In a 75-minute bidding war, which the auction house dubbed the longest living memory for a single lot, more than 100 bids raised the price to HK $ 307 million (US $ 40 million) – more than double the pre-sale estimate .
The exuberance of buyers in Asia sales could hardly have been further from the gloomy mood that prevailed in the auction world six months ago. Coronavirus lockdowns forced top homes to postpone their main spring sales, close the doors of their historic showrooms, and cut jobs and pay as well as vacation workers.
This heralded a short-term transformation of the sector from physical to online sales. It has evolved from what Sotheby’s managing director Charles Stewart referred to as a “live theater experience” to a “live streaming model” of keeping the trade in desirable artwork.
Sotheby’s will hold 500 online auctions in 2020, up from 130 last year. “We have seen digital behavior accelerate by five years in the past six months,” said Stewart. “And as we all know with technological innovations, once it has happened you don’t go back.”
The challenge for the top auction houses was to recreate the glamor and adrenaline of their evening auction sales online, where super-rich collectors are willing to spend staggering sums on works by Pablo Picasso and Jean-Michel Basquiat or Gerhard Richter.
To tackle this, they have embarked on a period of intense experimentation in which their auctioneers take their bids from a bank of staff on phones, overlaid with comments from anchor presenters, or switch between podiums in different regions to try to gain momentum produce.
Georgina Adam, Editor-in-Chief of Art Newspaper, said, “The live experience has been taken from auction houses, galleries and art fairs, and they are trying to find an online equivalent that will attract customers.”
While auctioneers continue to rely on the few hundred buyers who have deep pockets and sufficient passion for art to fuel those big buys, they also want to attract younger buyers through social media.
Giovanna Bertazzoni, Christie’s vice chairman of the 20th and 21st Centuries, said a big sale in New York earlier this month generated $ 340 million in sales and attracted 280,000 viewers when streamed on Facebook and YouTube . “We now have an enormous platform of people watching us.”
In the short term, the auction houses are catching up on sales and hope to make up the lost ground in the first half of the year. Christie’s auction sales were down to $ 1.4 billion by the end of July. That was the first month the company was able to delay its redesigned live streaming evening sales from the spring.
From January to June last year it was $ 2.8 billion. For 2020 as a whole, Christie’s managing director Guillaume Cerutti recently said he expected sales to decline 30 percent from 2019. Sotheby’s stated that sales were currently down 25 percent over the same period last year.
Sotheby’s management team arrived a few months before the outbreak of the pandemic following a change of ownership at the company. Last June, telecom and media billionaire Patrick Drahi unveiled a $ 3.7 billion deal to bring it back into private hands after three decades as a public company. The purchase means that the top three homes are now privately owned. Christie’s is owned by French billionaire businessman and art collector François Pinault and Phillips of Mercury Group, a Russian retail and real estate conglomerate.
Although auction sales are publicly available, it is difficult to get an idea of the financial position of the three houses. They are excited about essential parts of their business including private sales, profitability, and the guarantees they make with customers in order to gain ultra-high-end work.
Cutting costs to improve margins is an integral part of Drahi’s playbook. Sotheby’s new boss, Mr Stewart, a former senior executive at Mr Drahi’s Altice, said the new management has followed a “delay strategy” since it was acquired. “Instead of having three levels of reporting between me and a function, it’s much flatter,” he said. “As a structure, we consider this to be important so that decisions can be made quickly.”
In response to the pandemic, jobs were cut in March, although Mr Stewart refused to say how many. Christie’s also cut staff in the summer after initially limiting its response to employees on leave.
Moving to online sales brings savings from expensive physical events that no longer occur. However, other fixed costs have been incurred as auction houses seek to attract potential buyers online and generate excitement for a sale.
“Splashy Digital Experience is here to stay for auction houses, but the cost of creating it is high,” said Doug Woodham, founder of Art Fiduciary Advisors in New York and past president of Christie’s for the Americas. “If you have to put out 20 compelling videos for every evening auction and create cool private content, it’s expensive.”
There is another trend accelerated by Covid-19, Woodham said: auction houses and the major commercial galleries are increasingly playing “in each other’s backyard”.
In February the art world was shaken when Catherine Marron, the widow of U.S. financier Donald Marron, decided not to sell the 300+ works in the family’s art collection via Sotheby’s or Christie’s – the old way for art assets – through a trio of commercials Galleries, Pace Galleries, Gagosian and Acquavella Galleries.
The deal was made before the pandemic, but Mr Woodham sees longer-term ramifications for the future of the art market. “If buying art is a purely digital experience, perhaps these three galleries will say that we already have properties in all major markets. We know who the buyers are. We probably know who is shipping [art works]. What the hell – we’re going to have an auction. ”
Ms. Adam from Art Newspaper said, “Until now auction houses have parked their tanks on the gallery lawns by borrowing money [on art] and private sales and other services. Now we have three major galleries challenging auction houses. ”
Private sales, which allow buyers and sellers to turn away from the public gaze, have become increasingly important for auction houses. Christie’s Ms Bertazzoni said her department had twice as many private sales “from the moment we entered the lockdown”. Some buyers were unwilling to wait for an auction to go ahead, while others went cashless after selling stocks during the market turmoil and viewing art as a useful hedge as well as a desirable purchase.
Mr Stewart said Sotheby’s has no goal of crowding out galleries or dealers, citing an initiative during the pandemic as it promoted works sold by several commercial galleries on its website to help keep the sector going. “We’re doing more with dealers and gallery owners than ever before. . . We’re not trying to take their place. ”
Both auction houses said the number of requests for ratings had increased during the pandemic as owners assessed the value of their art for a possible private sale or wanted to borrow against their collections at historically low interest rates. Other works of art are being spun out of trouble, like a painting by David Hockney, valued at £ 11 million to £ 18 million, up for sale at Christie’s by the Royal Opera House in London.
In the short term, attention is drawn to late October sales and the remainder of the fourth quarter, the most important money-making period of the year. The usual calendar for the jamboree of fairs, auctions, and exhibition openings has been torn apart: auction sales usually coincided with the Frieze Art Fair in London in October before moving to the Fiac contemporary art fair in Paris. This year, Friese’s physical event has been replaced with an online offering, while Fiac has been postponed until next year. In response, the auction houses have realigned their own calendar.
Mr Stewart of Sotheby’s concluded by warning of forces beyond the control of the sector. “Covid and the US election are likely the two spots of uncertainty in the market right now,” he said. “As soon as the choice is behind us, the market will adapt to the new reality.”
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