The star of the evening, Twombly’s “Untitled,” was vulnerable because it didn’t have a bidder lined up.
So Sotheby’s cut a deal with Sundheim, the chief investment officer of Viking Global Investors and a trustee of the Museum of Modern Art. According to people familiar with the deal and a financial filing with New York State, the house let the collector largely pay for the Twombly with a pledge to consign seven other works with a combined estimated value of $50 million to $75 million. Sandy Heller, a prominent art adviser, was still negotiating for Sundheim as the auction began.
Sotheby’s guaranteed Sundheim minimum prices for the art -- a move that leaves the house on the hook if prices fall short. Four of Sundheim’s pieces, among them a Warhol and a Basquiat, are going up for auction in May.
Broader ‘Economics’
Executives have been willing to give up commissions and assume such risks to generate buzz and hopefully higher prices for entire auctions.
“They view it not as an economics of that lot but rather how that lot will contribute to the economics of the entire sale,” said Evan Beard, national art executive at U.S. Trust. Both Sotheby’s and Christie’s want to dial back the deal-making to put a floor under commission margins. A new management team at Sotheby’s, led by Tad Smith, seems less willing to trade profits for market share. In February, he told analysts the deal-making remains “fairly significant” for collections that are highly competitive but he’s seeing signs of fewer givebacks on single consignments.
The same goes for Christie’s. “We are trying to re-calibrate the market and persuade the sellers to come to a more realistic point of view,” said Brett Gorvy, global head of postwar and contemporary art at the London-based house. “We believe that if we work very hard and create value for the consignor, we should be paid for it.”
The question is whether collectors will be willing to forgo deals that have been so lucrative for them.
Thomas C. Danzinger, a New York lawyer who negotiates auction sales for major dealers, advisers and collectors, agrees the auction houses want their old commissions back. But art is a brutal business, and many are now worried the market is starting to cool. Letting go of the enhanced hammer may not be so easy.
“We’d ask for enhanced hammer for anything,” Danziger says. “That’s the most powerful tool the auction houses have to attract consignors.”