Latest news with #BonnieBrennan
Times
09-05-2025
- Business
- Times
Are London's grand auction houses in trouble?
There's an air of bleary-eyed exhilaration in the marbled entrance hall of Christie's. Bright young staffers share excited whispers by the staircase, while gloved workmen come and go, carrying artworks for which, a few hours earlier, those staffers were taking stratospheric telephone bids. Even the uniformed doormen seem cheerier than usual — as if they too were still buzzing from the night before. The final numbers are still coming in, but everyone knows the previous evening's auctions were a resounding success. A three-hour, double-header evening sale of 20th and 21st-century and surrealist art raised £130.3 million. The auction hall was packed and, better still, the atmosphere was electric. Five lots went for more than £6 million and one — René Magritte's haunting La reconnaissance infinie — for £10.3 million. The boldness of the bidding provoked frequent applause. Upstairs in a panelled boardroom, the Christie's chief executive Bonnie Brennan is buzzing. 'It was a great room, wasn't it?' she says. 'The energy! And the depth of bidding, not just in the room but online, on the telephones. I think we sent a great message to the world.' The equivalent double-header in 2024 raised £196.7 million. But dispiriting year-on-year comparisons are barely worth stating out loud in today's art world: they're everywhere. Brennan's point was that, in the present climate, this solid showing could perhaps be welcomed as a sign that the worst is over. A lot of people in the auction business would like her to be right. The alternative hardly bears thinking about. Total auction sales at Christie's, Sotheby's and Phillips fell 19 per cent in 2023; last year they decreased a further 26 per cent. Such sales aren't the only way in which auction houses make money. But even including private sales and other services, the figures are shocking. Christie's aggregate sales have fallen by almost a third in the past two years, from $8.4 to $5.7 billion. Sotheby's, meanwhile, reported an 88 per cent fall in its core earnings last year and was forced to lay off more than 100 staff. The 281-year-old auction house is (like its rivals) a private company, owned by the French-Israeli telecoms tycoon Patrick Drahi. It usually keeps its financial affairs to itself, but it's no secret that things could have been much worse had it not been for a $1 billion investment last year from Abu Dhabi's sovereign wealth fund, ADQ. Sotheby's quickly used more than $800 million of that to pay debts of about $1.65 billion. Concerns remain, however, about the $60 billion debt burden of Drahi's Altice group. Such troubles tend to feed on themselves. Moody's and S&P both rate Sotheby's bonds as junk. It's hard to assess how fair these ratings are when the company keeps so much of its affairs private; likewise with Phillips, which appears to be sustained largely by loans from the Russian luxury retail group Mercury. (Phillips's ultimate parent company is now registered in the British Virgin Islands, while Mercury's Russian-born founders, Leonid Fridlyand and Leonid Strunin, are resident in Monaco and Cyprus respectively.) But few would dispute that — with the possible exception of the much smaller Bonhams, whose sales fell by a mere 12 per cent last year (from a record $1.14 billion in 2023) — the capital's four great auction houses, founded in central London between 1744 and 1796, are going through difficult times. There's less agreement, however, about what the problem is, or even how bad it is. 'Ups and downs in the market are nothing new,' India Phillips, the managing director of Bonhams, says. 'It's a very cyclical business. You just need a couple of good seasons and you feel the buoyancy coming back.' Others, such as the JP Mei & MA Moses Art Market Consultancy, take a bleaker view. The highly regarded US analysts made headlines last year with a report saying that for the auction houses things were 'financially as bad as it gets'. But, its co-founder Michael Moses says, 'we were wrong. It's got worse.' The consultancy's position is based on exhaustive analysis of the sale prices of more than 50,000 artworks that have been purchased at auction since 1970 and then resold at Christie's, Phillips or Sotheby's since 2000. Last spring, the mean compound annual return on such works was down to 'almost zero'. By the autumn, however, 'for the first time ever, it was negative'. You can query the Mei & Moses methodology, which takes no account of private sales (where the auction house finds a buyer for a client's artwork without the uncertainty or scrutiny that goes with an auction). But its point is worth making, because poor returns aren't always obvious. Auction houses give low estimates to minimise the risk of disappointment, and sellers often withdraw works rather than