Followers of the art market in recent years are well aquainted with the usual parade of records and unthinkably huge numbers when yearly results are announced. Well, Christie’s has just announced its sales totals for 2011, and they do indeed involve a parade of records and some unthinkably huge numbers. Business, it would seem, is booming: With some $5.7 million in total sales reported, this was a very good year for Christie’s. 

What to make of all this? What’s going on beneath all those numbers? Below, we look at some of the finer grained details of Christie’s 2011 performance:   

Total sales for 2011: £3.6 billion ($5.7 million)

According to the auction house, the total is a record in pounds (but not in dollars because of conversion rates) — and it’s up a truly massive £300 million (nine percent in pounds, 14 percent in dollars) from last year’s £3.3 billion sum. The company is based in London, so it reports sales in British pounds sterling. Because it’s not a public company it isn’t required to report revenue or profit, the twice-yearly reported sales totals are the some of the only financials to analyze.  

Most expensive lot of the year: Roy Lichtenstein’s “I Can See the Whole Room!… And There’s Nobody in It!” (1961) at $43.2 million

Pop art, as ever, is hot. Our own Judd Tully covered the November contemporary sale in New York and noted that the lot was scooped up by New York-based dealer Guy Bennett, who took it home for a client at a price near the high end of its $35-45 million estimate. It helped Christie’s to a $773 million total for contemporary art, which continues its run as the best-performing category of the year.

Most expensive Impressionist and modern lot of the year: Pablo Picasso’s “Femme Assise, Robe Bleue” (1939) at £18 million ($28 million)

Its Nazi-looted history helped this portrait of Picasso’s mistress Dora Maar sell for several million pounds above its £4-8 million estimate in London last June. However, the Imp-mod category as a whole declined 28 percent to £548.6 million.

Asian art sales: £552.9 million

Meanwhile, the total for the Asian art category is up 13 percent from 2010, and now trumps Impressionist and modern art for sales. Something to think about. 

Growth in Hong Kong: 11 percent

That would seem to be quite respectable — but it’s also a notable leveling off from the epic 114 percent growth it reported in 2010 in Asia.

The Elizabeth Taylor Sale: $157 million with 100 percent of 1,778 lots sold.

The Taylor sale was one was one of the undoubted media events of the year — and the hype paid off for the house, clearly. The $157 million total presumably doesn’t even include any revenue from all those people buying tickets and standing around the block to see Liz’s baubles when the auction house toured them around the world. As for the sale itself, probably enough has been said.

Private sales totals: £502 million

The house’s incursion into the private market continues, and the half-a-billion total for Christie’s in this department amounted to a 44 percent increase from 2010. It’s a boon for Christie’s, clearly — but for journalists, the increasing attachment of auction houses to this kind of transaction also means that trying to make sense of the art market becomes more difficult, for those not privy to the back-room deals, that is.

Originally posted on Above the Estimate.

Christie’s took a different approach than usual for its Old Masters sale on Wednesday, breaking out works by French artists into their own “Art of France” sale immediately following the venerable sale and following that up with a wine pairing — an additional auction of French vintages, that is. The morning sale brought in $34.3 million, the afternoon auction added another $10 million to the total, and the wine topped things off with another $1.2 million. The buy-in rates are telling, however: while a respectable 42 of 59 lots sold at the first Old master sale (71 percent by lot and 70 percent by value), only slightly over half of the ”Art of France” sale found buyers, with 57 percent sold by lot and only 52 percent sold by value. The wine portion, in which 96 percent of lots sold, showed that buyers aren’t willing to pay the top prices they once were for the best Bordeaux. The sell-through rate by value was 91 percent.

The painting expected to bring the highest price of the day, a tondo of the Virgin Mary and baby Jesus by the 15th-century Dutch painter Hans Memling, failed to sell (est. $6-8 million). As a result, the top lot was Giovanni Battista Tiepolo‘s “The Arrival of Henry III at the Villa Contarini,” which set a record for the artist at auction when it sold for $5.9 million (est. $4-6 million). The painting depicts the arrival of the newly crowned king of France to the Italian country estate in 1574, ascending the steps of the villa as the Contarini family and other village onlookers greet him. The work, commissioned in 1744, was originally just a sketch for a larger fresco that Tiepolo did on the wall of Federico Contarini‘s villa. However, when the 19th-century owners of the villa, Edouard André and Nélie Jacquemart, tried to move the fresco from Italy to their townhouse in Paris, it was badly damaged. Now the oil sketch stands as the more complete work.

