Complex Deals Fueling May Art Auctions

On the coattails of the Frieze and TEFAF art fairs, the art world is gearing up for another busy week in New York, during which the major auction houses will hold their yearly May auctions of Impressionist, Modern and Contemporary artworks. Approximately $1.9 billion of art was sold last May,¹ and auction property with a similar aggregate value is expected to go "under the hammer" this week. 

As the value and volume of artwork transacted continues to set new records on practically an annual basis, and artwork is increasingly viewed as an asset class for both long-term and shorter-term investment strategies, the art market has witnessed an evolution in the structures employed for auction consignments of high-value works. In the current market, financial deals for consignments often include complexities such as "house" guarantees, "third-party" irrevocable bids² and advance loans (whether to the consignor³ or irrevocable bidder). From 2016 to 2018, the use of