biggest problems facing New York–based Sotheby’s and London-based Christie’s. In the hunt to capture market share, the auction houses often tank their own commissions. “Sotheby’s will think, ‘If we don’t do it, Christie’s will,’ and vice versa,” says Philip Hoffman, a former Christie’s executive who now runs the Fine Art Fund, an investment group in London.

It doesn’t help that it’s a seller’s market, one where collectors play the houses off each other to earn the best deal. In 2013, when newsprint magnate Peter Brant decided to sell Jeff Koons’s Balloon Dog (Orange), he shopped the 4-foot-high (1.2-meter-high) stainless steel sculpture to both, hoping the sale would fetch as much as $75 million, according to people familiar with the matter. Christie’s made the winning pitch, they say, by offering to forgo most of its sales commission paid by the buyer. Yet expected bids from Qatar never materialized, and the piece went for $58.4 million. While that was the highest price ever for a living artist, people familiar say Christie’s made no money after marketing and installation costs. (Christie’s declined to comment.)

Similarly, Sotheby’s has offered lofty guaranteed prices so that sellers don’t decamp. Take its sale of Alberto Giacometti’s 1950 painted-bronze sculpture Chariot, the prize of Sotheby’s biggest-ever Impressionist and modern art sale in New York in November. The gavel went down after just a single $90 million bid from hedge fund billionaire Steven A. Cohen. The sale accounted for about a quarter of the auction house’s total that night and was the most expensive work auctioned in 2014. But Sotheby’s had guaranteed the seller, Greek shipping heir Alexander Goulandris, that the work would collect at least $103 million and had agreed to cover any shortfall. Even after the buyer’s commission brought the final price to $101 million, Sotheby’s still lost $2 million or more, depending on marketing costs, according to people close to the sale.

Loeb finally got his way when the board announced Ruprecht’s departure in November. It installed Tad Smith, the former CEO of Madison Square Garden, in his place. Admitting he knows little about art, Smith, 50, says he’s focused on building the Sotheby’s brand, expanding the house in Asia, and boosting its Internet business. He’s also vowed to tread carefully with guarantees. “We will not roll dice in the auction room with shareholders’ money,” Smith told analysts on May 11. Since taking the helm in March, Smith—who sports salt-and-pepper hair and a Hollywood smile—has been meeting major clients, such as Ovitz; Don Marron, CEO of Lightyear Capital; and David Geffen, the billionaire entertainment executive, to determine how the auction house can improve its game.

With Smith’s appointment, Sotheby’s appears to be taking a page out of Christie’s playbook. In 2010, Christie’s also installed an art world outsider as CEO—Steven Murphy, former head of publishing company Rodale. Murphy invested $50 million into Christie’s online auction platform and expanded its presence in Asia. Then, in December 2014, just two weeks after Ruprecht left Sotheby’s, Christie’s announced that Murphy would step down, giving no reason for his departure. Patricia Barbizet, a 60-year-old Frenchwoman who had been chairman of Christie’s and a longtime Pinault adviser, assumed the role of CEO.

Art dealers and former auction house executives say Murphy left because he sacrificed profit for the sake of gaining market share through excessive use of guarantees. Murphy declined to comment. Barbizet, for her part, dismisses concerns about guarantees. “Our profit margin is good,” she says via e-mail. “Guarantees are risk management and offer an assurance to the seller.”

Ahead of the May sales in New York, Barbizet floated through the exhibition rooms at Christie’s, Pinault at her side. She exuded the house of Pinault, wearing a necklace by Bottega Veneta (a Pinault brand) and a black-and-white striped jacket by New York designer Joseph Altuzarra (in whose company Pinault owns a stake). Barbizet has been a key figure in Pinault’s empire since 1989, when she became chief financial officer of his holding company. Though Christie’s technically falls under Groupe Artemis, where Pinault’s son, François-Henri, is chairman, Barbizet says she talks to 78-year-old François every day. The two paused the longest in front of Giacometti’s 1947 sculpture Pointing Man. Later, the work sold for $141 million, becoming the most valuable sculpture in the world—and trouncing Sotheby’s disappointing Giacometti sale in November.

