By Stephen P. Sweeting, ASA
As appraisers we routinely discuss market conditions within our appraisal reports. Depending on the type of report, discussions might range from a brief overview of the relevant market in a summary report to a more detailed description and analysis included in a self-contained appraisal document.
In this age of globally-connected marketplaces and international reporting it is not difficult to find generalized overviews of market conditions in sources like Artnet, Artfact, Art and Auction and other on-line and print publications. In the appropriate circumstances, sources like these can provide an excellent foundation for discussing international market conditions within the context of an appraisal report.
Where these excellent sources sometimes fall down, however, is on the coverage of local market conditions. To explore these it is essential to be plugged into what is going on in your own community. Attending auctions, browsing in commercial galleries and shops, and discussions with dealers, auctioneers, collectors, and other appraisers are obvious sources for intelligence of this order.
But it is also important to pay attention to local stories published in print and on the Internet by daily newspapers—some of which might have ramifications on the marketplace. An interesting example of an arts-related business story that could have a real effect upon a local and a regional market currently is being played out in Toronto. After a long-term business relationship Sotheby’s Canada and Ritchies Auctioneers are effectively “divorcing” due to alleged non-payment issues. According to reports in the press, a significant number of consignors had not been paid by Ritchies’ accounts department and Sotheby’s had to step in to rectify the situation.
Over the past eight years, Sotheby’s Canada and Ritchies have been linked through an auction services agreement with the local auctioneer handling the international firm’s bi-annual sales of Important Canadian Art. As one of the “big three” in the Canadian art auction scene, the Sotheby’s-Ritchies combination produced a series of impressive results, including the record-breaking sale of a remarkable Paul Kane canvas in 2002 for a hammer price of CAD $4.6 million and multiple successes in the Canadian Contemporary Art field. Although "Sotheby’s in Association with Ritchies" had settled into a second place position behind another auctioneer (see my July 11, 2009 post, Canada's First "PoMo" Auction House Navigates Soft Art Market), they have remained a potent force in the auction world in Canada. (To Read the Rest of the article click the Read More Link below)
The relationship’s end sent a minor shockwave through the auction-going community here in Toronto and was covered by the local and national press. There is little doubt, however, that Sotheby’s will recover from the temporary setback. After all, Sotheby’s has been in operation in Canada since the late 1960s and the firm has many years of experience in presenting auctions of high-end Canadian art in major hotels with their own staff. The Sotheby’s-Ritchies split simply suggested that the two firms would continue independent of each other as they had prior to 2002. While Sotheby's would continue to focus on the upper-end Canadian art market, Ritchies would be able to continue its role as a general auctioneer active in a variety of market sectors related to fine art and antiques, albeit at a regional rather than a national level.
But an additional angle to the story emerged when resignations and layoffs at Ritchies were reported in the press and circulated by staffers. As well, unconfirmed stories started to emerge that Ritchies’ consignors were scrambling to recover property and that proceeds had not been paid. Rumors of a potential sale of the auction house surfaced and Ritchies’ offices and salesrooms were effectively shut down without any clear indication of how business operations would resume. Observers of the auction trade in Canada are asking whether or not Ritchies is going to end up as yet another victim of the recession.
The Sotheby’s-Ritchies split and the latter house’s teetering position in the Canadian auction market will have little if any affect on global markets. And indeed, I suspect there will be little impact on the top tier of the Canadian art auction market; the three major players – Heffel Fine Art Auction House, Joyner-Waddington’s and Sotheby’s -- will still be in the game. But the lower and mid-levels of the Canadian fine art and antiques auction market could be affected if Ritchies disappears from the scene. And there is little doubt that both the Toronto market and the regional market in southern Ontario will be affected with one fewer general auctioneer.
I believe this interesting Toronto scenario is a good tool for appraisers to consider how a local fine art and antiques market might be affected by reduced competition due to insolvency or other recession-driven circumstances. Below I have listed a number of possibilities that crossed my mind while drafting this article. Of course, all these are speculative without any grounding in evidence – but they are interesting possibilities to consider:
As appraisers we routinely discuss market conditions within our appraisal reports. Depending on the type of report, discussions might range from a brief overview of the relevant market in a summary report to a more detailed description and analysis included in a self-contained appraisal document.
