After a two-sided battle that has spanned about 200 years, Christie's and Sotheby's find themselves now gearing up against a new rival - the online auction. Matthew Gwyther slips behind the salerooms to see how the traditional agents of the aristocracy are holding their ground in cyberspace.
By MATTHEW GWYTHER.
Sotheby's and Christie's. They trip off the tongue like Coke and Pepsi, or Spurs and Arsenal, and the war between the two is no less intense.
Currently running virtually neck and neck, the world's leading auction houses have been battling it out for market territory for more than 200 years. It's a cutthroat environment where no hostages are taken.
What makes them different from Coke and Pepsi, though, is all that gorgeous merchandise. Theirs is a sexy business. The raw materials fought over are not mundane fizzy, sweetened waters but beautiful paintings by Degas, David and Da Vinci, exquisite pieces of Tang dynasty ceramic, Chippendale chairs to die for, even Jackie O's cocktail shaker.
At the top end, auctioneering is a glamorous game, but a ceaseless struggle nevertheless. They fight for clients, they fight for press coverage, they fight to get buyers in with their chequebooks. Fraternising between forces is frowned upon. Sometimes, but rarely, experts - the platoon commanders - defect to the other side. But now both armies may face a common threat in the danger that both could be outflanked by the internet.
The internet threatens to widen the appeal of the auction as a sales medium. By democratising the process and throwing it open to anyone with a PC and a modem, the rarefied atmosphere of the hushed auction room and the refined auctioneer in black-tie faces replacement by what is, in effect, an enormous international boot sale in which any Tom, Dick or Harry can take part.
THE FIELD MARSHALS
These two institutions are originally pukka British and the classy patina provided by the correct accents and the vast numbers of aristocrats on their boards is vital to their appeal. However, both are now controlled/owned by foreigners: Christie's by a French luxury-goods billionaire, and Sotheby's by a man who made his mint building shopping malls in the Midwest of America.
If shopping malls sound bad, it is worth remembering that Alf Taubman was a white knight who came to the rescue in 1982 to prevent the venerable Sotheby's falling into the hands of a pair of chancers named Cogan and Swid who had made their millions by swooping on an industrial felt and carpet underlay company in Delaware. This so upset the British Establishment that a Monopolies Commission referral was engineered by the Conservatives.
Francois Pinault bought Christie's for £721 million in 1998 and added it to his collection of ritzy desirables such as the Chateau Latour vineyard, the Vail ski resort in Colorado and the slightly more prosaic maker of suitcases, Samsonite. There are currently no overt plans for cross-fertilisation of brands. Pinault's rival, Bernard Arnault, owner of the luxury goods firm LVMH and now involved in a dispute over shareholdings in the Gucci fashion empire, has been rumoured to be interested in buying Sotheby's.
THE EUROPEAN GENERALS
The European managing directors of Sotheby's and Christie's are two very different creatures. Ed Dolman, 39, the Christie's boss, has worked his way up from the bottom of the heap. He went to university at unfashionable Southampton and was at a loss for a career idea when he left. At school, however, history of art and economics - an unconventional pairing - had given him pleasure. So, in 1984 he started as a porter at Christie's South Kensington - the venue for middle to low-value sales in London. His salary was £3,600 a year. 'Even then that wasn't much,' he admits. He worked his way through the furniture department to eventually managing the operation in Amsterdam.
By contrast, his opposite number at Sotheby's, Robin Woodhead, 47, has been parachuted in from the City. He is a lawyer by training and formerly chief executive of the London Commodity Exchange - an institution not known for an interest in aesthetics or gracious niceties. Woodhead is no red-necked trader in pork-bellies, however, having chaired the Ballet Rambert as well as having been on the board of the Whitechapel Foundation and the Contemporary Art Society.
'Auctions are magical, exciting, enthralling and imbued with an element of the hunt,' he enthuses as one who used to buy before turning gavel-banger. 'And what you need to remember is, that although the broad assumption is that everything sold here is of inestimable value, and so only for the very rich, the truth is that 80% of what we sell goes for less than £8,000.'
Being the boss means you get the pick of the paintings coming up for sale to hang on the wall of your office. When we visited, Woodhead had bagged a Damian Hirst spot number and an Yves Klein from 1960 (estimated at £70,000-£90,000).
In the old days Sotheby's and Christie's were home to any number of slow-witted but essentially amiable Sloane Rangers, especially the willowy blondes who looked so decorative dotted around the place. Now competition for jobs is intense and more meritocratic. Sotheby's will get up to 300 good graduates in art history chasing from three to six trainee places each year. Besides superb taste, the successful candidates will have two or three languages and highly commercial natures. Such is Sotheby's attraction that 300 people each year work there as unpaid volunteers.