“It’s a superaggressive, supercompetitive business,” says Thomas Seydoux, founder of private art dealer Connery, Pissarro, Seydoux and a 15-year Christie’s veteran. And in that sense, Christie’s appears to have the edge.

This story appears in the July/August Rivalry Issue of Bloomberg Markets magazine.

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Rare Imperial photos, miniatures, jewelery at London sale

visionsart — Tue, 07 Oct 2014 17:58:00 +0000

New Delhi: A Mughal-era manuscript filled with Indian miniatures discovered locked up in a cupboard inside a rural England castle is now up for sale at Sotheby’s upcoming auction in London.

Ancient Indian artifacts

Also on offer at the auction titled ‘Art of Imperial India’ scheduled for 8th October is a group of albums containing historical black and photographs of India.

“The contents of the sale is very eclectic. One very old manuscript with 140 miniatures in it was discovered in a cupboard in a castle owned by the Duke of Northumberland,” Edward Gibbs, Chairman and Head of the Middle East and India departments at Sotheby’s, London said.

“The manuscript is quite splendid and looking at the miniatures is a very intimate experience as it was locked up so it has been preserved in pristine condition in its original binding and not subject to natural light or insects. It’s an exciting find for scholars and historians and those in auction business,” Gibbs said.

The illustrated book, which Gibbs says is ‘about the size of an iPad’ is likely to originate from end of 17th century.

“Interestingly the manuscript contains an earlier portrait of Shah Jahan in his old age on folio seven, and this appears to have been added at some point after the production of the work,” auctioneers said.

Towards the end of the sale is featured a group of 31 albums containing over 2,000 photographs of India, Ceylon, Burma and South East Asia dating from the 1850s to the early 20th century.

Sourced from London-based collector Sven Gahlin, provenances of the album date to the family of Lord Curzon, the Viceroy of India among others.

“Gahlin has been slowly putting together a collection of photos of India. He has been a true pioneer in the filed going to flea markets, jumble sales and other sales. The collection runs to thousands of photos of historical places, costume studies of the courts of the maharajahs etc,” Gibbs said.

The photos, according to auctioneers can be broadly categorized into three categories- architecture, topographic images and generic subjects.

It includes among others ‘views and people in Bombay, Agra, Delhi, Amritsar, Darjeeling, Kashmir, the Himalayas, Calcutta, and Ceylon’.

Among the group photographs is one of the Maharajah of Kashmir and his entourage, and one of another tribal leader.

A set of photographs of the train for the Viceroy of India which was constructed in the workshops of East Indian Railway Company 1902-1904. The images include a exterior view of the train, and images of the interior including the viceroy’s office, bedroom, bathroom, the dining saloon, kitchen, servant’s apartment and guards compartment. It has been estimated to fetch Rs 151,454 – Rs 201,939.

A diamond, rubies and emerald ‘maharani necklace’ from late 19th century Rajasthan also features in the Art of Imperial India sale. Auctioneers have estimated it to fetch between 2.5 crore to Rs 3 crore.

Jewelery and works of art from the Mughal and the Rajput courts as well as the period of the Raj also feature in the sale, auctioneers said.

The sale is part of the India Islamic Week, which began on 3rd October and is spread across three major auctions – the Modern and Contemporary South Asian Art, Art of Imperial India and Arts of the Islamic World.

Tyeb Mehta’s 1982 ‘Blue Painting’ the property of Japan’s Glenbarra Art Museum is most expensive of the lot at the Modern and Contemporary South Asian Art scheduled on 7th October with a reserve price of Rs 60,177,751 – Rs 80,237,001, auctioners say.

Other works on offer are those by M F Husain, S H Raza, Rashid Rana, Subodh Gupta and Bharti Kher.

