Auction Houses Vs. Dealers

When Christie's announced in February that it had acquired Haunch of Venison, a contemporary art gallery in London and Zürich, dealers on both sides of the Atlantic talked about the potential for conflicts of interest and suggested that Christie's wanted access to Haunch of Venison's artists to stock its contemporary sales.

Haunch of Venison's co-founder, Harry Blain, calls those concerns "rubbish." But dealers' worries are, on a deeper level, well founded. Christie's acquisition of Haunch of Venison could portend a significant restructuring of the art market, changing the terms of the artist-dealer relationship and blurring the lines between what galleries and auction houses offer. Eventually, the financial might of the auction houses could lead to the consolidation of the art business under a few owners, as happened in the book-publishing world.

In the fall, Haunch of Venison will open a gallery in New York, in Rockefeller Center. The New York gallery will be run by Barrett White, who was previously Christie's North American director of 20th-century private sales.

The president of Christie's, Marc Porter, said the market's structure has already been changing. "To presume that the golden day of the '60s and that gallery system is what's appropriate in a global art world may be a great disservice to artists and to collectors," he said. "What we're doing is ensuring that the art business evolves, so that the people who use the business are best served."

Christie's is not the first auction house to acquire a contemporary art gallery, but it could be the first to operate one successfully. In 1996 Sotheby's acquired Andre Emmerich Gallery, and in 1997 it purchased a 50% interest in Deitch Projects. Neither relationship panned out. In 1998 Sotheby's closed Andre Emmerich; later, it sold its share in Deitch Projects. A Sotheby's spokeswoman, Diana Phillips, said in an e-mail the relationship with Jeffrey Deitch "was ended on friendly terms … because the mutual advantages we sought did not materialize."

Last summer, Sotheby's acquired a Dutch dealership, Noortman Master Paintings, from its owner, Robert Noortman, who died in January. Sotheby's head of global sales, Daryl Wickstrom, said Noortman approached Sotheby's because "he had a vision that the next step in the evolution of his business was to be part of a broader art services company." Another factor may have been his $11.7 million debt to the auction house, disclosed in Sotheby's filing about the sale to the Securities and Exchange Commission.

While some dealers think Christie's wanted access to Haunch of Venison's artists, others believe what the auction house really sought was the gallery's lucrative business in the secondary market, for works that have previously been sold and are being put back up for sale by a collector or dealer.

Haunch of Venison will now take over all of Christie's private sales. Mr. Blain and his partner, Graham Southern, who until 2001 was the head of Christie's contemporary art department in London, will continue to run the European galleries.

"From Christie's point of view," Mr. Blain said, "they wanted to move away from being seen as an auction house to being seen as a global art business which does auctions but also has a gallery that has its own clients and autonomy and [other ventures like] Christie's Great Estates."

Mr. Porter said that during the last several decades as more and more collectors are buying at auction, Christie's has developed relationships with private clients who want the option to buy and sell privately, as well.

A professor emeritus of economics at Harvard and the author of "Creative Industries: Contracts between Art and Commerce," Richard Caves, said it was natural for Christie's to expand the bundle of services it can provide its clients. "If I walk into Christie's with my Rembrandt under my arm and ask them what they'll do for me, I as a potential seller would of course prefer to have a nice long menu of services they can provide."

But to dealers, the expansion of the auction houses' role is understandably threatening. "The first flag that goes up for me is the question of whether they're approaching monopolistic enterprise," the president of the Art Dealers Association of America, Roland Augustine, said. Dealers say moves by Christie's and Sotheby's into the gallery business raise potential conflicts of interest. If one of the gallery's artists comes up for auction through the secondary market, will Christie's specialists not be inclined to put a higher estimate on the work or push it harder on their clients in pre-sale discussions? (Mr. Blain implied this would be unlikely, since the gallery would try to get its artists' work back for private sale. But the relationship creates a situation in which Mr. Blain will be competing against his colleagues on the auction side for material, and sometimes the auction side might win.)

"The less clarity there is in the relationship between the dealers, the auction houses, the collectors, and the museums, the more open to misunderstanding the situation is, and the more the collector doesn't know," the dealer Anthony Brown of the London gallery Connaught Brown said. "It's the same with guarantees," he added. "It simply muddies the water."

Mr. Porter said that all relevant financial relationships will be disclosed, as required by law. If Haunch of Venison consigns a piece to Christie's, it will be disclosed in the catalog and by the auctioneer that the auction house has a financial interest in the work. And, for now, Haunch of Venison is forbidden to bid at Christie's auctions.

Mr. Wickstrom said Sotheby's had also taken steps to prevent conflicts of interest. "We take quite a bit of effort to make sure that no additional information is available to Noortman Master Paintings than would be available to any other bidder," Mr. Wickstrom said, and "if Noortman has additional information concerning a consignment, then of course they may not bid."

Mr. Augustine said he is also skeptical that an auction house can nurture an artist's career with the same care and devotion as an individual dealer can. "Running an auction house and going out and looking for material is very different from developing an artist's career, which is more like raising a child," he said.

But Mr. Blain resisted the implication that Christie's was only interested in the gallery's secondary-market business. "It's disappointing when people see [the sale of the gallery] as a commercial transaction," he said. "Well, I mean, of course it's a commercial transaction," he said, correcting himself, "but as only a commercial transaction, as though it ignores the artists." He added: "The whole purpose is to support the artists. ... If it was just private placement, I wouldn't need 37 people in London and Zürich!"

Mr. Blain argued that the relationship with Christie's will allow Haunch of Venison to support more large-scale projects — the gallery represents Keith Tyson and Bill Viola, both of whom do complex and expensive works — and to make more sales to museums. (Dealers always want to sell their artists' work to museums but museums want the best work for a discount, and it can be years before payment is made.)

Mr. Blain said he expects that if Haunch of Venison's relationship to Christie's is financially successful, and beneficial to the artists, it will be replicated. "Another dealer said to me that this could be the start of some consolidation," he said. "Most galleries are undercapitalized."
So far, no artists have left the gallery. Mr. Tyson did not respond to an e-mail query, and Mr. Viola, through an assistant, declined to comment. Another artist, Bill Fontana — one of whose sound sculptures, "Panoramic Echoes," is installed in Madison Square Park until May 1 — said he thought the relationship with Christie's was positive. "It will give them greatly enhanced resources to invest in the artists they represent," he said.

Another advantage to the artists of being under a large corporate parent, Mr. Porter and Mr. Blain both argued, is access to the international market.

With the opening of the New York space, Haunch of Venison alone will have four locations, including a "project space" in Berlin. Eventually, the plan is to open another space in downtown Manhattan, Mr. Blain said. In the long term, following the eastward expansion of the art market, he also wants to open a gallery in China.