The headlines after the Sotheby’s $½ billion Taubman auction guarantee disaster was their new acquisition of the Art Agency, Partners (AAP).  The firm is lead by a group of high powered art advisors who claim a leadership role in the high end of the fine arts market.  Sotheby’s, is doubling downing on this segment of the market for their future growth.  Of course there must not be any possibility of a bust in this inflated world.

What this new step by the new CEO, Tad Smith indicates to me is that their reliance on controlling their traditional auction methods is coming under undue pressure for profits and playing the dealer role is now the only viable option to growth.  The crap shoot of guarantees and other manipulative methods is becoming more challenging to profits and the public’s perception of their integrity.  

However, the ambiguous nature of these firms is highlighted by a comment by Mr. Smith that the acquisition gives them “new growth opportunities in advisory services and reinforcing the client-first culture in all what we do.”  So who is their client and who are they working for, a buyer or seller; you can’t work for both without a conflict of interest, and an auctioneer by definition should be working for a seller.  How do you reconcile this?  Would the new AAP division advise a purchase at Christie’s, or possibly from a private dealer that stocks a certain artist that a collector is looking to acquire?  Is that a client-first thought; I find that hard to believe.

Art Advising is fraught with conflict of interest and the professionals who work in this field are savvy, aggressive, and recognize opportunities as they arise.  How they can operate within the auction process is dubious by any measure.   Independent and unbiased perspectives of any consultant will always better serve the private individual seeking such services.  Advising under the control of Sotheby’s is like asking a financial consultant who works for Chase Bank to recommend an investment fund outside one of its own financial products.  Good luck!

However, like their successful track record shows, they do have the PR and image game down pat.  You can always trust Sotheby’s or Christie’s because they are who they are, corporate, experienced, and nobody else can complete with them.  So now we see that the future of companies like Sotheby’s is morphing into a consulting business and not the traditional role that auctioneers played as passive market makers.  Stay tune for future conflicts of interest, deceptions, and of course fraud in the operations of this industry.