THE DIFFERENCES BETWEEN THE ARMIES
It used to be said that Christie's was a firm of gentlemen trying to be auctioneers and Sotheby's was a group of auctioneers trying to be gentlemen.
What is the difference today between the two parts of this international duopoly? Like everything else, it's all down to brand power, apparently.
Woodhead: 'The Sotheby's brand is more powerful than the Christie's brand. Everywhere we are differentiated by superior client service that ultimately is our distinguishing feature.'
Dolman (shown in photo at right): 'Cobblers. But I'd be interested to see his reasoning behind that. They've had some disastrous attempts to roll out their brand, putting their name on cigarettes, for example. The truth is we are very closely associated in the minds of clients and many find it hard to distinguish between the two. Maybe we're perceived as a bit crustier, a little more English, more aristocratic. In New York we're seen as more traditional, whereas Sotheby's is more brash, more new money.'
In reality the focus groups and qualitative research both sides have performed have not revealed anything decisive. The two are often muddled by those not in the loop. For the person who finds a painting in the attic, the toss-up will be decided by the reception they get when they bring in the item for valuation. The sellers' premiums for low-value items are non-negotiable, although some vigorous horse-trading occurs when high-profile collections come into the arena. Buyers' premiums - only introduced in the 1970s - are 15% up to £30,000 and 10% thereafter.
Sotheby's, incidentally, is on the Microsoft Word spell-checker; Christie's is not.
BATTLES WON AND TERRITORY GAINED
Each year there is a turnover victor. From the mid-18th century until 1954, Christie's held the edge. Then Sotheby's went ahead in every year until 1996. In the past three years it has all been very close. For example, 1997 went 52:48 in Christie's favour. Indeed, Sotheby's had a wretched '97 when nothing seemed to go right: it lost the Loeb impressionists and the Ganz Picassos to the other side, and Channel 4 broadcast an embarrassing programme that suggested collusion in smuggling. Then it found itself forced to postpone the Al Fayed-inspired sale of the Duke and Duchess of Windsor's trinkets when the Princess of Wales was killed in Paris.
In 1998, however, Sotheby's bounced back by outselling the opposition in Old Masters and American art 1840-1945. It also got a £55-million sale last autumn from Reader's Digest. Total revenues for the year came out at $447 million ( £274 million).
Turnover, however, is irrelevant. It's profits that matter. Christie's insiders admit it is less profitable than Sotheby's but as both are privately owned there is no necessity to issue figures. Sotheby's is perceived to be more effective in financial services, real estate and add-on.
THE MECHANICS OF BATTLE
Auctioneering has been called the most highly efficient method in existence of transferring property. But it's not as straightforward as buying something with a price tag in a shop. It can prove to be cheaper than a retail sale, or disastrously more expensive if you get carried away with the bidding paddle.
In his entertaining and informative book Sotheby's: Bidding For Class, Robert Lacey observes: 'The successful auction house presents itself as a temple of civilised style and judgment, but its essential function is to uncivilise the judgment of at least two normally balanced people and entice them to bid and counter-bid for any given object as far as possible above the price it would command in a shop. The appeal is to cupidity and recklessness. The trick is to persuade people who already possess more than their fair share of worldly goods that their happiness depends on acquiring even more ... A busy auction room smells of cash, greed, and folly, in roughly similar proportions.'
But what exactly is at the crux of the business? The mechanics of acquiring high-price goods for sales are complex and involve far more than valuing items that come in unsolicited off the street - although the odd major discovery is still made this way.
A not altogether flattering insight comes from the recently published biography of the writer Bruce Chatwin by Nicholas Shakespeare. Chatwin was a young star at Sotheby's in the late '50s and early '60s. The methods of bringing in business, works of art to be sold, is portrayed as a mixture of unctuous schmoozing and vulture-like circling over potential carrion: 'Peter Wilson (chairman from 1958), seeking to prize from Christie's their traditional clients, trained his young men to cultivate connections and to nourish their contacts. The saying went that both auction houses dealt in the three Ds: divorce, debt and death. The difference between them was at the death, Christie's would send a wreath to the funeral while Sotheby's sent a representative.'
Each morning at 9am, the first thing to be read would be The Times obituaries.
'The stock letter, drafted by Peter Wilson, asked the bereaved not to overlook Sotheby's. "The catalogue will be a monument to your deceased wife/husband's taste and judgment."'
Although ambulance (and hearse) chasing is clearly important, keeping in with collectors who are not afflicted by any of the three Ds is also vital. Often the significant collectors in one specialist area may not number more than a dozen worldwide. They can expect many boardroom-lunch invitations.
