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Luxury Outlook 2022

Collaboration Over Competition

Collaboration Over Competition

While auction houses and galleries historically have vied for business, they’re increasingly finding more benefits to collaborating.

Sotheby’s is known for its live auctions. It’s now working with galleries more directly, too

Sotheby’s is known for its live auctions. It’s now working with galleries more directly, too

A new symbiotic relationship has evolved largely out of the challenging business environment under the Covid pandemic lockdowns, which shuttered galleries and stalled in-person auctions.

Sotheby’s Noah Horowitz

“When the lights went off during Covid, everyone had to get creative because they didn’t have the ability to get in front of their clients,” says Noah Horowitz, worldwide head, gallery and private–dealer services at Sotheby’s. “There’s a willingness to look at things anew and rethink how to enhance relationships with collectors and get business done.”

Once traditional auctions became impossible in March 2020, Sotheby’s was quick to respond by expediting the introduction of its Gallery Art Network as a way to work together with galleries and art dealers to drive sales.

The network is an online marketplace that enables contemporary art galleries to showcase collections to global audiences and transact sales. It launched with more than a half-dozen high-profile New York City galleries participating, including Lehmann Maupin, Kasmin Gallery, Luhring Augustine, Petzel Gallery, Jack Shainman Gallery, Sperone Westwater, and Van Doren Waxter.

As lockdowns waned, Sotheby’s began opening brick-and-mortar gallery spaces in key art markets around the globe. In the summer of 2020, it opened a space in the Hamptons, followed by others in Palm Beach; Monaco; Cologne, Germany; and Los Angeles.

“This started bringing to the surface, in a public way, the relationships and collegiality between Sotheby’s and gallerists,” Horowitz says.

“Sotheby’s recent efforts are just the beginning of a long evolution in the relationship between galleries and auction houses,” he adds. “There is an extraordinary opportunity to do so much more in this space, to put Sotheby’s resources at the fingertips of the international gallery community.”

Spotlight on: Sotheby’s Financial Services

Sotheby’s Financial Services, the only full-service global art-lending operation, was founded in 1989 to support clients with their borrowing requirements during the banking crisis, when many banks were refusing to extend loans. It has since become a major institution inside Sotheby’s, working with clients globally across price points and collecting categories, and has extended over US$9 billion in funding.

Sotheby’s Damian Leslie

Damian Leslie, head, Sotheby’s Financial Services for Europe and Asia, offers a snapshot.

Why do clients come to you versus their own bank?

We have three decades of expertise, and with everything from valuations through legal services and storage being completed in-house, we have the ability to provide truly bespoke facilities for our clients without additional fees.

The majority of lenders are fairly restrictive about items they can use as collateral in terms of the artist, minimum value, or category of art. We are much more flexible and can lend against any items that Sotheby’s has a market to sell.

As a full-service lender, we can be much faster while keeping costs low for our clients. It takes an average of three or four weeks for our conventional loans, compared with three or four months for other lenders.

Can you break down your lending services?

Our borrowers come in three types. The first are sellers who want to consign works for sale and are looking for immediate access to capital. Second, buyers looking to acquire artwork who want to finance all or part of the purchase either through a secured loan or an arrangement to pay over time. And third, people who have no intention of selling their art, but want to release the value stored in their collection, either via a straight term loan or a revolving credit line.

We often help beneficiaries of estates to raise funds to pay inheritance taxes, typically by way of our consignor solutions. These tax obligations are often due prior to selling items or due prior to the sale proceeds being received, so Sotheby’s Financial Services can extend a loan against the value of the art collection within the estate, allowing the beneficiaries to settle the obligation.

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