The Back Room
The Back Room: Back to the Future
This week, the case for Sotheby’s to go public again, Judy Chicago x Kanye West, and another 30-year-old talent goes stratospheric in Asia.
Every Friday, Artnet News Pro members get exclusive access to the Back Room, our lively recap funneling only the week’s must-know intel into a nimble read you’ll actually enjoy.
This week in the Back Room: the case for Sotheby’s to go public (again), Judy Chicago x Kanye West, another thirtysomething talent goes stratospheric in Asia, and much more—all in a 7-minute read (2,004 words).
Top of the Market
The House on a Hill
Happy new year, art pros! While many of us were stressing over COVID tests and last-minute gifts, Katya served up a bravura column on what is already shaping up to be one of the defining stories of 2022: the prospect that Sotheby’s, slimmed down and powered up by moves made under owner Patrick “Cost Killer” Drahi, could go public again soon.
To refresh, Drahi acquired Sotheby’s in 2019 for $3.7 billion, a price widely considered rich at the time. Two Decembers later, the house announced that it racked up an all-time-high $7.3 billion in auction and private sales in 2021… and Bloomberg News reported the same day that Drahi was exploring relisting the house on a public stock exchange.
A Sotheby’s spokesperson said the company doesn’t “comment on rumors or speculation,” and employees were told not to worry about the story. Still, as Katya detailed, there are plenty of reasons the move would make sense.
Why Go Public (Again) Now?
- Drahi has proven willing to shift his other companies from public to private whenever a switch is financially advantageous. “There have been whispers about a possible IPO from day one under Drahi,” Katya wrote, “even though the new owner told employees that the acquisition was about his legacy and that one day it would be run by his children.” (His son Nathan was named managing director of Sotheby’s Asia in 2021.)
- Other areas of Drahi’s portfolio could use a cash infusion. He appears to be looking to beef up his majority stake in the British telecom giant B.T., and shares in its stateside counterpart Altice USA are down about 56 percent since last January, as cable customers convert to streaming services in droves.
- The market timing is right for IPOs in general. Last year saw 2,388 IPOs generate $453 billion in worldwide investment, per Ernst & Young research—a historic amount of activity in the space. Institutional investors are flush with cash and eager to deploy it before the Fed raises interest rates later this year. All of which means IPO issuers are “able to get premium valuations,” according to Lisbeth Barron, CEO of Barron International Group.
- Drahi could get the best of both worlds by relisting only a minority share of Sotheby’s. The math is complicated a bit by current minority stakeholder Alex Klabin, who, sources said, invested about $100 million in the house last year. But since companies in an IPO typically only offer shares equivalent to a 15–25 percent stake, Drahi could retain control while also fattening his pockets.
How Did Drahi Reduce Costs?
All told, Deloitte analysts projected year-over-year cost savings “in excess of $100 million” during the first year of the Drahi regime. He pursued that goal by…
- Embracing lockdown-era budgeting. Travel, entertainment, publishing, and marketing spending nose-dived in the social-distancing era, with Sotheby’s switch to digital-only catalogues being just one example.
- Wielding furloughs, layoffs, and pay cuts for rank-and-file staff. The company furloughed 12 percent of its workforce in April 2020, additionally laying off scores of people in the U.K. and Europe. The new leadership also trimmed salaries and delayed bonuses and equity payouts.
- Finding lower-priced replacements for executive rainmakers, especially those with big egos. Under new CEO Charles Stewart, “most of the existing C-suite was gone before lockdowns even went into effect,” Katya wrote. Insiders also said that the senior executives left were offered reduced salaries in exchange for equity down the line, as at tech start-ups.
How Else Has Drahi Added Value?
- New Revenue Streams. In 2021, Sotheby’s implemented a new “overhead premium” equaling 1 percent of the hammer price. (Christie’s and Phillips don’t have an equivalent fee.) New tech-focused hires and investments also built on ones made by Drahi’s predecessors, enabling the house to amp up its online auctions, capitalize on new sales categories (see: $1.5 million Nike sneakers, NFTs), and accept payment in cryptocurrency.
