Marion Maneker0August 08, 2014

Sotheby’s 2014 Auction Sales Up 24% to $2.7bn

Sotheby's Headquarters

Sotheby’s has released some highlights from its earnings this morning that include the news of layoffs and tax charges. Overall, the central business of auctioning art was very strong in the first half of 2014. You can download the releases yourself at the end of the post:

Bolstered by continued strength in the global art market and by excellent spring sales worldwide, Sotheby’s achieved a 42% increase in adjusted operating income* and a 20% increase in operating income in the first half of 2014.

Sotheby’s net auction sales increased 24% to $2.7 billion on strong global sales during the period – particularly in Hong Kong and London – which led to an 18% increase in auction commission revenues to $403.8 million as compared to the prior year.

In the first half of 2014, adjusted expenses* increased 4% to $301.8 million, due to higher salaries and related costs, consistent with prior guidance and the increased earnings for the period. These factors were partially offset by lower marketing and general and administrative expenses, reflecting management’s ongoing efforts to reduce costs in those areas. In the first half of 2014, total expenses increased 22% due to the cost of Principal revenues attributable to a series of profitable transactions completed in the period ($32.0 million) and special charges ($24.3 million).

In July, Sotheby’s announced a restructuring plan that will reallocate resources to collecting categories and regions with the highest potential for growth and to further reduce costs. “We are engaging in this reallocation of staff and resources to achieve cost savings and to focus our resources and people on areas of the Company with the greatest growth opportunities,” said Executive Vice President and Chief Financial Officer Patrick McClymont.

Adjusted net income* increased 22% to $84.9 million for the first half, resulting in adjusted diluted earnings per share* of $1.20 as compared to $1.00 per share in the prior year. The comparison of adjusted net income* to the prior period is significantly influenced by an increase in Sotheby’s effective tax rate from 23% to 39%, primarily due to the accrual of U.S. taxes on the earnings of foreign subsidiaries in 2014 and the impact of a non-recurring $6.8 million tax benefit recorded in the second quarter of 2013 related to a loss on the tax basis in a foreign subsidiary.

Net income for the first half increased 3% to $71.5 million, resulting in diluted earnings per share of $1.01. First half net income was adversely impacted by after-tax special charges of $13.3 million.

For the second quarter of 2014, adjusted operating income* increased 12% from the prior year. In the quarter, a 19% increase in net auction sales resulted in a $35.5 million (13%) increase in auction commission revenues as auction commission margin decreased from 15.9% to 15.2%, primarily due to competitive conditions and sales mix. In the second quarter of 2014, operating income decreased $2.9 million (2%) due to special charges of $18.6 million.

Adjusted net income* for the second quarter of 2014 decreased 4% to $87.8 million, resulting in Adjusted diluted earnings per share* of $1.26, as compared to $1.33 per share in the prior year, largely due to the increase in Sotheby’s effective tax rate.

Net income for the second quarter decreased $14.1 million (15%), resulting in diluted earnings per share of $1.11. Second quarter net income was adversely impacted by after-tax special charges of $10.2 million.

2Q2014EarningsRelease WITH SALES

1H2014 Earnings At A Glance

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Marion Maneker0August 07, 2014

Sotheby’s Stock, Down from the Height of the Proxy Fight, Is Right Where It Ought to Be, Says WSJ

BID Oct12 to Aug 14

The Wall Street Journal’s Spencer Jakab wonders why Sotheby’s stock is languishing far below the level it attained during Daniel Loeb’s proxy fight and trailing the S&P. Pulling back a bit in time shows why the stock trades below the peak of the proxy fight. Those expectations where untenable. Even at today’s reduced price, Jakab sees 17-times earnings as a fair price for a cyclical stock that faces an inevitable market retrenchment:

Analysts expect Sotheby’s on Friday to report earnings per share of $1.40 for the second quarter, up from $1.33 in the same period a year before. That is about what was predicted last fall.

