Sonnabend Goes Private

Sonnabend Goes Private
For a look at five works believed to be a part of the April sale, click here.

 

In a move that left art market observers flabbergasted, the heirs of the dealer Ileana Sonnabend, who died last October at age 92, sold a portion of her postwar-art collection privately for $600 million. The earlyApril transaction—the largest private sale in history—completely bypassed the major houses just ahead of their big spring evening auctions in New York.

 

Several factors led the Sonnabend estate executors—Antonio Homem, Sonnabend’s adopted son; and Nina Sundell, her daughter by first husband, Leo Castellito dispose of about 25 works by such artists as Jasper Johns, Bruce Nauman, Robert Rauschenberg and Andy Warhol in a deal handled by the powerhouse art world attorney Ralph Lerner, of the New York law firm Withers Bergman LLP.  The primary impetus was a loomingdeadline to pay an estimated $450 million to $500 million in taxes on the billion-dollar-plus estate. “It seemed to us easiest to work with people we knew who wanted to make purchases that would add up to the kind of figure required,” says Homem.

The fluctuating financial markets were also an issue. Christie’s and Sotheby’s already had more than $650 million worth of art lined up for their postwar and contemporary evening sales, and adding works valued at another $400 million to $600 million seemed risky.“In an uncertain economy, the executors felt thatthe prudent thing to do wasto raise their cash needsas soon as possible, and that is what we did,” says Lerner.

Pressed to respondto criticism, notably from the auction houses, that the family left money on the table in the transaction, Lerner replies that, in proceeding in this manner, “we had no risk.” Homem says he is happy with the outcome, adding, “It’s very important that Nina and I are able to basically keep the collection.” But given the size of her assets, Sonnabend’s lack of estate planning shocked several observers. “This is a prime lesson on how not to handle an estate,” says one New York–based art adviser. “They had all the time in the world to designate trusts and deploy different vehicles to keep the collection intact.” The exact numberof pieces owned by the family is not publicly known.

Although details are veiled by confidentiality agreements, it is understood that two sets of works were involved. One was a group of approximately 10 Warhol paintings that was split between two buyers in an approximately $200 million transaction brokered by the New York überdealer Larry Gagosian. The remaining $400 million or so was realized through the sale, handled by the private New Yorkand Paris dealership Giraud Pissarro Ségalot (GPS Partners), of a second set of works, including Jeff Koonss sculpture Rabbit, 1986; a Warhol Silver Disaster, 1963; and at least three paintings by Roy Lichtenstein, the priciest of which, Eddie Diptych, 1962, is estimated to have sold for $65 million to $80 million.

The purchasers in the Gagosian part of the dealare believed to have been the44-year-old oligarch Mikhail Fridman, the founder of the Russian financial-industrial conglomerate Alfa Group, and the Greenwich, Connecticut–based hedge fund manager Steven Cohen. The GPS client or clients remain a mystery, but some speculate that the buyer was the Mexicantelecommunications multibillionaire Carlos Slim Helú, who is building an addition to the Museo Soumaya, his family-owned museum in Mexico City. Several sourcesalso claim that the collector François Pinault bought the Koons Rabbit, whichthe French tycoon has long coveted, for $65 million—more than double the artist’s auction record.

Indeed, some in the business doubt that the GPS deal involved just one buyer and suggest that both that dealership and Gagosian recruited minicartels of top clients to scoop up the trove. “The day Ileana died,” says a prominent New York art adviser, “we started getting calls from dealers who wanted to round up a posse and go after the whole thing.”

Efforts to reach GPS for comment were unsuccessful, but the Gagosian Gallery had prepared a written statement trumpeting its success:“The substantial private sales made recently from the Sonnabend collection clearly convey the important message to collectors and institutions that some private galleries, such as Gagosian, can more effectively handle transactions of this scale than their auction counterparts.”

The New York dealer David Zwirner agrees. “As you can see from the Sonnabend deal, the private markethas many strengths,” he says.The heirs “were sending signals out to the community: ‘Make us offers.’ And the private dealers beat out the auction houses.”

Zwirner himself was in a similar position recently. This past March, his eponymous gallery—along with affiliates Hauser & Wirth, of London and Zurich, and Zwirner & Wirth,of New York and Zurich—went toe-to-toe with Sotheby’sfor the Pop and Conceptual artworks of the German collectors Helga and Walther Lauff, whose complete holdings are reportedly worth €400 million ($635 million). In the end, the auction house and the dealers split the property.

Others in the art world share Gagosian’s and Zwirner’s enthusiasm. “It is nice to know the market can be bigger than the duopoly of Christie’s and Sotheby’s,” says Mary Hoeveler, the former managing director of Citigroups Art Advisory Service, in New York. “There are other ways to go.”

Still the Sonnabend coup left out many significant players, including the paper magnate Peter Brant. The Greenwich, Connecticut, collector made some of his first purchases in the 1960s from Galerie Ileana Sonnabend, in Paris, including a Warhol “Disaster” painting for which he paid $35,000 in 1969. “I was not given the opportunity to buy anything,” laments Brant, “butyou have to give credit to the dealers who put it together and to the collectors who made up part of the group.”

The auction houses, of course, don’t see it quite that way. As one high-ranking specialist puts it, “The number of disappointed people who have spoken to us about not having the opportunity to buy is an indication of what would have happened if you had gotten the billionaire titans bidding against each other.”

George Sutton, a stock market analyst with the Minneapolis-based firm Craig Hallum Capital who tracks Sotheby’s shares, sees wider consequences. “Anytime a private sale happens, it’s a concern” for the investment community, he says. “It’s a surprise and a disappointment for the auction market—and a bit of a revenge for dealers.”

"Sonnabend Goes Private" originally appeared in the June 2008 issue of Art+Auction. For a complete list of articles from this issue available on ARTINFO, see Art+Auction's June 2008 Table of Contents.