“This a really a feast of Indian art. I think it is very exciting to see how there is a continuity of modern contemporary with classical historical because you see contemporary art does not appear out of thin air but is rooted in tradition,” Gibbs said.

Stating that there is ‘something for all tastes and pockets’, Gibbs said the advantage of having all the sales in the week is to ‘cross market it to different potential buyers’.

“A large scale company school album was brought by an Indian collector in the first edition of the Art of the Imperial last year,” Gibbs said.

Jagran Post News Desk

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London’s ‘India Week’ hosts rare art from global collections

visionsart — Sat, 06 Sep 2014 05:38:00 +0000

New Delhi: A painting by Tyeb Mehta from a Japanese museum collection, a set of rare Kalighat paintings dating pre-Independence and a large stained glass piece by F N Souza are among artworks set for auction in London soon.

Tyeb Mehta’s painting

In a new initiative ‘India Week’, global auctioneers Sotheby’s have brought together many artworks done by Indian modern and contemporary artists which includes quite a few pieces that have never been seen in public for over 50 years. “We are holding three auctions in October of about 100 artworks beginning from 1500 to present time. Many works are coming to the market for the first time. It is a huge cross marketing platform to appeal to art collectors across the world,” Yamini Mehta, international director for Indian and South Asian Art said. The two-day event beginning October 7 with ‘Modern and contemporary South Asian’ auction followed by sale of ‘Arts of Imperial’ and the ‘Arts of Islamic World’ is estimated to raise a total of 10 million pounds. The initiative, says Mehta is also a build up to Frieze, one of world’s largest contemporary art fair that takes place annually in London and sees buyers including Indians, from all over the world visiting. “We are selling some real treasures. It is very eclectic and had something for all tastes and pockets,” says Edward Gibbs, chairman Middle East and India for Sotheby’s. Rare black and white photographs of historic monuments and important personalities in pre independent India that were commissioned for Lord Curzon feature in the ‘Art of Imperial’ sale. ‘Blue Painting’ the oil on canvas painting by Tyeb Mehta in 1982 from the Glenbarra Art Museum in Japan has been estimated to fetch between Rs 5.97 crore to Rs 7.97 crore (600,000 to 800,000 pounds) in the modern and contemporary auction. “The painting had visited India in a show in 1997 and it is now coming back here for the first time after that,” says Priyanka Matthews, head of sales, Sotheby’s who is slated to auctioneering at the India Week. A set of Kalighat paintings from the William and Mildred Archer collection is among those set to go under the hammer. “William was one of the most prolific scholars of Indian art and this set of paintings was discovered by his son in an attic at his home in rural England and we brought them in. It is such a treasure and pleasure to have a group of Kalighat paintings,” says Mehta. Two works on paper by Rabindranath Tagore are from the same collection. Among other highlights of the auction are works by M F Husain. “Some of his wooden toys are being brought from a French diplomat in Monaco,” says Mehta. An early work ‘Prophet’ by Akbar Padamsee has been sourced from an art collector in Brazil. From a Swiss collector comes a Krishen Khanna work. “A large Benaras paper work by Ram Kumar, a beautiful early work by Satish Gujaral and one of the largest F N Souza depicting Goan landscape are some of the other works,” says Mehta.
Early works by Jamini Roy, Mrilalini Mukherjee and Rameshwar Broota also figure in the sale that sees works by artists from India and Pakistan like Rashid Rana, Bharti Kher and Subodh Gupta. Previews of select artworks are set to be held here and in New York and London prior to the sale, according to the auctioneers.

Credits : Jagran Post Editorial

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Rare bronzes from India at New York auction

visionsart — Sat, 15 Mar 2014 15:20:00 +0000

Press Trust of India | New Delhi March 10, 2014 Last Updated at 13:00 IST

Thangkas, sculptures and ritual objects, from a Japanese collector of Tibetan art are coming up for auction in New York later this month. The sale also includes items associated withIndia.