A portrait by Frans Hals greatly outperformed its $700,000-1 million estimate, possibly because its longtime home was over the fireplace in Elizabeth Taylor‘s Bel Air mansion and was the only Old Master in the film star’s estate. After a long bidding war, the hammer finally came down at $2.1 million. The painting had previously been attributed to a follower of Hals, but in 2011 was upgraded by scholars and conservators to an autograph work by the Dutch master himself.

The National Gallery of Art in Washington added a Thomas de Keyser painting to its collection at the auction, courtesy of the Lee and Juliet Folger Fund. The museum’s bidder only came away with the lot after pushing the price up three times above the $300,000-500,000 estimate. “Portrait of a Gentleman, Bust-Length, in a Brown Doublet and Ruff,” an octagonal work on copper by one of Rembrandt‘s best-known rivals in Amsterdam, hammered down just below $1.5 million. Though the exact date of the painting is unknown, the stiff, intricate collar on the sitter suggests it is from sometime between 1615-1635. The work’s most recent owner was Gerard d’Aquin, who made a name for himself as the art buyer for William Randolph Hearst.

Later, at the “Art of France” sale, the highest-estimated lot — Jean Honoré Fragonard ‘s “The Good Mother” (est. $5-7 million) — was bought in. The highest total came from another lot by Fragonard, a pair of large paintings entitled “Le Jour (Day)” and “La Nuit (Night)” (probably late 18th century). The two decorative canvases show a group of putti frolicking in the clouds during the day and laying down to sleep at night. After 50 years in a private collection without being shown to the public, the paintings were scooped up by an American collector for $3.7 million, just topping the auction house’s $2-3 million estimate. The Fragonard diptych was the only lot in the French auction to top the $1 million mark. However, a trompe-l’oeil painting by Louis-Léopard Boilly of a cat peeking out of the back of an old, tattered canvas fooled Christie’s appraisers ­­— it was only estimated to sell for $150,000-250,000, but brought in $842,500.

The day’s finale was a classy affair of mostly wine professionals sipping on Krug and munching on caviar as they lifted their paddles for the modestly priced lots at the special wines of France auction. The top-estimated Bordeaux mostly went to Asian buyers who were bidding online. A lot consisting of a dozen bottles of 1982 Château Pétrus — one of the best vintages of Bordeaux in the last 30 years — sold for $58,000 (est. $42,000-65,000). Three different lots tied for the second-highest priced, all selling for $46,000 — a dozen bottles of 2000 Pétrus, a dozen bottles of 1982 Château Lafite-Rothschild (no longer the favored child among Bordeaux, it seems), and an assortment of 12 bottles of Burgundy from the Domaine de la Romanée-Conti region.

When a group of artists including Chuck Close and Laddie John Dill filed a class action lawsuit against Christie’s and Sotheby’s for violating the California Resale Royalty Act, they probably knew they’d be in for a lengthy legal battle. But now the auction houses are looking to end the fight early. On Thursday, Christie’s and Sotheby’s filed a joint resolution to dismiss the artists’ suit, which was filed in U.S. District Court in California. The law, they argue, is “unconstitutional, and therefore unenforceable.”

The resale act mandates that artists are entitled to five percent of the sale price of any artwork resold in California or by a California resident for over $1,000. As it stands now, California is the only state in the union to have such a law, and the act has been inconsistently enforced since it was passed in 1976 — not only by auction houses but also by galleries who deal on the secondary market. In the original suit, filed in October of last year, Close, Dill, the estate of sculptor Robert Graham, and the Sam Francis Foundation accused the houses of concealing the identities of California sellers so they did not have to pay the resale royalty fee.

In the motion to dismiss, the auction houses argue that the law is unconstitutional because it contradicts the Commerce Clause, which says that no state law should seek to regulate economic activity outside that state. To provide some backup arguments, they also allege that the resale law is preempted by the national Copyright Act, which “entitles a lawful owner of a copyrighted work to resell that work without restriction,” the Art Law Blog points out. California’s resale royalty law has been challenged in court twice before, according to the book “Art Law: The Guide for Collectors, Investors, Dealers & Artists,” and in both cases the law was upheld. Nevertheless, the book’s authors Ralph Lerner and Judith Bresler have said that “some question remains as to the constitutionality” of the law.  