realise a loss. And if you learn, for example, that a small Francis Bacon Study for a Portrait fetched the equivalent of £3.95 million at auction in 2020 and was resold for £4.3 million in 2023, you might not think, 'Somebody lost money on that artwork.' But they must have done, allowing for fees, costs and inflation. Other declines are more obvious. Many of the Damien Hirst artworks sold at the Beautiful Inside My Head Forever auction that Sotheby's held in September 2008 have depreciated significantly. For example, Beautiful Mider Intense Cathartic Painting (with Extra Inner Beauty) sold for £668,450 at Sotheby's in 2008 and for £449,000 at Phillips in 2017. And works from Jeff Koons's Balloon Monkey series (2006-13) fetched $25.9 million at auction (the orange one) in 2014; $12.4 million (magenta) in 2022; and $9.9 million (blue) in 2024. • Old books, art and antiques: how to sell your valuables at auction But it's the less celebrated names and works that account for most of the collectively poor performance of art as an asset class — since we rarely boast about our poor investment choices, these tend to go unnoticed until a data analyst highlights them. The Dallas art economist David Kusin claims that, allowing for inflation, the aggregate value of fine art, decorative art and antiquities fell by 23 per cent between 1988 and 2023, while according to the luxury investment index in the Knight Frank Wealth Report 2025, the value of investments in art fell by 18 per cent last year alone. They can't all be precisely right, but the overall message is clear: after decades in which prices have been assumed to move naturally upwards, the art world is experiencing an uncomfortable reality check. And with insecurity sweeping through the global economy, it could hardly be happening at a worse time. The boom years feel like a distant echo. Dealers have closed (remember Marlborough Fine Art?). Grand galleries — the Tate, the Royal Academy, the Gagosian — have been shedding staff or, like the National Gallery, reporting spectacularly reduced visitor numbers. Others are staging fewer, smaller exhibitions, while collectors are said to be favouring smaller collections. This isn't all bad: in an age of cultural overload, less can be more. But 'the big slowdown', as the Art Newspaper calls it, hardly bodes well for auction house earnings. There's more to it than that, though. The global art market has shrunk — by 12 per cent last year, according to the Art Basel & UBS Art Market Report 2025, to an estimated $57.5 billion — and total sales by auction companies, public and private, have shrunk by more (20 per cent last year). There has also been a long-term drift away from Europe, especially to China, although the trend slowed down last year. Twenty-five years ago, Christie's and Sotheby's accounted for more than 70 per cent of the world's art auction turnover. Now it's barely 50 per cent, with Chinese rivals such as Poly Auction, China Guardian and Rong Bao claiming an increasing market share. The big four British auction houses have invested heavily in expanding their Asian operations, with the Middle East seen as the next big growth area. This may or may not seem like money well spent in the light of the present turmoil in global trade. 'We don't really get tied up in market share,' Brennan says. 'And we don't think of competition between regions either, because we're a global organisation. I just have to deliver a profitable business. Our focus is on client service, and on how we innovate and stay relevant to young buyers.' Art auctions, she says, are only part of Christie's business. Private sales make up 27 per cent of its revenue: 'We had our second best year ever last year for private sales.' Then there's luxury. A substantial portion of the company's auction revenue (16 per cent last year) comes from sales of items such as handbags, jewellery, shoes, fine wines, whiskies and, following last year's purchase of the specialist auction house Gooding & Company, classic cars. There's also a banking arm, Christie's Art Finance, which allows clients to borrow against their collections, and a venture capital fund, Christie's Ventures, which backs start-ups involving 'new technologies that impact the art world'. The company has its own fully on-chain auction platform, Christie's 3.0, for collectors who want to buy NFTs (non-fungible tokens) with cryptocurrency. Overall, it takes about 80 per cent of its bids online. It even held an auction earlier this year, controversially, in which every lot was an artwork generated with the help of AI. 'We're a thought leader at the interface of art and technology,' says Brennan, who once spoke at a conference as a hologram. It's not just about the revenue generated. 