Scott Reyburn has a spot on column about the New York marquee sales this coming week which are markedly down in estimates and likely to show a dramatic contraction in the very top of the art market. Art advisors Reyburn spoke to rightly point to the diminished sales subsidies offered by the auction houses in the form of guarantees, direct or third party:
“A sea change has occurred at auction,” said Wendy Cromwell, an art adviser in New York. “The night sales are smaller, the estimates more conservative, the guarantees less exuberant, the great works fewer and far between.”
At the moment, Ms. Cromwell added, discretionary sellers will not part with masterworks “unless they are offered ridiculous sums of money.”
But Todd Levin gets right to the heart of the matter by pointing to Christie’s as the primary driver of the guarantee engine:
“The guarantees aren’t there anymore at the highest level,” said Todd Levin, another art adviser in New York. “Christie’s has stepped back, and the market is no longer on steroids and is returning to its normal state.”
The chart above shows the last New York Contemporary evening sale where Christie’s and Sotheby’s were neck-and-neck in the fight for market share.
Starting in 2013, Christie’s hit the afterburners by opening the guarantee book and pulling away significantly. Since this chart, Sotheby’s has caught up but the November 2014 sales were the peak of the guarantee-supported market:
Reyburn also has some color on Sotheby’s where Amy Cappellazzo offers her trademark quote grafting financial terms uneasily onto the art market:
“Our position on guarantees is to do them when we have calculated that it is a good financial opportunity for Sotheby’s, more like private equity decision,” said Amy Cappellazzo, chairman of Sotheby’s Global Fine Arts Division. “We feel confident about the deals that have been done for May, and expect to be pleased with the results.”
It’s not clear what Cappellazzo means by a private equity decision. But since private equity deals are levered (meaning their financing is mostly in the forms of loans) and guarantees are not loans but full equity positions (to continue with the financial lexicon,) the metaphor seems to falter. What Cappellazzo seems to want to get across is the simpler idea that they won’t offer guarantees where they don’t see a way to profit, which is quite sensible.
Finally, Todd Levin reminds us that Sotheby’s sale results are likely to reflect the recent staffing changes more than its market share:
“The brains trust has been depleted and it’s really affected their competitiveness,” Mr. Levin said. “Sotheby’s evening auction is about 10 lots short of what it should be.”
A Crush of Headline Auctions in New York (The New York Times)