Christie's vs Sotehby's

Newsweek has a very interesting article on the battle between international auction houses Christies's and Sotheby's.  As the art market has grown to a $50+ billion business, the two auction houses are in a fight for not only supremacy, but some also believe for survival, particularly for Sotheby's.

The Newsweek article is well worth taking the time to read and there is some pretty interesting information and commentary. Of course it foucses on the top end of the market and masterpieces, but overall it is of interest to appraisers. Follow the source link below to read the full article.

Newsweek reports

Never before have the stakes been so high. Art is now a $55 billion business and the amount of money flowing through the major auction rooms is staggering: In two nights in November, Christie’s and Sotheby’s sold more than $1 billion worth of art. At its Contemporary and Post War sale this week, Christie’s broke the price record for the most art sold in a single night – $691.6 million, and its Francis Bacon fetched $142.4 million – the most ever paid for a piece of art at auction. The next night, at Sotheby’s contemporary sale, Silver Car Crash sold for $105.4 million – more than $30 million higher than the price the last big Warhol fetched. That helped Sotheby’s sell $380.6 million in art – more than any other auction in its 269-year history.

The forces driving the bidding in these salesrooms right now are much bigger than either Christie’s or Sotheby’s – or even the art market. Over the past five years, a huge wave of global wealth has been swelling, transforming markets and industries across the globe. Since 2009, the number of billionaires in the world has tripled, to 2,170. Last year, Asia produced 18 new billionaires and is on track to pass Europe’s total by 2017. Many of the new rich are from parts of the world unaccustomed to this proliferation of wealth: Brazil, China, India, and Russia. Those 2,170 people control some $6.5 trillion and each year, on average, spend $78 million apiece on real estate, $60 million on yachts, $22 million on private jets, and $16 million on art. “These are people for whom five- or ten-million dollars is like you and me buying lunch,” says Philip Hoffman, president of the Art Fund, an investment pool for buying art.

Auctioneers, art dealers, and collectors tell stories of new buyers who scoop up four or five items in a single auction, spending tens of millions of dollars. A Brazilian man who had never bought a major work of art recently plunked down $67 million at his first auction. An Asian collector bought one item for $1 million last spring, then jumped to a $10 million work in the summer sales, and most recently bought something for $30 million. During the sale of a Mark Rothko painting last spring, there were 10 bidders still in the running at the $50 million mark, and they pushed the price of that canvas to $86 million. This month, at the Christie’s Impressionist and Modern sale, Chinese tycoon Wang Jianlin bid ferociously for a painting of Picasso’s children, Claude et Paloma – ratcheting up the bidding by $1 million increments. He finally won his prize for $28.2 million – more than double its $9 million to $12 million estimate.

All this good news is making some people nervous. “The more you are pushing the market toward the high end, the more you are raising the stakes,” says Anders Petterson, managing director of ArtTactic Ltd., a London-based art market research firm. “If a work with a high estimate doesn’t sell, that creates a big hole that could send a negative signal into the market.” The art market is fickle, swayed by trends, personal taste, even emotions, and there are works by great artists that don’t sell. Last spring, Sotheby’s failed to sell a painting by Bacon that had an estimated value of $30 million to $40 million. This month, at an estate sale for famed dealer Jan Krugier, Christie’s failed to sell a Picasso, estimated value: $25 million.

The only fail-proof items are the masterpieces. And that is where the arms race between Christie’s and Sotheby’s has turned ugly. Almost by definition, masterworks are hard to come by – but as more billionaires with open checkbooks enter the market, these items are ever more coveted. And harder to find. Most of the great Old Masters and Impressionists are claimed, and the best Rembrandts, Monets, and Van Goghs are in museums or foundations. That leaves the contemporary market, which is now the fastest-growing segment of the market. Since 2009, sales there have grown 2,000 percent, to $6 billion, according to Arts Economics, an art market research firm. Yet even here, the supply of truly great work is dwindling. It will be a long time – if ever – before the world sees another Warhol Car Crash on the market; the other three paintings in that series are in museums.

Source: Newsweek