With publicly traded Sotheby’s having issued its 2009 annual report on Monday, we can at last do an apples-to-apples comparison with privately held Christie’s to determine market share for total sales (auction, post-auction and private sales) in 2009.
Last month, Christie’s had misleadingly claimed a 56.4% auction market share over its arch-rival. As I reported here, that claim to supremacy was based on a an apples-to-oranges statistical comparison: Christie’s compared its 2009 auction total including post-auction private sales with Sotheby’s total that excluded such sales, thereby beefing up Christie’s figure.
At the same time, Christie’s had reported that its total sales (including both auction and private) amounted to $3.3 billion. On that figure, we can now go apples-to-apples: Sotheby’s total for all sales, public and private, as reported in its annual report and its press release (buried on p. 2), was $2.8 billion. That means that Christie’s scored a 54% market share.
Although proclaiming to stock analysts during a Mar. 1 conference call that Sotheby’s goal was “not to be the biggest but to be the best,” Bill Ruprecht, the auction house’s chief executive, was himself not averse to playing the market-share game:
We now have, to date, market share in 2010 of over 60% versus our
principle competitor, who has consistently defined itself by
This vaunted two-month lead is owed in large measure to one monster lot—Giacometti‘s “L’Homme Qui Marche I,” which sold in London on Feb. 3 for a staggering $104.32 million—the highest auction price ever achieved by any artwork. (Bloomberg later reported, based comments by two anonymous sources, that the buyer was Lily Safra, London-based widow of Lebanese banker Edmond Safra.)
Sales volume is not the same as profitability. As a private company, Christie’s does not disclose its net income, but publicly traded Sotheby’s is required to do so. Sotheby’s emphasized that its $73.6 million net income for the last three months of 2009 made that the company’s “second best fourth quarter ever.”
The full year, however, was a loser: The net loss for 2009 was $6.53 million, compared to a net gain of $26.46 million in 2008. (The recession hit the art market, like the rest of the economy, in September 2008.)
In discussing the prospects going forward, Ruprecht tried to make the most of the anomalous Giacometti price, which was the highlight of an Impressionist/modern sale that achieved $235.7 million, the highest total ever for a London sale. The hope is that discretionary sellers, who have been waiting out the market slump, may now come out of the woodwork.
Ruprecht told the analysts:
These results provide us the clearest example we can give that worst of the recent market appears [to be] behind us and there is enormous demand for works of art of great quality.
In response to a question, he added that when works are “fresh to the market and presented so the audience can get excited about them, rather than overpricing or overreaching with those objects, the sky’s the limit.”
That analysis might itself be over-hyping and overreaching.
The key, as Ruprecht acknowledged, is getting stellar consignments: “When you get great things, there is demand for them, whether it’s an ebullient time or not.” But in his comments on future sales, Sotheby’s chief was not yet able to publicize any information on property committed for the big May sales in New York of Impressionist, modern and contemporary art, saying only that negotiations were in progress.
Christie’s, on the other hand, has recently announced a big consignment coup for its May evening contemporary sale—works from the collection of the late author Michael Crichton.
We don’t know what deals Christie’s may have cut to snag this consignment. Only four Crichton offerings were announced on Feb. 5, but last week, a presale exhibition of “50 highlights” from the collection was announced.
Was a guarantee offered to the seller? I have not yet heard back from Christie’s on my query about this. (I will update here if I do.) But significantly, Ed Dolman, Christie’s chief executive, recently told
Bloomberg‘s Scott Reyburn:
You will see guarantees
coming back. But
it won’t be like the height of the market in 2007. We’ll be
looking to share the risk much more. The contemporary market
By contrast, Ruprecht said this to the stock analysts:
We expect to continue to significantly limit the use of auction guarantees going forward.
Both houses had been burned by guarantees gone bad when the market went south. Sotheby’s reported that it had suffered a net loss in 2008 of some $60.2 million “related to property offered or sold under auction guarantees.” (Guarantees are prices that the auction house agrees to pay to consignors, whether or not the bidding reaches the level guaranteed.)
As of Dec. 31, according to its annual report, Sotheby’s had one outstanding guarantee of $4.5 million, “fully hedged as a result of an irrevocable bid of $4.5 million from an unaffiliated counterparty.”