Sotheby's doubles price guarantees for NY auction
Sotheby’s has guaranteed 78% of the value of a contemporary art sale next month, increasing the risk of losses in a market weakened by the financial-market turbulence.
By Agencies |
LONDON: Sotheby’s has guaranteed 78% of the value of a contemporary art sale next month, increasing the risk of losses in a market weakened by the financial-market turbulence. Sotheby’s promised sellers minimum prices for art valued at $174 million to $220 million, based on data in the catalogue for the November 14 sale, said analyst Kristine Koerber of JMP Securities.
The guarantees include works by Francis Bacon, Mark Rothko and Andy Warhol. A year ago, Sotheby’s guaranteed 35% of the value of its contemporary art sale, Koerber said.
Sotheby’s must pay the guaranteed amount to the seller if a work is unsold or fails to reach the agreed minimum. The high level of promised payments may be especially risky as buyers have lately discounted high-priced Western artists.
A Bacon painting scraped above its low estimate and two Andy Warhols failed to sell at rival Christie’s International this month in London. “When money tightens, buyers become more careful,” said New York collector Larry Warsh, who plans to sell Western works to pay for Chinese art, which continues to soar in value.
Sotheby’s wouldn’t comment on Koerber’s report. Nor would Christie’s, whose commitments run to 52 % of its November 13 sale, said Koerber. Before the London auctions, Sotheby’s shares reached $57.64 on October 10 on NYSE, then slipped to $51.38 by Monday’s close.
The stock has gained about 66% this year. Sotheby’s CEO William Ruprecht couldn’t be reached. He has said guarantees consistently added to profit over the past decade or so and Sotheby’s approach to risk is “conservative”.
Sotheby’s guaranteed lots include Bacon’s $35 million bullfight picture and $15-million self-portrait; an untitled Rothko painting valued at as much as $18 million; Jeff Koons’ “Hanging Heart”, with a $20 million top estimate; and an Andy Warhol self-portrait with a $12 million high valuation, Koerber said in the October 19 report.
Sotheby’s contemporary evening sale may take in $220 million to $284 million before commissions, Koerber said. Christie’s, which is owned by the French billionaire Francois Pinault, values its evening sale at $271.3 million to $373.4 million.
Guaranteed lots include Andy Warhol’s “Liz”, owned by actor Hugh Grant and valued at as much as $35 million; a $30 million Rothko; a $20 million double-portrait by Lucian Freud, and Koons’ “Blue Diamond”, valued at around $20 million.
Western Contemporary art may be most vulnerable to a setback after appreciating faster than works from earlier periods, said New York dealer Richard Feigen. The most expensive contemporary paintings, which are favoured by the top 10 buyers including hedge-fund managers, appreciated 37% in H1, or 4.5 times since 1996, according to Art Market Research’s Contemporary Art 100 Index of the top 10% of works. The same index lost half of its value from 1990 to 1996.
While Koerber said the spiralling of Sotheby’s guarantees “is concerning”, she rates Sotheby’s shares “market outperform”. The auction house may double its November sales of impressionist to contemporary art, which account for about a third of fourth quarter revenue, Koerber said.
The guarantees include works by Francis Bacon, Mark Rothko and Andy Warhol. A year ago, Sotheby’s guaranteed 35% of the value of its contemporary art sale, Koerber said.
Sotheby’s must pay the guaranteed amount to the seller if a work is unsold or fails to reach the agreed minimum. The high level of promised payments may be especially risky as buyers have lately discounted high-priced Western artists.
A Bacon painting scraped above its low estimate and two Andy Warhols failed to sell at rival Christie’s International this month in London. “When money tightens, buyers become more careful,” said New York collector Larry Warsh, who plans to sell Western works to pay for Chinese art, which continues to soar in value.
Sotheby’s wouldn’t comment on Koerber’s report. Nor would Christie’s, whose commitments run to 52 % of its November 13 sale, said Koerber. Before the London auctions, Sotheby’s shares reached $57.64 on October 10 on NYSE, then slipped to $51.38 by Monday’s close.
The stock has gained about 66% this year. Sotheby’s CEO William Ruprecht couldn’t be reached. He has said guarantees consistently added to profit over the past decade or so and Sotheby’s approach to risk is “conservative”.
Sotheby’s guaranteed lots include Bacon’s $35 million bullfight picture and $15-million self-portrait; an untitled Rothko painting valued at as much as $18 million; Jeff Koons’ “Hanging Heart”, with a $20 million top estimate; and an Andy Warhol self-portrait with a $12 million high valuation, Koerber said in the October 19 report.
Sotheby’s contemporary evening sale may take in $220 million to $284 million before commissions, Koerber said. Christie’s, which is owned by the French billionaire Francois Pinault, values its evening sale at $271.3 million to $373.4 million.
Guaranteed lots include Andy Warhol’s “Liz”, owned by actor Hugh Grant and valued at as much as $35 million; a $30 million Rothko; a $20 million double-portrait by Lucian Freud, and Koons’ “Blue Diamond”, valued at around $20 million.
Western Contemporary art may be most vulnerable to a setback after appreciating faster than works from earlier periods, said New York dealer Richard Feigen. The most expensive contemporary paintings, which are favoured by the top 10 buyers including hedge-fund managers, appreciated 37% in H1, or 4.5 times since 1996, according to Art Market Research’s Contemporary Art 100 Index of the top 10% of works. The same index lost half of its value from 1990 to 1996.
While Koerber said the spiralling of Sotheby’s guarantees “is concerning”, she rates Sotheby’s shares “market outperform”. The auction house may double its November sales of impressionist to contemporary art, which account for about a third of fourth quarter revenue, Koerber said.
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