Not so long ago, fine-art auctioneering was dominated by just two houses, Sotheby’s and Christie’s, who went after the art, put it on the block, tried to achieve the highest price, but who did little more. Today, that picture has been shattered. Faced with a diminishing supply of art and an expanding number of people chasing it, the auction houses have been increasingly muscling into the role of dealer.
The blurring of roles was underlined in 1990 when Sotheby’s and Bill Acquavella, a New York dealer in 19th-and 20th-century art, acquired the estate of the Pierre Matisse Gallery for a massive $142.8 million. It was probably the first time that an auction house had actually bought inventory instead of just being the go-between, and it caused considerable disquiet in the trade. Then, in 1996, Sotheby’s purchased the André Emmerich gallery and a year later, a share in Deitch (see p.34).
Continuing the push into the dealers’ bailiwick, the auction houses started offering vendor’s guarantees or outright purchases of works of art for sale. In fact, guarantees are not new; credit was given extensively in the 19th century (but mainly to book dealers). What is new is the range and volume of guarantees, with the most flagrant example being the current behaviour of the upstart auction house Phillips, which, since being acquired by Bernard Arnault, has given huge inducements to vendors at a loss to themselves in order to grab market share at the very top end of the market.
The auction houses behave like dealers in other ways. Phillip Hook, senior specialist in Sotheby’s Impressionist and Modern art department, notes, “Today, when we are marketing a sale, we will take the pictures around to collectors all over the world to make sure that potential buyers physically see them; we will lend them pictures to hang in their homes and see how they look. The promotions are very carefully targeted to the buyer; we give them advice on building up their collections”.
Another important element is private treaty sales. This deals with the desire of many consignors not to sell publicly, previously a powerful weapon in the dealers’ armoury. Building on their traditional business of arranging private treaty sales to museums, the auction houses have boosted the practice: for the last three years Christie’s has had a special department for private treaty sales, run by Dominique Lévy; Sotheby’s does not have a special department, but phalanxes of tax advisors and lawyers provide the same service.
Faced with this onslaught, are dealers a disappearing species? The short answer is, no, they are still doing very nicely, thank you, judging by the number of auction house specialists who have left to become dealers (Sotheby’s even earmarked funds, $13.7 million so far this year, to keep specialists on board).
“The dealer offers discretion, brings his considerable experience and his knowledge to his client. He has a personal relationship with the buyer, and can help build up collections: he will buy at auction, offering impartial advice. He has access to pieces that have never been at auction, through buying back or because vendors do not want to sell publicly. When a vendor sells to a gallery, he or she is sure of the money, whereas a painting that is put up for auction could fail, and become difficult to resell. And many clients just do not have the time to go around salerooms; they prefer to rely on a dealer,” says Ben Brown, previously at Sotheby’s but now working for the Leslie Waddington Gallery in London. “When I arrived here, I discovered many collectors whom I had never even heard of when I was with Sotheby’s,” he notes, adding, “Look at the major art fairs, Maastricht, Basel, FIAC: most of the works in the booths have never been at auction, they have come to the dealer through his personal contacts, through buy-backs or repeat business”.
Add to that one area which the auction houses have failed to crack, that of the decorators, who typically get a discount from dealers, which represents their fee for the work. The auction houses guard their buyers’ premium jealously, and are unable to vie with dealers over this.
The other major change in the market has been the arrival of new players. In the auction field, where once there was a cosy duopoly, now there is an aggressive new kid on the block, Phillips, once the staid but respectable purveyor of brown furniture to the British middle classes is now smart and skinny and operating out of a chic minimalist headquarters on 74th Street, New York. Of course, such facelifts do not come cheap, and the revamp could not have cost much less than $200 million. But the results are there, and Phillips has elbowed itself in between the Big Two.
Meanwhile, the market has seen another intruder in the flowerbeds. This time, instead of an existing player reinventing itself, a few intrepid souls have created a role ex nihilo. The trailblazer was Robert Holden, who set up 25 years ago as an “art agent”, advising vendors on how best to sell their art and taking a cut on the way past. “At first everyone thought there was no room for someone like me,” he says. However, he has proved that he can justify the extra fee. “I have the time and the knowledge to look at each item individually, and can recommend the best way of selling it. I might recommend auction or a private sale and negotiate the terms,” he explains. A case in point is his brilliant success with Waterhouse’s 'St Cecilia', which was actually with a dealer at £2.8 million. Mr Holden persuaded the vendor to entrust it to him, and initiated a blitz marketing campaign, plastering the image in magazines in the major London hotels, and investing his own money to do so. “By the time I’d finished it had become an iconic image, one a major collector in the field couldn’t do without. John Schaeffer was in the Ritz, saw it and became one of the underbidders at the sale”. The painting finally sold to Lord Lloyd Webber for £6.6 million.
Originally appeared in The Art Newspaper as 'Not on my patch, please'