A more likely reason concerns long-term expectations. Despite inking an agreement with eBay Inc. EBAY to sell Picassos alongside Pikachus, the ebb and flow of the auction business is tied to the fortunes of rich people. In booming 2007, for example, Sotheby’s and Christie’s had a combined $11 billion in auction sales. Two years later, these were less than half as much amid a global recession.

The impact on a business with bills to pay rain or shine is stark. Sotheby’s fell to a per-share loss of 10 cents in 2009 from a profit of $3.25 in 2007. Likewise, between frothy 1999 and rocky 2002, the bottom line fell from a profit of 56 cents a share to a loss of 89 cents.

One benefit of tomorrow’s earnings release is that the stock has jumped above the $40 threshold in anticipation. Let’s see if it can stay there.

AHEAD OF THE TAPE: Don’t Expect a Bargain at Sotheby’s  (WSJ)

Marion Maneker0August 07, 2014

Delaware Museum Stays the Course, Sells More Art to Close Budget Gap

Winslow Homer, Milking TimeDeborah Solomon works extra hard to compare the Delaware Art Museum to Detroit’s embattled collection in her New York Times story on the Museum’s decision to sell two more works  this fall–a Winslow Homer (above) and a Alexander Calder (below.) Of course, the two situations have next to nothing in common. In Delaware, the museum seems to have lost the support of the surrounding community, which is explicitly not the case in Detroit where creditors were demanding the sale of city assets.

Interestingly, the Delaware Museum is comparable in one sense. The museum’s management is choosing works that were purchased with museum funds instead of donations:

Asked how he chose the Holman Hunt for selling, as opposed to any of the 12,500-odd other works in the museum’s collection, Mr. Miller said the process was relatively straightforward. You might assume that he met with the museum’s curators, asking them to weed out works that struck them as inferior, or too similar to other works to merit space. But the curators were never consulted. “They didn’t want to have anything to do with this,” Mr. Miller said. “And we didn’t want to bring them into this.” Instead, he deferred to the marketplace. He contacted art appraisers from Sotheby’s, Christie’s and Bonhams, and had them valuate “a very short list” of works the museum had purchased over the years. Gifts or bequests were excluded, to minimize the potential of lawsuits from donors or their heirs.

Censured Delaware Art Museum Plans to Divest More Works  (

Alexander Calder, Black Crescent

Marion Maneker0August 07, 2014

Understanding ‘Today’s Craziness’: Georgina Adam’s Big Bucks

Georgina Adams, Big Bucks

Georgina Adam’s Big Bucks won’t be released in the US until the end of this month and we haven’t been able to get a pdf (*cough* Georgina! *cough*) to read yet. So we’ll have to rely upon the Grumpy Art Historian’s take:

Georgina Adam is one of the smartest art market commentators, and this book is a lively view of today’s craziness. She’s especially penetrating in her analysis of the market’s corruption – both the corruption of the market and corruption by the market. For example, she tells us that members of Tate’s collection committee each donate at least £10,000 a year – or, to put it less politely, buy their way on. Though she doesn’t draw it out in this particular case, that gives opportunity to promote purchase of artists that the committee members collect, boosting their value. And it skews the Tate’s collection towards art cherished by rich collectors who are not necessarily the sharpest connoisseurs (though some of course are the sharpest connoisseurs; my point is simply that connoisseurship is not proven by a donation of ten grand).

Adam quotes an anonymous American museum director:

“The problem of collectors sitting on museum boards and trying to use their position to validate their own holdings is ubiquitous, and is being exacerbated by the new class of trustees, who today are investor-collectors … They will try to use their position to either influence the purchases of the institution, in line with their own collection, or have their own works included in museum exhibitions. You cannot imagine how cajoled and caressed I have sometimes been to take a painting into a show!” (p. 172)

Actually I can imagine. And this is the tragedy of the contemporary art market – not that collectors over-pay for fashionable mediocrity, but that the ghastly bad taste of the contemporary market pollutes the public sphere by influencing museums. This book gives insight into how the contemporary art world works.