The Indian, Himalayan and Southeast Asian Works of Art Sale by Sotheby’s scheduled on March 19 includes over 45 thangkas, sculptures and ritual objects, from the collection of Yoshitomo Tamashige.

The collection was first exhibited at Meditation Homeland in Toyama Prefecture in Japan in 2004 and published in a catalogue titled “Gems of Thangka Art.”

Many of the works up for auction were also included in the 2005 exhibition “The World of Mandala” at the Okura Museum of Art in Tokyo.

Leading the sale is a very fine gilt copper alloy figure Depicting Tara from the Yongle period (1403-1424) and estimated to fetch USD300,000 to USD 500,000. It has been finished and gilded to perfection with the Yongle hallmark style of jewelry and lotus petals.

Also included from the collection in an epic thangka depicting a King, possibly Tri Ralpachen, one of the three legendary imperial patrons of early Buddhism in Tibet estimated to fetch USD 60,000 to USD 80,000).

The very large-format narrative thangka depicts a temple at the centre.

Further highlights from the auction include a rare copper alloy figure depicting Bodhisattva Manjushri, the oldest and most significant bodhisattva in Mahayana Buddhist literature.

Cast in a lustrous copper alloy with silver inlay in the Kashmiri style has been estimated to fetch between USD 350,000 to USD 450,000.

An 18th century parcel gilt copper alloy group depicting Manjushri on a snowlion has been estimated to fetch between USD 40,000 to USD 60,000.

Also up for offer is a large-scale granite figure of a Yakshi from South India and is pegged to sell between USD 50,000 to USD 70,000.

The 13th century bronze has been sourced from a private West Coast collection that includes Gandharan and Central Indian stone sculpture.

The auction also features an eclectic group of Indian miniature paintings from Rajasthan and Punjab led by a opaque watercolour with gold on paper titled “Maharana Ari Singh Searching the Skies circa 1764 (estimated USD 15,000 to USD 20,000).

The painting has been part of a private New York collection since 1989.

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Husain’s paintings fetch $4.7 million at New York auctions

visionsart — Sat, 17 Sep 2011 04:48:00 +0000

A collection of over 20 paintings by legendary artist M.F. Husain fetched $4.7 million at auctions held at the prestigious Christie’s and Sotheby’s in New York.

An auction held on Thursday at Sotheby’s of 11 masterpieces by late Husain fetched a total of $557,500 with one of his paintings Man with Sitar selling for $146,500.

However, proceeds from the Sotheby’s auction paled in comparison to those generated at Christie’s two days ago, where a single Husain work was sold for $1.14 million.

At the Christie’s sale, Sprinkling Horses went under the hammer for $1.14 million, one of the highest amounts ever paid for the late master’s work.

It was among the 13 paintings that were auctioned at Christie’s sale of South Asian modern and contemporary art.

The 13 paintings were sold for a total of $4.2 million.

Eleven Husain paintings were on sale at Sotheby’s, which presented Modern and Contemporary South Asian Art including Indian Miniature Paintings as part of its week of Asian art auctions.

A legendary artist, whose work often landed him in controversy, Husain passed away in June this year. He was among the first and few artists from India to be in the ‘one million dollar club’

His Empty Bowl at the Last Supper was sold for $2 million in 2005, which was at that time the highest sum ever paid for a work of modern Indian art.

In 2008, Husain’s Battle of Ganga and Jamuna: Mahabharata fetched $1.6 million, setting a world record at Christie’s South Asian Modern and Contemporary Art sale.

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Sotheby’s, Christie’s Contemporary-Art Sales Total Drops 75%

visionsart — Wed, 16 Dec 2009 04:08:00 +0000

Annual sales of contemporary art slumped 75 percent at the two largest auction houses’ evening sales in 2009 after they abandoned price guarantees to sellers.

