THE DEVIL IS IN THE DETAIL | February 10th 2008

Christie's Images, 2008

Auctioneers have been bullish lately, boasting record sales to quash fears of a slow-down in the art market. But the story is a bit gloomier upon further inspection, writes Fiammetta Rocco, the Books and Arts editor of The Economist ...

Auctioneers are as good as politicians, if not better, at putting a jolly spin on stories. The week just ended was one of the busiest of the year, and both Sotheby's and Christie's were keen for it to be remembered as one of their best.

"The highest total ever for any sale ever held by the company in Europe," trumpeted Sotheby's after their Impressionist and modern art sale on Feb 5th. "Five lots sold for over £5m ($9.7m)."

Christie's were just as bullish at the end of four days of sales. "Forty-one lots sell for over £1m; 74 for over $1m; 23 new artists' records established."

Jussi Pylkkanen, president of Christie's Europe, was particularly keen to dispel any concerns over the recent volatility in the stockmarkets and show that it was business as usual. "This was the third successive series of auctions at Christie's London to realise over £200m, following the corresponding sales weeks in February and June 2007," he said. It was as if the credit crunch and the sub-prime crisis had been left firmly at the elegant auction house door, along with dogs, muddy gumboots and maxed-out credit cards.

The aim was to prove that fears about an impending recession were unfounded. But was the auctioneers' bullishness really warranted, or does a detailed breakdown reflect a gloomier reality?

Take Christie's sale of Impressionist and modern art, one of the highlights of the week.

The auction starts at 6pm, and is generally considered a posh affair. Bidders, many in suit and tie, tend to be more elegant than their daytime brethren. And the pictures are usually smarter and more expensive than those in other sales. The auction houses' experts have examined hundreds of pictures in advance of the sale, and they turn away many more than they accept. This is an event that should not go wrong. Only the best work of the most saleable artists is included.

The glossy catalogue lists the provenance of each lot and provides a mass of art-historical detail. It also sheds light on the complex psychological three-way relationship between auctioneers, sellers and buyers.

The auction houses need to give bidders an idea of how much a painting will go for. Its pre-sale estimate is quoted net of buyers' premium, VAT, the artist's resale tax (or droit de suite, as it is usually known), and any other extra cost. But the price a picture fetches is quoted with all these included.

The auction houses argue that this reflects more accurately the full cost paid by the buyer. This is true. However, there is also a psychological reason why pre-sale estimates and post-sale prices are calculated differently: a pre-sale estimate that is quoted net of costs is lower, which helps attract potential bidders. A high post-sale price helps boost auction records and is a psychological boon to sellers.

To get a real picture of a sale, you need to compare like for like, counting both pre-sale estimates and post-sale prices as being net of costs.

Looked at in this way, a closer examination of Christie's sale of Impressionist and modern art this week shows that things did not go quite as well as the post-sale press release let on. True, there were some notable successes: Picasso's 1938 "Femme au Chapeau", which featured on the back cover of the catalogue, fetched £5.7m, far more than expected.

Just as successful was one of the Egon Schiele gouaches that sold to benefit Ronald Lauder's jewel-like little Neue Galerie in New York, and a roughly hewn head in wood carved in 1916-1917 by Karl Schmidt-Rottluff, a German Expressionist sculptor.

Despite the apparent popularity of the artists on show, however, the sale was, on the whole, a less-than-stellar event. It began badly when the first lot, "Faunesse debout", a bronze of a woman by Auguste Rodin, failed to sell at all. As the evening wore on, two-thirds of the sale proved to be a disappointment. Of the 97 remaining lots, 25 others besides the Rodin failed to find a buyer, including a Matisse, a Pissarro, a Chagall, three Schieles and two works by Picasso.

Moreover, a further 33 lots sold only at the low estimate or below. Of the seven paintings by Alexej von Jawlensky, a bold, Russian-born Expressionist who worked in Germany, only the first that came up, the "Mädchen mit roter Schleife" of 1911 (pictured above) fetched a good price (£2.9m). Two others barely reached the bottom of the estimate; the four remaining did not sell at all.

The record prices reached in 2007 have brought a flood of new works to the market. But sellers have become greedy and buyers are nervous. Christie's Mr Pylkkanen and his fellow auctioneers will have a hard time calming them with soothing words, however much they try.

(*Fiammetta Rocco writes the Art.view column on Economist.com, and is the author of "The Miraculous Fever-tree".)