The bull case for Sotheby’s, the only publicly traded auction house, is that the auctioneers are expanding into private sales in a big way. Last year, Sotheby’s and Christie’s each rang up $1bn worth of private deals leveraging their huge footprint of client contacts across the globe. One of the assumptions about the private sale business is that it is immune to the margin pressure seen at auction where consignors with the most attractive lots are able to dictate the lowest commissions.

That’s changing, according to Philip Boroff’s excellent Artnet News article on declining private sales margins at Sotheby’s.

As at auctions, savvy private sale consignors try to negotiate commissions down, said Thomas C. Danziger, a New York lawyer who specializes in art. “As more people use this as a means of selling, they’re getting more sophisticated,” he said in an interview. “They’re not going to sign onto whatever the printed rate card is.”

Boroff pulled out a green eye-shade to provide evidence of the squeeze. Although there is one caveat worth noting: as with all sales commissions, the size of the commission falls as the absolute size of the sale rises. So on Sotheby’s recent $75m private sale of da Vinci’s Salvator Mundi the commission would be a smaller percentage than on, say, a mere $5m Joan Mitchell.

Over the past three years, commissions for every $100 of private sales have dropped, from $9.82 in 2010 to $8.13 last year. They’re down 17 percent, versus a 13 percent decline in auction margins. (Sotheby’s doesn’t break out private sales commission margins but artnet calculated them based on publicly disclosed sales and commissions.)

Sotheby’s Private Sale Margins on Downward Trend  (Artnet News)