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Sotheby’s, citing weak margins, quits live auctions

Collectors bid for paintings at an auction at the Royal Ontario Museum in Toronto, November 27, 2012.

J.P. MOCZULSKI/The Globe and Mail

Sotheby's Canada is getting out of what it calls the "theatre" of auctions as a way to sell important Canadian art after an often tumultuous run of more than 45 years.

Sotheby's will now focus on "private sales," with the Toronto-based operation functioning "privately and discreetly" as the liaison between the consignor of a particular piece of art and those clients with sufficient dollars to buy it.

"[Private sales] is the growth area of this business; it's not the auction part that's profitable," said Sotheby's Canada president David Silcox late Tuesday afternoon in making the announcement. "We actually want to operate only at the high level … with our highest transacting clients … and we'll be more profitable because of it."

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The change means that the upper echelons of the live Canadian art auction market are now in the hands of only two companies – Vancouver-based Heffel Fine Art and Joyner Waddington's in Toronto. Indeed, some would argue that Sotheby's decision to discontinue holding a live sale each spring and fall largely formalizes the domination of art auctions that Heffel has enjoyed in this country for almost eight years. Last November, for example, Heffel's live Canadian sale in Toronto grossed almost $11.4-million, including buyers' premiums, whereas Joyner's live auction that month was only $2.51-million, Sotheby's $5.5-million.

"We tried to put the level of our sales up. We were trying to take nothing less than $8,000 or $10,000 [on the lowest lot offered for sale]," observed Mr. Silcox who was named Canadian president by Sotheby's New York in June, 2001. "But that still [didn't] seem to do it. In fact, the profit at that level is minimal, making it hard to even justify the cost of holding a live sale."

Sotheby's Canada vice-president Linda Rodeck added that the Toronto branch already does a considerable amount of private sales, including sourcing important international works held by Canadian collectors for Sotheby's sales rooms in New York, London, Paris and Hong Kong. In fact, as part of the Canadian branch's new role, "we'll be spending much more time looking for great international art."

By eschewing auctions – Ms. Rodeck indicated the company may hold one-off live sales of important estates here – "we actually see ourselves as being freed up to do a better a job" while bringing the Canadian operation "into closer alignment with international standards." Previously, "when we took consignments … often we had a pretty good idea of where they were going to go, who the top three people are who [were] going to compete … so we don't view this as an abandonment [of the Canadian resale market] at all."

Veteran Canadian art dealer Christopher Varley said Sotheby's move out of auctions and into private sales of both Canadian and international art as "perfectly reasonable" in light of its live sales performance in recent years. "They can't possibly be making money on their sales here … but funnelling stuff [to New York, London etc.] makes perfect sense." At the same time, he's concerned this gives Heffel "a quasi-monopoly because they can squeeze everyone and that's not really good for anybody."

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