Christies Auction Debacle 2023

Nov 07, 2023,04:15 AM

Many of you probably noticed that something very odd happened earlier today at the Christies single owner auction of Mohammed Zaman's collection.  There was an hour long delay at the beginning of the auction.  Then, during the auction, the low estimates jumped up in price for all the lots.  Here's an example involving a Ludovic Ballouard:

Original estime:

Revised estimate: 

This was an odd turn of events.  To make things even stranger, it appeared as though a specific bidder, paddle 1013, was winning the majority of the lots.

After discussing this auction with several collectors and individuals involved in the industry, I feel like I have somewhat of an understanding of what happened.

Christies made a very appealing offer to Mr. Zaman in order to win his business, guaranteeing that he will net a certain set amount of money on each of the lots that he submitted.  This was a way for Christies to entice him to sell with them.

Before the auction began, Christies realized that they had greatly overestimated market demand, and that many of the lots were going to sell for significantly less than the guarantee.  Christies would be on the hook.

And so they sought out a third party guarantor onto whom to transfer some of the risk.  Perhaps this was the reason for the hour long delay at the beginning of the auction, as they scrambled to work out the details with the third party.

At this point, Christies raised their low estimates to one bid short of the guarantee levels, in order to mitigate losses.  The original low estimates were a marketing ploy.  Bidders went into the auction thinking that they could win a piece for a certain amount, only to find out that the minimum had been significantly raised.  

And so the third party guarantor, whom I assume was represented by paddle 1013, walked away with a large number of lots for prices that we will never know.  I assume they won the lots at hammer price, with no fees, although we will never know for certain.

Mr. Zaman sold his collection in 2023 for 2022 prices.  

Allegedly, Christies has a similar guarantee deal with Mr. Getreide and his OAK collection.   Oops.

Moderator Edit: While the above scenario is considered to be speculative, it is a highly plausible scenario and is supported by facts.  I encourage all members to vigorously discuss the topic but try to keep your speculations within the supported facts.  Discussions about past auction house misconduct is appropriate too, but ideally it should be related to this story.  I have faith that all our members are going to pursue gentlemanly and thoughtful discussions, this message is just a word out of an abundance of caution.  Many many thanks and please carry on!  

This message has been edited by patrick_y on 2023-11-07 17:27:47

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It may be a legal thing

 By: Cozmopak : November 7th, 2023-04:36
They were obligated to raise it once they had a third party guarantor

Christie's is paying someone to take on their guaranteed minimum obligation.

 By: als1678 : November 7th, 2023-04:41
There were no unsold lots after the revised estimates.

That someone is not just someone, has to have some 🤑🤑🤑

 By: Clueless_Collector : November 7th, 2023-04:45
These auctions and the seller are not philanthropists….one side willing to sell, other side happy to buy…. Win-win to both sides.

These auction houses all seem to do incredibly sketchy things

 By: m2 : November 7th, 2023-04:38
Which is frustrating because they often end up with the super rare stuff. I wish other buyers would hold them to a higher standard when purchasing. At least that way they could step on consumers so badly.

A good opinion, but nevertheless, still just an opinion.

 By: patrick_y : November 7th, 2023-04:39
Yes, a bunch of sales cleared the low estimate plus the 26% buyers premium. And many to the same paddle. So your theory is definitely a good theory. But - for now, it's just a rumor with little factual basis from those in the know. But good theory! I'd sa... 

We will never know the “facts”

 By: Cozmopak : November 7th, 2023-04:43
Auction houses operate under a cloak of secrecy. But what we do know is that what happened during the auction with low estimates being raised suddenly was at the very least extremely unprofessional.

Agreed. Very secret.

 By: patrick_y : November 7th, 2023-04:48
And I agree, your theory covers all the sparse facts we do know and paints a likely scenario about what happened.

Another “fact”

 By: Cozmopak : November 7th, 2023-04:47
Is that the decimal repeater Kari at that auction was broken. I emailed Christies about it and told them to update their disclosure. They blew me off. Lol


 By: Cozmopak : November 7th, 2023-04:54


 By: m2 : November 7th, 2023-05:10
It’s weird since there’s usually some consumer recourse for stuff like this in most countries…

Buyers' recourse against auction houses... mmh not sure that works

 By: VinnieD : November 7th, 2023-07:42
My experience is that once the hammer falls, all accountability disappears. This is a typical adverse agency problem: 'bad' owners or pieces end up at auction for that very specific reason. Good grey dealers show more accountability than auction houses.

