Sotheby’s first to show pain of fines

CHRISTIE’S emerged with record worldwide sales from a year in which both major auction houses incurred potentially crippling fines, but Sotheby’s saw significant losses of market share both in Europe and the USA during 2000.

In 1999 the rival auctioneers each reported sales of $2.3 billion (£1.46bn), but in 2000 Christie’s went on to increase their sales to $2.32bn (£1.559bn), while Sotheby’s saw theirs fall by nearly 16 per cent to $1.936bn (£1.229bn).

As a public company Sotheby’s are also obliged to publish profit and loss accounts which showed them making a net loss of $189.7m (£127m) in 2000.

The costs which pushed Sotheby’s into the red included an exceptional charge of $203m (£136) for settlement of the anti-trust class action which applies to both houses, and $12.6m (£8.45m) for “restructuring” the business in New York and London.

The closing and merging of low profit departments and the concentration of staff at Sotheby’s newly extended headquarters in New York is expected to produce substantial savings, but a further outlay of $7m (£4.7m) in 2001 is already allocated to developing the “new Olympia middlemarket saleroom” in London.

A large proportion of the fines faced by Sotheby’s is to be met personally by Sotheby’s former chairman Alfred Taubman. By going first to the authorities with evidence of the collusion, Christie’s have escaped criminal prosecution and much of the public scandal surrounding the resignation of Taubman and his CEO Diana Brooks, who now faces a jail sentence.

In the absence of detailed accounts it is not clear how far owner François Pinault is prepared to support Christie’s, but there are signs that they will not have an easy ride and face tough cost-controls in 2001.

Sotheby’s.com achieved sales of $52.9m (£35.5m) in its first year, but costs rose to £56m (£37.5m). Sotheby’s hope to save $25m (£16.8m) next year by restructuring the internet business and moving it to their main New York offices.