Putting the hammer on the Big 2 good for collectors

A packed Christie’s auction room
This article was first published March 5th, 2000, in the Sunday Business Post

The number of column inches that the price-fixing fiasco between Sotheby’s and Christie’s has received recently has been nothing short of startling. But the subsequent resignations, the US Justice Department antitrust investigations and the outcry from clients and shareholders have to a great extent overshadowed the power and influence that these two monoliths of the art world really command.

Amazingly they control 95 per cent of the worldwide art salesroom business and have done so for many years.

A quick glance at the problems that Bill Gates is currently experiencing only goes to show how influential they have been in keeping their monopoly on art sales to themselves for the past two and a half centuries.

Sotheby’s, for instance, bigger of the two by just a whisker, was a company that started as a bookseller in 1744.

Its first sale, the contents of a gentleman’s library, barely realised a couple of hundred pounds, yet last year they recorded a turnover of just under 2 billion dollars.

The company was bought in 1983 by American entrepreneur Alfred Taubman, a shopping centre billionaire who swiftly used his considerable talents to turn a venerable old institution into a powerful stock market performer with over 100 offices around the world.

The board now boasts such influential surnames as Rockefeller, Getty and von Thyssen to name but a few.

When the downturn came in the late 1980s, the market slowed considerably, especially with contemporary art which bottomed out completely. The need for cashflow, as in every business, was pressing.

Drastic measures had to be taken and as everyone now knows, this was the genesis of the cosy cartel and tinkering with commissions which is just the latest in a series of high-profile gaffes.

But Sotheby’s had been involved in controversy before. Take the sale of thf McAlmont estate in Mount Juliet, Co Kilkenny, in 1986. The estate had just been sold to a consortium of businessmen headed by Tim Mahony of Toyota Ireland to be developed as a golf and country club.

The sale of the contents of the house – a unique collection that had been in the McAlmont family for a few generations – was handled by Sotheby’s and was a high-profile affair that attracted attention from private buyers and dealers from across the globe.

A heavily illustrated catalogue was issued and the sale went very well. Except for one hiccup; one of the paintings which had an estimate in the low hundreds sold for £27,000.

To most people that would be a godsend but the art world does not like surprises of this nature.

Sotheby’s thought the painting so insignificant that there wasn’t even an illustration of it in the catalogue.

It was subsequently learned that the painting had been bought by London art dealer David Posnett, who had identified the work as a sketch of Captain Cooke by William Hodges. Hodges was the official artist on Cooke’s voyages to the south seas.

Posnett later sold the painting to the National Maritime Museum in Greenwich for stg£650,000.

With the resources available to the big two, one wonders how something on this scale could happen.

One half of one of their big departments, of which the have numerous experts in every conceivable area of collecting, would still be bigger than our biggest Irish auction house, yet things like this rarely if ever happen here.

But the established Irish dealers and auctioneers are not faceless monolithic institutions worrying about share prices.

Sothebys make auction history with Francis Bacon’s Tryptych 1976 which made $86m in 2008

Quiet competition, the personal touch and attention to detail have always worked well in this country.

The real question lies in the relationship between business and art.

As far as the visual arts are concerned, a lot of hungry artists are leading a less hungry existence because of corporate buying policies. But when big business enters the fray with dollops of other people’s money, it is time for the ordinary collector to take stock. Artificial markets tend to bubble and burst.

Meanwhile cracks are beginning to appear. Sotheby’s shares have dropped from a high of $47 last year to around $15 last week.

The best advice would be to let the big boys fight it out for themselves. Competition is always good for business. The collector can be the only winner.

This article was first published March 5th, 2000, in the Sunday Business Post