Christie's to Restructure?

Bloomberg recently ran a piece stating that after CEO Steven Murphy stepped down, replaced by Patricia Barbizet, the international auction house is considering restructuring operations. The Bloomberg article does not state any planned changes and gives more background, and also mentions the stepping down of Sotheby's CEO.  The article does state that as competition for the best artworks, and competition to be the biggest and best is brutal, and actually has a tendency to lower commissions.  I would think that is correct at the top end, but it very well could draw in other consignments were discounts and accommodations are not made.

In any event, it will be interesting to follow both Sotheby's and Christie's approach to the luxury and art markets with each of their new CEOs.

Bloomberg reports

Christie’s International Plc’s Patricia Barbizet, who was named chief executive officer last week after the surprise exit of Steven Murphy, will review options that may include a restructuring of the world’s largest auction house, said people familiar with the company’s plans.

French billionaire Francois Pinault brought in longtime adviser Barbizet, 59, to evaluate the future strategy of the company he took private for $1.2 billion in 1998, said one of the people, who asked not to be named as the matter is private. Pinault doesn’t plan to sell Christie’s, a spokeswoman for his holding company said.

Murphy, 60, was informed of the management change at a meeting with Pinault in late November, one of the people said. Christie’s and Murphy said Dec. 2 the decision was mutual.

Barbizet’s appointment comes at a delicate juncture for the most-storied auction houses after the CEO of rival Sotheby’s stepped down last month following calls from activist investor Daniel Loeb to cut costs and increase shareholder value. Both companies are under pressure to land the best consignments, with a record $2.3 billion of art snapped up in just two weeks in New York last month. Auction houses offer sellers guarantees, which can cut into profit if prices aren’t met.

Koons Collector

“That high-end, ultra-exceptional property part of the market is so fraught with trying to win it that it’s hard to make money,” said Michael Plummer, co-founder of Artvest and former chief operating officer of Christie’s Financial Services, a planned art-investment fund Christie’s scrapped five years ago. “Over the last 20 or 30 years, the trend tends to be as sales go higher and higher, commission margins go down.”

Pinault, 78, made his fortune in lumber before expanding into retail and luxury goods. As one of the world’s biggest collectors of art, he owns works by artists including Jeff Koons and Mark Rothko and has likened his passion for art to religion. His son, Francois-Henri Pinault, 52, runs the owner of Gucci.

Christie’s said it had no further comment beyond its Dec. 2 statement announcing Murphy’s resignation after four years and that Murphy wasn’t available to comment. Murphy didn’t respond to a phone message or e-mail requesting comment on Friday.

During Murphy’s tenure, “Christie’s has assumed a truly leading position, with sales and profits at their highest ever levels,” Barbizet said in the statement.

“Having completed this core work, the company is positioned for its next phase of development and I look forward to leading the global team into a new chapter of innovation,” she said in the release. Barbizet wasn’t immediately available for further comment. She may outline details of her strategy in coming weeks after meeting with staff, one of the people said. Christie’s reports sales next month.

‘Next Chapter’

“Profits are high and things are very healthy here,” Murphy said in a Dec. 2 interview. “I helped the team build a new frame and Patricia will take it to the next chapter.”

William Ruprecht, the CEO of Sotheby’s (BID) since 2000, said Nov. 20 that he would step down, six months after the New York-based auction house ended a bitter proxy battle with billionaire Loeb. Sotheby’s, which in May agreed to give Loeb, founder of hedge fund Third Point, and two of his candidates seats on its board of directors, said the decision was by mutual agreement.

The fight to lure wealthy collectors “has taken its toll at both houses and on its senior management team,” said Plummer. “It’s ultimately one of the reasons that Ruprecht is out. It could be one of the reasons that Murphy is out.”

Barbizet has worked for Pinault since 1989 and served as CEO of Artemis for more than two decades. She also sits on the boards of Total SA (FP), Europe’s second-largest oil company, and French carmaker PSA Peugeot Citroen. (UG)

Art Outsider

Sales of art and collectibles at Christie’s rose to a record in the first six months of the year as purchases of contemporary works and demand from new clients surged. Unlike Sotheby’s, a public company, Christie’s only releases sales figures twice a year.

Now may be the right time to consider a sale of Christie’s, according to Sergey Skaterschikov, founder of Skate’s Art Market Research in New York. “Not only has it been producing records, but they also won a lot of market share from Sotheby’s. And even though the profit margins are declining, they can get a good valuation.”

Murphy was considered an outsider in the art world, having held jobs in the publishing and recording industries. He helped the auctioneer push into new markets in Asia and and build online sales.

“My understanding was that he was close to Francois Pinault,” said Tim Hunter, who worked for Christie’s for 16 years and is now vice president of art financing at Falcon Fine Art Ltd. in London. “You have to ask what happened. The relationship must not have been working.”

For Related News and Information: Turner Painting in Private Collection Fetches $47.5 Million Collectors Buy $2.3 Billion of Art in Two Weeks at Auctions Christie’s Names Barbizet First Female CEO as Murphy Departs

Source: Bloomberg