"Red flag" for Sotheby's
ARTinvestment.RU   07 мая 2020

Sotheby's in 2020, to repay $120 million of accumulated debt of $467 million (not counting interest)

When, in June 2019 Patrick Gray bought Sotheby's, art-мире and art-рынке raised concerns regarding the preservation of the transparency of such a large institution after its transition into private hands. However, published last week the results of the annual audit report by Deloitte has raised fears of a different kind: it turned out that under certain circumstances the art market may be short and the auction house.

According to figures of the report, for the first time appeared in the material Art Market Monitor, the total debt of the auction house at the time of purchase Gray totaled more than $467 million and, according to available information, to be repaid by parts: $120 million in 2020 and then — at $84 million annually for 4 years.

In the circumstances of the pandemic and crisis, when most of the business of the auction house stopped, the specialists conducting the test, came to the conclusion that I can't give any specific predictions about the future of the company. "In normal times, if you only look at the results of the audit, the situation with the auction house was marked with a red flag (in financial terminology — designation of high threat level of activity of the company. — AI.)", — said one of the experts, art-консультант Todd Levin. But time is unusual and Sotheby's is not an ordinary company.

in Order to cushion the effect produced by the Deloitte publication, a day after the publication of the report of General Director of Sotheby's Charles Stuart sent the customer an email in which he told about the successes and future plans of the company, including nearly $70 million of proceeds received for the 37 online-аукционов conducted from March 2020, and plans for the first trades after the lifting of the quarantine.

And these plans — Grand. Forbes according to, that in June in the catalogs of Sotheby's we will see: "Triptych inspired by the "Oresteia" Aeschylus" (1981) Francis bacon —, its price is expected to reach $60 million, the song "White brushstroke I" by Roy Lichtenstein with an estimate of $20-30 million, the paintings of Clifford still and Mark Rothko from the collection of Harry and Mary Margaret Anderson, estimated at $55 million, and much more.

If all goes well, Sotheby's may be able to get a few dozen million gross sales just for June. In addition, the reduction in staff related to the current suspension of business, according to auditors, will lead to "significant cost savings — more than $100 million compared to the previous year." The measures Sotheby's in the current environment to save the contents of the auction house, are also the reduction of salaries by 20-30 %, the dismissal of about 200 employees, deferred payments of bonuses for personal sales and bonuses of employees and total cost reduction. While Sotheby's still needs to be in the first quarter of 2020 to pay $13 million to $14 million in severance to dismissed at the end of last year to the highest officials.

In the current situation, as the saying goes, a blessing in disguise. But what happens when the market recovers and the number of in-person auctions will increase significantly? Will the Sotheby's setemployees again or recognizes that to Patrick Gray state of the auction house was unreasonably large?

the Material was prepared by Maria Kuznetsova, AI

Sources: forbes.com, news.artnet.com