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• Issue #270
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By Alex Novak

The Breuer Building may add to Sotheby's woes because the New York City Landmarks Preservation Commission is considering it as both an individual and interior landmark building. Photo by Ajay Suresh from New York, NY, USA, CC BY http://bit.ly/4gxqKmM via Wikimedia Commons

It hasn't been the kindest year to the art and collectibles market in general, unlike the currently booming stock market. Whether you are a gallery, private dealer or auction company, this might be one of the worst markets seen in quite awhile.

It was reported at the end of August that Sotheby's told lenders that its earnings before interest, taxes, depreciation and amortization (Ebitda) plunged 88% to just $18.1 million in the first half of 2024. Even after it stripped out further costs--such as severance pay and legal settlements--from these earnings, Sotheby's adjusted Ebitda fell 60% to $67.4 million.

It also booked $558.5 millions in revenue in the first six months of 2024, a 22% fall on the $712.3 million recorded in the same period last year, according to an earnings report shared with its lenders.

In July, figures from London-based analysts ArtTactic showed that worldwide sales at Sotheby's, Christie's and Phillips slumped 27% in the first half of 2024. New York's marquee sales in November were down an estimated 50% on the year before. Full auction results for the second half and full year are not expected to bring positive news to the auction houses.

At Sotheby's hundreds of staffers in NYC (100 over the last few weeks), London (about 50 in May), Hong Kong and Paris have been shown the door recently or earlier this year, or were converted into "consultants", while the company announced a $1 billion investment from Abu Dhabi's ADQ sovereign wealth fund less than two weeks ago.

Art Newspaper reports that a cost reduction was promised as part of Sotheby's deal with Abu Dhabi, where the auction house's chief executive Charles F. Stewart was visiting on business when news of the further job losses broke early last week.

Sotheby's and its primary owner Patrick Drahi are facing financial difficulties. Sotheby's itself had reportedly $1.8 billion in long-term debt before the ADQ investment; while reportedly Drahi's companies as a whole currently have about $60 billion in debt, with some loans requiring payment in 2027. Sotheby's total liabilities stood at $4.3 billion at the end of June.

Adding some further (and unnecessary) change to Sotheby's is its announcement that not only is it reversing its very recent lowering of buyer's premiums (it had lowered the base rate from 25 to 20% of the hammer price), but now it is actually increasing the original percentage to 27%!

And just last month, Sotheby's finalized its purchase of the Breuer building on Madison Avenue in New York, the former home of the Whitney Museum of American Art, for $100 million. Documents filed with the NYC Office of the City Register show the Breuer building was acquired by 945 Madison Avenue LLC through a $35 million mortgage from Barclays Bank and Sotheby’s signed a 15-year lease, set to expire on October 31, 2039. The LLC was formed in Delaware on September 4th and subsequently filed as in NY as a "foreign limited-liability company six days later.

But nothing is simple in NYC. The New York City Landmarks Preservation Commission on December 10th voted to calendar the Breuer Building for consideration as both an individual and interior landmark, casting uncertainty on Sotheby's renovation plans, in particular for the interior.

Meanwhile, Ed Dolman, who has been CEO and executive chairman at Phillips since January, is already stepping down. Art lawyer Martin Wilson is stepping up, the company announced.

The shift at Phillips comes less than a year after the auction house announced a change in leadership, bringing back Dolman as its CEO following the resignation of Stephen Brooks after just two years on the job. Dolman had previously been CEO from 2014 to 2021.

Amanda Lo Iacono, who was appointed as deputy CEO at the time, is also leaving. Dolman will stay in an advisory role through May to assist with transition, according to Phillips.

Since 2019, Wilson has been on Phillips’s executive board as chief legal officer, overseeing the firm’s legal and compliance matters. He is the founder of the Art Lawyers Association and holds law degrees from Sorbonne and King’s College, London. He is also the author of the textbook "Art Law and the Business of Art" (2019).

Novak has over 48 years experience in the photography-collecting arena. He is a long-time member and formerly board member of the Daguerreian Society, and, when it was still functioning, he was a member of the American Photographic Historical Society (APHS). He organized the 2016 19th-century Photography Show and Conference for the Daguerreian Society. He is also a long-time member of the Association of International Photography Art Dealers, or AIPAD. Novak has been a member of the board of the nonprofit Photo Review, which publishes both the Photo Review and the Photograph Collector, and is currently on the Photo Review's advisory board. He was a founding member of the Getty Museum Photography Council. He is author of French 19th-Century Master Photographers: Life into Art.

Novak has had photography articles and columns published in several newspapers, the American Photographic Historical Society newsletter, the Photograph Collector and the Daguerreian Society newsletter. He writes and publishes the E-Photo Newsletter, the largest circulation newsletter in the field. Novak is also president and owner of Contemporary Works/Vintage Works, a private photography dealer, which sells by appointment and has sold at exhibit shows, such as AIPAD New York and Miami, Art Chicago, Classic Photography LA, Photo LA, Paris Photo, The 19th-century Photography Show, Art Miami, etc.