Sotheby’s and Christie’s International made a combined total of $482.3 million with fees from their five regular “Part I” sales of high-value art in New York and London this year, according to figures compiled by Bloomberg News. In 2008, the same group of flagship auctions made $1.97 billion. That compares with a record $2.4 billion in 2007, and $1.1 billion in 2006.

Worldwide auction sales of contemporary art grew more than eightfold between 2003 and 2007, according to France-based database Artprice. Demand contracted in the fourth quarter of 2008, after the September collapse of Lehman Brothers Holdings Inc., with Sotheby’s and Christie’s losing at least $50 million and $40 million respectively as artworks failed to achieve prices guaranteed to sellers. Phillips de Pury & Co. also stopped providing guarantees before its fall series of sales.

“As soon as guarantees were taken off the table, sellers became uncertain,” said Philip Hoffman, chief executive of the London-based Fine Art Fund. “Clients don’t want to see big- ticket works go to public auction and fail. A lot of people turned to discreet private sales at the auction houses.”

Private sales of contemporary art raised more than auctions at Christie’s in the first half of 2009, said the London-based auction house. Sotheby’s would not comment on private sales.

Demand Declines

Demand declined at smaller evening auctions in London and New York during the first half of the year. Christie’s February sale in London raised only 8.4 million pounds ($13.6 million), the lowest total at an evening event in the U.K. capital since 2004.

During the first six months of 2009, no single work sold for more than $10 million. The top price was the $7.9 million paid at Christie’s, New York, in May for David Hockney’s 1966 painting, “Beverly Hills Housewife.”

“At the time, people didn’t know what the art was worth or what they themselves were worth,” Francis Outred, Christie’s European head of contemporary art, said in an interview. “They were looking at each other in the saleroom and waiting for someone else to bid.”

As the slump continued, auction houses cut estimates by 50 percent or more from 2008 levels to shore up selling rates.

Richter Low

At Christie’s London in July — where 88 percent of the reduced 40-lot offering found buyers — a 1974 Gerhard Richter color-chart painting sold for 1.4 million pounds, at the low end of estimates. Another version from the same series fetched $4.1 million at Sotheby’s New York in May 2008, also near the lower estimate.

Following reports of improved levels of business at contemporary-art fairs such as Art Basel in June and Frieze in London in October, selling rates and prices increased at evening auctions in the final quarter of this year.

On Nov. 11, the Standard & Poor’s 500 Index closed at a 13-month high. Three hours later, Sotheby’s held a $134.4 evening auction of contemporary art in New York at which only two of the 54 offered lots failed. The total beat both a high estimate of $97.7 million and the company’s $125.1 million tally in November 2008.

Warhol Bills

Andy Warhol’s 1962 painting “200 One Dollar Bills” became the most expensive contemporary work sold this year, when five bidders pushed the price to $43.8 million. Entered by London-based collector Pauline Karpidas, it had been attractively estimated at $8 million to $12 million.

“It was the most significant event of the season,” Tobias Meyer, Sotheby’s worldwide head of contemporary art, said in an interview. “Up until then, nothing was trading above $20 million in the market.”

The policy of lowering estimates to generate high success rates had proven to sellers that the market for contemporary art “was alive and well at a recalibrated level,” Meyer said.

The success of the Warhol, together with a general stabilization of prices, is encouraging collectors to offer works publicly, said auction-house specialists.

“It’s balancing from private toward auctions again,” said Outred, of Christie’s. “It’s like the difference between night and day. The phones are ringing and people are interested in selling.”

The auction houses are aware that the market remains acutely price-sensitive.

“We need to continue to be conservative with estimates,” said Meyer, of Sotheby’s. “The market will be completely determined by supply at the right level. If sellers become overconfident, it will freeze again.”

By – Scott Reyburn

(Scott Reyburn writes about the art market for Bloomberg News. Opinions expressed are his own.)
Dec. 16 (Bloomberg)

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Royal treasures shine at Russia sale, others flop

visionsart — Wed, 02 Dec 2009 04:41:00 +0000

By Mike Collett-White
Source – Thomas Reuters

LONDON (Reuters) – Rediscovered royal treasures from Russia broke records at a London auction late on Monday, but a separate sale of paintings fell well short of estimates.

