“The significant loss... was primarily affected by the special charges associated with the Department of Justice investigation and related antitrust and shareholder litigation settlements,” said William Ruprecht, chief executive of Sotheby’s, in a statement released last Wednesday. Sotheby’s agreed to pay $256m to settle price-fixing allegations from a class-action of 120,000 clients at the end of September, of which $156m of these costs would be met by ex-chairman Alfred Taubman. This left Sotheby’s to find the remaining $100m, together with the $40m in Class A common stock that Sotheby’s issued to their shareholders for the settlement of a related civil lawsuit and the $45m the company were fined after pleading guilty in October to criminal charges of price fixing.
In spite of a tumultuous period for the company since the scandal broke in February, auction revenue for the first nine months of this year stood at $207.5m compared with $216m over the equivalent period last year – a drop of only $8.5m. However, the value of single-owner private collections is significantly down on 1999, from $239.3m to $107m, suggesting a crisis of confidence among the wealthiest vendors.
Sotheby’s plan to restructure their auctions will focus on Internet operations, specifically sothebys.com, and the reduction of “operating costs in lower-end markets”. All eyes are now on sotheby’s.com and Sotheby’s South (Sussex) – both sharing the same plot of real estate at Summers Place.
Internet expenses for the first three-quarters of the year stand at $43.9m, against turnover of $39.9m. “It is certainly under consideration to scale down property we directly source for the Internet”, said Craig Moffett, chief executive of sotheby’s.com, “but we will continue to sell property sourced by dealers to sotheby’s.com (about 75 per cent of all lots posted for sale) aiming for increased selectivity and higher value goods”.
As far as Sotheby’s Billingshurst salerooms are concerned, “there are no plans at present to close Sussex”, said Sotheby’s executive vice president Robin Woodhead, speaking exclusively about a new saleroom to be launched in London next year for the sort of mid-range goods normally sold at the Billingshurst salerooms. However, he would not rule out this possibility.
Meanwhile, reports in the New York Post that 100 staff members were to be laid off as part of the restructuring programme in America were being denied by Sotheby’s, although management have confirmed that redundancies will be announced at the end of the year.
