Clifford Steele 1949-A-No. 1 Sotheby's New York, 09.11.2011 Estimate: 25-35 million dollars Result: 61.6825 million dollars Source: economist.com

Clifford Steele 1947-Y-No. 2 Sotheby's New York, 09.11.2011 Estimate: 15-20 million dollars Result: 31.4425 million dollars Source: economist.com

It is not clear, the author writes The Economist, as the art market today can not hold fast to the position where a huge number of barely on the brink of a deep economic recession. At the prestigious evening auctions in New York, held earlier this month, the three largest auction houses - Christie's, Sotheby's and Phillips de Pury - earned an impressive amount of contemporary art in 633 million dollars. It was established many records, it remains unsold lots are scarce. According to trade evident that rich people, no matter what, no shortage of free money and still consider art a worthy object for investment.

However, the author notes the publication , auction houses in the form of market support and trying to reduce its volatility, and they do so with the help of skillful tricks, called "guarantee of a third party" or "irrevocable bid" through which to sell the work at the minimum price before the auction. This bet becomes a "reserve" (reserve price), less a work can not be sold. Warranty gives the seller is exhibiting work at auction, confidence, and potential customers like that, besides these there are other contenders for the product. However, the course and content of the negotiations on the terms of such financing agreements are kept secret and is complicated by the conflicting interests of different players. Many dealers, for example, David Nash (David Nash), one of the partners in the company of Mitchell-Innes & Nash believe that such deals distort the free market.

auction houses began to practice guarantees from the beginning of 1970 - ies, and the purpose of introducing this practice was to attract collectors - sellers of works of art. This lasted until the fall of 2008 when, following the collapse of the market from Christie's and Sotheby's had to pay at least $ 200 million for unsold work for which they gave the sellers a guarantee in the amount of their minimum price. Since then, the major auction houses prefer to have the financial risks assumed the third party.

first guarantee, which ensures financial third party, apparently, was organized by the auction house in November 1999 . Then the company found a surety Sotheby's, which provided 40,000,000th warranty on the work of Pablo Picasso (Pablo Picasso) «Seated Woman in a Garden." The picture was put up for auction dealer Seydenberg Eleanor (Eleanore Saidenberg), representing many years of Picasso in America, and her husband Daniel. From 2000 to the present day auction houses work with third-party financial guarantees that are often have large funds often specialize in certain works of art dealers like Bill Akvavelly (Bill Acquavella), Bob Mnuchina (Bob Mnuchin), David Nahmada (David Nahmad) and Adam Lindemann (Adam Lindemann). There are also 30-40 collectors, who often act as guarantors of this, for example, the publishing magnate Si Newhouse (Si Newhouse), founder of SAC Capital, Steve Cohen (Steve Cohen), owner of Taiwan's Yageo Corporation Computer Corporation Pierre Cheng (Pierre Chen), and and the royal family of Qatar.

general public know very little about how agreements are reached to provide such guarantees. In September 2008, Sotheby's began to publish in their catalogs special characters that allow consumers to distinguish between the lots, guaranteed by the auction house, from those who provide a guarantee to a third party. At Christie's followed the example of colleagues and competitors a month later, but neither the identity of the guarantor, nor the size of them introduced by the auction houses guarantee amount is not disclosed.

The number of lots (percent) evening sale of the leading auction houses, which provided certain guarantees (blue marked the third-party guarantees, blue - full or partial guarantees auction houses) Source : economist.com

lot of controversy is the practice of paying auction houses guarantors so-called "fee for the guarantee." Under the rules of Christie's guarantor receives a reward, regardless of whether he goes to work or to another buyer, but at Sotheby's In contrast, pay compensation only if the guarantor of interrupting the work of another buyer. The stakes in this game are high: in this way guarantee can earn a lot to several million dollars. The differences between the way build their financial policies in this regard Sotheby's and Christie's, are very important and influence the ratio of the guarantors to the auction houses and their preferences when choosing which company is better deal.