The Sotheby’s auctions pointed to ongoing uncertainty in a market that has grown virtually from nothing in the last 15 years as newly wealthy Russians and former Soviet tycoons sought to buy back art taken out of the region after the revolution. The sales also underlined the importance of provenance, with imperial links apparently the most desirable of all.

The so-called “Romanov Heirlooms,” which had been lost to posterity for over 90 years before they were discovered in Sweden in 2009, fetched 7.1 million pounds, around seven times expectations.

An auction record for a Faberge cigarette case was set when an imperial jeweled, four-colored gold example went to a private U.S. buyer for 612,000 pounds ($1 million) including premium, nearly six times its pre-sale estimate.

Several other cases smashed the previous auction record of 433,600 pounds set in 2006, including a jeweled, three-color gold work that fetched 601,000 and also went to a bidder from the United States.

“WHITE GLOVE” SALE

Every lot at the auction was sold, making it a rare “white glove sale” for the auctioneer. All but one of the lots on offer sold for amounts in excess of their pre-sale high estimates.

“The extraordinary results of this evening’s sale … are tributes to the exquisite quality, outstanding provenance and romantic story behind this remarkable collection,” said Olga Vaigatcheva and Darin Bloomquist, Sotheby’s Russian art specialists in charge of the sale.

“Successful buyers in tonight’s sale have, without doubt, acquired a piece of Russian imperial history.” The objects on sale originally belonged to Grand Duchess Maria Pavlovna and her late husband Grand Duke Vladimir, brother of Czar Alexander III.

In grave danger after the Bolshevik revolution of 1917, the duchess, a renowned socialite, fled Russia and organized for her treasures to be collected. They were deposited at the Swedish Legation in St. Petersburg in two pillow cases.

Less impressive was the evening sale of Russian paintings, which raised 4.1 million pounds, well short of expectations of between 7.8 and 11.1 million pounds.

Despite the disappointing total, Sotheby’s said it set a new auction record for a work by leading 20th century female artist Alexandra Exter, whose bright-colored “Venice” went for 1 million pounds including commission, in line with expectations.

(Editing by Paul Casciato)

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Sotheby’s Posts Sobering First-Half Results

visionsart — Fri, 07 Aug 2009 05:32:00 +0000

NEW YORK—As if Sotheby’s 87 percent drop in profits in the second fiscal quarter, announced Tuesday, wasn’t sobering enough, the firm also got walloped by its archrival Christie’s in the auction sales arena in the first half of 2009, with its $995 million tally falling far behind Christie’s $1.5 billion.

The gap can be largely attributed to Christie’s record-shattering Yves Saint Laurent/Pierre Bergé single-owner extravaganza in Paris in February, which brought a staggering €374,392,500 ($484.4 million). Twelve works sold for over $10 million each at the six-session sale, including Henri Matisse’s 1911 still life Les coucous, tapis bleu et rose, which fetched $46,457,480. It was the most expensive picture ever to sell at auction since Claude Monet’s Bassin aux nympheas (1919) sold at Christie’s London to private consultant Tania Buckrell Pos for a record £40,921,250 ($80,451,178) in June 2008.

Comparisons are also striking in two critical fine art arenas, Impressionist/modern and postwar/contemporary, where Christie’s posted worldwide auction sales of $620.7 million and $192.3 million, respectively, as opposed to Sotheby’s approximate breakdowns of $240 million and $200 million. Again, the one-off YSL sale was a major factor.

