62On Sept. 5 shareholders of publicly traded
Sotheby’s approved a $3.7 billion acquisition offer
from French telecommunications tycoon Patrick
Drahi. Come this November during the auctions in
New York, clients bidding on treasures like Claude
Monet’s Charing Cross Bridge will likely be raising
their paddles inside the halls of a private company.
While the news sent shock waves through the art
world, Drahi, not known as a major collector, declined to
speak publicly.
Art lore says that the public Sotheby’s was long at a disad-
vantage to the more nimble and risk-tolerant Christie’s, which
is owned by French billionaire François Pinault. Christie’s
doesn’t have to answer to shareholders and isn’t punished by
stock declines. There’s also the presumption that Pinault’s
deep pockets allow it to offer far higher guarantees—which
effectively ensure that the consignors will be paid a certain
amount, giving the house another leg up.
But even as Sotheby’s evolves, clients of the 275-year-
old auction house—collectors and dealers who buy and sell
Picassos and Warhols, Chinese porcelain and $437,500 Nike
sneakers—predict business as usual.
“Sotheby’s going private, I don’t see that it would have that
much of an impact on most people,” says Morgan Long, senior
director at the Fine Art Group Ltd., a regular client. “I don’t
find on the consignment side or the buy side that there’s much
difference between Sotheby’s and Christie’s.”
“There was always this perception that being public ham-
pered our ability to do business,” says Scott Nussbaum, who
left Sotheby’s in 2015 after 13 years to join Phillips, a boutique
auction house owned by Russia’s Mercury Group. “Now that I
work for a private company, I am not sure that’s true.”
Nonetheless, Sotheby’s going private is important for
the art market, where it and Christie’s accounted for 46% of
$29 billion in global auction sales in 2018, according to a UBS
report. Clients are watching to see if Sotheby’s will attract more
rainmakers and reduce its red tape.
“It’s bullish for the market,” says collector and dealer BRUNOLEVY/REDUXFALL CULTURE PREVIEW Bloomberg Pursuits September 16, 2019Adam Lindemann. “People from the outside will take the art
market forward. It can’t be just musical chairs between [gallery
owners] Larry Gagosian, Hauser & Wirth, and David Zwirner.”
Sellers make choices between houses, in part, based on
which team can maximize the value of an object and offer bet-
ter financial terms, says art adviser Gabriela Palmieri, a former
Sotheby’s specialist. For buyers, the house they choose hinges
on the quality of artworks—and such practicalities as more
favorable payment plans and efficient shipping.
Emotions also play a role in whether a client chooses
Sotheby’s or Christie’s or Phillips. Long, of the Fine Art Group,
says one of her clients only works with Christie’s because his
father had a long-term professional relationship with a spe-
cialist there. That doesn’t change with corporate ownership.
Then there’s the optics, which, given that the
art world is built on perception, is no small thing.
“For many years we thought that Christie’s was
doing better than Sotheby’s, but we didn’t really
know,” says Barbara Bertozzi Castelli, owner of
Castelli Gallery in New York. “Maybe they were
losing money.”
Pinault understands and accepts the risks and
rewards of owning Christie’s, says Paul Gray, who’s
bought works on behalf of clients including hedge
fund manager Ken Griffin. “That definitely gives them an edge
in guaranteeing works at speculatively high levels,” he says.
“We’ve seen this strength come back to haunt them, and the
house has ended up with some really major buy-ins of guar-
anteed material with writedown sales afterwards.” That is, if
a work fails to sell, Christie’s (or Pinault) has to purchase it at
the guaranteed price.
Sotheby’s, until now, was a different story. Losing money on
a guaranteed artwork, which would have to be disclosed, often
contributed to disappointing quarterly results. Shares would
nosedive, which in turn could make management more reluc-
tant to offer lucrative deals to future sellers of the most prized
works. This dynamic will now change, but as a result the func-
tions of a huge chunk of the market will be hidden from view.
Drahi, who’s worth $10.7 billion, hasn’t disclosed his vision
for Sotheby’s. His 2016 acquisition of Cablevision from the
billionaire Dolan family was followed by cost-cutting of jobs
and programming, according to a lawsuit filed last year by
the Dolans against Drahi’s telecommunications giant, Altice
Europe NV. The parties settled in August.
Whatever lies in store for Sotheby’s, Drahi isn’t spending
the money “to leave it as it is,” says Alberto Mugrabi, whose
family is among the most ubiquitous buyers and sellers at auc-
tion. Technology is expected to be part of the new manage-
ment’s focus given Drahi’s role as president of Altice. “He has
new ways of seeing things,” Mugrabi says. “The new owners
will give me more options how to sell my art.”
Come November, whatever the outcome for the Monet, esti-
mated at $20 million to $30 million, employees won’t have to
worry about satisfying shareholders. “They would need to
report to one person, and one person only,” Long says. Will going private mean big
changes at the storied auction house?
By Katya KazakinaA New Master
At Sotheby’s
DrahiAUCTIONS
62
On Sept. 5 shareholders of publicly traded
Sotheby’sapproveda $3.7 billionacquisitionoffer
fromFrenchtelecommunicationstycoonPatrick
Drahi.ComethisNovemberduringtheauctionsin
NewYork,clientsbiddingontreasureslikeClaude
Monet’sCharingCrossBridgewilllikelyberaising
theirpaddlesinsidethehallsofa privatecompany.