'It's about giving people what they want. Forty-one per cent of our new bidders are millennials or younger. Collectors are changing and it's important to broaden our audience.' Brennan didn't get to the top of her business by being downbeat, and you don't have to spend long in the 51-year-old New Yorker's company for her enthusiasm to start rubbing off. Maybe she is right. There is, after all, no shortage of people with money to spend. (Aggregate billionaire wealth has more than doubled globally since 2011.) The challenge is to persuade them to invest it in art, rather than something more obviously profitable (stocks, shares, bonds, real estate), secure (gold) or gratifying (superyachts, parties, island bolt holes). Brennan's mission, as she sees it, is to 'engage new audiences, geographies and technologies', so that everyone with the means and inclination to use Christie's services knows that they are there. 'We're educators. So somebody might come in for a handbag or a piece of jewellery, or prints or photographs, and it's our job to interrupt that pathway with something else to show them: maybe a work of art or an artist they've never really investigated before. Everything connects. 'We have a long heritage for a reason,' she adds. 'It's because we're nimble. We evolve.' • The craziest items sold at auction: Freddie Mercury's moustache comb and more This is much the same message I hear from Alex Branczik, the chairman and head of modern and contemporary art for Sotheby's Europe. 'We've been doing this for over 280 years,' he says, in a snug upstairs room in the company's imposing New Bond Street building. 'We're not going anywhere. I can't comment on corporate matters, but as a day-to-day business we're highly profitable. We had £1.4 billion of private sales last year. Luxury has grown significantly for us. We had a record year for financial services. And more than 90 per cent of the bids we get are now online.' Sotheby's key spring evening sale, the day before Christie's, generated a relatively modest £62.5 million, but Branczik insists that this too was a success. 'The room was packed. There was great depth of bidding from all over the world. We achieved a world record price for a Lisa Brice [£5.4 million for the South African artist's After Embah] and we had 90 per cent sold by lot.' Sotheby's has been through 'a quiet period', he says. 'But I'm very confident. The demand is absolutely there. What's held back the market is supply.' And that, he argues, is just a matter of confidence. 'When people think the market is down, they think it's not a good time to sell. But once the great artworks come out, and you achieve great prices, it's the other way round.' Like Christie's, Sotheby's is much diversified, with Sotheby's Financial Services, Sotheby's International Realty (for real estate), Sotheby's Concierge (real estate auctions), Sotheby's Metaverse (NFTs and crypto) and RM Sotheby's (car auctions). It is globally dispersed too: 'We've opened incredible new premises in Hong Kong and Paris, and this year there'll be the most exciting move of all, to the Breuer building in New York.' (Sotheby's finalised the purchase of the former home of the Whitney Museum on Madison Avenue for $100 million last summer.) Last year it had more Middle Eastern buyers than ever and this February it held its first auction in Saudi Arabia, in a starlit amphitheatre in Diriyah, with bids accepted in crypto. It has big plans in Abu Dhabi too and, indeed, in crypto. ('It's like we discovered a whole new continent of potential bidders.') All it needs, Branczik reflects, is for the supply of key masterpieces and big collections to come back on tap. But not everyone shares his confidence. 'People at auction houses are super-optimistic,' says Christine Bourron, the French-born founder of the London art market analysts Pi-eX. 'They're in the business of making you excited about art. So they tell you the good news — like the Cattelan banana.' That's the artwork by Maurizio Cattelan, called Comedian and consisting of a banana duct-taped to a wall, that Sotheby's sold at auction in November for $6.2 million. This was a coup for Sotheby's and Branczik mentions it as an example of the auction house's dynamism. 'But what no one points out,' Bourron says, 'is that the rest of the auction was a disaster and many of the lots didn't sell. Everyone was looking at the banana.' Likewise with Christie's pioneering auctions of digital art, which Brennan cites proudly. Christie's sold more than $150 million of NFTs in 2021, including a game-changing $69.3 million for a work by the digital artist Beeple, Everydays: the First 5,000 Days. 'It was a great achievement,' Bourron says. 'But look at what's happened to NFTs since.' (Answer: sales of art-related NFTs have fallen by about 98 per cent, and 95 per cent of NFTs — which have no inherent value beyond what someone is prepared to pay for them — are now considered worthless.) The digital art market may still have a future, at some level. But it's hard to see it turning the industry round just yet. 