Sotheby’s CEO William Ruprecht sought a silver lining during a conference call session following the firm’s second-quarter filing, perhaps largely in an effort to make up for recent restructuring and cost-cutting, saying, “Our auction commission margins are up 41 percent, and operating costs are down 39 percent [excluding restructuring charges].” Christie’s has also struck a positive note, with CEO Edward Dolman stating, after the company’s figures were released July 23, that the house is “delighted to have further enhanced our leading global-market share in the first half of 2009 and increased sold-by percentages at all price levels.” But both houses suffered during the financial downturn, compared with the same six-month period a year ago, with Christie’s auction sales (even with YSL) dropping 52 percent from $3.2 billion and Sotheby’s 67 percent from $3 billion. The houses performed similarly in private sales or so-called “private treaty” transactions, which include sales at Christie’s wholly owned gallery subsidiary Haunch of Venison and Sotheby’s Noortman Master Paintings, with Christie’s racking up $199.7 million and Sotheby’s $198.4 million. But while Christie’s private-sale figures were down 34 percent from the same six-month period the previous year, Sotheby’s registered a 46 percent uptick in private transactions for the second fiscal quarter, with $134 million.

That’s about as much comparison as anyone can do, since Christie’s, a privately held company controlled by French multibillionaire François Pinault, remains a closed book in terms of reporting any profit/loss picture. At Sotheby’s, a publicly owned American firm with stringent public financial disclosures, though, the picture is pretty clear.

For the second quarter that ended June 30, Sotheby’s registered net income of $12.2 million. This compares with $95.3 million for the same period last year — hence the 87 percent plunge — but still, it was the first profitable quarter reported by the firm after three consecutive quarters of losses.
For the bigger first-six-month period of 2009, though, Sotheby’s suffered a net loss of $22.3 million, compared with net income of $82.9 million for the same period a year ago. And that’s despite a 28 percent reduction in operating costs.

Ruprecht credited the blitzkrieg cuts in both staff and operations during the teleconference on Tuesday. “We adjusted quickly to the different and difficult environment that suddenly presented itself, and we are very well positioned to capitalize on a market rebound and benefit from improved margins and lower costs,” he said.

Those improved “margins,” relating to how much money the firm makes in its auction-room business, largely refer to the recent absence of super-high-priced lots that often go to auction without any commission charges on the seller’s part.

Sotheby’s, like Christie’s, has for the most part stopped its risky strategy of offering financial guarantees to lure high-end property to auction, and with it, the chance to take a bigger cut in star-lot profits. This more conservative posture further reduces the salesroom gambling that led to millions of dollars in losses for both houses when the postwar and contemporary art market tanked last November.

During the teleconference, Ruprecht fielded a question from a financial analyst covering the industry as to whether “we’ve hit the bottom or can things get worse.” He responded, “I think we’ve seen pretty much the bottom of what we’d anticipated in terms of the volume of commerce in our business. … I don’t see it getting any worse than first-half volumes.”

If Sotheby’s sticks to its plan to save $160 million in costs by the end of the year and manages to attract sufficient auction-bound and private property to improve its financial footing, the firm stands a chance to return to profitability.

The stock market reacted unfavorably to Sotheby’s financial report card on Wednesday, with BID (Sotheby’s trading acronym) dropping 51 cents (3.4 percent) to close at $14.48 per share. That compares with a 52-week high of $28.92 per share last August.

Judd Tully is Editor at Large of Art+Auction.

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Sotheby’s Sees Art Market Bottom: Profit Declines 87%

visionsart — Thu, 06 Aug 2009 05:35:00 +0000

Aug. 5 (Bloomberg) — Sotheby’s Chief Financial Officer William Sheridan said art prices and sales have stabilized, after the New York-based auctioneer reported a worse-than- expected 87 percent drop in second-quarter earnings. “Unless there’s some external event we’re not aware of, we believe the market has bottomed out,” Sheridan said in an interview last night.
Auction houses including Sotheby’s and Christie’s International abandoned the practice of guaranteeing minimum prices at the end of 2008. Sellers were reluctant to offer works at auctions when prices were falling. The average auction price of contemporary art dropped 76.2 percent since May 2008, London- based ArtTactic said in May.

