To Buy Is Cheaper, To Sell Is More Expensive

On February 7th, days after it was revealed that Christie’s cooperation with the Department of Justice’s antitrust investigation had resulted in its being granted conditional amnesty for its alleged past price-fixing conduct, the firm announced a change in the structure of both its buyers’ premiums and sellers’ commissions.

In this new world order, buying art at Christie’s becomes more expensive. Effective March 31, Christie’s is charging buyers a 17.5 percent premium on the first $80,000 of property bought and 10 percent thereafter, as opposed to 15 percent on the first $50,000 and 10 percent thereafter. As a result, a lot whose hammer price is $50,000 now costs an additional $8,750 (instead of $7,500), for a total of $58,750. Likewise, for a lot hammered at $80,000, a Christie’s buyer is now paying a premium of $14,000 as opposed to the previous $10,500, for a total of $94,000.

While it is costing more to buy, it is becoming somewhat more affordable to consign works of art to Christie’s, as commissions have been lowered for property valued at $100,000 andabove. (Works valued at less than $100,000 are still subject to the old rate structures, which go as high as 20 percent for lots sold for less than $2,000.)

For private sellers (commissions vary slightly for the trade and nonprofit institutions), the new commissions, effective immediately, are as follows: 8 percent (instead of 9 percent) for items sold for $100,000 up to $249,999; 7 percent (instead of 8 percent) for lots fetching up to $499,999; to 5 percent (instead of 6 percent) for items achieving up to $999,999; 4 percent (instead of 5 percent) for items sold between $1 million and $2,499,999; and 2 percent (instead of 4 percent) for items in the $2.5 million to $4,999,999 range. In the $5 million-plus region, sellers’ commissions will now be determined on a case-by-case basis, a sea change from the previous 2 percent commission that has been in operation at both houses since September 1995.

In addition, for the very first time in its history, Christie’s has decided to reward clients who buy at its auctions by lowering their commissions as sellers in proportion with the
amount of premiums they have paid throughout the year as buyers in its salesrooms worldwide. (Up until now, a seller’s buying activity at Christie’s had no bearing on its charges as seller.) “This structure allows us to benefit buyers for the first time,” explains Edward J. Dolman, Christie’s new CEO. “Aggregating their purchases allows us to reduce their commissions when they are selling with us. We believe the new mix of charges allows us the flexibility to do that.” (“If I understand correctly, they’re finally looking at clients as clients and not just as sellers or buyers,” says J. Patrick Cooney, a New York private art consultant and former head of Christie’s Client Services. “It’s a big change in the auction world.”) “Historically, most of our work has been focused on gathering material and servicing the owners of objects that come up for sale,” Dolman continues, “but now the imperative is to really focus on servicing the needs of the buyer. We feel that we came up with the right balance in terms of our business plan, which is really aimed to strike at the top end of the market.”

Declining to comment on how the news of the ongoing antitrust investigation and the conditional amnesty impacted on the firm’s decision to announce the new structure, Dolman says, “I can’t comment on that, but I think you can draw your own conclusions. It was something the new management of the company was quite keen to get out as quickly as possible.” Dolman stresses that the auction house had been weighing such changes for about a year. (In its February 7th press release, Christie’s stated that the announcement “has simply been accelerated by the recent events.”)

Reactions to the changes are mixed. Given that one of the requirements for leniency in the Department of Justice’s corporate leniency policy calls for “the corporation, upon its discovery of the illegal activity being reported, [to take] prompt and effective action to terminate its part in the activity,” several lawyers speculate that Christie’s changing its premiums and commissions—thus making them different from Sotheby’s—came about as a condition of the firm’s amnesty. (Neither Christie’s nor the Department of Justice will comment on this point.)

“I find it strange that Christie’s has raised the buyer’s commission,” says an irked uptown dealer. “It’s an insult that I take personally—that they decide to make the prices higher, not lower. I was thinking of sending something quite valuable to Christie’s for the spring sales, but I’m really concerned now that buyers might be put off by this added premium.” But a New York private dealer asks, “Do you think that the consignor of an important work of art is going to decide which house to give it to based on one or two percentage points? I don’t think so. It’s nice for the press to write about, but that’s not going to make up a seller’s mind as to where to consign.”

The new structure applies to Christie’s main salesroom in New York, London and Hong Kong. Christie’s is expected to announce different rates for its salesroom specializing in lower-end collectibles and works of art, such as London’s South Kensington and Christie’s East in New York. “If we tried to do it all in one statement, it would have been fantastically complex,” says Dolman.

Declining to comment on the changes, a spokesperson for Sotheby’s says that the firm is studying Christie’s announcement. At press time, Sotheby’s five-year-old rate structure remained unchanged.

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