In this age of globally-connected marketplaces and international reporting it is not difficult to find generalized overviews of market conditions in sources like Artnet, Artfact, Art and Auction and other on-line and print publications. In the appropriate circumstances, sources like these can provide an excellent foundation for discussing international market conditions within the context of an appraisal report.
Where these excellent sources sometimes fall down, however, is on the coverage of local market conditions. To explore these it is essential to be plugged into what is going on in your own community. Attending auctions, browsing in commercial galleries and shops, and discussions with dealers, auctioneers, collectors, and other appraisers are obvious sources for intelligence of this order.
But it is also important to pay attention to local stories published in print and on the Internet by daily newspapers—some of which might have ramifications on the marketplace. An interesting example of an arts-related business story that could have a real effect upon a local and a regional market currently is being played out in Toronto. After a long-term business relationship Sotheby’s Canada and Ritchies Auctioneers are effectively “divorcing” due to alleged non-payment issues. According to reports in the press, a significant number of consignors had not been paid by Ritchies’ accounts department and Sotheby’s had to step in to rectify the situation.
Over the past eight years, Sotheby’s Canada and Ritchies have been linked through an auction services agreement with the local auctioneer handling the international firm’s bi-annual sales of Important Canadian Art. As one of the “big three” in the Canadian art auction scene, the Sotheby’s-Ritchies combination produced a series of impressive results, including the record-breaking sale of a remarkable Paul Kane canvas in 2002 for a hammer price of CAD $4.6 million and multiple successes in the Canadian Contemporary Art field. Although "Sotheby’s in Association with Ritchies" had settled into a second place position behind another auctioneer (see my July 11, 2009 post, Canada's First "PoMo" Auction House Navigates Soft Art Market), they have remained a potent force in the auction world in Canada. (To Read the Rest of the article click the Read More Link below)
The relationship’s end sent a minor shockwave through the auction-going community here in Toronto and was covered by the local and national press. There is little doubt, however, that Sotheby’s will recover from the temporary setback. After all, Sotheby’s has been in operation in Canada since the late 1960s and the firm has many years of experience in presenting auctions of high-end Canadian art in major hotels with their own staff. The Sotheby’s-Ritchies split simply suggested that the two firms would continue independent of each other as they had prior to 2002. While Sotheby's would continue to focus on the upper-end Canadian art market, Ritchies would be able to continue its role as a general auctioneer active in a variety of market sectors related to fine art and antiques, albeit at a regional rather than a national level.
But an additional angle to the story emerged when resignations and layoffs at Ritchies were reported in the press and circulated by staffers. As well, unconfirmed stories started to emerge that Ritchies’ consignors were scrambling to recover property and that proceeds had not been paid. Rumors of a potential sale of the auction house surfaced and Ritchies’ offices and salesrooms were effectively shut down without any clear indication of how business operations would resume. Observers of the auction trade in Canada are asking whether or not Ritchies is going to end up as yet another victim of the recession.
The Sotheby’s-Ritchies split and the latter house’s teetering position in the Canadian auction market will have little if any affect on global markets. And indeed, I suspect there will be little impact on the top tier of the Canadian art auction market; the three major players – Heffel Fine Art Auction House, Joyner-Waddington’s and Sotheby’s -- will still be in the game. But the lower and mid-levels of the Canadian fine art and antiques auction market could be affected if Ritchies disappears from the scene. And there is little doubt that both the Toronto market and the regional market in southern Ontario will be affected with one fewer general auctioneer.
I believe this interesting Toronto scenario is a good tool for appraisers to consider how a local fine art and antiques market might be affected by reduced competition due to insolvency or other recession-driven circumstances. Below I have listed a number of possibilities that crossed my mind while drafting this article. Of course, all these are speculative without any grounding in evidence – but they are interesting possibilities to consider:
- Reduced competition in the Toronto auction market could cause commission rates and buyer’s premiums to rise. Increased costs have the potential of making sale at auction less attractive, resulting in fewer properties finding their way to the public market.
- Fewer venues for the sale of low and mid-range properties might stimulate the buying and selling public to look to alternative avenues of sale like eBay, Craigslist, consignment shops, etc.
- With only one rather than two general auctioneers in Toronto, consignors might be forced to be less aggressive in their reserve expectations. This could result in lower prices.
- Competing auctioneers in neighboring cities and regions might find that both consignors and potential buyers seek them out resulting in a de-centering of the marketplace.
- New or lower tier auction businesses with aggressive commission structures and buyer’s premiums might be encouraged to step into the void.
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