This relatively obscure legal issue has made headlines several times in recent months. A bill recently proposed in Congress seeks to make a resale royalty into national law, similar to the “droit de suite” laws that currently exist in Europe. California artist Mark Grotjahn is also suing collector Dean Valentine under California’s Resale Royalty Act, arguing that he refused to give him the five percent fee to which he was entitled when the collector flipped his work.

Spring is art fair season in New York, and this year it will be more crowded — and more competitive — than ever. Earlier today, news broke that the New Art Dealers Alliance (NADA), the gallery collective that organizes an annual fair in Miami during Art Basel, is launching a new event in New York this May. The event is set to run the same month as Frieze New York, the first-annual stateside installment of the popular British art fair. Two other art fairs, Pulse and Red Dot, have also reshuffled their dates to coincide with Frieze. So what does this mean for New York’s art fair season? Well, for one thing, there will be two of them.  

March and May are quickly turning into rival encampents for two sides that are trying to lay claim to the New York fair market. In March, collectors can take in the Armory Show, the Art Dealers Association of America show (ADAA), Independent, Scope, Volta, and Moving Image. In May, there’s the aforementioned cluster of Frieze, Pulse, Red Dot, and, now, NADA — not to mention the major contemporary and Impressionist art sales at Christie’s and Sotheby’s. 

The international spring art calendar offers even more competition. Five weeks after the Armory show ends, Art Cologne, kicking off its debut partnership with NADA, opens in Germany, Then, fewer than ten days after Frieze ends on May 7, Art HK — which was recently purchased by Art Basel, and is poised to be a hotter ticket than ever — begins in Hong Kong. Less than a month after that, then, the grand dame of art fairs, Art Basel, opens in Switzerland. 

Is our collective appetite for art fairs large enough to sustain two rival groupings in New York, let alone countless others worldwide? Fair organizers are betting on it. George Billis, the director of the Red Dot fair network, kept his hotel fair, Art Now, scheduled for March to coincide with the Armory, but moved his flagship Red Dot fair to May. While he said logistics played a large role in the decision — staff found itself racing to prepare for Red Dot New York after completing Red Dot Miami in December — he also noted that, “typically, even without any New York fair, it seems to me that most collectors are in the city in May for the auctions, or one reason or another.”

Cornell DeWitt, the director of Pulse, reiterated Billis’ logistical concerns as a reason for the shift. “We didn’t make the decision because we believe the Armory is circling the drain or anything — we think they are a great fair,” he said. Still, he noted, “Frieze is the shiny new bauble in town that everyone is excited about.” Pulse plans to stick with the May date for at least a couple years: “It’s going to take more than a year for there to be a determination if March or May ends up on top,” he said. “What’s actually happening is not that we’re a new paradigm, but that the paradigm is shifting and we don’t know where it’s going yet.”

One development is certain: in New York, galleries now have to either pick allegiances or participate in both the March and May fairs. Some, like Luhring Augustine, David Zwirner, Regen Projects, and Lehmann Maupin, have signed on to both ADAA in March and Frieze in May (as has Nicole Klagsbrun, who, to make matters even more complicated, is also a NADA member). Hotel, Gavin Brown, Bortolami Gallery and Elizabeth Dee — as well as Jack Hanley, the treasurer of NADA — have also signed on to both Independent and Frieze.

Still other NADA members, like James Fuentes, could have been anchors for the group’s New York fair had they not already signed on to exhibit with Frieze. As of press time, NADA has not yet announced any details about its fair, but it bears noting that despite the loss of a handful of dealers to Frieze, several prominent members — Rachel Uffner, CANADA, Untitled, and Leo Koenig  among them — exhibited with the Armory Show last year and are said to be likely to jump ship. All this is made more uncertain, however, by the fact that the Armory Show has not released its exhibitor list — despite the fact that the fair is less than two months away.  

Christie’s ended 2011 with a Hollywood-style bang after its $157 million Elizabeth Taylor estate sale, which included the most valuable sale of jewelry in auction history. However, last year was not without its hiccups for the auction house as it struggled with weakening demand for wine in Hong Kong, increasing competition in Asia, and a flop of an Impressionist and modern auction in New York. After the Liz Taylor dust settled, ARTINFO caught up with one of the figures behind the sale — Christie’s international jewelry specialist and the president of Christie’s Hong Kong François Curiel — to discuss the importance of provenance, the advantages of low estimates, and how the end of 2011 will affect 2012 and beyond.

