In an art market that has been defined by the uncertainty of world events and declining inventory, it was reported earlier today that Sotheby’s announced fourth quarter earnings of $65.5 million, which is an increase over that same period in the prior year. The auction house had a loss of $11.2 million in the fourth quarter of 2015. Sotheby’s adjusted net income for 2016 was $99.6 million, which is down from $143.1 million in 2015.
Sotheby’s has been working to counter this softening in the art market by diversifying its business. In particular, Sotheby’s recently acquired art authentication firm, Orion Analytical, in addition to acquiring Amy Cappellazzo’s art advisory business last year. The auction house further acquired Moses Art Indices, which monitor the auction business, and hired Christy MacLear, the chief executive officer of the Robert Rauschenberg Foundation, in an effort to expand its advisory services for both living artists and artists’ estates and foundations.
Further, although there is a widespread reluctance on the part of auction houses to give away profits through guarantees, Sotheby’s president and chief executive officer, Tad Smith, indicated earlier today that the auction house would use such guarantees when necessary. With the expertise of Sotheby’s team, Mr. Smith affirmed that “we can confidently offer a guarantee to the seller and hedge it on the other side. Used prudently, guarantees are good for consignors, collectors, the market overall, and investors.”
It will be interesting to see whether the other auction houses will follow suit in using such guarantees in future art auction sales this year.