Grumps goes on to take issue with a few things. Notably, he rightly points out that “She speaks of increased professionalisation, like the use of PR firms, and increased globalisation and scale. But none of this is unique to art dealing; the economy has become more global, and many business sectors have become more commercialised. There are lots of comparisons between art dealing today and art dealing in the past, but too little comparison of the art trade and other trades.”

Where Adams does look above the parapet to survey the broader economic landscape, the Grumpy Art Historian suggests, she may be too glib: “In the conclusion Adam speculates about whether the art market is ‘too big to fail’, but this is to misunderstand the concept of too big to fail. ”

He also observes that “comments on collectors today being more likely to jump in at the top end of the market, or being more focused on the investment angle, are speculative. It’s hard to know if the story here is about the changing nature of the art collector or the changing perception of the art collector.”

Finally, it’s refreshing to see that Grumpy isn’t having any of the “shock, horror” nonsense about commercial matters polluting disinterested scholarship, one of the deathless canards of the art market observer: “Connoisseurs like Berenson were utterly implicated in commerce, and many experts sold certificates of authenticity, advised dealers and collectors or traded art themselves. There has been a period when museums moved more consciously to distance themselves from the trade, and I agree that has been breaking down. But it’s a more nuanced story than the rupture implied here.”

All of that said, we can’t wait to read it.

Grumpy Art Historian: ‘Big Bucks’: Georgina Adam on the art market (Grumpy Art Historian)

Marion Maneker0August 07, 2014

Who Is Cui Ruizhou? China’s Most Ambitious Painter

CUi Ruizhou

The Wall Street Journal’s China Real Time has a mini-profile of the artist Cui Ruizhou who first came to the West’s attention when Poly Auction accidentally lost one of his works that had sold in Hong Kong for $3.7m. Though Cui was not the consignor of the work, Jason Chow learned that the artist does sell a substantial amount of his own work through auction houses. Last year, his total auction sales were $35.3m; so far this year, he’s set a personal record by selling a $23.7m painting at auction:

Unlike most painters, Mr. Cui is shameless about his commercial aspirations and says he hopes to one day tops the list as China’s most valuable painter. In 2010, when his record price at auction was HK$15 million, he boldly predicted he’d sell a work at HK$100 million within four years. Since then, he has sold seven pieces over that threshold.

“I dream in ten years that my art’s value will surpass Dali, Monet and Picasso,” he said confidently. “I will be the best-known Chinese artist in the 21st century. My work is already making history.”

Unlike most artists, Mr. Cui eschews private galleries and says he mostly sells his works by auction. And though he has museum shows coming up next year in France and England, he says he doesn’t aspire to be recognized by Western galleries and museums. Instead, he believes Chinese collectors and their interest will continue to lift his career into stratospheric heights

“I think it’s useless to try to introduce myself to the Western audience. To understand my work, they have to learn Chinese and Asian art first,” he said. “The Chinese already know my art. And the stronger the Chinese economy, the more I can sell my works.”

Chinese Painter Whose $4 Million Work Was Accidentally Thrown Out Says He’s Not Bitter (WSJ)

Marion Maneker0August 06, 2014

Miami MOCA Moves Out, Leaves Collection in Limbo

Miami MoCA New Home

The Miami Herald reports that MoCA has moved out of its North Miami building:

The new Institute of Contemporary Art will open a temporary facility in November at the Moore Building in Miami’s Design District, according to a statement from co-chairs Irma Braman and Ray Ellen Yarkin.

Still unclear: What art will be shown at the new site in Miami’s Design District. MOCA’s roughly 600-piece collection remains in storage, the subject of ongoing negotiations between the board and city.

The two sides have been working toward a settlement since attending mediation sessions in mid-June. Questions remain about how MOCA’s well-regarded permanent collection will be split and whether the “Museum of Contemporary Art” name can still be used by either institution.