Let’s begin with the Liz Taylor sale. You wrote in your email to ARTINFO that the sale demonstrated the significance of provenance in jewelry, where the history of the object has often been of less importance than in visual art sales. Do you think that means provenance will be more important for jewelry sales going forward, or was this auction be an outlier?

It has always existed. One can always sell jewels with a royal provenance — or if you remember when we sold the jewelry that belonged to Ellen Barkin three or four years ago, it commanded a premium over the intrinsic value of the jewels. But, in the case of Elizabeth Taylor, it was really exemplified. The premium was larger than for many other collections. If you look at the very old catalogues from Christie’s when I started working in the 1970s, whenever a piece of jewelry came from a private client, we used to put a note in the catalogue that it came from “property of a lady” or “property of a lady of title.” That sent a message to potential buyers that it came from a distinguished provenance. So it [the importance of provenance] has it has always existed, but not to the level that we have seen at the Elizabeth Talyor sale.

Does it allow you to market jewelry more easily if you can lean on the provenance?

Yes. Whenever we have jewels somewhere in an exhibition, there is always a lot of interest. Jewels attract passionate people. But had the collection of Elizabeth Taylor not belonged to Elizabeth Taylor, we certainly wouldn’t have sold 25,000 tickets at $30 a piece for people to come to the exhibition, and we certainly would not have had 39,000 people around the world look at the exhibition. Her name drew the crowd.

There is a rumor that BVLGARI bought many of its own vintage jewelry back at the auction. Is it common for jewelry companies to collect their own pieces?

I can’t comment about BVLGARI because they did not make any press releases or announcements, but I remember doing some auctions several years ago, and Van Cleef and Arpels used to — in a very proud manner — buy their invisible-set jewelry, which is a very rare technique that Van Cleef and Arpels had created in the ’60s. Cartier always buys some of their vintage pieces when they come up for auction. Some very rare pieces end up in the Cartier Museum.

Prices at jewelry auctions — and not just auctions tagged with celebrity names — seem to have increased tremendously in the last few years. Is there a sense that gems, like art, are becoming more popular as an alternative investment or is there something else going on?

It’s part of a general movement where, at the moment, works of art and jewelry attract a lot of customers. It’s no longer the best-kept secret. Financial markets are not very attractive at the moment. If you give money to your bank they give you one percent a year, if that. The fact that the art market, over the past five to ten years, performed extremely well — not only in jewelry, but in Impressionist and modern art as well as post-war and contemporary — also gives new buyers courage to enter the market. I think it is mostly the lack of confidence in the monetary system, which pushes people to works of art and jewelry.

There are quite interesting statistics [about the jewelry market]. The Elizabeth Taylor Diamond was purchased by Richard Burton for her for $300,000. That, corrected for inflation, comes to $1.95 million. We sold it for $8.8 million. There are many examples like that, and we see the publicity that the auction houses now give to their reserves. I think it gives a lot of confidence to new collectors to enter a market that ten years ago was probably the best-kept secret, or reserved for a small group of aficionados.

In January the droit de suite royalty law goes in effect in London for artists deceased up to 70 years, and last week was a bill proposed in the U.S. to impose a tax of 7 percent on the resale of contemporary artworks. Do you see this benefitting Hong Kong’s auction market? If taxes go up enough, will Western collectors start consigning in Hong Kong?

Not at the moment. I have seen this several times in my life. When there was a droit de suite in France and many other European countries, as well as in England for dead artists, some people thought that the market would move to Switzerland where there was no droit de suite — but it didn’t. The big markets for Impressionist and modern pictures and for contemporary pictures are London and New York, and I can’t imagine that contemporary pictures will be sold in Hong Kong soon because of droit de suite. I think at the moment, the markets will stay where they are. Look at the case right now — London has droit de suite and New York does not, and the London market has not disappeared. It’s just another tax — it makes things more expensive and not everyone is happy about it — but I don’t think that the market is going to shift to Asia, at least not in the immediate future.

While prices are still high, 2011 wasn’t quite as spectacular as 2010 in the Chinese auction market. China’s overall economic growth is slowing a bit. The demand for fine wine has leveled off a bit. How does this affect Christie’s in Asia?