The experts make no attempt to hide the fact they keep in close but subtle contact with those who are likely customers.
'We want a long-term relationship with people,' says Simon Taylor, the deputy managing director of Sotheby's Europe and a expert in Victorian painting, 'Because people who buy today will be those who in 10 to 20 years are the sellers. We're exactly the same as private client bankers.' Taylor has a Rossetti on his wall estimated to be worth £200,000-£300,000.
'The family that is selling that bought it from the artist for £10 in 1851 and it has never been on the market since.'
BIG GUNS AND SECRET WEAPONS
Behind the glamorous facade of the front-of-house show, however, working conditions are not quite so luxurious. Serena Sutcliffe is head of Sotheby's wine department, one of Sotheby's star turns. Her office, down a grimy, urine-soaked alley off New Bond Street, has no natural light: 'It's hilarious, isn't it?' she says without a trace of hilarity. 'Everyone thinks we all swan about in couture with glorious chandeliers everywhere, and then you see this.'
The second woman ever to achieve the qualification of Master of Wine, she was brought in to sort out the wine department in the early '90s when it lagged far behind the enemy. Their market share at that time of 20% to 22% is now up to 40% worldwide and they dominate in the US. Sutcliffe brought in the celebrated Lloyd-Webber collection when the composer went on the wagon and had a cellar clear-out. That sale set a £32,500 case record for Cheval Blanc 1947. (There is little love lost between her and her opposite number, Michael Broadbent, who recently made some extraordinarily catty remarks about Ms Sutcliffe on the BBC programme Vintner's Tales.) Sutcliffe is a tall, elegant woman in her early fifties who is also a Chevalier dans l'Ordre des Arts et des Lettres for her writings on French wine. She was previously a soixante huiter and NATO translator who spent all her spare time in the French vineyards, picking and pruning.
A subject on which she is excellent is how haughty and out-of-reach the top auction houses have traditionally been perceived.
'I can remember being brought in here as a young teenager and being completely intimidated,' she recalls. 'I had the feeling the man on the door in the uniform was going to stop me. In more recent years, when we did some research, we found out a lot of people actually thought you had to pay to get in.
The truth, of course, is that it's actually a free great museum, except it's better because you'll see works of art and other items that you'll never, ever see again, because they go from one private collection to another.'
Sotheby's knew well that this intimidating facade was probably putting off many people who were loaded and obvious potential customers. 'New money' needed new ways. So they've developed their entrance area, put in a cafe and tried to open things up.
Sutcliffe has contributed to this by devising courses in wine-appreciation that are booked up for months ahead. She gives some of the classes and is an oenological Jean Brodie: 'Gather yourself before each wine as if before diving off into a swimming pool,' is one memorable entreaty to her pupils. 'The first impression is so vital. You never get a second chance. Don't leave half your mind elsewhere, gazing at a lovely neighbour. Gather yourself into a bunch and say "Wham!"'
BATTLES OVER THE WATER
There is no doubt that London's importance is on the wane, at the hand of New York. As the American economy charges relentlessly ahead and the Far East falters, the US is where the buyers are currently wielding the big bucks. Both houses have responded by huge investment in their premises.
Christie's has just opened the doors of its new home in the Rockefeller Centre to the strains of the Girls Choir of Harlem. The design is very deliberately like a museum, encouraging as many people in as possible.
Storage is in the basement. No more expensive warehouses in Long Island.
The main saleroom seats more than a thousand, but the podium is still designed by Chippendale. The renovation of the former garage is rumoured to have involved a $50-million investment.
Sotheby's owns its building on York and 72nd, which is being extended vertically to 10 floors in a development costing more than $130 million.
Glass and transparency are the goals. You will even be able to peer in at the experts while they do their work.
THE FRENCH PROBLEM
In the meantime the two houses have an issue on their hands which has made both see red for years - the French government, which for years has operated a monopoly in the auction business that makes it impossible for outsiders to hold sales inside France. This runs contrary to the Treaty of Rome and Paris has often been warned of this fact. (But as France has far and away the highest number of censures against it from Brussels, water and ducks' backs are what come to mind.)
The effect historically has been to drive many sales out of France to London and, latterly, New York. Legislation has finally been promised and the market may well open up in the future. To this end both Sotheby's and Christie's have had to open their wallets to acquire posh Paris salerooms.
A more serious danger lurks in Europe. Many countries observe an old French law called droit de suite - a 4% sales tax on works of art that goes back to the artist or the artist's family. In France, 80% of its earnings go to six families. Sotheby's say Tony Blair is trying his best to resist its introduction in Britain.