- New Payment Terms. Sotheby’s used to pay sellers in 35 days. Drahi’s team changed it to 35 business days, then 45 days. Meanwhile, buyers still have to pay by day 30—creating 15 extra days for Sotheby’s to leverage sales proceeds before settling up.
- New Property. Drahi has proven eager to add real-estate assets that can appreciate over time and throw off more cash ASAP via mortgages and refinancing. Drahi OK’d the acquisition of a new building for Sotheby’s France only meters away from its former (rented) home in December 2020. He then bought the building housing Sotheby’s London for £230 million… only to lease it back to the company, while also securing a £450 million loan and a £100 million dividend, per the Telegraph.
- The guarantee Sotheby’s offered for the Macklowe collection is rumored to be $100 million more than Christie’s offered.
- Insiders say Drahi himself was the winner of Sotheby’s top lot of 2020: Triptych Inspired by the Oresteia of Aeschylus (1981) by Francis Bacon, which fetched $84.6 million.
The Bottom Line
Combined with the onset of the pandemic, Drahi’s decision to take Sotheby’s private has allowed him to aggressively slash costs, restructure, and reprioritize without having to please Wall Street. The house’s record results and the broader financial climate now position him to reap outsize rewards.
Only Drahi knows how much of an IPO windfall he would funnel back into Sotheby’s versus his other assets. But he’s too shrewd a businessman to believe this golden opportunity will last forever.
In the latest Wet Paint, we learned that all-time-great Judy Chicago was hired as a creative consultant to Kanye West for his recent benefit concert for Larry Hoover, the long-imprisoned (and long-repentant) former leader of the (city of) Chicago-based gang the Gangster Disciples. As part of her advisory contributions, Chicago (the artist) designed a new cloudscape piece for the rappers’ 90 minute-set, which was streamed on Amazon and Twitch.
Here’s what else made a mark around the industry since the last Back Room of 2021…
- The following upcoming fairs have been postponed due to Omicron: the London Art Fair will move from January to April 20–24; Salon du Dessin (Paris) will move from March to May 18–23 at the Palais Brongniart; Drawing Now (also in Paris) will move from March to May 19–22; the Outsider Art Fair (NYC) will move from February to March 3–6 at the Metropolitan Pavilion; the Winter Show (NYC) will move from its January 21 opening to new dates TBD; and the India Art Fair (New Delhi) will move from February to April 28–May 1.
- The following upcoming fairs still plan to open as scheduled: the L.A. Art Show will debut January 19 at the Los Angeles Convention Center; FOG Design and Art Fair (San Francisco) will open January 21 at the Fort Mason Center for Art and Culture; and Felix (L.A.), fresh off releasing its exhibitor list, will proceed with its latest edition beginning February 17 at the Hollywood Roosevelt Hotel. (No news is presumably good news for Frieze Los Angeles, which is set to debut the same day as Felix.)
