Christie's to Reorganize

According to Scott Reyburn of Bloomberg, Christie's auction house plans on reorganizing in January. What that actually means remains to be seen, but we know Sotheby's was cutting jobs and reducing salaries, and both auction houses were talking of stopping or minimizing guarantees and were lowering estimates by at least 10%. Much of this has been covered in the AW Blog and other sources over the past several weeks. The blame, again, is the current world financial crisis.

The very interesting comment within the article is the rumor or speculation that billionaire Christie's owner Francois Pinault was entertaining thoughts of selling the auction house. Pinault's company bought Chrisite's in 1998 for $1.2 billion. The other interesting comment is that Phillips, recently purchased and cash infused in part by Russian luxury goods retailer Mercury group is in the process of expanding.

The recent auctions of quality property, but with less hype and fanfare of the modern and contemporary sales have also been struggling with lower sales vlaues and higher buy in rates.

Reyburn reports Christie’s Dec. 12 sale of 20th-century British art, the mainstay of U.K. private art collecting, ended with 57 percent of the lots successful. The below-estimate total of 4.1 million pounds with fees was less than half the 9.4 million pounds achieved at the equivalent auction last year. Then, 81 percent of the lots were sold.

“The auctioneers are nervous. You can see it in their faces,” Offer Waterman, who deals in 20th-century British art, said in a telephone interview.

“Anything second-rate is falling away dramatically,” said London-based Waterman. “Trade buying has wilted. The good things are still selling, but people don’t want to risk good things at an auction if 50 percent is going to fail.”

Sotheby’s Dec. 9 auctions of marine paintings and Victorian & Edwardian art could only find buyers for 39 percent and 49 percent of the material.

Two days later, Bonhams held a 56-lot auction of Impressionist and modern art in London that it forecast to fetch more than 3 million pounds. Only 23 percent of the works sold, raising a total of more than 600,000 pounds ($928,000) with fees.

“The failure rates are very high,” said London-based dealer David Mason. “If you have something to sell at the moment, you have a problem.”

The last sentence and quote by London based dealer David Mason is rather telling about the art and auction markets at this point in time. With all of the talks of job losses, salary cuts, lower estimates and no guarantees, the current outlook or rather the short term outlook for 2009 does not appear overly promising. Too many auction houses and dealers seem to be bracing themselves for continued negative effects of the world financial markets. The common mantra is, if it is not the ultimate and absolutely best, the value has been diminished.

In another report, Bukowskis auction house, the Nordic region’s largest, will slash almost a third of its workforce to cut costs after the art market stalled, Dagens Industri reported, citing part-owner and board member Filip Engelbert. Again, the culprit is the art market caused by economic turmoil.

To read the full Bloomberg article click HERE.