Premium Lots

The other day I posted about lot guarantees at the major auction houses.  Today's post takes a look at premium lots.  If you recall, Sotheby's started this process after several Asian sales purchasers failed to settle on large accounts.  The premium lot was developed where potential buyers of lots over $500,000.00 had  to register and place a deposit in order to bid. 

A new Artnewspaper article reveals that many believe the premium lot system has failed, after 4 of 5 of premium lots failed to sell in the NY Sotehby's September Asian sales.  Also, at Sotheby's April Hong Kong sale 22 of the 77 lots were offered as premium.  Reports are that half of the April sale premium lots failed to sell and where bought in, there are also reports of some after sale activity.

Sotheby's appears to be denying the implications that the premium lot is alienating bidders, and believes it is the market that is dictating the high buy in rate of there premium lots.  Given that Chrisite's is crushing Sotheby's in the Asian market and is not using a premium lot system, perhaps Sotheby's may need to revisit the premium lot concept.  Competition can be a real equalizer.

The Artnewspaper reports

Talking about the New York sales, London-based dealer Giuseppe Eskenazi says the premium lots system was at least partly responsible for the spectacular failures. This is rejected by Sotheby’s vice-chairman of Asian art in New York, Henry Howard-Sneyd, who blames “expectations of the vendors, which were a little high”. Dealers confirm that while the bronzes were marvellous, they were heftily estimated. Nevertheless, says Howard-Sneyd apropos the premium lots: “We are constantly reviewing our systems, which often need fine tuning.” Christie’s has a similar policy, and says that it “takes the necessary steps with potential buyers… to ensure that credit is checked thoroughly” and may ask for a deposit. “The policy is applied on a worldwide basis,” it says. The elephant in the room is, of course, that auction houses do not want to appear to apply the system only to Chinese buyers.

At the end of the week of Asian sales, Christie’s had totalled $75.8m, against Sotheby’s $31.4m (see chart), confirming its dominant position. The firms have different approaches in New York: Christie’s held six sales, as opposed to Sotheby’s three. Howard-Sneyd says that his firm favours higher value over higher volume sales. So lower value works, such as Japanese items, where the market is weak, are not offered in New York by Sotheby’s. Hugo Weihe, Christie’s international director of Asian art, says his firm’s policy is to cover all aspects of Asian art in New York—including Japanese and Korean art, which did not perform well this year. François Curiel, Christie’s head in Asia, says that the firm “spreads property around all its selling centres, which helps to raise our profile everywhere”. And Christie’s strength in New York also comes from its traditional dominance—“success breeds success” commented one observer—which enables it to attract major collections such as last year’s Anthony Hardy sale.

To read the full Artnewspaper article, click HERE.