'It's like when a child is crying,' Bourron says, 'and you distract it by focusing the conversation on something else.' The concealed issue here, she believes, is that collectors are becoming pickier, as buyers and as sellers. 'More and more people look at art as an asset class,' she says. 'And now there are organisations like Pi-eX [founded in 2014] that can help them analyse the market properly, through data.' This has been transformative, because the data has rarely been flattering. 'Art used to have a reputation as a very stable, reliable investment, where prices kept going up,' she says. 'But actually it's one of the most volatile markets there is.' • Going, going … is Sotheby's on the brink? Bourron isn't alone in thinking this. Kusin, the author of Art as an Asset in the 21st Century, argues that the whole global art sector needs to be 'rebuilt using modern principles and tools'. All other economic marketplaces — for stocks, bonds, real estate, commodities and more — 'use vast amounts of data in order to buy and sell much more quickly and accurately' yet 'the experience of buying and selling art is virtually the same now as it was during the 18th century'. His company, Kusin & Co, offers clients a range of high-powered data-crunching tools to help them to find value in the art market. Yet the auction houses, he writes, despite 'competing directly against some of the largest banks and insurance underwriters in the world', have yet to learn 'basic statistical standards and the proper use of sufficient, relevant financial data'. Hence their present woes. Those who remember the auction houses' gilded era might flinch at this hard-headed do you quantify the thrill of those magicaldecades, from the early Seventies onwards, when everything the auction houses touched seemed to turn to gold and the British Rail Pension Fund got rich by buying into the boom? Even the scandals were steeped in glamour — remember the $400-million price-fixing case which led to the Sotheby's chairman Alfred Taubman being jailed? How do you measure those spine-tingling moments when an auctioneer, coaxing a sale room with the artistry of a great conductor, conjures a collective surge of adrenaline that propels the bidding far beyond the boundaries of prudence? No one was talking about data when Sotheby's sold Giacometti's L'homme qui marche I for £65 million in 2010, or Christie's sold Francis Bacon's Three Studies of Lucian Freud for $142.4 million in 2013, or Phillips sold Picasso's La Dormeuse for £37 million in 2018 — or, most breathtakingly, when Christie's sold Leonardo da Vinci's Salvator Mundi for $450.3 million in 2017. But auction houses with global markets and multibillion-dollar turnovers cannot simply refuse to engage with life's grubbier realities. Art's value is not just financial, but auctions are about money. And collectors are no longer buying — or selling — blind. As a result they are becoming more cautious. The proportion of high-net-worth individuals who buy artworks on impulse has declined dramatically, according to the biggest ever study of their collecting habits, The Art Basel & UBS Survey of Global Collecting 2024. And those who study the data first aren't in a hurry to make up the shortfall. The problem is exacerbated, Moses believes, by the comparatively high returns offered in recent years by stocks and shares — and also, Bourron adds, by the auction houses' increased reliance on guarantees (offered by the auction house to a potential seller to buy a work at an agreed minimum price) and third-party guarantors (who take on the risk from the auction house with a low but irrevocable bid). These helped to resuscitate the market after the 2008 financial crisis. But now, Bourron says, 'the auction houses are addicted to them. It's made the market very inefficient, because people look at historic prices and they don't want to sell for a lower price than they've seen that artist get before. So you end up with an overpriced market that has lost its ability to adjust to demand.' The solution, she says, is for the auction houses 'to go cold turkey' and let the market find its natural level. That may not happen soon, however, and nor do the auction houses seem likely to curb their enthusiasm for art-secured lending. That's 'the biggest thing in the art world right now,' Wendy Goldsmith, the Florida-based art adviser, says, and it gives the auction houses much-needed extra revenue. But it doesn't help to bring masterpieces to market, because collectors who can borrow against their artworks no longer have to sell to get liquidity. 'And why would you sell now if you didn't have to?' Luckily, the auction houses have deep-pocketed proprietors to fall back on. Sotheby's has Drahi, Phillips has Mercury and Christie's has belonged to François Pinault's Groupe Artémis since 1998. Only Bonhams, which is owned by the private equity group Epiris, comes close to being exposed to the realities of the market. But 'no one's going to let them fail', says Goldsmith, a former Christie's director and auctioneer. 