At the moment it doesn’t affect it as much. We just released our figures for 2011. We’re 25 percent up over 2010. Our sales in the fall were very strong. So far, it hasn’t affected the art market in Asia. So far, we have seen the same phenomenon in Asia that we have seen in Europe: buyers going for works of art and jewelry. Our biggest jewelry auction of the group this year was in Hong Kong for $80 million — New York was $60 million and Geneva was $50 million. There used to be three big centers for jewel auctions: Geneva, New York, and Hong Kong. Now, Hong Kong is way ahead of Geneva and New York because of the presence of Chinese buyers. There are three or four Chinese artists in the list of top ten living artists at the moment. This is just this year. So, on the contrary, I think the Asian market is getting stronger and stronger, and is not affected by the slowdown of the economy.

Do you see that continuing into the next year?

When you sent me your email today you didn’t tell me to take out my crystal ball, so I left it in the office… but, we are cautiously optimistic. At the moment, there are no signs that the market will slow down, but we are all extremely careful putting together our sales for next year. We certainly want what we have seen at the end of the year — for quality items there are always buyers. Perhaps next year we should have smaller sales with quality items, and also very attractive estimates.

The Elizabeth Taylor sale worked so well not just because  it had quality items, but also the becasue if the fact that the estimates were very conservative. The $8.8 million ring was estimated at $2-3 million. Everyone knew it was going to bring more, so I asked, “Why did you put such low estimates?” They were there because of the estate — it’s a complicated story. But in the end, the conservative estimates very often make for the success of a sale. Had we estimated the Peregrina pearl at $8-12 million, I am not sure that it would have sold for $11.8 million. But if we estimate it at $4-5 million or $3-5 million, maybe it will get to a very high price.

ARTINFO had a conversation with the director of China Guardian a few months ago and he mentioned that he is studying Christie’s and Sotheby’s to try to bring his business model, specifically authentication methods and client services, up to your level. Mainland China seems pretty separate as an auction market for the moment, but do you see the big Chinese auction houses competing in Hong Kong at some point in the future?

Absolutely. Poly has opened an office in New York. They definitely want to connect to Chinese American sellers. So far we haven’t seen them much in Hong Kong in terms of planning presale exhibitions, but they come to Hong Kong to buy works of art. It’s a new force on which we will have to count. Before the market was just the two major auction houses, but now there are two very strong competitors with Poly and Guardian. It’s amazing what you say that they are studying us, because I think they are doing pretty well, and their model is right. They don’t do things too differently from us. What do they do differently?

What he said was that their authentication methods are not up to the same standards as yours.

It’s certain that Christie’s and our competitors have a group of experts who have been here for a long time. When an expert in Hong Kong sees a Chinese work of art, it is also vetted by six or seven other specialists at Christie’s — in New York, in Paris, in Amsterdam — and they have regular conference calls where they look at each other’s property and they discuss it among themselves. It is nice because you can play ping pong with a colleague rather than being isolated. I suppose if you work for a small auction house you can’t talk to too many people. That is one of our strengths. Every department works as a team and works with specialists around the world. That network is difficult to replicate because we have been around since 1766. The system has been around for a while. If you take the five major departments, Impressionist and modern, post-war and contemporary, jewelry, Asian art, and Old Masters, there are between 25 and 30 specialists in each of the departments. They don’t always all meet all the time, but there are always six or seven of them looking at every work of art that is sold at Christie’s, with different points of view from different countries.

Does Christie’s have any other expansion plans in Asia?

When I joined Christie’s Hong Kong in January 2010, we were 80 colleagues in Beijing, Hong Kong, and Shanghai. Now, about two years later, we are 140. Nearly two years later, we have added specialists, we have added client-services colleagues, we have added support staff for all the departments. We are also having more exhibitions in Shanghai and Beijing of the works that are being sold not only in Hong Kong, but all around the globe. We have had Chinese concierges head up customer service in London and New York so that the Chinese would find someone who speaks their language when they go there. We have done a lot of work to have our Web site in Chinese. My job when I went there was not to China-ize Christie’s, but to make it easier for clients there to work with us. 

Imagine you are an artist, and you sell a painting to someone for $10,000. Ten years later, your popularity has spiked and that someone sells your painting at auction for $1 million. The price appreciation is great for the collector, but under current U.S. law, it’s not so great for the artist — he or she receives none of the proceeds from the resale. Now two Democratic congressmen, House representative Jerry Nadler of New York’s 8th District and Senator Herb Kohl from Wisconsin, are trying to change that.

