Issue #52  1/13/2003
Trying to Solve Its Woes, Sotheby's Sells NYC Headquarters and Hikes Its Premium Again

In an obvious effort to aid its serious financial problems, Sotheby's has agreed to sell its NYC headquarters for $175 million to RFR Holding, LLC. The Company will lease back the building, widely regarded as a white elephant and a drain on Sotheby's, from RFR Holding for a period of up to 40 years, which includes renewals. The building had been the brainchild of disgraced former Chairman A. Alfred Taubman.

Sotheby's president, William Ruprecht says that Sotheby's pursued the sale "as a means of financing to provide long-term liquidity for our business. It will also allow Sotheby's to pay down $100 million in short-term debt as well as antitrust fines, which strengthens our balance sheet." Ruprecht added: "Sotheby's expects to report a gain on the sale of the building in the range of $25 million, which will be amortized over the initial term of the lease as required by the relevant accounting rules."

I think if you do the math, you will realize how much "long-term liquidity" Sotheby's will get from this sale. This is still a company in need of a deep-pocketed buyer who can get them through this recession that our President keeps telling us is over.

In other action to shore up the embattled company and further bad news for auction buyers, Ruprecht also hiked the buyer's premium once again, effective January 10 (just in time for Sotheby's new photo auction in February). The hike is effective for all sales in New York, London and Geneva.

The buyer's premium will be 20% of the hammer price on the first $100,000/£70,000/SF170,000 and 12% on any amount over those levels. Previously, the buyer's premium was 19.5% on hammer prices up to $100,000/£70,000/SF170,000 and 10% on everything above those levels.

We will await Christie's and Phillips' non-collusive response.

Just as an aside, Sotheby's and Christie's can't seem to find my records for their court-directed settlement. Odd that, especially considering that they sent me papers noting my activity in the first place. Seems like the management of the two major houses want to continue to play hardball with all their customers. That's not exactly helping to build future goodwill.