Recourse is possible …

 By: Cpt Scarlet : November 7th, 2023-09:08
You would need to take firm legal action against the auction house to stand any chance of getting satisfaction. Against this you have to weigh up the significant costs.

Consumer protection agencies can be pretty aggressive

 By: m2 : November 7th, 2023-16:10
In the US at least, not sure about outside of the US. But here it's pretty easy to get sued by a consumer protection agency if even just ~3 - 5 people report you. We had ~4 people file a complaint for a business with ~500,000+ customers and the UT consume... 

Right before the auction the estimates jumped up, the third party guarantee was disclosed.

 By: als1678 : November 7th, 2023-05:14
Everything sold! Those are facts. I personally completely disagree with how you frame this discussion - members of the forum should be allowed to freely express their opinions on what had transpired. Given plenty of historical precedents, there is no reas... 

Just "Moderating" the conversation here...

 By: patrick_y : November 7th, 2023-16:34
I find these false accusation or fact-less accusations ungentlemanly. Hence, why I'm trying to remind readers about speculation. Am I wrong? You're not wrong, as you stated, this is a message board and not a news outlet. But this isn't a Reddit board wher... 


 By: Cozmopak : November 7th, 2023-16:45
I know that you mean well. And I truly appreciate your moderating efforts. I have had several discussions with collectors on this forum about your moderation as being perceived as combative and defensive. I'm offering you this insight constructively and i... 

So far we are all good, I haven't seen too wild of speculation on the forum yet.

 By: patrick_y : November 7th, 2023-17:11
You are mistaken. You, and other members are making a huge assumption that I'm of an older generation. Just because I use the antiquated word "gentlemanly" doesn't mean that I'm approaching this from an older generation perspective. There are also other m... 

I think the word schadenfreude still applies in my context. But if you can think of a better word...

 By: patrick_y : November 7th, 2023-23:58
If you can think of a better word, I'm all ears (eyes in this case, since you'll probably type it). My vocabulary isn't as good as it used to be! But yes, I feel many of our members take pleasure in criticizing and pointing out the failures of big brands ... 

lol true

 By: m2 : November 7th, 2023-20:28

I haven't seen that episode.

 By: patrick_y : November 7th, 2023-22:43
Haven't really seen that show - caught half an episode on an airplane. Sounds like a hilarious show though.

I'm aware of the facts.

 By: patrick_y : November 7th, 2023-16:58
There is no need to suggest that I am giving the benefit of the doubt to auction houses. Your participation here already makes the assumption that your moderators are as objective as possible.

Interesting read. Checked the results yesterday evening and found them odd in some cases. Do you have a list of watches bought by 1013?

 By: nafetS : November 7th, 2023-06:14
Shady sales processes are a part of the watch industry I‘m afraid, not just in auctions, but also in first hand sales and grey market sales (I of course don’t want to say that they make a majority of the sales, but they happen often enough). In my experie... 

As a side note, prices seem to be extremely soft at the moment across the board

 By: VinnieD : November 7th, 2023-07:49
...and I am convinced this is bound to persist. Several new impromptu collectors are likely being burned right now and will exit the market with a loss. All the better for real enthusiasts and collectors who were priced out in the last 2 years I remain ne... 

I spoke a lot of people yesterday because of this MANIPULATED auction ( also a link to a good article in this message )

 By: Bruno.M1 : November 7th, 2023-08:10
On my IG stories I wrote something about it and the messages I received were overwhelming. And believe me, some of them were from really HUGE collectors. One thing is clear, none of them had something positive to say Anyway, this article sums it up perfec... 

We Live In Interesting Times

 By: enjoythemusic : November 7th, 2023-12:23
Am not at all surprised, it's an auction house.

I wasn't that surprised neither...

 By: patrick_y : November 7th, 2023-17:44
I was thinking - totally not surprised. The only thing surprising was that it was so obvious... It must've really been a last minute decision!

