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Auction Houses Find New Ways to Survive

It is an indication of the auction world’s close-knit club that Mr. Cerutti once worked for Sotheby’s for eight years. This year, Marc Porter returned to Christie’s as chairman of its American business; he had held the title previously, but did a short stint at Sotheby’s in the interim. Edward Dolman, the chief executive of Phillips (owned by the Russian luxury goods company Mercury Group), used to hold that title at Christie’s.


Guillaume Cerutti


Despite that familiar cast of players, the competition has grown more fierce since the Great Recession. The fight for buyers has moved to the internet and to Asia. The supply side is somewhat trickier, especially when it comes to the most valuable merchandise. To get prime material to the auction block, it looks more like messy trench warfare, with juicy incentives being offered.

The year 2016 was a “slightly mellow” year for the auction houses compared with 2015, in the words of Oliver Barker, chairman of Sotheby’s Europe and one of its principal auctioneers globally. Sotheby’s is a publicly traded company, and its all-in sales total (which includes private sales) fell to $4.9 billion from $6.7 billion.

Mr. Cerutti’s version of the “mellow” euphemism was that 2016 was a “transition year.” In the same year comparison, the Christie’s all-in sales total dropped to $5.4 billion from $7.4 billion.

Political uncertainty was part of the equation. The elections in the United States and France had buyers and sellers on edge. “People were just waiting to see what would happen,” Mr. Cerutti said.

But the vote in the United Kingdom to leave the European Union, known as “Brexit,” created the most worry of all, one that continues as the long process of carrying out the decision begins.


The Sotheby’s auctioneer Oliver Barker selling the work “Paulette Jourdain” by Amedeo Modigliani in 2015.

Christian Hansen for The New York Times

“The French traditionally had the strongest market in the world until the 1950s, and they taxed it out of existence,” Mr. Dolman said. “It went to London. And so I think market observers are watching Brexit quite carefully.”

But the United States stock market has been robust this year, giving some hope.

“Twenty years ago, the art market was always called a ‘lagging indicator,’ ” Mr. Dolman said. “The market would hit a peak after the stock market hit a peak. I don’t think that exists anymore. I think actually we’re pretty lock step with the market now.”

Regardless of the economic context, certain trends have been underway for years. Auctions are a more diverse business over all, and that includes the items on the block.

“I think that if you look at the top five lots we sold globally this year, it tells a very interesting story about the diversification of the market,” Mr. Barker said.

As of Sept. 30, Sotheby’s had the top lot of 2017 so far, the untitled Jean-Michel Basquiat painting that sold in New York for $110.5 million, a record for an American work. But the second- and fourth-highest prices at Sotheby’s were for jewels. No. 2 was a pink star diamond that Sotheby’s sold for $71.2 million in Hong Kong, a record for any lot sold in Asia and for any jewel.


Gustav Klimt’s “Bauerngarten” sold for $59.3 million at Sotheby’s London in March.

Via Sotheby’s

Fueled largely by China and the sales center of Hong Kong, but also bolstered by Japan and South Korea, Asia is the explosive growth center for all of the auction houses.

“For the first six months of this year, Asian buyers represented 35 percent of the span at Christie’s, which is incredible,” Mr. Cerutti said, especially given that as recently as 2000, that figure was a relatively negligible 9 percent.

Rebecca Wei, the Hong Kong-based president of Christie’s Asia, chalked it up to “very stable economic growth in the region.” She added, “Political-wise we’re also quite stable.”

Ms. Wei said that it was the perfect backdrop to “a mood of collecting and the confidence to spend big.”

Traditionally, Asian buyers gravitated toward the classic artworks produced on their continent, but tastes have radically shifted to international modern and contemporary art, watches, wine and jewelry, mirroring the overall move in the market worldwide.


Phillips sold this Patek Philippe watch for about $11 million last November. It set a record for the auction house.

Via Phillips

The United States is still a strong driver of the market, and Asia’s gain helps make up for Europe’s loss. Though Christie’s added a new flagship office in Beijing this year (it does not conduct sales there as it does Hong Kong and Shanghai), it closed its beloved lower-priced branch in South Kensington, London — known as a true collector’s paradise, particularly for decorative arts — and moved some of those sales to its King Street headquarters. It also streamlined its operation in Amsterdam.

There are still, however, headline-making sales in the Old World: In March Gustav Klimt’s “Bauerngarten” sold for $59.3 million at Sotheby’s London, though the buyer and their nationality were not identified.

But Europe — the place where the big auction houses were founded, after all — is now more vital on the supply side. “From the helicopter point of view, Europe is mainly a zone of exportation,” Mr. Cerutti said. “There are more sellers than buyers.”

Of course, with the digitally connected world, the physical auction location now matters less and less. “The internet is a key battlefield,” Mr. Barker said. At Sotheby’s, it most likely accounts for the fact that in 2007, buyers came from 117 countries; in 2016 that number was 126.

Bringing in new buyers is crucial for any business, and among online purchases last year, 45 percent of the buyers were new to Sotheby’s.


Henri Cartier-Bresson’s “Coney Island, New York” (1946) was offered for sale online by Christie’s.

Via Christie’s

Standing at the lectern as he does presiding over major sales, Mr. Barker sees the new era firsthand. “Increasingly, I’m having to get used to a button flashing in front of me, which demonstrates that there is a client now trying to transact a bid over the internet — a major change,” he said.

Online-only sales are more common every year, and not just for the lowest-value items, as was true when they were initiated. Phillips has a mobile app that offers live-streaming of auctions and real-time bidding on the lots.

Starting this month and going through April, Christie’s is selling deaccessioned photographs from the Museum of Modern Art’s collection in a series of sales, some of which are online-only. One of the online sales was Henri Cartier-Bresson’s “Coney Island, New York” (1946).

In terms of the categories seeing growth, contemporary art continues to rise.

“Young collectors want to buy the art of their time,” Mr. Barker said, adding that it is a “gateway” to other types of art.

But it is increasingly the non-art categories that occupy the attention of the houses, led by jewelry. Two years ago, Sotheby’s opened an office in Mumbai, India, a city that it sees as having huge potential as a jewelry hub.

Watches are another focus. Last November in Geneva, Phillips set a record for the category when it sold a Patek Philippe for about $11 million.

Like jewels, watches are small, light and do not require special storage. “Unlike a picture, it’s much more robust and easier to transport,” Mr. Dolman said. “It’s a very nice category for an auction house.”

Though the hammer’s coming down on a major price in front of a crowd is good for headlines, auction houses have dealt with the pressures of the business by branching out. Private sales are increasingly important to the bottom line, as are advisory businesses — the auction houses help a collector manage her treasures, for instance, or broker acquisitions for museums.

“We look at ourselves now as an art business, as opposed to historically being just an auction house,” Mr. Barker said — yet another avenue for these businesses to try to navigate from the 18th century through the 21st.

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