GOING, GOING, GONE - VIRTUAL WARFARE ON THE NET
The black tie, the hardwood gavel, the hush of anticipation, the gasp of excitement may be regarded as fundamentals of the auction business but technology marches on. Sales over the internet are growing in popularity worldwide and neither Sotheby's nor Christie's want to be left behind.
Bernard Arnault recently paid about £2.6 million for a 20% stake in Icollector.
The houses vary in their enthusiasm for the enterprise. Robin Woodhead is bullish saying it's completely logical and merely an extension of telephone bidding which has been around for years. 'It's the most efficient form of e-commerce,' he says. 'Once we have it up and going, 200 million people will have access to our sales. The new world of auctioneering will divide between the live and the net.'
The Sotheby's approach has been to create sothebys.com on to which 1,500 art dealers in the US and Europe have been invited. They are 'Charter members of Sotheby's Internet Associates' and will sell their wares on the site. This close link between dealers and auctioneer has raised a few eyebrows because a state of dynamic tension between the two is seen as the healthy norm. The initial investment in the enterprise is $25 million and Susan Solomon, previously chief executive of Sony Worldwide Networks, has been brought in to head the operation. It aims to offer online live bidding this summer for a baseball memorabilia collection in New York.
Christie's is also going for the net but Dolman is aware it is not without potential problems. 'It's a threat and an opportunity at the same time,' he says. 'We see it as potentially geared towards the lower end of the market.' He is, however, worried about integrity, warranty and authenticity.
'Our research indicates an incredible level of fraud associated with net auction things,' he says. As usual with the net, policing is very difficult.
Checking authenticity or provenance is tricky if you cannot handle the goods. And items such as furniture look ghastly on screen.
Meanwhile, Americans are charging ahead with net auctions. The latest wheeze came from a team of 16 bored and depressed 'cybergeeks' at a California internet company who put themselves up for bids, starting at $3.14 million a year in wages. If you are looking to recruit, you can bid for them on eBAY - which adds an amazing 150,000 lots to its collection every day - and cut out the head-hunter's fees.
The path of internet bidding does not run entirely without glitches.
Witness the recent case of Andrew Tyler, aged 13, who bid nearly $3 million for a variety of items over a number of weeks using his parents' eBay account. The little New Jersey collector bid for 13 items including $1.2 million for a medical centre in Florida, $500,000 for a Van Gogh painting and $120,000 for the first issue of the Superman comic book. He actually won the auction on five separate items, including $24,500 for a Corvette sports car, $23,000 for a 1955 Ford convertible, and $900,000 for an 1860s bed once owned by Sir John MacDonald, the father of Canada's confederation.
This bidding frenzy began when Andrew tried to sell his best friend as a slave, stating that, 'He's ugly, and he smells' but 'he will work very well'.
When pursued by the seller of the bed for his money, Andrew's mother was reported to be 'hyperventilating'.
In his defence Andrew apparently explained: 'I spend a lot of time alone.'
CHRISTIE'S: 1766 James Christie, a well-connected and socially adroit businessman, opens an auction house in Pall Mall. One early client is Frederick, Prince of Wales.
1926 Romney's Portrait of Mrs Davenport becomes the most expensive work of art sold between the wars, at £60,900.
1941 Christie's premises in King Street are destroyed in the Blitz and are not rebuilt until 1953.
1965 Rembrandt's Portrait of Titus sells for a record £798,000.
1968 Paris office opens.
1973 Christie's is valued at £14 million in a stock market flotation.
1977 New York saleroom opens on Park Avenue.
1987 VanGogh's Sunflowers sells for a record £24.75 million.
1998 French retailer Francois Pinault buys Christie's for £721 million, taking it private.
1999 Modern premises open in New York's Rockefeller Centre and online service is set for autumn, but both Sotheby's and Pinault's rival Bernard Arnault have a running start on the internet.
SOTHEBY'S: 1744 Sotheby's founder Samuel Baker, a bookseller, holds his first auction in London's Covent Garden.
1823 Sotheby's stages the sale of Napoleon's library from his exile on Elba.
1917 The Wilton auction, a coup for Sotheby's and its first major fine art sale, flops. A smear campaign is suspected.
1929 Sotheby's profits of £35,000 exceed Christie's profits for the first time.
1937 The sale of the contents of the Rothschild residence in London is broadcast by the BBC and makes £25,000.
1955 Sotheby's opens its first New York office.
1967 Paris office opens.
1977 Sotheby's valued at £16 million on flotation.
1983 US industrialist A Alfred Taubman acquires the group for £80 million in takeover battle. A year later Sotheby's has its first American chief executive.
1999 Sotheby's announces £15 million online service for January called sotheby's.com, to sell in £200 to £7,000 range, with first sale in July. Ten-storey Manhattan HQ under construction.