Christie’s Cuts Costs as Art Market Slows
Date: 15 Jan 2009 | | Views: 3094
LONDON — When works by the British artist Damien Hirst sold for a record $127 million on the same day in September that Lehman Brothers filed for bankruptcy protection, it seemed the art market might escape the economic crisis.
But a string of disappointing auctions over the last four months showed that the art market had no such immunity, prompting Christie’s International, the large auction house, to start a cost-reduction effort on Monday that will include job cuts.
“We have begun to implement a companywide reorganization, which includes significant staff reductions, not renewing many consultants’ contracts and the continuation of other cost-reduction initiatives, that will ensure we remain competitive and profitable in 2009,” Christie’s said in a statement on Monday, without saying how many positions might be cut or giving any further details.
In the last months, auction prices dropped together with financial markets, ending a decade-long boom in the art market that was buoyed by record bonuses paid to financial executives.
Lehman plans to sell about $8 million in artwork to help pay its creditors, but if a recent auction by the bank’s former chief executive and his wife is anything to go by, it might be a challenge to attract buyers as many still wait for bigger bargains. Richard S. Fuld Jr. and his wife, Kathy, sold 16 drawings for $13.5 million through Christie’s in November in New York, below the $15 million low estimate.
Christie’s reorganization is the first at the London-based auction house since 2001, when the end of the dot.com boom eroded investors’ appetite for art auctions.
Its rival, Sotheby’s, said in December that it planned to reduce costs by $7 million in 2009 by cutting jobs and salaries, citing an “uncertain and challenging macroeconomic environment.”
Initial predictions by some art investors last year that oil-rich Arab countries, Russia, India and China would continue to spend on art, even as the United States and much of Western Europe stumbled into a recession, proved too optimistic.
A two-day sale of paintings and jewels in Dubai by Christie’s in October yielded only about half of what the auction house expected. A sharp drop in the price of oil since its peak in July made the region, identified by Christie’s as a growth market, less open to investing in art.
At an auction in New York in November, almost a third of the pieces remained unsold, including a self-portrait by Francis Bacon.
Christie’s, which is preparing a sale of artworks from the collection of the late Yves Saint Laurent and his partner, Pierre Berge, in Paris, is owned by François Pinault, the French billionaire who also owns Gucci.
The auction house was founded in 1766 by James Christie, whose friendship with craftsmen and artists turned his house into a gathering place for art collectors, dealers and high society. Now, Christie’s has 85 offices in 43 countries and employs about 2,100.