There are a couple of ideas floating around in the art press that deserve a little unpacking as they get repeated to the point of becoming meaningful without having much real meaning. One is the auction house statistic of Sold by Value. Kelly Crow uses it in her Wall Street Journal auction reports often and we’ve received calls in the past asking for an explanation.
The statistic is derived by taking the sum of all the top bids on every lot in the sale–whether the work is sold or not–and dividing it by the total hammer price. The problem with the statistic is that it is very difficult for an observer to distinguish between chandelier bids (the phantom bids below the reserve price that the auctioneer is allowed to call out as a way of building momentum) and real bottom-fishing bids that do not reach the reserve.
If an auction house wanted to goose it’s Sold by Value stat–though what would be the point?–all the auctioneer has to do is not encourage trial balloon bids. During the opening few seconds of any lot, one can hear the timber of the auctioneer’s voice change as he goes from dissembling to playing air traffic controller with big jet collectors and dealers.
Auction houses seem to keep this statistic for arcane internal reasons. It is not clear why the public should be concerned with it because it does not measure “value” in any real way.
The other perplexing issue is how guarantees work in the bidding process. Every since the financial crisis, Sotheby’s has introduced the concept of an irrevocable bid. One suspects that a public company dealing with the aftermath of the auction house guarantee system wanted to create a term that signalled the end of its own capital being at risk. Whatever the motivation, the irrevocable bid is simply a third-party guarantee described as an initial salvo in the bidding process.
What Sotheby’s doesn’t explain is whether the bidding process now starts at the level of the irrevocable bid or whether that bid is treated as something like a bid left with the auctioneer where the person with the hammer has the discretion to counter competing bids up to the client’s specific level. The former would make more sense but the ambiguity has lead to this question from Vogel in the New York Times about Sotheby’s sale of Jeff Koons’s Pink Panther:
In 1999 at Christie’s he bought Jeff Koons’s “Pink Panther,” a 1998 porcelain sculpture of the hapless-looking cartoon cat being hugged by a buxom, topless blonde, for $1.8 million, which at the time seemed a very high price. But on Tuesday night another “Pink Panther,” belonging to the publisher Benedikt Taschen, was on offer with an estimate of $20 million to $30 million; it sold to a lone telephone bidder who was talking to Patti Wong, chairman of Sotheby’s Asia. The sum was undisclosed, but a tiny symbol in the catalog indicated that Sotheby’s already had what it calls an irrevocable bid going into the sale — meaning that the buyer had already agreed to buy the art, and must be paying the $20 million low estimate.
The work sold for $15m on the hammer and is listed on Sotheby’s website at a total of $16.88m with premiums. Before the sale, one would have assumed that the irrevocable bid was at or near the low estimate, the published figure that potential buyers know must be above the reserve. Reserve prices can be changed–indeed, many seem to have been changed last night at Sotheby’s–but irrevocable bids cannot be changed.
So was the irrevocable bid $14m, the sum on the auctioneer’s lips just before Patti Wong bid for a client?
Bidders Proceed with Caution at Sotheby’s (Wall Street Journal)
Not Even Warhol Can Enliven a Slow Night for Contemporary Art (New York Times)