Sotheby's reported its yearly and quarterly earnings to the end of 2010 yesterday, trumpeting the results as the best in its history, outside of the bubble year of 2007. Total revenues were $318 million for the quarter, an increase of 46 percent. For the full year, revenues were $774.3 million, up 60 percent on 2009, while net income rose to $96.2 million from $73.6 million. Total consolidated sales amounted to $4.8 billion for the year.
What's behind the surge at Sotheby's? The key word is "global." According to the official announcement to investors, the success is owed mainly to an increase in auction commission revenues stemming from a strong global market for art at auction. CEO William Ruprecht, meanwhile, said: "The recovery of the global art market, which was aided in part by the increased buying activity of clients from new markets, certainly contributed to these results." (This was consistent with the analysis Christie's offered of its strong 2010 sales as well, which totaled $5.2 billion.)
At the same time, 2010 saw the number of lots sold for more than $1 million at Sotheby's more than double. Since that marks the point at which the buyer's premium — the additional charge the auction house adds to sales as a fee — declines from 20 to 12 percent, the same near-record quarter also saw a decline in "sales margin," from 20.7 percent to 18.3 percent in 2010. In other words, Sotheby's made more money overall, but was also less profitable.
The announcement marks a good omen for the art market going into New York's important Armory Week of art fairs — though, at the same time, the fact that the results are matched only by 2007, which has come to be remembered as the peak of a precarious bubble, might give one pause as well.