Sotheby's, the auction house that sold Edvard Munch's "The Scream" for a record-breaking $120 million, reported a $7.6% drop in profits last year, according to Bloomberg News. For a company that netted $71.5 million in a single year in 2011, the decrease in revenue is significant -- enough to cause a shake-up in the way the auction house collects fees.
Sotheby's is reportedly increasing its buyers' fees in response. This comes after a similar announcement from Christies, and represents the first time in five years that the auction houses have raised their premiums.
So what exactly accounts for the drop in profits? William F. Ruprecht, chairman and chief executive officer of the company, stated in a press conference that the decrease was affected in part by the "unprecedented level of single-owner sale events we had in 2011 which we were not so lucky to have in 2012.” The Wall Street Journal echoes this sentiment, reporting that Sotheby's did struggle to win consignments in a competitive auction environment last year, selling only 35 works priced above $10 million (which is still a high figure, we know), compared to Christie's 49 big money-makers.
The WSJ proposed another possible explanation: Asia's slowing economy. Sotheby's sold $593 million worth of Chinese artwork in 2012, which amounted to a 39% drop in that category since 2011. In the early days of 2012, the art market in China was thought to be the world's largest, but estimates are now showing major declines in the country's two major auction houses, as well as profit declines in Sotheby's and Christie's outposts in Hong Kong. So what do you think, readers? Do the declining numbers cause you to raise an eyebrow?
The Biggest Art Auction Sales of 2012
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