The frenzy begins in days. Between Wednesday, Nov. 4, and Friday, Nov. 13, Christie's, Sotheby's and Phillips will auction hundreds of Impressionist, Modern and contemporary artworks worth — they hope — nearly $2.8 billion, each one in a matter of a minute or two, sometimes in seconds. Dozens of people labor for months to put together and pull off these twice-a-year bellwether auctions.
"The buzz in the sale room is a high point," said Patti Wong, chairwoman of Sotheby's Asia, "but a lot goes on before the auction that leads to the evening."
 Jussi Pylkannen |
"Auctions," said Todd Levin, a veteran art adviser, "are purely staged events, choreographed in advance."
The auction houses, whose booming sales last year climbed to a new height of more than $14 billion, freely admit to many theatrical tactics. Within a sale, artworks are not positioned in a sequence that honors art history or chronology, as they used to be, but rather to spark excitement. The perfect Lot 1 will double or triple its presale estimate, igniting high spirits in the salesroom that encourage enthusiastic bidding.
The global president of Christie's, Jussi Pylkkanen, whose photograph landed in the news media around the world in May when he sold Picasso's "Women of Algiers (Version O)" for a record $179.4 million, is a showman who uses direct eye contact and expectant, outstretched arms to coax higher bids from dithering bidders. He likens his preparation to that of stage actors: "They get in the zone, and I'm by myself, getting in the zone, getting loose."
Meanwhile, although demand for tickets to the evening sales is growing — many registered bidders must stand or are relegated to "overflow" rooms — most actual buyers aren't in the salesroom: They bid by telephone or use a proxy bidder (also often on the phone). At least 80 percent of those well-dressed people who break into applause when a price soars are spectators, the auction houses say.
"It's not the auction itself in terms of my buying something that I go for," said Martin Margulies, a real estate developer who has collected for 30 years. "It's that you see collectors from all over the world, and you get the undercurrent of what's happening in the art world beyond the auction."
That's understandable, as even experienced collectors have trouble discerning what's actually happening at an auction — and not just because of the prearranged minimum-price guarantees. At the auction, guarantors may well be bidding on the very works they've already underwritten, sending the price higher than the prearranged floor. And dealers — usually sight unseen, on the phone — may be bidding on works by artists they represent to protect their prices. "It's a very opaque financial environment," Mr. Levin said.
Here's a look at how it all happens.
Six months elapse between the big sales in New York each May and November, but the drive to secure material for them never ends. Less than 48 hours after an evening sale concludes, the Sotheby's specialists Simon Shaw, co-head of worldwide Impressionist and Modern art, and Alexander Rotter, co-head of contemporary art worldwide, sit down with their business teams to analyze the results: When was the bidding robust, and when not? Who bought what?
"If an artist was dead at Sotheby's and Christie's, you don't want to put them in the next sale," Mr. Rotter said. "But if there were five bidders on an Agnes Martin, we say, 'Let's go get another.' " It's their job as specialists to know who owns what, but they also have legions of staff digging through art books, historical files and publications. When auction employees visit museum exhibitions, they're looking at the labels to see if a picture is in private hands — and therefore potentially available.
 Patti Wong, on the phone at an auction. |
In contemporary art, "Cy Twombly was a main target," Mr. Rotter said. "His market has risen dramatically in the last few months, especially for his 'blackboard' works. We said we had to get a monster blackboard work, and we did." (In his blackboard works, Twombly used a white crayon to make loopy designs on a gray surface.)
After visiting the Los Angeles collector Audrey Irmas regularly for years, they convinced her, with an estimate of about $60 million, that it was time to sell her "Untitled, 1968 (New York City)."
Sometimes, pictures come to the specialists. In September, Mr. Shaw received a brief email from a client referring to a Magritte gouache he bought at Sotheby's six years ago: "What's it worth? Is this the moment?" Valued at $3 million to $5 million, the work, "Le Maître d'École" ("The Schoolmaster"), will be in the sale on Nov. 5. "That pitch took a maximum of 30 seconds," Mr. Shaw said with a grin.
