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Are Auction Guarantees the New Private Sales?

Are Auction Guarantees the New Private Sales? Yes, for Art Buyers Who Don’t Want to Get Ripped Off

artnet News | Felix Salmon

Art auctions look pretty simple, on the surface. A buyer consigns a painting, the people who want the painting bid against each other, and the highest bidder wins. That’s certainly the impression given by the auction itself, whether you attend in person or just watch online. But it’s not the reality. At the top end of the market, art auctions are increasingly complex and opaque. Consider the three paintings Steve Wynn had up for auction at this month’s sales, carrying a combined estimate of some $135 million. One of those paintings was withdrawn after being damaged by mistake; one of them was hammered down at $33.5 million, which works out to $38 million after fees, but sold for only $37 million; and one of them was withdrawn on the grounds that it was covered by the same third-party guarantee that also included the damaged work.

If you don’t entirely understand what’s going on in the previous paragraph, then you’re exactly where Christie’s and the art world more generally want you to be. The art market is built on opacity, and the less that people know about what’s going on, the more opportunities there are for profit and arbitrage. When you take a closer look at this season’s big auction sales, one trend seems to be emerging: Auctions are looking less and less like anonymized price-discovery mechanisms and more and more like gussied-up private sales. Often, the person who walks away with the artwork is an art dealer or speculator who had been betting that they’d be able to smoke out a competing buyer who, for whatever reason, wasn’t willing or able to bid at the auction…read more

Image: Auctioneer and Global President, Jussi Pylkkänen at the Post-war and Contemporary sale. Image courtesy of Christie’s.

2018-10-29T09:40:53+00:00