The pair introduced a bill in Congress last week that would guarantee an artists’ right to resale royalties — or droit de suite, to use the French term — for visual artwork bought on the secondary market. This law already exists in Europe, where it will expand even further in 2012, and it’s already (a much-flouted) state law in California. But certain artists and their advocates would like to see it go federal in the U.S. One major difference between the new proposed legislation and the other models is that the Nadler-Kohl bill would restrict royalties to works bought at public auctions through houses that bring in revenue over $25 million per year — only big fish like Christie’s, Sotheby’s, Phillips de Pury, Heritage, and Bonhams, in other words. Secondary-market sales through galleries, dealers, and online auction sites like ebay are all exempt, as are auction house private sales. Those restrictions aside, the bill proposes an exorbitantly expensive royalty — a full seven percent tax — that is far higher than its European counterpart, and is likely to forever change the secondary-market landscape in the U.S. if passed.

On the surface, the Nadler-Kohl bill seems rational — it’s a populist response to the corporate behemoths that rule the art world and give collectors in the 1 percent a platform on which to throw millions of dollars back and forth between one another. But the problem is that it goes too far and is likely to backfire. The tax is substantial enough to cause the auction houses to change their business model rather than pay it, and in the end it would serve to either line the pockets of the establishment while punishing struggling artists, or push even more of the auction market to Hong Kong. ARTINFO studied the text of the proposed legislation and pulled out five things you need to know about it and its consequences.

IT WILL DRIVE THE MARKET TO MORE PRIVATE SALES

The exclusion of private sellers from the bill is an attempt to circumvent one of the major arguments against droit de suite in Europe, which is that it disproportionately affects smaller galleries and dealers because they are ill-equipped to shoulder the administrative costs of paying the royalties and tracking artists down — unlike the major auction houses. The problem is, the biggest sales done in the art world often happen in the back room. The rumored top three art sales in history (“rumored” because private sales don’t need to be disclosed) are Jackson Pollock‘s “No. 5, 1948,” which was sold privately by music executive David Geffen through Sotheby’s for $140 million to an anonymous buyer in 2006; Willem de Kooning‘s “Woman III,” which was sold (again) by Geffen to hedge fund giant Steve Cohen through megadealer Larry Gagosian for $137.5 million in 2006; and Gustav Klimt‘s “Portrait of Adele Bloch-Bauer I,” which was sold privately through Christie’s by Maria Altmann to cosmetics magnate Ronald Lauder for $135 million in 2006.

While the thrill of the packed auction room certainly boosts hammer prices for Christie’s and Sotheby’s, it’s clear that they can also pull in impressive sums privately. A massive tax is likely to push even more big-ticket items behind the curtain of private sales, or into the hands of secretive dealers like Gagosian who have an interest in keeping quiet about who’s buying, who’s selling, and what prices are like at the top end of the market. 

IT’S NOT A SLIDING SCALE

One of the craziest things about this bill is that it institutes a flat tax on the auction houses — the rate is seven percent whether a work sells for $10,000 or $10 million. In Europe, droit de suite is determined by a sliding scale, much like buyer’s premiums at auction houses. For work sold for more than €1,000 and less than €50,000 the royalty is four percent, but as the price goes higher the percentage charged for the royalty goes down. At the low end, sellers of works that reach prices of more than €500,000 ($651,000) are only taxed .25 percent. Assuming prices are always in dollars to avoid exchange rate confusion, the auction house that, say, sold a painting for $1 million in London or Paris would be responsible for a few thousand dollars in European droit de suite taxes. Under this proposed legislation, if Christie’s or Sotheby’s in New York sold a painting for the same amount, the auction house would be responsible for $70,000 in taxes.

A difference of more than $50,000 in tax for selling a $1 million work of art in New York versus London is far more than enough to defray the cost of shipping the work to Europe for auction. As a result, New York’s long-held dominance in the contemporary art auction market could be imperilled, with much of the inventory being shipped to London, or even better, Hong Kong, to be sold at their respective contemporary auctions.

COLLECTION AGENCIES WIN, ARTISTS LOSE

The essence of the bill is this: after an auction, the house has 90 days to pay a collection agency the royalty. That agency can then take up to 18 percent off the top for its own operating expenses. Half of what’s left goes into an account that will be used to fund various art nonprofits. Then, and only then, does the artist get a cut — now down below 3 percent of the purchase price. For the minimum price of $10,000, the artist would get $287. 