'They're too big. Just look at who's invested.' • Where to find affordable art for your home Yet that doesn't mean that all is well. Looking through the big four's schedules for the next six months you'll see sale after sale involving handbags, jewellery, watches, wines, whiskies or sporting memorabilia. Each of these sales will generate lots of traffic and a degree of revenue. But it's hard to see how the global trade in ultra-exclusive luxury can remain undamaged by Trump's tariffs. As for salvation: no handbag auction will ever generate the kind of transformational, $50-million-plus sale that a great auction house can occasionally achieve through art. It's the same, for the foreseeable future, with the wild frontiers of digital art. Global auction sales of NFTs yielded just $9 million last year (compared with $232 million in 2021), while Christie's contentious auction of AI-assisted art generated a grand total of $728,784. 'The amounts involved are tiny,' Bourron says. Meanwhile, more traditional categories — whether it's niche subjects such as 18th-century porcelain or big but no longer booming sectors such as old masters — risk becoming marginalised. 'Sotheby's is haemorrhaging expertise,' Goldsmith says. 'It's terribly sad, because it won't come back.' Even at Christie's, she adds, there are many areas where 'there just isn't enough volume for people to cut their teeth on. And this is a business you can only learn through osmosis.' Twenty-five years ago, Christie's would hold about 700 auctions a year. Last year it held 293, of which 136 were online only. The frustrating thing, Goldsmith says, is that 'the money is absolutely out there — just look at real estate'. The art is out there too. Charles Stewart, the chief executive of Sotheby's, estimates that collections worth more than $100 billion will come to market over the next five to ten years, as trillions of dollars' worth of baby boomers' wealth and assets — including art collections — passes down to their descendants in 'the greatest generational wealth transfer in history'. But that's yet to happen and there's no guarantee that, when it does, the young collectors of tomorrow will share the artistic tastes of their parents' generation. This month the auction houses may get a taste of what's to come, with hundreds of millions of dollars' worth of art due to go under the hammer in New York. Much of it will be at the day and evening auctions that are the traditional highlights of the late spring calendars, but Christie's will also be auctioning the Riggio Collection — an estimated $250 million worth of fine art belonging to the late Leonard Riggio, the founder of Barnes & Noble, and his wife Louise. Sotheby's, meanwhile, will auction old masters with an estimated value of $80-$120 million from the collection of Jordan Saunders and her husband, the late Thomas A Saunders III, the Morgan Stanley banker. It's not on the scale of the renowned collections of the past: the $1.62-billion Paul G Allen collection that Christie's sold in 2022, for example, or the $922.2-million Macklowe Collection that Sotheby's sold in 2021-22. But it's big enough to test the market — and perhaps, with stocks and shares less attractive than they were, it could mark a turning point. If the bidding is robust and headline-making sums are realised, it will send another signal to the world: that, as Brennan puts it, 'the market is strong, and confidence is returning'. And that, in turn, could be enough to release the pent-up supply of must-have masterpieces. 'I actually think this might be a historic opportunity,' says Jianping Mei, the other half of Mei & Moses, 'because the market hasn't been this bad for about70 years' — just before the great post-war art boom began. Bourron's hopes, however, are more modest. 'For me,' she says, 'at this time, if New York is not catastrophic, that would be good.'
CNBC
08-05-2025
- Business
- CNBC
Christie's CEO: Tariffs haven't scared people away from our sale rooms
CNBC's Robert Frank got a special sneak preview of Christie's marquee May auction of 20th and 21st century art in New York City. He spoke with Christie's CEO Bonnie Brennan about how tariffs and global economic uncertainty are impacting the fine art market; the collection of rare works at auction this month including from Mondrian, Picasso and Monet; where Christie's is seeing growth in the luxury space beyond art; and how Christie's is adapting its business to attract a younger generation of collectors. Watch the full conversation above. The Inside Wealth newsletter by Robert Frank is your weekly guide to high-net-worth investors and the industries that serve them. Subscribe here to get access today.
