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This is how the bosses at, respectively, Christie's and Sotheby's could be described in late 2011.

This is also how the new bosses at, respectively, Sotheby's and Christie's, can be described today.

Tad Smith's appointment as president and CEO at Sotheby's from March 31 indicates - on the surface at least - that the two great auction rivals are swapping visions as they reposition strategy.

The sudden departure of Stephen P Murphy from Christie's in December after three years marked the end of a vigorous period of gloves-off competition for trophy art at any cost, which reportedly resulted in the company failing to make any money from the sale of Jeff Koons' Balloon Dog (Orange) despite it going for $52m hammer in New York in November 2013. The battle of the brands was all-important, as was the gloss of luxury that multi-million dollar hammer prices gave the company.

Pylkkänen Promotion

Significant uplift in online investment also marked the Murphy rule. The long-term potential of internet sales appears favourable but shorter-term margins less so.

The did-he-jump-or-was-he-pushed debate continued after he ceded his position to the duo of Patricia Barbizet, CEO of owner François Pinault's parent company, as CEO and Jussi Pylkkänen, a 29-year Christie's veteran Impressionist and Modern specialist and the firm's top auctioneer, as president.

In Pylkkänen, Christie's appear to be turning back to expertise within the auction world, although with Barbizet in pole position, marketing and business development from a broader perspective will also be playing its part.

Meanwhile, across at Sotheby's 35-year auction veteran Bill Ruprecht - who began by training as a rugs specialist - is preparing to make way for Smith, a Harvard Business School graduate who for the past year or so has been CEO of the Madison Square Garden Company, where he oversaw the overall strategy and day-to-day operations of MSG Sports, MSG Media, and MSG Entertainment.

Sotheby's new chairman, lead independent director Domenico De Sole - a retail luxury goods specialist himself - described Smith as "a proven leader and value creator with CEO experience, strategic vision, brand-building expertise, an ability to serve client needs, and a track record for driving revenue and profit growth".

As one mergers and acquisitions specialist who keeps an eye on the international art and antiques market, but asked not to be named, told me: "In some ways this is no different from any other industry. Sotheby's want to maximise shareholder value by applying the same marketing techniques as other businesses. That means pushing prices at the top end.

"It's about the commoditisation of the market, which may well work in the long term, but comes up against the traditional ways of doing business in the short term, especially in terms of valuing expertise."

Investors are not there to be sensitive, he added. "They want change and they want it now. History will tell whether they are doing the right thing."


Smith reportedly intends to focus on boosting Sotheby's brand and ramping up the firm's internet offer, which sounds similar to the strategy Murphy adopted at Christie's.

Both firms have market-leading brands and both have the financial clout to compete for market share at the top level. However, Christie's owner and Sotheby's highly active shareholders expect to reap far better yields for all the multi-billion dollar annual sales totals than they have. That has probably been the biggest driver of change at the top.

Both auction houses must now focus on greatly improved profit margins… but not at the expense of market share. They may appear to have swapped direction when it comes to the guiding expertise for reaching this target, but it is difficult to see how they can avoid taking the same path.

Revenue Streams

Client service and developing new revenue streams from non-core business, such as their finance and realty arms, as well as kickstarting flagging private treaty sales, will have to be at the heart of both firms' strategy. And they must do this while cutting costs, a considerable challenge when one considers just how expensive marketing a global brand like these two has proved over the years.

In Christie's case, the elevation of Stephen Brooks to global COO completes a triumvirate that indicates the sort of balance between asset development and understanding of the auction process required to take the business to the next stage.

One only needs to look back to the dog days of Phillips under LVMH to see that expertise in one part of the luxury sector does not guarantee success in another.

Whatever Smith does in executing his plan he would be advised to take on board two clear truths: auction is not retail and, like it or not, art does not behave like other commodities.