The problem with this is that collectors buying in the primary market are going to expect to have to pay the full seven percent royalty if they resell a work. If they expect to get seven percent less back if they resell the work, they probably won’t be willing to pay as high a price in the primary market, meaning that the artist would lose out on the first transaction. The vast majority of artists never see their work get resold at auction, so they only lose out on the first purchase of their work.

THE CAVEAT

The one caveat to all of this analysis is that it relies on basic economic theory, which has one major flaw: it assumes rationality. If you have ever been to a flashy contemporary art sale at one of the major auction houses, rational is the last word you would use to describe it. As art advisor Todd Levin told ARTINFO in regards to the European droit de suite question, “I get that the economists are looking at this strictly as a dollar-and-cents thing, but I don’t think that the economists get how the collectors think.”

Wednesday evening marked the end of December’s Old Master and British painting auctions in London, where the three major sales at Christie’s, Sotheby’s, and Bonhams brought in over £50 million ($78 million) — revealing a robust yet selective market with high demand for work by 17th-century Dutch and Flemish artists. On the whole, there were high buy-in rates, but the works that did sell often went for prices that far surpassed estimates.

The sales began on Tuesday evening at Christie’s, where the auction house brought in £24.2 million ($37.6 million) — at the high end of its £18.2-26.5 million pre-sale estimate. A 1798-9 Francisco José de Goya y Lucientes  portrait of Phillip II‘s court embroiderer, failed to sell on an estimate of £4-6 million ($6.1-9.2 million), but otherwise the sale was a tremendous success. Sell-through rates were a respectable 72 percent by lot and 79 percent by value, with 73 percent of the works that sold going above-estimate.

The top lot ended up being Pieter Bruegel the Younger‘s “The Battle Between Carnival and Lent.” Bidding blasted through the £3.5-4.5 million estimate for the painting — one of several studies that the younger Bruegel did of his father’s 1559 masterpiece of the same name — to hammer down at £6.9 million ($10.7 million), setting a record for the artist. Rounding out the top three were Willem van de Velde II‘s maritime painting “Dutch Men-o’-War and Other Shipping in a Calm,” which sold for £5.9 million ($9.2 million), tripling its £1.5-2.5 million estimate, and a recently rediscovered 1646 portrait by Govaert Flinck, a student of Rembrandt. “An Old Man at a Casement” found a buyer at £2.3 million ($3.6 million), well ahead of its £700,000-1 million estimate. Both sale prices set records for the artists at auction.

At Bonhams the next afternoon there was a mix of wildly overperforming prices — and an abundance of unsold work. While only 32 of the 62 offered lots found buyers, making for a sell-through rate of 52 percent by lot, the sell-through rate by value was a remarkable 92 percent. The star of the afternoon was a Diego Rodriguez de Silva y Velazquez portrait that the auction house stumbled upon last year during the sale of little-known 19th-century British painter Matthew Shepperson‘s collection. It was analyzed extensively by Peter Cherry — an authority on the Spanish master — and found to be authentic. The painting fetched just under £3 million ($4.7 million), at the high end of its £2-3 million estimate ($3.2-4.8 million).

In a more unexpected turn of events, Adriaen Coorte‘s 1693-95 still life “Three Peaches on a Stone Ledge With a Painted Lady Butterfly” also passed the £2 million ($3.2 million) mark. The work, estimated to sell for £300,000-500,000, set an auction record for the Dutch artist, who specialized in small, simple still lifes that often contained just a few objects.

At the £20.1 million ($31.4 million) sale at Sotheby’s Wednesday evening (est. £17.6–24.2 million, $27.5-37.9 million) 12 of 38 lots were passed up, making for a 68 percent sell-through rate by lot. However, the rate by value was a lofty 90 percent — meaning that many of the paintings that did sell achieved prices higher than expected.

As predicted, the highest price paid at the auction was £6.8 million ($10.6 million) for a pair of group portraits known as “conversation pieces” by German-born artist Johann Zoffany. Zoffany was good friends with the British actor David Garrick, and these two paintings depicted him and his family at their estate near Hampton Court, just outside of London. The pre-sale estimate on the duo was £6-8 million.

Just below the top lot was a 1660 Dutch interior painting by Jan Steen — the artist’s masterpiece, according to Sotheby’s — which depicts several people playing cards. The £4.9 million ($7.7 million) total set a record for the artist at auction, though it fell at the low end of the £4.5-6 million ($7-9.4 million) estimate.