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It was Easter Monday 1986 and I found myself in the departure lounge of Leonardo da Vinci, Rome's airport, waiting to fly back to the UK. Looking over the shoulder of the person sitting next to me, I noticed the headline on the newspaper they were reading. Roughly translated, it read: 'British Queen's home on fire'.

Buckingham Palace! I immediately thought. But it wasn't long before I realised that the article actually referred to Hampton Court.

What seriously alarmed me was that I was a cub reporter on the local newspaper at the time and the area I covered included Hampton Court Palace. The biggest story to break on my patch since I had started my career as a journalist and I wasn't even in the country.

Having missed the initial scoop, I was determined not to be caught out again and, back in the office the next day, arranged to be given a tour of the charred ruins of what was a significant part of Christopher Wren's extension, built on the orders of William and Mary.

Shock and destruction

A few hours later I found myself clad in Wellington boots stepping gingerly across the wreckage of the King's apartments, the roof open to the sky two floors up, and all about me collapsed, with blackened timbers, plaster and other amorphous debris smoking gently under a light fall of rain. The shock was palpable. Hampton Court had always been there, part of the fabric of our history and an institution. What I was witnessing brought home to me how even the most established parts of our culture could not be taken for granted, and that they could disappear in all but an instant.

The smell of burning was still strong and my next thought was how they would ever come back from this.

However, my abiding memory is the sound of loud crunching under my feet wherever I went. Looking down, covering most of the debris I saw an ocean of tiny blackened scallop shells. There must have been millions of them. Think of Ai Wei Wei's sunflower seed installation and you begin to get the picture. I picked one up as a souvenir but it crumbled almost immediately in my hand. It transpired that Wren had used the shells to fill the spaces between the joists, providing sound and heat insulation, and they had come raining down as the building collapsed.

There can be no doubt that what was learnt in the aftermath and recovery contributed significantly to our understanding of the palace and the development of conservation. There was tragedy, but then there was triumph.

That sea of blackened seashells came to mind again when considering two of our own industry's firmly established cultural icons, Christie's and Sotheby's, as I read all the breathless speculation surrounding Stephen Murphy's departure from the former a mere ten to 12 days after the announcement of Bill Ruprecht's resignation at the latter.

Change of direction

Is the roof about to cave in? Will all those hard-to-grasp, blue-chip contemporary artworks and their associated guarantees come tumbling down as the bubble finally bursts?

Maybe not yet, but the two vacancies at the top certainly indicate that both companies have realised the current direction of business has to change.

Here are some questions I would like answered:

  • Why sideline the middle market, where most of the profit is made, especially when it can also supply those vital new buyers and collectors who eventually spend at the top end?
  • Why do so when your buyer's premium rates are staggered to favour margins at the lower-to-middle price ranges, a hedge against the bad times?
  • If you are going to develop sales online, have you ensured that your most prized clients, opting to bid at the click of a mouse as a novel alternative, will receive the same level of after-sales service to which they have become accustomed in the saleroom itself?

Behind the imposing façades of Bond Street and King Street, Rockefeller Plaza and York Avenue lies what appears to be an increasingly hard-nosed and, dare I say, frantic atmosphere as the stakes at the top end of the market rise ever higher. Booming sale prices may seem to herald the good times, but all the signs have shown that the clamour for market share at the top has become so frenzied common sense may already have fallen by the wayside.

In this sort of environment businesses tend to take more risks, however soundly calculated they may appear. Most dangerous of all is the tendency to lose touch with the real world; such loss of objective perspective can make one genuinely consider all sorts of practices normal and acceptable, only to discover in the cold light of day, once the party is over, that the rest of the world deems them anything but.

The test is: would I feel confident attempting to justify my actions in front of a government select committee or the equivalent committee in the Senate or House of Representatives if they decided to review practices within our industry?

With this in mind, here is something the boards at both of our leading auction houses might like to consider as they do some serious thinking about their business models in order to make them fit to compete in the marketplace for the long term: the third-party guarantee, also known as the irrevocable bid, could prove to be one of the biggest threats to a market attempting to stave off direct regulation.

The chief motivation for introducing it - to offset risk onto a third party - is clear enough and understandable. However, this esoteric arrangement raises too many questions and much suspicion among outsiders. The agreed purchase level must at least meet the reserve and, one assumes, cannot rise above the low estimate if bidders are not to be misled. But, this all has to be taken on trust as the auction houses guard the details jealously.

Market manipulation

It's one thing asking wealthy top-tier collectors to take a punt on works they may or may not want in return for a share of the profits should the guarantee level be met by another buyer.

However, as far back as 2011 The Economist reported a list of leading dealers as guaranteeing works at auction. It remains unclear whether the trade are guaranteeing works by artists they represent directly or have a clear financial interest in propping up, but if so, then this is surely a step too far along the road of market manipulation.

It might be clever; it might even be legal, but as far as I (and I suspect the man in the street) am concerned, one thing is certain: it isn't right.

My guess is that it won't be long before other people of influence outside the art market take the same view and if this is the sort of thing going on when that happens then there will be trouble.

The public spotlight will turn its full glare on the way the whole industry does business. Are we ready for that?

A key element of business planning must be to ensure that in mitigating one type of risk you do not expose yourself to others. Is it purely coincidence that in their first corporate announcement of new appointments since the departure of CEO Stephen Murphy, Christie's have stated that as well as being responsible for the day-to-day management of corporate activity, new Global COO Stephen Brooks will now adopt responsibility for the management of "global infrastructure and risk planning process"?

It's time for the top end of the global art market - auctioneers and dealers - to consider all this carefully before someone else does. Otherwise it is only a matter of time before there is another bonfire of the vanities.

As that Hampton Court fire of 1986 taught me, however established in our psyche an institution may be, it cannot be taken for granted.

I, for one, have no desire to witness the aftermath of another conflagration.