Others take hours. A team makes up dummy catalogs and plans to show the art in buying hotbeds like London, with proposed exhibition designs. They present marketing plans, sample advertisements, web videos, media strategies and maps of likely bidders. They estimate what the art will fetch and outline their track record for selling works by the artists in question.
Ms. Wong, who has a list of about 100 wealthy Asian clients, was at one of the van Gogh pitches to the foundation's trustees, which took place in Paris, London and Geneva. "I know who is after this picture," she said. "I suggested bringing it to Taiwan, rallying new interest in it." Trustees agreed, and it was shown there in October.
Specialists like Mr. Rotter and his counterparts at Christie's and Phillips are constantly calling clients. They offer free appraisals and advice on framing, exhibition loans and conservation. They arrange tours of museums and art fairs. When asked if they would help get a collector's child into college to get a great consignment, Mr. Rotter and Mr. Shaw both laughed and nodded yes.
Frequently, however, "it's just money," Mr. Rotter said. Discounts on the seller's premium, he said, referring to the commission that auction houses charge consignors, "or guarantees on the price. Are we willing to work for less or pay more for it?"
 Simon Shaw |
It becomes tricky when guarantors bid on — and win — the artwork at a price above the guarantee. At Sotheby's, they pay the full winning bid, known as the hammer price, and the commission that auctioneers charge buyers, called the buyer's premium — just like any other bidder would — and receive no other compensation. Phillips declined to explain its policies.
At Christie's, it depends. If the deal stipulates a fee linked to the hammer price, a guarantor who wins a painting he guaranteed pays the hammer price, plus the buyer's premium, and is not paid anything additional — the same as at Sotheby's. But if he agreed to a deal with a fixed fee — no matter happens at the auction — he does receive that.
 Alex Rotter |
Many collectors, including Mr. Margulies, say guarantees do not trouble them. Prices are, in the end, whatever the market will bear. But others say that auction arithmetic matters, because it may influence markups. A future buyer may be paying a marked-up price based on the recorded price, not the "real" one, Mr. Levin said. Recorded auction prices also affect the valuation of similar works: Appraisals are based on comparable past sales, but art dealers rarely, if ever, disclose the prices of the works they sell. Yet they sometimes raise their prices based on auction prices.
But without the assurance of a surefire price, many sellers would never put their great works on the market — including this fall's star lot, Modigliani's "Reclining Nude," which Christie's will offer on Nov. 9 at an estimated $100 million.
"Everyone at the auction houses would love to have a real auction," said Stephane C. Connery, an art adviser and former Sotheby's executive. "They would love to estimate a $10 million picture," he said, at $5 million to $7 million. "But to get to the seller," he added, "who wants $11 million, they have to be innovative." Translation: If they do not offer guarantees, the potential consignor is unlikely to sell his art. And the stakes are growing, as guarantees grow in size and number.
"Third-party guarantees are at levels that would make me blush to ask," Mr. Connery said. Auction house disclosures show that about 35 percent of the lots in the November sales are guaranteed.
For the auction houses, once these consignments are secured — about four weeks before a sale, as the catalog is going to print — their focus shifts to potential buyers. Top collectors and art advisers receive (or have had) advance notice of lots they may like or an early look at the auction catalogs. "I'm continually on the phone to buyers, every day," Mr. Rotter said. "As soon as I hear of something they want — I'd say: 'There's a great Frank Stella coming up. Get ready.' " As the auction nears, prospective buyers may be wined and dined.
Sometimes it goes much further. In late September, Mr. Shaw flew to the West Coast to deliver high-quality reproductions of works by Degas and Toulouse-Lautrec to a client who wanted to see how they would look in his home. To an Asian client, he is actually taking Modigliani's "Portrait de Paulette Jourdain," estimated at $25 million to $30 million. "We'll hang it and light it and let him see it within his collection overnight," he said.
