Art Market Monitor

Global Coverage ~ Unique Analysis

  • AMMpro
  • AMM Fantasy Collecting Game
  • Podcast
  • Contact Us

Slipping Auction Commission Margins Impact Sotheby’s Stock

February 28, 2014 by Marion Maneker

Sotheby's Stock 22814Lost in all the commotion caused by Daniel Loeb’s initiating a proxy fight for seats on Sotheby’s board was the reaction to yesterday’s earnings call. Sotheby’s stock fell as much as 7% in trading today. Philip Boroff explains why on Artnet’s news site. Boroff draws out one particular issue that has not gotten enough attention: the long-term decline of Sotheby’s commission margin. When asked, CEO Bill Ruprecht demurred that he could give no timetable for when the trend my reverse itself.

It is worth noting that Loeb raised this issue in his letter to Ruprecht but has offered no public indication that he has a solution for the eroding margins. Here’s Boroff on the matter:

Sotheby’s fourth-quarter net income was $1.30 per share, short of the $1.41 consensus of analysts surveyed by Bloomberg. Full-year earnings rose 20 percent to $130 million, but lagged that of 2011, 2010, and 2007, even as art prices for marquee works soared to record levels. […]

Sotheby’s auction commission margin, a closely watched measure, fell for the fourth consecutive year. It took in $15.90 for every $100 of auction sales in 2013, down from $16.30 in 2012 and $20.70 in 2009. While Sotheby’s private sales have grown, auction commissions still represent 81 percent of revenue.

(If you look closely at the chart of Sotheby’s stock above, you’ll notice a surge in buying that followed Loeb’s proxy fight announcement. But the rise is volume and price quickly faded suggesting Loeb’s campaign is far from convincing and few are eager to buy shares to vote him in.)

Loeb Presses Case Against Sotheby’s (Artnet News)

More from Art Market Monitor

  • Zhang Xiaogang and Key Chinese Contemporary Artists from Storied Johnson Chang Collection Come to AuctionZhang Xiaogang and Key Chinese Contemporary Artists from Storied Johnson Chang Collection Come to Auction
  • Bacon, Picasso, Lichtenstein Top 2020 Global Modern & Contemporary Auctions: AnalysisBacon, Picasso, Lichtenstein Top 2020 Global Modern & Contemporary Auctions: Analysis
  • Van Rysselberghe, Klee, Magritte Lead June 2020 Paris Impressionist and Modern Sales: AnalysisVan Rysselberghe, Klee, Magritte Lead June 2020 Paris Impressionist and Modern Sales: Analysis
  • As Coronavirus Escalates, Sotheby’s Relocates Modern and Contemporary Hong Kong Sales to New YorkAs Coronavirus Escalates, Sotheby’s Relocates Modern and Contemporary Hong Kong Sales to New York
  • Sotheby’s Unveils Plans for New Galleries at York Ave.Sotheby’s Unveils Plans for New Galleries at York Ave.
  • Freud’s £4.5m Early Portrait at Sotheby’s in MarchFreud’s £4.5m Early Portrait at Sotheby’s in March

Filed Under: General Tagged With: Sotheby's

About Marion Maneker

LiveArt

Want to get Art Market Monitor‘s posts sent to you in our email? Sign up below by clicking on the Subscribe button.

  • About Us/ Contact
  • Podcast
  • AMMpro
  • Newsletter
  • FAQ

twitterfacebooksoundcloud
Privacy Policy
Terms & Conditions
California Privacy Rights
Do Not Sell My Personal Information
Advertise on Art Market Monitor
 

Loading Comments...