Sell-through rates — the percentage of lots sold at auction — jumped to 81 percent in May from 64 percent in November at Sotheby’s New York evening Impressionist and modern art auctions, Chief Executive William Ruprecht said in a conference call.

Yesterday, Sotheby’s reported its first quarterly profit in a year. Net income fell to $12.2 million, or 18 cents a share, from $95.3 million, or $1.41 a year earlier, the company said in a statement. Analysts had estimated on average a profit of 29 cents, according to data compiled by Bloomberg. Sheridan said higher taxes contributed to the drop in net income.

Commission Revenue
Sotheby’s made $21.30 in commission revenue for every $100 in auction sales in the quarter, up 41 percent from $15.10 a year earlier, Sheridan said. The increase was due to fewer sales of high-priced lots. Commissions are on a sliding scale, with lots over $1 million garnering lower fees as a percentage than cheaper works.

To reduce costs, Sotheby’s has fired staff, cut pay and required unpaid furloughs. Excluding restructuring charges and a nonrecurring benefit recorded last year, the company reduced operating expenses by $73.5 million, or 39 percent.

The shares fell 73 cents to $14.99 yesterday in New York Stock Exchange trading before the results were released. They’re up 68 percent this year and 74 percent below their closing high of $57.64, on Oct. 10, 2007.
Auction-related revenue declined by more than half in the first six months, to $197 million.
“I don’t see it get any worse than those first-half volumes,” Ruprecht said. He remained equivocal about forecasts. In answer to an analyst who requested guidance on when the market would recover, Ruprecht said: “How many qualifiers do you want before I answer that question?”

To contact the reporter on this story: Philip Boroff in New York at pboroff@bloomberg.net;

The post Sotheby’s Sees Art Market Bottom: Profit Declines 87% first appeared on Indian Art News.

Valuation services bring stability, strength in art market

visionsart — Thu, 23 Jul 2009 04:03:00 +0000

Source: Economic Times

By – Ashok Nag

KOLKATA: Valuation services revolving around art extended by leading international auction houses inject a degree of stability and strength inthe market. This system could also come of good use in India if introduced in a concerted way by auctioneers and leading galleries.”The present downturn in the art sector, especially beyond the auction circuit in the retail and dealer segment, is making a cross-section of buyers question the intrinsic value of art as an asset class. If one does not read too much into the recessionary conditions, the position of art as an asset is proved by the fact that top auction houses abroad run a valuation service where they carry out a detailed cataloguing and evaluation of art collections,” art connoisseur and Kolkata’s oldest gallery owner Prakash Kejariwal, told ET.A spokesperson of famed international auction house Sotheby’s added, “If a client approaches us, we are happy to do valuations for their artworks.

We look at various factors including condition, provenance, artist, year, medium and quality of work. Of course, in India, we only do this for works under 100 years old, because pieces beyond that span come under the Antiquities Act.”According to Mr Kejariwal, this evaluation by these leading overseas auctioneers is accepted by banks and insurance companies. “Recently, a section of Indian collectors have got some of their artworks assessed and the results were fairly encouraging. Therefore, those who have been buying art should not be entirely disheartened by the current atmosphere. It may not be a surprise if artworks again see an appreciation over a period of time like it happened in the boomtime. Of course, high value art should follow their own price graph as they have scaled international levels.

But, quality art, which is still lying low, can be poised for appreciation in future,” Mr Kejariwal said.On the other hand, as far as Contemporary art goes, this genre is competing with international art of the same category with prices comparable to tags in other western and Asian countries. So, the price rise in their case will depend on world trends in this sphere, economic conditions in these regions and the further internationalisation of Contemporary art.”Taking the cue from auctioneers in the West, recognised Indian galleries and auction houses can kick off valuation services. It is important to get experienced galleries involved in this process because they can not only perform the job of evaluating artworks, but can also authenticate the pieces based on their track record,” Mr Kejariwal said.

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