Major auction houses are increasing their focus on private sales through curated exhibitions.
In the last five years, private sales at auction houses have been increasing exponentially. Not only do market giants broker sales away from the public auction rooms, they also mount curated, private selling exhibitions at their bespoke art spaces around the world. Art Radar investigates the growing trend and what it means for art galleries and dealers.
A taste of the primary art market
When in 2007, Christie’s announced its acquisition of Haunch of Venison gallery in London and New York, the news came as a shock and there were heated speculations about why the auction house had “morph[ed] into a dealear”, as WSJ wrote at the time. Christie’s, as all other auction rooms, had always been working in the secondary market, so why would it make a move to gain a foothold in the primary?
Rumour had it that Haunch of Venison sold to benefit from the financial help that Christie’s would provide, as costs of successfully running a gallery were increasing. Meanwhile, Christie’s would benefit from the control over a portion of the gallery’s dealings in the primary art market, to its advantage when presenting artists at auction.
Private sales in the secondary art market
It wasn’t long before Christie’s surprised the art world and Haunch of Venison again – by announcing the closure of the galleries in London and New York for good in 2013. While the London location would become an exhibition space for Christie’s private dealings in the secondary market, New York would close forever. The auction house was then establishing a renewed interest in its private sales in the secondary market, as opposed to its main auctions. In an article on Phaidon, Emilio Steinberger, the gallery’s Senior International Director, was quoted as explaining:
The proposal is for Haunch of Venison to evolve into Christie’s private sales. Private sales at Christie’s have been growing exponentially and the decision was made that’s where the focus should be.
The same article says that the auction house’s private sales had proved lucrative, growing by about a quarter, year-on-year, making GBP631.1 million in 2012, up 26 percent from the previous year, as Blouin ARTINFO reported. By 2013 they represented 16 percent of Christie’s global business.
As Bloomberg reported, Todd Levin, Director of Levin Art Group in New York commented:
At the end of the day, the auction house is about maximising profits. To work as a primary gallery representing artists and estates is tremendously difficult. It’s a slow, incremental development of a career over many years and decades.
This was a definitive sign for art dealers and galleries that the market had one more competitor, with a big advantage. But, as art advisor Mark Frahm told ARTINFO, the auction house’s cut with the primary market made sense:
It’s not the business of the auction houses to manage and nurture artists’ careers and I think with this move, Christie’s has clearly decided to focus on their core business.
In 2013, Sotheby’s opened its S|2 London location, by which time the New York gallery had held 13 exhibitions and 2 pop-up shows in Los Angeles and Hong Kong. The auction giant also mounted its annual outdoor sculpture exhibition at Derbyshire’s Chatsworth House, following the success of its previous 8 editions, featuring some of the most internationally renowned post-war and contemporary sculptors and curated by its own specialists. In Hong Kong, Sotheby’s held a selling exhibition of Picasso’s work in late November 2014, which proved to be very successful after the New York fall auction of a Picasso collection achieved several world records.
Perhaps one of the reasons for the rise in private sales and the mounting of private selling exhibitions at auction houses was to counteract the steep decrease in income from classic auctioneering. In 2012, Sotheby’s reported – as Adam points out – a fall of 42 percent in net income. Christie’s situation was more obscure, as it is not a publicly quoted company.
The smaller Phillips de Pury held more than 25 exhibitions from 2005 to 2012 and Adam points out that since 2011, private selling exhibitions have increased exponentially. The trend is indeed growing and expanding, West and East alike. In February 2014, Christie’s opened its first Asian gallery, the James Christie Room in Hong Kong, which would target the rising art market in Asia and Asian art collectors.
In September 2014, the Room featured its inaugural private selling exhibition of Korean modern and contemporary art. The auction house has also held private selling exhibitions in Shanghai, and in late 2014, it launched a cross-departmental private sales exhibition that would be showcased in both Hong Kong and Shanghai. In early 2015, Christie’s also opened its West Galleries in New York, with the inaugural private selling show “Rockefeller Center and the Rise of Modernism in the Metropolis”.
