Art Market Monitor

Global Coverage ~ Unique Analysis

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

Sotheby’s Opens Up Its Guarantee Book

February 27, 2017 by Marion Maneker

BN-SB418_klimtg_G_20170210163454

One of the subjects that causes a great deal of consternation within the art market is the use of guarantees by the auction houses. A few days ago, the New York Times suggested that Sotheby’s was operating differently by proffering a guarantee to the seller of the Gustav Klimt this week in London. The seller was offered a guarantee directly from Sotheby’s which then arranged an irrevocable bid for the work.

In today’s earnings remarks released before the call, CEO Tad Smith discusses the use of guarantees. He refers to the process described above as a hedge. That’s not really the best way to think about it. A hedge involves using one trade to counteract the possible negative outcomes of another trade. Here Sotheby’s is replacing their direct offer with a minimum offer that reduces their risk with a definite sale (as a opposed to benefiting from the opposite eventuality.)

Either way, Sotheby’s has a $48.3m in exposure to the next fortnight’s sales:

With respect to our hedging of such guarantees, as of February 22, 2017, we had outstanding auction guarantees totaling $147.7 million and as of that date we have reduced our financial exposure with irrevocable bids totaling $89.4 million, and may yet secure more irrevocable bids in the lead up to the March sales.

More from Art Market Monitor

  • Sotheby’s Shows The DealmakingSotheby’s Shows The Dealmaking
  • Sotheby’s Has $258.8m in Guarantees This Fall Offset by $144.2m in Irrevocable BidsSotheby’s Has $258.8m in Guarantees This Fall Offset by $144.2m in Irrevocable Bids
  • Art Auction Guarantee: Bringing Guarantees to the Primary Market.Art Auction Guarantee: Bringing Guarantees to the Primary Market.
  • Where Is the Stolen Gardner Museum Art Hiding?Where Is the Stolen Gardner Museum Art Hiding?
  • It's Better to Settle than FightIt's Better to Settle than Fight
  • Who Caused the Market Slump? Cheyenne Westphal & Alex RotterWho Caused the Market Slump? Cheyenne Westphal & Alex Rotter

Filed Under: General Tagged With: Guarantees

About Marion Maneker

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

Top Posts

  • Keith Haring’s 1989 Retrospect Comes to Sotheby’s London Prints Sale
  • The Brandeis-Madoff Connection
  • Rare Photo Album by Dutch Street Photographer Bought at Auction by Rijksmuseum
  • Norman Rockwell's Not Gay. But Is He a Great Artist?
  • Christie's Announces $70m Picasso Self Portrait
  • Phillips Includes $2.5m Norman Rockwell Painting in November Evening Sale
  • Four of Picasso's Women Valued at $28m Come to Christie's from Rose-Walters Collection
  • Roy Lichtenstein’s Top Ten Auction Prices
  • Tony Podesta's Secret Art Buying
  • David Hockney's $20m Pacific Coast Highway & Santa Monica
  • 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