- RX France, the parent company of FIAC and Paris Photo, accused the Grand Palais of perpetrating a “hostile eviction attempt” by issuing an open call for competing events at the venue in November, when both FIAC and Paris Photo are due to open at the Grand Palais Éphémère. Winners of the open call will be announced Monday. (Le Monde | Artnet News)
- Sotheby’s appointed Shanghai-based Jean Qian as its managing director for China. Quian, who takes up the role immediately, most recently oversaw a team of 150 people across Asia at online luxury fashion platform Farfetch. (Press release)
- Christie’s posted $7.1 billion in combined auction and private sales in 2021, its highest total in five years… but still about $200 million less than rival Sotheby’s. (Artnet News)
- French auction house Artcurial closed 2021 with €169 million ($191 million) in total sales, with highlights including a $3.3 million Mikhaïl Larionov painting and a $2.9 million result for Salvador Dalí’s Machine à coudre avec parapluies dans un paysage surréaliste (1941). (Press release)
- Beeple will open a solo show with Jack Hanley Gallery on a date TBD this March, though there are no signs yet that Hanley will represent him in an ongoing way. (Vulture)
- David Zwirner and his wife, Monica, have submitted plans to refurbish 17 cottages and a large house on Lake Montauk to turn them into a subsidized “artist’s retreat.” (East Hampton Star)
- Photographer Liz Nielsen is now represented by Miles McEnery, making her the first shutterbug on the gallery’s roster. (Wet Paint)
- Iwona Blazwick will step down as director of the Whitechapel Gallery this April after 20 years in the role. She will continue to work as an independent curator, including with the Whitechapel “into 2023.” (Press release)
- The Los Angeles County Museum of Art has acquired 60 works in two years to amp up the collection’s proportion of Black artists, via a combination of cash gifts and donations from patrons. The haul includes an Amy Sherald painting from Willow Bay and Robert Iger, and a Kehinde Wiley from sports agent Rich Paul. (The Art Newspaper)
- Kelly Taxter, whose tenure as director of the Parrish Art Museum in the Hamptons began in March 2021, departed after less than a year on the job. No reason was given publicly; Parrish board president Mary E. Frank told ARTnews it was “the right thing to do at this point in time.” (ARTnews)
NFTs and More
- OpenSea raised another $300 million in venture funding at a valuation of $13.3 billion. (Artnet News)
Top Five, Dead or Alive
Through November, the hottest artist by value at auction in 2021 was once again Pablo Picasso, who amassed nearly $658 million in gavel-driven sales worldwide.
The silver and bronze medalists were born much closer to the present day: Jean-Michel Basquiat ran up $414 million in sales, while his occasional collaborator Andy Warhol raked in $342 million.
But the top-selling quintet varied dramatically in terms of the number of works traded: Picasso’s total came from 2,622 sold lots, and Warhol’s from 1,107. Basquiat sold 80 works, while fourth-place Claude Monet ($305 million) and fifth-place Vincent van Gogh ($235 million) sold just 23 works and 12 works, respectively.
“I been hacked.
All my apes gone.
This just sold
please help me”
—Todd Kramer, cofounder of Ross + Kramer gallery, alerting the world in a since-deleted tweet that 15 NFTs (including multiple entries in the Bored Ape Yacht Club series) worth an estimated $2.2 million had been stolen from his crypto wallet and resold just before New Year’s Eve. OpenSea soon froze the fraudulent transactions. (Artnet News)
Artwork of the Week
Roby Dwi Antono’s Goddess Pramani
Estimate: $5,000 to $7,000
Sale Price: $150,000
Sold at: Christie’s “First Open,” December 15
There are many reasons that the most recent edition of Christie’s “First Open: Postwar and Contemporary Art” online sale achieved $6 million, the highest total in the history of the offering. But an unexpected propellant was this painting by Roby Dwi Antono, a not-quite 31-year-old artist based in Indonesia. A bidding war launched Goddess Pramani (2021) more than 21 times above its high estimate to $150,000 (including fees).
Christie’s specialist Michael Baptist attributed the quantum leap to “the technical skill, as well as the surreal imagery, of this particular painting.” But it’s fair to say that bidders saw even more than prowess in the piece, which the seller acquired just four years earlier from Srisasanti Syndicate gallery in the Indonesian city of Yogyakarta.
To date, 18 works by Dwi Antono have appeared at auction per the Artnet Price Database. His record stands at just under $307,000, for Muram Temeram (2013), a painting nearly triple the size of Goddess Pramani that soared to almost 10 times its high estimate at a November 2021 joint sale in Hong Kong from Phillips and Poly Auction. Another work reached $108,000 at Taiwanese house Ravenel last month.
Yet every other Dwi Antono lot sold so far has gone for less than $14,000. Regardless of the reasons, it’s time to start bringing those estimates up…
Additional reporting and writing by Naomi Rea.
Thanks for joining us in the Back Room. See you next Friday.
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