In Asia, Ms. Wong — who can often be seen juggling two or three telephones at a sale — is alerting her clients to works they may like in the catalogs. "I will have had the text translated into Chinese first, so they will be able to read" it, she said. "Then the key is keeping them interested, especially in the week leading up to the auction. I give them daily reports. The key is to impart as much information as I am allowed, so they can make informed decisions."
She is keen to provide price guidance. "The client may ask, 'What do you really think?' " she said. "I say I think it will go for X. It's important to have that conversation with the buyer as to why it's worth more, so they are not caught out on the phone when they have only a few seconds to decide."
Many collectors are perusing the catalogs on their own, of course. "I see what's there that in one way or another, I want to be involved with — either for myself or if I want to aggressively advise a collector to buy it," said Robert Mnuchin, a New York art dealer. If someone is interested, "we talk about prices, but nine times out of 10, the collector decides the number and frequently not until the moment of the sale itself." Other collectors approach an auction with a ceiling on what they will bid.
Lately, the auction houses say, 10 to 15 percent of the registered bidders at contemporary art sales are new. The search for more is global. At the May evening sales of contemporary art, would-be buyers came from more than 40 countries.
Phillips, much smaller than Christie's and Sotheby's, is trying a new tactic this year with a sale of 20th-century art on Sunday, Nov. 8 — not a traditional auction night. It fits the goal of hanging out what Damian Whitmore, Phillips's new marketing director, calls a "newcomers welcome" sign. "We're all chasing the same people, but we have to be the most persuasive," he said.
At the center of this activity is the auctioneer. "I follow all of the discussions about what people are interested in," Mr. Pylkkanen says. "I convene senior specialists regularly to discuss interest and value."
On the day of an evening sale, he studies an "auction book" prepared by the bids department. It has a picture of each lot, with a full description, the reserve (the undisclosed price, set with the seller, that must be realized for a lot to sell), the guaranteed price (if there is one), absentee bids left for the auctioneer to execute, telephone bidders, other likely bidders and more.
"I'm an annotator," Mr. Pylkkanen said, so he writes down his thoughts on, say, an object's quality, which may come in handy when he's on the rostrum. He also studies the seating charts: Up to 1,000 people can sit at ticketed evening sales at Christie's; 900, plus 100 standees, at Sotheby's; and 420, plus 150 standees, at Phillips.
It's not easy. He has to multitask among bids in the book, in the room, in the overflow room, on the phone and on the Internet (conveyed on a tiny screen on his rostrum). "I have only 90 to 120 seconds for each lot, but it can be an incredibly meaningful moment in the buyer's life," he said.
With each lot, he starts the bidding "on what we call the right foot" to facilitate a sale. "If the reserve is 10, you start the bidding at 8," he explained. The next bid would be 9. If there is none, the auctioneer is allowed to announce a "chandelier bid," a phony but legal bid on behalf of the owner, as a tactic to incite more bidding. The next bid from the audience is 10, the reserve, which is a winning bid (unless there are additional bids). If there was only one bidder, and the auctioneer started at 7, he could announce a chandelier bid at 8, the bidder would say 9, and the action would stop: By law, the auctioneer can use chandelier bids only up to, but not including, the reserve. Since the last bid was below the reserve, the artwork was "passed" or "bought in." The auction house owns it if the lot was guaranteed; if not, it belongs to the consignor. Then it's on to the next lot.
As at a bad play, people may well leave in midauction. So it's good to set conservative estimates, Mr. Pylkkanen explained: "Then they come in feeling that they may win the object, and when they have that idea in their head, it's psychological; they go longer. They're thinking about the celebration they are going to have" if they win.
But "if the room is quiet, I make sure the pace is up," Mr. Pylkkanen said. "If lots are unsold, I pass them without making anything of it. There's no shame in it. It might sell very well next time with different people in the room."
For him, "it's like being a scuba diver or a sky diver — you're always a bit nervous." When it's all over, Mr. Pylkkanen said, "I have a gin and tonic, no ice." And he lets the adrenaline drain.