Artnet News wrote in March 2014, when Sotheby’s launched its private selling exhibition “Shuimo/Water Ink: Enchanted Landscapes” in New York:
Private sales are soaring at increasingly versatile auction houses—boosting profits, blurring market distinctions, and stressing dealers.
By that time, as Artnet News reported, privately negotiated sales at Sotheby’s had increased 30 percent, to USD1.2 billion including commissions, according to the Securities and Exchange Commission. Private sales also grew at twice the rate of its auctions, generating commissions of USD88.2 million, and they accounted for 10 percent of revenue, up from 6 percent in 2010.
But at the same time, private sales commission margins were decreasing, even more than auction margins, and were down 17 percent from the previous year. By November 2014, Artnet News reported a drop of 61 percent in private sales at Sotheby’s during the third quarter of the year.
Stephane Connery, a private dealer who ran Sotheby’s private sales until 2012, was quoted in the article as saying:
Christie’s and Sotheby’s profile depends on what goes up at auction. As a private sales person in the auction business, you have a lot of pressure from your colleagues to feed the auction. […] It is bloody hard to come by great material. Without the object you’re not going to do the trade.
An unavoidable trend
Nevertheless, auction houses still continue to keep a focus on private selling exhibitions, invading the turf of dealers and galleries, without the element of representing artists on the primary market.
During Art Basel Hong Kong 2015, Art Radar’s correspondents at the fair talked to a variety of exhibitors to find out their opinion about this trend. Many galleries, like ShanghART and Beijing’s Aye Gallery, think that curated private sales in auction houses are increasingly becoming a source of competition, but also think this trend is unavoidable.
Berlin-based Neugerriemschneider and Mumbai’s Chemould Prescott Road also see private selling exhibitions as competition, but August Joyce from the Berlin gallery thinks it is so only if the shows are well curated. He feels that it is still very important for galleries to nurture artists and develop their long-term careers, as well as long-lasting relationships with collectors. According to Joyce, this is something that auctions cannot do even with themed and curated sales.
What has worried dealers most since the beginning of this unusual trend is the fact that auction houses, with their gigantic networks, can have access to top artwork and artists, let alone top collectors that want to either sell or acquire. Collectors might also think of consigning their works for private sales to auction houses rather than dealers and galleries. All this leads to a confusion and a mix-up of the responsibilities of the diverse players in the art world, as Yuli Karatsiki, Gallery Manager of Kalfayan Galleries, points out:
Auctions and galleries have – and should have – a different role, purpose and importance in the growth and progress of the art scene and the art market. It is only when these roles are mixed up that the game for all, including the artists, becomes … dangerous.
Others are more welcoming of the transformations and adaptations happening on the international scene, even if it involves increased competition. Joanne Huang Chi-Wen, Gallery Manager of Taiwanese Chi-Wen Gallery, has a positive outlook and thinks that it’s a good trend, and doesn’t mind working with auction houses.
In an era of increased diversification and cross-pollination among the various players in the global art stage, and with the proliferation of biennales, art fairs, online art spaces and ventures in addition to the more ‘classical’ types like galleries and museums, it is difficult to make everyone happy and avoid competition. Competition is what makes a market and a scene thrive, as long as it is up to the ever challenging standards of the international art world.
I am all for more interesting activities for the sake of building up the attractiveness of a city. Competition has always existed, but at the same time the market expands on account of the competition and concerted effort of all participants.
C. A. Xuan Mai Ardia
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- TEFAF Report 2015: US tops the global art market, China and UK tie at second place – March 2015 – the 2015 Report reveals an all-time high of USD53.7 billion record-breaking sales
- Christie’s Hong Kong autumn auctions: A pan-Asian vision – November 2014 – Christie’s Hong Kong’s autumn auctions for Asian Contemporary broke new records, showing renewed strength in the Asian art market
- Christie’s opens first Asia-based gallery in Hong Kong – March 2014 – Christie’s opens its first Asian gallery in Hong Kong, targeting the region’s rising art market and affluent collectors
- Hong Kong autumn auctions set new world records – sales round up – October 2014 – Sotheby’s, Christie’s, Poly Auction and China Guardian all had major auction sales, despite Hong Kong’s Occupy protests immobilising the city’s main arteries
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