The museum’s board filed a breach of contract lawsuit against the city in April, claiming its municipal landlord was failing to properly maintain the facility, provide adequate security or even pay the interim director.

MOCA board to form new entity, move out of North Miami (

Marion Maneker0August 06, 2014

Artprice: 70m ‘Art Consumers’ Send Market ↑17% in ’14


We recently heard from Artnet that the global auction market was up 19% to $8.6bn for the first half of 2014. Now Artprice has released their auction figures which tell a similar tale just with slightly different numbers:

The global art market rose in value by 17 percent to a record $7 billion in the first half of 2014, according to new industry figures. Artprice, a French company which tracks art sales worldwide, said that during the first six months of the year art works sold at public auction totalled $7.15 billion ($5.22 billion euros), up on $6.11 billion for the same period in 2013.

“The art market is hungry,” Thierry Ehrmann, Artprice’s president and founder, told AFP. “We have gone from 500,000 collectors in the post-war period to nearly 70 million ‘art consumers’ — art lovers and collectors — worldwide,” he said.

Global art market in rude health (GlobalPost)

Marion Maneker0August 06, 2014

Warhol Super-Panel: Brant, Colacello, De Salvo, Gagosian, Holzer, Mugrabi and Rosen Discuss Warhol

Warhol Super Panel


The panel hosted by Bob Colacello and including Peter Brant, Donna De Salvo, Larry Gagosian, Jane Holzer, Alberto Mugrabi and Aby Rosen is now online.

Marion Maneker0August 06, 2014

Goodman’s Good Taste

Marian Goodman

It’s nice to see Carol Kino and Marian Goodman together in the Wall Street Journal for the occasion of Goodman’s London space opening. At 86, Goodman is godmother of the art market, floating above the greedy scrum:

Although she had no business experience—or her own checkbook, either, until her divorce in 1968—Goodman soon became a preeminent editions publisher, working with Americans such as Claes Oldenburg, Roy Lichtenstein, Robert Rauschenberg and Larry Rivers. In 1970, the year Multiples exhibited for the first time at Art Basel, Goodman published Artists and Photographs, a 19-piece portfolio that’s now seen as seminal. Based on a show of the same name, it explored the way artists such as Ed Ruscha, Christo and Bruce Nauman were incorporating photography into their work.

Yet Goodman had sensed even broader vistas in 1968, when she visited West Germany for the first time to see the art exposition Documenta. “I realized there was a fully formed art world in Europe with major artists we didn’t know much about,” Goodman says. “It changed everything for me.”

On that trip, she discovered Joseph Beuys, the shamanistic godfather of conceptual art, with whom she published several multiples. On another, she became enchanted by Marcel Broodthaers, a Belgian surrealist poet-turned-artist whose installations often critiqued museum displays. Her efforts to find him a New York gallery led to “a strikeout,” Goodman says. So she did “the most irrational thing in my professional life for sure.” In 1977, a year after Broodthaers’s death, she opened the Marian Goodman Gallery with a show of his work. She was bent on exhibiting Europeans who might otherwise not be seen in New York.

At first Goodman, who supported the business with sales of editions, found it hard going. But “Marian was remarkably farsighted,” says Serota, “in choosing to work with artists who would have the potential for a long career, to evolve and develop. And then she stuck with them.” By 1985, the year after she moved into the building on West 57th Street that still houses her gallery, her program was strongly focused around post-minimalist, conceptual work, with Italian Arte Povera sculptors such as Giuseppe Penone and Giulio Paolini, and a lot of young Germans, including the installation artist Lothar Baumgarten, a former student of Beuys, and the then little-known painters Anselm Kiefer and Gerhard Richter.

Marian Goodman’s New London Gallery  (WSJ)

Marion Maneker0August 05, 2014

For No Good Reason, A 3yr Old Film About Tom Sachs

Tom Sachs Talking Tom Sachs Video