Art Market News
Mystery Surrounds The Sale Of Jeff Koons $16.5M Pink Panther
It has been rumoured that Sotheby's has had its Lawyers sending litigation threats to one of the oldest online publications for writing a leading passage in an article. The report concerns the sale of Jeff Koons' Pink Panther sculpture from his 1988 Banality series which took place in New York on 10 May. The auctioneers allegedly asked the publication to remove a passage which they claimed was unsubstantiated. The website had described the lot's sale as "sold for form's sake. This was altered under pressure, presumably from Sotheby's legal department to read, "as if for form's sake" A point that has been defiantly maintained by them. So not to beat around the bush, the publication is clearly suggesting that Koons' Pink Panther was unsold. Sotheby's and their hoards of lawyers don't seem to be able to do anything about the sentiment of the passage, a clear indication that there is no smoke without fire and The Pink Panther was a passed lot, as implied in the article.
The Sotheby's sale was reported to have generated a total of $111,115 million ($128 premium incl.). If the Koons sculpture is deducted at approx. $16.5 million the sale would amount to $96 million almost pushing Sotheby's NY's Spring season sale of Contemporary Art onto the level of new comers Phillips de Pury's results for a similar spring Contemporary sale. Phillips would then be within a 10% result margin, in what is the most lucrative area of the art market.
We understand that Sotheby's allegedly knocked Pinky down to Patti Wong, their own Asian employee. The Pink Panther had an eyebrow raising unrealistic estimate of $20m - $30m and with the work sold to China further transparency will be impossible. If this sounds irregular just read the small print in any Sotheby's,Christie's or Phillips' catalogue. This grey area is known as,The irrevocable bidder.
Under the “irrevocable bid” arrangement, a person prepared to submit a bid for an undisclosed amount ie a sealed bid and If no one bids any higher, then the buyer gets the work and pays the buyer’s premium. If the work sells for more, then the “irrevocable bidder” gets a cut of what is called the “upside”, the difference between the final price and the secret price he or she agreed to bid. In most cases the irrevocable bidder secures the work at the price agreed in advance, so in effect, the work had been pre-sold. The only unknown is if anyone else bids. The auction houses have been cutting back on financing guarantees themselves and instead are passing them onto other clients directly, in the form of “third party guarantees”. This is when an outside person carries the risk and benefits financially if the work of art sells for more than the expected price.’The bidder will be compensated based on the final hammer price in the event he or she is not the successful bidder. If the irrevocable bidder is the successful bidder, they will be required to pay the full Buyer’s Premium and will not be otherwise compensated. If the irrevocable bid is not secured until after the printing of the auction catalogue, a pre-lot announcement will be made indicating that there is an irrevocable bid on the lot. All of the main auction houses use this newish method. It operates with an emphasis on grey areas maintaining self interest to optimise premiums from both the buyer and seller. This newest form of manipulation is like a secret reserve when the seller, requires just a willing buyer. Ordinary bidders don’t normally have the advantage of inside information to secure a bid before they see a catalogue, never mind not knowing that the irrevocable bid is somehow above the reserve. Whether or not the irrevocable bidder knows what that reserve is, remains to be seen, certainly not officially. The major auction houses seem to practice the method of compensating the unsuccessful irrevocable bidders. This whole process is like the dealer “ring” in reverse, where a “ring” member buys the item and gets compensated by an amount over the final price as hammered out in the “ring”. I believe the government came down quite hard on dealers for acting in this manner as a form of auction price manipulation. How this is allowed and written into The big auction house's terms and conditions is mind boggling? Finally, as an affront to the irrevocable bidder, they start the bidding below what amounts to their guaranteed offer. Bidders are being opened up to the potential of sham biding not only by the reserve, but cajoled to bid over that price point, to a second undisclosed price point. Can you imagine a public property auction operating this way? A disclosed offer above the seller’s minimum acceptable price is where the bidding should start. The auction industry is currently self-regulated and with the Billions of dollars generated it needs a strong international regulating body to oversee the industry, much in the way the stock market operates.
Postscript: Christie’s Contemporary evening sale featured 11 irrevocable bids, Phillips de Pury had 10, whereas Sotheby’s had only two. These deals spare the work the ignominy of being “bought in”, but they can create misleading benchmark prices that tend to flout ordinary rules of supply and demand. Note: Some of this information was taken from: Newel's Antiques Blog, Artnet and information provided by Erwin Rehn