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Recent Sotheby’s Sale Draws Unwarranted Pessimism

March 11, 2024

front entrance to sotheby'sI wasn’t originally going to write about the Modern & Contemporary evening sale held at Sotheby’s on Wednesday, March 6th. However, I felt compelled to do so after seeing an incredibly misleading headline from The Art Newspaper. According to their analysis, this sale made 40% less than the same sale held last year on March 1, 2023. This number implies that 40% less somehow equates to 40% worse. After reading the piece, I saw they were doing it all wrong. 

Kabir Jhala, the publication’s deputy art market editor, described the auction as “staid though not disastrous”. With some of the absolutely enormous sales over the past several years, I suppose Jhala’s expectations are so high that a successful sale by normal standards just won’t cut it. He arrived at that 40% figure by comparing the total hammer prices of this sale and the same sale last year. The 2023 sale made around £137 million (or $164.6 million), while this year’s made about £82 million (or $104.7 million). Therefore, Sotheby’s is doing terribly, the art market is failing, the sky is falling, and so on. This is not just a misleading headline but also an incredibly inaccurate analysis. Yes, the auction house and the name of the sales are the same, but not their contents. The 40% number would be more reflective of the market if it were the same batch of paintings up for sale again. Unfortunately for Jhala, it was a new set of lots up for grabs on Wednesday night. The estimates were, therefore, completely different. So, I would like to set the record straight by pointing out how to better compare these two sales.

To judge whether the Modern & Contemporary sales at Sotheby’s did better or worse this year, looking at a broader array of data is essential. In that regard, the 2024 sale fared better in many ways. It made £82.2 million against the low total estimate of £73.34 million. This is nearly 10% above the low estimate. In contrast, the 2023 sale made £137.2 million against an estimate of £133.6 million, meaning it only did 2% better. Then there is specialist accuracy: on Wednesday night, twenty-seven of the fifty-nine available lots sold within their estimates, giving Sotheby’s specialists a 46% accuracy rate. Meanwhile, the experts had a 40% accuracy rate last year. Both are phenomenal outcomes, but one is clearly better than the other. Furthermore, the 2024 sale did better than last year regarding the sell-through rate. The sale on Wednesday night saw six lots (10%) fail to sell. This is the same number of lots as last year. However, because last year’s sale had fewer lots in total, the unsold lots constituted about 17% of the auction’s contents. Jhala called this year’s 90% sell-through rate “respectable” but also mentioned that this number would fall to 77% if you count all the lots that were withdrawn before the sale. At this point, I think he’s actively trying to be pessimistic about this since you rarely consider the withdrawn works in a sale.

In the end, I think this all comes down to the fact that bad news gets more attention than good news. It’s in the same vein as the old saying in journalism, “If it bleeds, it leads.” If you write about how everything’s fine, people tend to be very blasé about it. But when you frame something as if the world is coming to an end, your readership will listen to what you write. It’s very difficult to compare two sales and say that one objectively did better than the other. You can judge how well the house specialists understand the market by comparing how many lots sold within their estimates. You can also look at individual paintings and highlight if they did better or worse than the last time they were at auction. But every sale is a completely unique event. You can’t boil them down to a single percentage.