Privatisation of Sotheby’s : What does it mean for the art world ?

Privatisation of Sotheby’s : What does it mean for the art world ?

NaHyun Kate Park

The businessman Patrick Drahi announced that he was buying the ancestral auction house Sotheby’s for 3.7 billion dollars (3.3 billion euros). The billionaire hopes for a return on investment, which is conceivable since the art market is growing, driven by flux of customers from Asia and Middle East. The two biggest auction houses on the planet are now in French men’s hands since Christie’s belongs to François Pinault. Beyond the quest of profit, this acquisition allows the businessman to make himself known to the greatest fortunes in the world.

Patrick Drahi, who once wanted to be a teacher himself, has an eclectic background. His internship at the end of first year at the SNCF (Société nationale des chemins de fer français "French National Railway Company”) convinced him that he does not have the soul of a cilvil servant, but of an entrepreneur. Then Drahi entered Philips, where he began his journey to the heights. Assigned to the head of the division of satellite television systems, he remained there for two years. Under his leadership, the turnover rose from ten million to one billion francs.

The extreme rivalry between Christie’s - the world leader in the sector, with 7 billion dollars in sales in 2018, up 6 percent over the previous year - and Sotheby’s - number two - should remain as strong as ever. Mr. Drahi has already assured that he will not change the teams or strategy of the auction house, which recorded, in 2018, a 16 percent increase in sales, to 7.35 billion dollars, in particular by over-the-counter transactions, good performances in Asia and strong growth in online auctions. On the other hand, the financial efforts to attract new customers resulted in a slashing of margins and a 10 percent drop in earnings to 108.6 million US dollars.

If Sotheby’s headquarters are now American, Sotheby’s cultivates its London origins. In 1744, Samuel Baker had created the ancestor of the auction house, just steps from Trafalgar Square in London. His first sale was “several hundred rare and valuable books of all branches of belles-lettres.“ It is still there that were auctioned, in 19th century, books that Napoleon had carried in his exile to Saint Helena. The final prize was the French Emperor’s walking stick, decorated with gold and tortoiseshell.

The question now people ask is : how far will the fight between Christie's and Sotheby's go? Unlike Christie’s, Sotheby’s has been publicly traded, and thus restricted by strict financial reporting regulations which could have been the major disturbance factor. Experts say that Sotheby’s will have more flexible environment, as explained by Tad Smith, who has been the president and chief executive officer of Sotheby’s since 2015. Considerable change came to Sotheby’s for the past few years. Tad Smith, also a man coming from the world of media, entertainment and television, his initial mission was to shake up the firm after it had been humiliated by Dan Loeb. Mr. Drahi coming from much more eclectic background, has certainly made himself an influential figure in the art market.

People now want to see Drahi standing opposite François Pinault, the another French billionaire. “Every successful businessman who gets involved with the auction houses thinks that he can reinvent the wheel,” says Wendy Goldsmith, the art consultant. “Mr. Drahi may indeed find that he can’t reinvent the wheel, but he will have a lot of fun trying.” Whatever Mr. Drahi does, the fierce competition of the world’s two most recognised auction houses await.

Photo credit : Wikipedia

Books and articles consulted :

https://www.bloomberg.com/news/articles/2019-06-23/debt-king-drahi-s-bid-for-sotheby-s-puts-the-art-world-in-play

https://www.art-critique.com/en/2019/06/who-is-patrick-drahi-sothebys-new-billionaire-owner/

ADAM, Georgina, « Dark Side of the Boom : The Excesses of the Art Market in the 21st Century », Lund Humphries, 2017