Guaranteed Sales Fuel The Art Market

Sellers want peace of mind, so auction houses are prearranging bids

- Katya Kazakina

From the moment Christie’s announced plans to sell a painting by Leonardo da Vinci, the buzz around the 500-year-old canvas swirled from Hong Kong to San Francisco. Naysayers questioned the authenticity of the rediscovered masterpiece, Salvator Mundi, but that didn’t stop more than 30,000 people from lining up to view the work during a whirlwind global tour. On Nov. 15 some 1,000 people packed into Christie’s salesroom in Midtown Manhattan, across from Rockefeller Center, to witness the event. Art world insiders were taking bets on the outcome.

It sold for a record-shattering $450 million. But the work already had been guaranteed to sell for more than $100 million weeks before the auction, thanks to a prearranged bid. Only 12 other artworks have ever passed that price milestone.

Over the past decade, such guarantees have become a must for the world’s top two auction houses, Sotheby’s and Christie’s Inc., as well as some smaller houses like Phillips Auctioneers LLC. The guarantees help the houses land the next big trophy work and gain greater market share. For sellers, the guarantees are like an insurance policy. “It became absolutely de rigueur that they ask for a guarantee option,” says Ed Dolman, a former Christie’s chief executive officer who now fills that role at Phillips.