Sotheby's, Christie's Sales of Contemporary Art Drop 75 Percent
Annual sales of contemporary art slumped 75 percent at the two largest auction houses' evening sales in 2009 after they abandoned price guarantees to sellers.
Sotheby's and Christie's International made a combined total of $482.3 million with fees from their five regular "Part I" sales of high-value art in New York and London this year, according to figures compiled by Bloomberg News. In 2008, the same group of flagship auctions made $1.97 billion. That compares with a record $2.4 billion in 2007 and $1.1 billion in 2006.
Worldwide auction sales of contemporary art grew more than eightfold between 2003 and 2007, according to French database Artprice. Demand contracted in the fourth quarter of 2008, after the September collapse of Lehman Brothers Holdings Inc., with Sotheby's and Christie's losing at least $50 million and $40 million, respectively, as artworks failed to achieve prices guaranteed to sellers. Phillips de Pury & Co. also stopped providing guarantees before its fall series of sales.
"As soon as guarantees were taken off the table, sellers became uncertain," said Philip Hoffman, chief executive of the London-based Fine Art Fund. "Clients don't want to see big-ticket works go to public auction and fail. A lot of people turned to discreet private sales at the auction houses."
Private sales of contemporary art raised more than auctions at Christie's in the first half of 2009, said the London-based auction house. Sotheby's would not comment on private sales.
Demand declined at smaller evening auctions in London and New York during the first half of the year. Christie's February sale in London raised only $13.6 million, the lowest total at an evening event in the British capital since 2004.
During the first six months of 2009, no single work sold for more than $10 million. The top price was the $7.9 million paid at Christie's, New York, in May for David Hockney's 1966 painting, "Beverly Hills Housewife."
"At the time, people didn't know what the art was worth or what they themselves were worth," Francis Outred, Christie's European head of contemporary art, said in an interview. "They were looking at each other in the saleroom and waiting for someone else to bid."
As the slump continued, auction houses cut estimates by 50 percent or more from 2008 levels to shore up selling rates.
At Christie's London in July -- where 88 percent of the reduced 40-lot offering found buyers -- a 1974 Gerhard Richter color-chart painting sold for 1.4 million pounds, at the low end of estimates. Another version from the same series fetched $4.1 million at Sotheby's New York in May 2008, also near the lower estimate.
Following reports of improved levels of business at contemporary-art fairs such as Art Basel in June and Frieze in London in October, selling rates and prices increased at evening auctions in the final quarter of this year.
On Nov. 11, the Standard & Poor's 500 Index closed at a 13-month high. Three hours later, Sotheby's held a $134.4 million evening auction of contemporary art in New York at which only two of the 54 offered lots failed. The total beat both a high estimate of $97.7 million and the company's $125.1 million tally in November 2008.