After I wrote about Sotheby’s guarantee, which may have gone sour, for its big-ticket Giacometti, I checked the auction house’s SEC filings. The most recent Form 8-K reveals that the total amount of that Sotheby’s guarantees to consignors as of Oct. 16 was a whopping $392.6 million. Some of this amount was concentrated “among a small number of high-value items” (presumably including Giacometti’s “Chariot,” whose $90-million hammer price fell short of its “in excess of $100 million” estimate).
Each Sotheby’s guarantee falls within the presale estimate for the relevant work. Under such arrangements, the auction house guarantees a certain amount to the consignor, whether or not the bidding reaches the level of the guarantee.
Only $35.4 million of the $392.6 million in guarantees was offset by “risk- and reward-sharing arrangements, such as irrevocable bids and partner sharing arrangements” (i.e., third-party guarantees). “Sotheby’s may further reduce its exposure under these auction guarantees by entering into additional risk- and reward-sharing arrangements prior to sale,” according to the 8-K. “The property related to these auction guarantees will be offered at auctions in the fourth quarter of 2014”—notably, one can assume, at the big Impressionist/Modern evening sale that occurred last Tuesday, and at this week’s evening sales for the Mrs. Paul Mellon Collection (Monday) and Contemporary Art (Tuesday).
The priciest guaranteed work in Sotheby’s Tuesday Contemporary sale, Warhol‘s “Liz #3 (Early Colored Liz),” 1963, is estimated to bring “in the region of $30 million.”
As of the date of the 8-K filing, $91.7 million of the aggregate guaranteed amount had been advanced to consignors by Sotheby’s. What’s more, Sotheby’s may have entered into additional guarantee agreements after Oct. 16.
As a privately held company, Christie’s does not publish information on the amount of its outstanding guarantees.