While the newssent shock waves throughthe art
world,Drahi,notknownasa majorcollector,declinedto
speak publicly.
ArtloresaysthatthepublicSotheby’swaslongata disad-
vantagetothemorenimbleandrisk-tolerantChristie’s,which
isownedbyFrenchbillionaireFrançoisPinault.Christie’s
doesn’thavetoanswertoshareholdersandisn’tpunishedby
stockdeclines.There’salsothepresumptionthatPinault’s
deeppocketsallowit toofferfarhigherguarantees—which
effectivelyensurethattheconsignorswillbepaida certain
amount,givingthehouseanotherlegup.
ButevenasSotheby’sevolves,clientsofthe275-year-
oldauctionhouse—collectorsanddealerswhobuyandsell
PicassosandWarhols,Chineseporcelainand$437,500Nike
sneakers—predictbusinessasusual.
“Sotheby’sgoingprivate,I don’tseethatit wouldhavethat
muchofanimpactonmostpeople,”saysMorganLong,senior
directorattheFineArtGroupLtd.,a regularclient.“Idon’t
findontheconsignmentsideorthebuysidethatthere’smuch
differencebetweenSotheby’sandChristie’s.”
“Therewasalwaysthisperceptionthatbeingpublicham-
peredourabilitytodobusiness,”saysScottNussbaum,who
leftSotheby’sin 2015 after13 yearstojoinPhillips,a boutique
auctionhouseownedbyRussia’sMercuryGroup.“NowthatI
workfora privatecompany,I amnotsurethat’strue.”
Nonetheless,Sotheby’sgoingprivateisimportantfor
theartmarket,whereit andChristie’saccountedfor46%of
$29 billioninglobalauctionsalesin2018,accordingtoa UBS
report.Clientsarewatchingtoseeif Sotheby’swillattractmore
rainmakersandreduceitsredtape.
“It’sbullishforthemarket,”sayscollectoranddealer BRUNOLEVY/REDUXFALL CULTURE PREVIEW Bloomberg Pursuits September 16, 2019AdamLindemann. “People from the outside will take the art
marketforward. It can’t be just musical chairs between [gallery
owners]Larry Gagosian, Hauser & Wirth, and David Zwirner.”
Sellersmake choices between houses, in part, based on
whichteam can maximize the value of an object and offer bet-
terfinancial terms, says art adviser Gabriela Palmieri, a former
Sotheby’sspecialist. For buyers, the house they choose hinges
onthequality of artworks—and such practicalities as more
favorablepayment plans and efficient shipping.
Emotions also play a role in whether a client chooses
Sotheby’sor Christie’s or Phillips. Long, of the Fine Art Group,
saysoneofher clients only works with Christie’s because his
fatherhada long-term professional relationship with a spe-
cialistthere. That doesn’t change with corporate ownership.
Then there’s the optics, which, given that the
art world is built on perception, is no small thing.
“For many years we thought that Christie’s was
doing better than Sotheby’s, but we didn’t really
know,” says Barbara Bertozzi Castelli, owner of
Castelli Gallery in New York. “Maybe they were
losing money.”
Pinault understands and accepts the risks and
rewards of owning Christie’s, says Paul Gray, who’s
bought works on behalf of clients including hedge
fund manager Ken Griffin. “That definitely gives them an edge
in guaranteeing works at speculatively high levels,” he says.
“We’ve seen this strength come back to haunt them, and the
house has ended up with some really major buy-ins of guar-
anteed material with writedown sales afterwards.” That is, if
a work fails to sell, Christie’s (or Pinault) has to purchase it at
the guaranteed price.
Sotheby’s, until now, was a different story. Losing money on
a guaranteed artwork, which would have to be disclosed, often
contributed to disappointing quarterly results. Shares would
nosedive, which in turn could make management more reluc-
tant to offer lucrative deals to future sellers of the most prized
works. This dynamic will now change, but as a result the func-
tions of a huge chunk of the market will be hidden from view.
Drahi, who’s worth $10.7 billion, hasn’t disclosed his vision
for Sotheby’s. His 2016 acquisition of Cablevision from the
billionaire Dolan family was followed by cost-cutting of jobs
and programming, according to a lawsuit filed last year by
the Dolans against Drahi’s telecommunications giant, Altice
Europe NV. The parties settled in August.
Whatever lies in store for Sotheby’s, Drahi isn’t spending
the money “to leave it as it is,” says Alberto Mugrabi, whose
family is among the most ubiquitous buyers and sellers at auc-
tion. Technology is expected to be part of the new manage-
ment’s focus given Drahi’s role as president of Altice. “He has
new ways of seeing things,” Mugrabi says. “The new owners
will give me more options how to sell my art.”
Come November, whatever the outcome for the Monet, esti-
mated at $20 million to $30 million, employees won’t have to
worry about satisfying shareholders. “They would need to
report to one person, and one person only,” Long says. Will goingprivatemeanbig
changes atthestoriedauctionhouse?
ByKatyaKazakinaA New Master
At Sotheby’s
DrahiAUCTIONS