The Summing Up Has Commenced

Lindsay Pollock looks at the role of guarantees in Christie’s sale:

Christie’s International and Sotheby’s sold about $418 million of art over three nights, below their combined low estimate of $682 million. The total was off about 37 percent from $665 million a year ago, even after Christie’s added an unusual second evening auction. (Tallies for both years omit day sales.) [ . . . ]

The results appear to have been helped by arrangements made prior to the sale. Five of the top 10 lots, including the Kandinsky, were subject to an auctioneer’s saleroom announcement that “parties with a financial interest will be bidding.” These works had effectively been sold weeks or even months before the sale date.

Christie’s had locked in “third-party guarantors,” according to Toby Usnik, Christie’s spokesman. These guarantors, who sometimes are required to place a bid, have been paid a fee to assume Christie’s risk. The guarantor’s compensation includes a portion of the revenues on the sale, whether or not the guarantor is the top bidder, he said.

These sorts of deals have been used over the past few years as the financial side of the auction business has become much more involved and competitive. They had a major impact last night: The five lots with third-party guarantors wound up contributing $63.1 million to the sale, or 43 percent of the $146.7 million total.

Souren Melikian gives the speculators what-for:

Of all the economic sectors, the art market alone is beating a fairly orderly retreat from the wild excesses that characterized it in the last four or five years. The major evening auctions of Impressionist and Modern art that began this week at Sotheby’s on Monday and ended at Christie’s on Thursday delivered two unequivocal messages. First, money is still available in abundance when rarities of stellar importance or, more simply, very beautiful works of art turn up. This is because, unlike the manufacturing sector or financial services, the actors here are driven by desire. And as anyone who ever yearned to acquire a coveted picture or object knows, the fear of missing an opportunity unlikely to come back is powerful enough to overcome awareness of economic difficulties.

The second message should come as a sobering thought to auction house managers who had better respond there and then if they are to avoid big trouble. The waves of newcomers loaded with money and playing the auction field as if works of art were chips in a poker game have vanished, leaving the floor to traditional buyers who know something about the art they chase.

NY Impressionist Sales Fall 37% from 2007 (Bloomberg)

Mixed sales reflect a return to basics and sanity (International Herald Tribune)