So, rumor has it that an art consultant, Guy Bennett (Guy Bennett), a trustee of the royal family of Qatar, has provided on behalf of their patrons guarantee of a third party on top lots of the recent New York auction of contemporary art Christie's and Sotheby's. The same Bennett 8 November evening auctions Christie's was the author of the winning bid in 38, 5 million dollars for a painting by Roy Lichtenstein in 1961, "I see the whole room! .. There is no one." usual auction house commission would raise the final price of Liechtenstein to 43.2 million dollars - a sum it officially unveiled the company. However, the influential guarantors often agree with the auction house to see equally 30%of the amount paid in excess of the size of guarantees, as well as to pay only 50%of the commission. There is evidence that the warranty on the work of Lichtenstein was $ 35 million. If the terms of the deal negotiated by Bennett were really like described, then he paid for the actual operation of the entire 40.3 million dollars.

On the back catalogs of Christie's so black and white and says, "remuneration is determined by taking into account the final cost" work, but few really understand what that means. Of course, other contenders for the product, in contrast to the guarantor, do not take financial risks, and less influential even offered a similar option. a collector admits: "The game is not on an equal that's why I like to participate in third-party guarantees of Christie's. If I get the job, I actually get a discount on it, as if there is not called ».

Company Sotheby's opposed the practice of such , in the words of journalist The Economist, opaque, sophisticated transactions, hinting at a style of its rival, Christie's. Bill Ruprecht (Bill Ruprecht), head of Sotheby's, said: "I can assure customers that they are fighting for the lots in a fair, transparent, equitable game and can not provide such guarantees in some other way. "However, it appears that for some rules of the game are" more equal "than others.

Thus, dealers Manhattan Madison Avenue before the auction Sotheby's whispered that the royal family of Qatar, ostensibly anonymously supplied guarantees three paintings by Clifford Still (Clyfford Still), and that the amount of the guarantee was $ 50 million (put together the lower estimeyty works). Well-informed insiders later said that an Arab the royal family bought the first and third lots Still for 61.7 and 19.7 million respectively, haggling over the phone through the Vice President Lisa Dennison (Lisa Dennison). The second canvas Still, the price of which soared to 28 million (31.4 to taking into account the Commission) has got to end up another call to the customer. Auction house Sotheby's pays a fee for the guarantee the guarantor only if he do not get a work which he had provided a guarantee. Thus, if the Qatari royal family is really guaranteed all three lots on Based on an agreement on the division in half with the auction house 30%of the amount paid in excess of the guarantee (which is supposed to be the lower estimate of the work), and the payment of 50%commission, the fee for the guarantee to the picture that was not purchased by them, should been formed at least 3.65 million dollars. And this is, you see, a kind of good "discount" the purchase of two other paintings.

So in fact the conditions of the auction game, the proposed Sotheby's, is hardly equal. The fact that the guarantor (or his representative) was to play by different rules. In this regard, Mark Porter (Marc Porter), head of auction house Christie's in North and South America, drew attention to the "ethical risk-taking incentive system "guarantees rewarding guarantor only if the product becomes someone else.

However, there are other reasons besides compensation to encourage dealers and collectors to act as guarantors. This may wish to purchase a particular job or having an extensive collection of works by some of the artist and the consequent interest in maintaining its high position in the market. In addition, act as a guarantor - so, as one sponsor of a third party, "to build a special relationship" with the auction house, and it allows access to sensitive information - for example, about the size of the reserve price for a particular job.

good auctions - it plays, just mimic the free market processes. According to tradition it is believed that Need for the successful sale of at least two candidates for a job. But now it happens that guarantee results in a "private transaction in the eyes of the public," when the guarantor is the only contender for the job. And when the highest prices for a particular product is achieved only by the artist similar arrangements behind the scenes taking place face-to-one, a reasonable question arises: Are these prices at least some relevance to the real situation on the market?

certainly loud sales - an important element of the auction "show", but a segment of contemporary art and without the lack of transparency. "Methods of auction business must be at today's high-value works of art - think Michael Plummer (Michael Plummer) and Jeff Rebin (Jeff Rabin) from the company Artvest Partners, which provides consulting services in investment in the arts. - It is necessary to insist on a higher level of transparency and ethics, because at stake is a lot of money. "However, it is not just about money: the market would be much more honest and open, if the auction house released a real Prices of products, as well as the names of the guarantors of a third party.

Prepared by Mary Estrova, AI

Source : economist.com , artinvestment.ru

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