Not surprised, we have long been questioning auction house tactics..

 By: jp884 : November 7th, 2023-16:27
It's the only way I can wrap my head around what Roger Smith watches go for now vs 3 years ago. They are great watches but are they really worth $700k+ at auction?

Same for Rexhep and dufour

 By: Bruno.M1 : November 7th, 2023-17:14
And don’t get me wrong cause if you ask me to name my 3 dream watches…. It would be dufour, Rexhep en smith But the amount they sell for today is a big joke Even at list they’re massive overpriced

At least none of them were stolen, this time.

 By: Spangles - Dr. Tabby : November 7th, 2023-17:25

Oh so true!

 By: patrick_y : November 7th, 2023-17:31

This will probably be investigated.

 By: Boris : November 7th, 2023-19:26
And my money is on the auction house’s lawyers having done their homework to ensure they abided to the law from a strictly formal, if not moral, standpoint. But I can’t help thinking that if this were a different jurisdiction (say, the US) and a different... 

Help me out here.

 By: Jay (Eire) : November 7th, 2023-23:52
The auction house client, to me always the seller, is surely not complaining. So the estimates move up, estimates are a teaser. They are supposed to entice bidders. They have historically always been low. A guarantor was needed to create a floor in the bi... 

??? There’s no bait and switch here.

 By: Jay (Eire) : November 8th, 2023-20:49
And I’m not pro auction house just for the record. Generally speaking catalogues are way too broad for the folks there to have the expertise to cover every lot, and then the vintage world is so littered with minefields that who knows really what’s truly c... 

I think there are two points - one bidder possibly had inside knowledge of the floor, other participants didn't.

 By: als1678 : November 8th, 2023-17:41
Second - the winning bid is not necessarily the price at which the watch sold. If that bidder is associated with the guarantor they are not paying fees to the auction house, in fact they are collecting a fee. So you are bidding against someone who is auto... 

But that bidder is being paid to make the floor on price.

 By: Jay (Eire) : November 8th, 2023-20:58
They are not doing that without risk right? And their fee is based on the risk being assumed. By definition they are only needed when there is a risk that minimum prices might be achieved and so once they are brought to the table it’s acknowledged that in... 

I am not saying that paying a third party to take on the risk is necessarily bad.

 By: als1678 : November 8th, 2023-21:55
But, and this is a speculation, if that third party was also a bidder and a buyer then there is a conflict of interest and the results are not real market prints. You don't really know the spread between how much the buyer is paying and how much the selle... 

I understand the point you are making.

 By: Jay (Eire) : November 9th, 2023-20:14
Assuming no other bidders to take the lot above the reserve then the reserve (which is the max bid the insurer will make in that case) is the winning bid. Yes, this is not reflective of a competitive bidding process. If the lot it bid higher than the rese... 

We are mostly on the same page I think. Absolutely agree that bidders should do their research. But the issue with transparency / lack of footnote is real and affects such research in the future.

 By: als1678 : November 9th, 2023-23:31
You mention that once bidding passes the guarantee the insurer is no longer involved. I thought the same but then someone pointed to me that in high value art auctions the insurer often gets a percent of the amount above the guarantee, basically shares th... 

Yes, may be also the case.

 By: Jay (Eire) : November 10th, 2023-15:07
Sharing some of that upside can make the “premium” a little cheaper for the auction house. To me, as I’ve said, this is a financial tool which allows the auction house to do its business. I’m curious as to what firms provide this type of product to the au... 

In the art world at least the guarantors are mostly wealthy collectors who are already clients of the auction house.

 By: als1678 : November 10th, 2023-20:25
There are clear incentives to manipulate the market. Is it illegal, does it happen? I have no idea.

A good article today on SJX about this auction

 By: sham1 : November 8th, 2023-05:24
and the general state of the auction market

Personally - I don’t see a problem here.

 By: Timeout : November 8th, 2023-23:48
Let’s be honest - we’re talking about the sales of “nice to haves” to an extremely small minority of the global population. If someone wants to up the ante on the minimums and has the capital and liquidity to do so then that’s their choice. Every buyer at...