Auction House Performance Commissions

I have posted in the past about the introduction, and potential use of success or performance commissions from the major international auction houses. These are added fees on sales should the selling price exceed expectations, such as the high estimate.

The Antiques Trade Gazette recently published an opinion piece by Pauly Viney, Chairman of UK auction house Woolley and Wallis and past chair of the Society of Fine Art Auctioneers and Valuers against the practice.

The ATG reports

The chairman of one of the UK’s most successful provincial auction houses has joined the condemnation of Christie’s new 2% success fee, saying he is appalled by it.

Paul Viney, chairman of Salisbury-based Woolley & Wallis, and a past chairman of the Society of Fine Art Auctioneers and Valuers, writes on this week's ATG Letters page that there can be no justification for such a commission, which the London auctioneers have decided to add to vendors' bills if lots reach their high estimate.

Mr Viney describes himself as 'extremely loath to denigrate a fellow member of our profession', but says that he is so appalled by the decision to impose the charge that 'I feel compelled to speak out'.

He dismisses Christie's argument that the commission will give an extra incentive to the vendor and the auction house as 'arrant nonsense' and blames 'bean counters'.

"I certainly can't see any self-respecting specialist advocating it," he concludes, arguing in turn that the 'unworthy decision' demeans auctioneers and 'sends out all the wrong messages'.

He further guarantees that Woolley & Wallis will never introduce such a commission while he is in charge, and he calls on fellow auctioneers across the country to take a similar stand.

Christie's, meanwhile, defended their position, saying: "We strive to be fair, innovative and competitive with our charges to clients. After an internal business review, we decided that all seller agreements (except online only sales) would be subject to a performance commission of 2%. But we would be entitled to this fee only if a sale reaches or surpasses the high estimate. It is linked solely to exceptional performance, and is, we believe, a reflection of the added value that such performance brings to clients."

Sotheby's Policy

Meanwhile, evidence has emerged that Sotheby's may have introduced a similar charge two years ago.

In October 2012 online analyst Art Market Monitor reported that a new clause had appeared in Sotheby's consignor contracts that read: "…a performance-related commission for each lot calculated as set out below will be charged in the event that the hammer price for the lot exceeds its final high presale estimate. Sotheby's performance related commission will be equal to the lower of (i) 2.00% of the hammer price achieved for that lot and (ii) the difference between the hammer price achieved for the lot and its final high presale estimate."

At the time Sotheby's were reported to have told the site: "This season, we formalised an existing practice which reflects our philosophy that when we exceed the expectations of our consignors, we should receive additional, incremental compensation which reflects that success."

However, the Art Market Monitor report is as yet the only identifiable source of this information and last week, when ATG asked Sotheby's whether such a charge had been levied since 2012, a spokesman replied: "Sotheby's does not discuss private client financial arrangements."

Source: Antiques Trade Gazette