How Do You Solve A Problem Like Tobias?

This past Friday, Sotheby’s released the news that Tobias Meyer, chief auctioneer and worldwide head of their contemporary art department, will be departing “by mutual decision” at the end of his current contract. Originally elevated to run the London office’s contemporary art wing in 1992, Meyer was crowned as global lead in the department five years later, then handed the auction house’s top gavel in 2000. This means he has been the public face of Sotheby’s throughout the contemporary market’s explosive growth this millennium. (As noted here, the research firm Arts Economics calculates that the market’s value has grown by 2,000% since 2009, now topping out at a tidy $6B total. Yes, that’s a ‘B.’) According to the official statement, he will transition from Sotheby’s New York headquarters into the role of a private dealer.

The core question surrounding this news is simple: How big a loss is Meyer’s exit for Sotheby’s? While it’s impossible to quantify, my answer is that it’s a potentially crippling blow. 

The reason comes down to relationships. When not at the dais coaxing actual bids in prime time, Meyer’s job was to organize each contemporary sale on Sotheby’s calendar, particularly the major spring and fall auctions in New York. In practice, this meant an around-the-clock campaign of networking, politicking, charming, and negotiating with collectors and dealers across the globe - and on both sides of the auction block.

You need two key ingredients to set auction records: acknowledged masterpieces, and hungry collectors willing to bid against one another for them. Meyer’s responsibility was to court both. He had to convince current owners to consign universally treasured contemporary works to Sotheby’s rather than their rival Christie’s (or any number of private dealers), and he had to convince would-be owners to acquire Sotheby’s high-end contemporary inventory rather than (or at least in addition to) everyone else’s.

Neither is an easy task. Christie’s has been mauling Sotheby’s of late - the former outsold the latter by $200+MM in the spring contemporary sales and by $300+MM just about ten days ago in the fall sales. Based on those grim results, I’m sure some would argue that Meyer has lost a step. But as the New York Times pointed out, he has been behind the podium for the sale of three $100+MM artworks since 2004, including Warhol's Silver Car Crash (Double Disaster) this November for $104.5MM. The heart of the matter is that every contemporary masterpiece that Sotheby’s has consigned and sold since Meyer’s ascension has been largely because of him. 

Why? Because, despite their very different business models, Sotheby’s and Christie’s can offer identical terms to every potential consignor. Choosing one auction house over the other basically rests on the question of whose representative you like and trust more to fetch the highest sales price for you. Transactions in the contemporary art world are almost invariably personal negotiations. Attorneys can get involved in contract language. Advisers (official and unofficial) can voice their opinions in the margins. But in general, deals are struck by two to three people chatting over dinner, convening in a gallery’s back room, or enjoying (or at least faux-enjoying) a weekend together at someone’s summer home. Committees are for museums. Private sales are the province of the independents. And as the stakes scale, the more intimate and prolonged the dance between client and dealer often becomes.

This is the key point: Given the personal nature of these transactions, Meyer wasn’t effective because of Sotheby’s brand. He was effective because of his own skill set, his own relationships, his own powers of persuasion. Over time, the auction house benefited more from his brand than vice versa. Transitioning into the role of a private dealer makes complete sense because, for all intents and purposes, he’s already been operating as one for the past 21 years. His office just happens to have been inside the larger construct of Sotheby’s. When he leaves, he takes his most trusted clients with him - and the only way they ever deal with Sotheby’s from this point on is with Meyer’s blessing.

This reality herds Sotheby’s into a precarious position. First, they have to choose whether they will attempt to elevate a single person to fill the dual roles of lead auctioneer and impresario of the worldwide contemporary department, or two separate individuals. But in either case, the crisis is the same. Meyer’s replacement(s) will essentially be starting from near zero with not only Meyer’s network, but to a certain degree, the entire strata of collectors at the apex of the art world’s pyramid. As reductive as it sounds, if his successor(s) already had solid transactional relationships with masterwork-level collectors, they would have already managed to devour Meyer from the inside like a flesh-eating bacteria. Now they must cultivate his contacts, replace his contacts, or suffocate in a cold vacuum of second-tier assets and middling hammer prices… and risk bringing the auction house down with them, since the contemporary sector is now the most active and most lucrative in the arts.

Christie’s may have obliterated Sotheby’s in 2013’s major contemporary sales. But the ~$380MM Sotheby’s raked in this fall was their highest total ever for an auction - not just of contemporary art, but of any genre. Meyer was crucial to that outcome. Whoever replaces him, Sotheby’s will be as dependent on them for its success or failure as it was with him. If the ship is already listing so badly with a helmer who can navigate them to record organizational grosses, how much longer can it stay afloat once Meyer leaves?