False Comparisons: Auction Scribes Perpetrate Inflation-By-Premium

Why does Carol Vogel in today's NY Times say that the sale total for Sotheby's Impressionist/modern auction last night was "right in the middle of its estimate," while CultureGrrl says that the sale total was "slightly below the sale's presale estimate"?

Because Carol Vogel (and we might as well add Lindsay Pollock and Philip Boroff, in today's Bloomberg) is wrong.

As Sotheby's itself acknowledges, the presale estimate, $219.6-299.8 million, is a prediction of the total hammer price, not hammer price plus buyer's premium (the hefty commission tacked on after the hammer falls). The $238.67 million total, cited by other reporters as evidence that Sotheby's sale achieved its estimate, includes the markup from the buyer's premium. Comparing that figure to the hammer-price estimate is apples-to-oranges. The appropriate figure for apples-to-apples comparison is the $212.07-million total hammer price, which fell below the $219.6-million low end of the presale estimate.

The hammer-price total was not released to me by the auction house's press office until I persisted. Before getting it for me, late last night, a Sotheby's press staffer encouraged me to follow the usual practice: Report the sale total with premium, compare it to the presale estimate, and say somewhere in the story that the estimate does not include the buyer's premium---20% of the hammer price on the first $200,000, and 12% on the excess. Smart as my readers are, I don't like to force them to do that complicated math.

Even Sotheby's officials don't have the temerity, in their official press release, to directly compare the premium-inflated total with the hammer-price presale estimate. But in an e-mailed message to me today, the Sotheby's press staffer sought to perpetuate the myth that the sale had reached its estimate. She wrote: "The sale brought $238.7 million, significantly above the presale low estimate of $219 million."

All true, but so misleading.