No Reserve

Weekend Edition—Christie's no-reserve Hockney; Visible consignors; Sotheby's new exhibition spaces

Late last week, as the auction house previews were in full swing, talk turned (as it always does) toward predictions for the coming week. How will it go? What’s the mood? The remarkable consensus brought about by the quality of the material on offer, the armature of third-party deals and guarantees, the absence of either market over-confidence or external macro-economic euphoria (let alone immediate threats) and the curious alignment of each auction house within its preferred lane was that the market had appeared to have achieved that rare Goldilocks moment where conditions are neither too hot or too cold but seem to be just right.

Into this porridge of perfection, Christie’s dropped a dollop of doubt when it announced—first through Josh Baer’s email and then on Twitter—that David Hockney’s Portrait of an Artist (Pool with Two Figures) would be auctioned on Thursday without a reserve.

The announcement has transfixed the art market. It brings out into the open a story that has mostly been playing out behind the scenes for some time. It also raises questions about the consignor’s goals and introduces a new element into the public’s perception of the art market that could easily overshadow the market’s current equilibrium.

Based upon little more than what has transpired semi-publicly, we’re going to take a very speculative stab at working out why Christie’s took this step.

Let’s start with the announcement. Rumors were about on Thursday that Christie’s had secured a third-party guarantee for the Hockney presumably near the consignor’s $80m level. The announcement of the no-reserve sale negates that rumor and all but admits that potential buyers have been shying away from the lot. No one believes it is because the painting is anything less than a massive trophy. So, if trophy buyers have to be enticed with a no-reserve sale, it must mean those bidders have expressed reluctance. The $80m price can be the only obstacle.

Simultaneously with the no-reserve announcement, Christie’s began to speak of the painting as an $80-100m object, introducing for the first time in public the nine-figure ambitions of the consignor. One presumes the consignor has come up with $100m as a target price based upon previous prices for Basquiat, Giacometti, Picasso, de Kooning, Pollock and Warhol all at that level. Last year’s Leonardo cannot have hurt the expectations either.

Clearly impatient with the market’s reluctance to meet his target price, the no-reserve strategy is an obvious squeeze the consignor is trying to put on potential bidders. What’s not obvious is how raising the bar to $100m helps motivate those same bidders who presumably will get in on the hopes that the bidding will be sparse and a bargain can be obtained. 

The consignor may be trying to squeeze bidders but Christie’s too has also found itself in a vise. On one side a powerful consignor; on the other, its own clients whom it must advise. The consignor’s art collection and wealth somewhat insulate the work from getting burned. So the state of play leading up to the no-reserve announcement must have been a stand off. The hardened stance of the consignor staring down the increasing frustration of Christie’s clients.

If the situation is not resolved amicably, there is potential for collateral damage for those trying to facilitate a sale, for those who deal with the same clients and for the public’s perception of the art market. 

If the Hockney fails to sell, it will be a high-profile collapse harped upon in many places. If the consignor takes a price lower than his target, no matter how many incentives it includes, the consignor loses face. If a lone bidder meets the consignor’s target price, he or she risks looking less than savvy.

The no-reserve announcement would seem to break that log-jam. Bidders on sitting on the sidelines now have to contend with the certainty that someone will end up with the painting—possibly at a very good price. 

There’s always the possibility that Christie’s very persuasive specialists sold the consignor on this high-risk strategy. But if they did, and the seller parts with the painting for an impressive $60-70m all in price, there’s still a good chance the seller will walk away frustrated. (If someone gets the painting for $40-50m, the consignor won’t be happy.) There’s also the chance that this new development has come too late in the game to overcome the wariness of the potential bidders.

One theory that skirts these risks is that the no-reserve declaration was made with a white-knight buyer waiting in the wings. Such a buyer would have to, first, want the painting and, second, have a good reason to want to protect the overall market as well as Christie’s place within it. 

High-risk or with the support of a benevolent buyer, it’s in the entire market’s interest that this high-wire act comes to a close without a fall.

Tobias Meyer, Adam Lindemann Fill Evening Sales

Katya Kazakina was keen to tell the world that large Andy Warhol, Gun, on offer for $7m at Phillips was being sold by private dealer Tobias Meyer. Her evidence is a W photo essay by Todd Eberle featuring Meyer and his partner Mark Fletcher’s former Columbus Circle apartment.

That reminded us of a 2010 portrait of Amalia Dayan and her husband, Adam Lindemann, taken for the Financial Times’s How to Spend It magazine. It features the two in front of a 2010 George Condo painting in their then Montauk home. That work of art, Washington Square Park, is now hanging at Christie’s with a $2.6m low estimate.

Given the interest in Condo’s work over the last 18 months in the art market, it is surprising that are so few Condo’s on offer. There’s been some debate around the Condo market since last November when a day sale lot set a new record for the artist at $4m. In May, Christie’s upped that record to $6m with Nude and Forms. That work carried a slightly lower $2.2m low estimate. The top prices for Condo’s work have come for paintings made between 2011-14.

So it isn’t a surprise that Christie’s went to Lindemann with a guarantee, which it has since backed up with a third-party, to see what price level Condo’s work (his late work, at least) will find.

It’s worth remembering that the Basquiat market had gone through a cycle of price growth that was winding down when Christie’s did something similar in May 2016. Lindemann consigned Basquiat’s Untitled (Devil) with a whisper estimate of $40m. That work made $57m with fees.

Sotheby’s New Exhibition Spaces Coming in April

One of the curious mentions in Sotheby’s earnings call last week was this final element in CEO Tad Smith’s five-point update on the company’s strategy:

  • “We are five months into our construction project for our new gallery space on floors one through four of our Manhattan headquarters, and are on target to unveil the finished product next April. We have completely reimagined the existing public spaces on those floors, and repurposed significant space that had not been adequately deployed previously.”

It turns out that “completely reimagined” isn’t hyperbole. Behind the walls where Sotheby’s has the material from its day sales on display are some vast, varied and very impressive spaces being built that will indeed be impressive when they are finished and revealed.

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