One simple trick which will improve all art auction reporting

We’re deep into auction season right now, which means we’re deep into reports about what happened at those auctions. At the heart of those reports is a perennial tension: they generally compare apples with oranges, when they contrast a work’s price with its pre-sale estimate. Here, for instance, is the NYT on last night’s Sotheby’s sale of post-war and contemporary art. The auction included big names like Warhol, Richter, and Twombly:

Only one bidder went for “Self-Portrait (Fright Wig)” from 1986, estimated at $12 million to $18 million; it went for $11.3 million… “Abstraktes Bild,” a vibrant red 1991 painting estimated at $15 million to $20 million, sold to an unidentified collector for $21.4 million… [the Twombly drawing] was expected to bring $3 million to $4 million. It sold for $5.2 million.

Similarly, Bloomberg Businessweek is reporting that “A bronze spider by Louise Bourgeois mounted on the wall later sold for $7.1 million, $1 million more than its high estimate,” and that “Judy Garland’s silkscreen sold for $1.2 million, slightly above its low estimate of $1 million”.

The problem here is that the estimates are for the hammer price, while the final sale prices quite properly include the buyer’s premium added on by Sotheby’s. So, did the Richter, which was estimated at $15 million to $20 million, actually exceed its high estimate when it sold for $21.4 million? Did that Judy Garland silkscreen actually beat the low estimate when it sold for $1.2 million?

To answer these questions, all you need to do is turn to Fusion’s GAVEL calculator.

Select “Sotheby’s New York”, and plug in the $21,445,000 sale price for the Richter, and you’ll find that the hammer price was actually $19 million: within the estimate, not above it. Similarly, the $1,205,000 paid for the Judy Garland silkscreen only met, and did not beat, the $1 million low estimate. And while the $7,109,000 paid for the Bourgeois spider was indeed above the $6 million high estimate, the hammer price of $6.2 million was only $200,000 above the estimate, rather than $1 million above the estimate.

All of which means that much of the reporting on auctions is inaccurate in important ways. If an auction house puts its chips on the table by setting an estimate for how much a work of art will be hammered down for, then reporters should not tilt the scales in favor of the house by then comparing the total price paid to the estimate for the hammer price.

Instead, they should treat all hammer prices equally. If a Warhol self-portrait is hammered down for $10 million, then it is absolutely correct to convert that hammer price into a total price paid of $11,365,000. But if you’re converting final hammer prices, you should convert all hammer prices, including estimates. So the hammer-price estimate, for that painting, of $12 million to $18 million, works out as a real-world estimate of $13.6 million to $20.3 million.

Reporters haven’t done this in the past, because converting a hammer price to a final sale price is hard. The official estimate is sitting in front of them, and of course the auction house will do the final sale price conversion for them. But the auction house won’t convert the hammer price, and therefore the reporter won’t do that either. The GAVEL tool, however, changes things: it’s very easy to plug in any estimate and convert it into real dollars.

The reader would be better served, as a result. No longer would you read something like this:

For the past several seasons, the German artist Gerhard Richter has been a major presence at auction, with mixed results. At Sotheby’s, however, “Abstraktes Bild,” a vibrant red 1991 painting estimated at $15 million to $20 million, sold to an unidentified collector for $21.4 million.

Instead, you’d read something like this:

For the past several seasons, the German artist Gerhard Richter has been a major presence at auction, with mixed results. At Sotheby’s, however, “Abstraktes Bild,” a vibrant red 1991 painting estimated at $17 million to $22.6 million, sold to an unidentified collector for $21.4 million.