In the Matter of the Buyer's Premium

In this post, I commented on serious issues raised in an in-depth Wall Street Journal article by the veteran, highly respected art-market writer, Alexandra Peers. The article described changes, of which I had been previously unaware, in auction-house practices regarding the buyer's premium charged to successful bidders.

In subsequent conversation with me, officials of both auction houses have disputed the article's suggestion that they sometimes reduce the buyer's premium for third-party guarantors who are successful bidders at auction. (Such guarantors are dealers, collectors or others who agree to take on some or all of the risk if a given work fails to sell. The consignor gets the guaranteed amount. The auction house and/or third-party guarantor pays the money and takes possession of the work.)

Bill Ruprecht, president and CEO of Sotheby's, denied that the buyer's premiums are ever reduced, and said that the only monetary compensation for Sotheby's third-party guarantors is participation in the fee that consignors must pay to the auction house if bidding exceeds the amount of the guarantee. If a work fails to achieve its guarantee, the third party may take possession of all or a share of it and may be able to sell it later for a profit.

Toby Usnik, head of public relations at Christie's, said that his company also compensates guarantors this way:

Third party guarantors, who may be dealers, collectors, or financiers, receive a fee for assuming some or all of Christie's risk with respect to a particular sale, regardless of whether they are the ultimate purchaser of the lot.

Alexandra, whose knowledge, passion for accuracy and long experience as an art-market writer I deeply respect, says she stands by her story and has the documentation to back it up.

I'm now going to recuse myself and let them work this out among themselves.