One of the Art Market's Biggest Secrets, Revealed

0:01The secrecy is incredibly attractive. So basically what Christie's is doing, they are reaching out to their top clients they think might be interested in this particular work. And it could be a handful, maybe two handfuls at most.

0:21Katya Kazakina:I'm Andrew Russett, and this is The Art Angle, a podcast by Artnet News.

0:33Katya Kazakina:art net pro has just released the latest edition of the art net intelligence report the year ahead which has comprehensive statistics about the past year in the auction market and a wide variety of interviews with important players and analysis of what has happened and where we could be headed as an art industry the cover story is called dark mode and it looks at private auctions, I am thrilled to be joined by Artnet's art detective columnist Katya Kazakina. Katya, thank you for coming on the podcast. It's such a pleasure to be here. It's been a punishing few years for the art market. When we have released these reports over the past couple years, we have mostly come on to discuss very bad news, a prolonged contraction.

1:22Katya Kazakina:Tell us what the report says this time? Is it more bad news? What happened in the data? I'm much more optimistic this year, and I'm so glad to be here and discuss this. We finally have turned the corner in one way, but the big picture is that the top of the market rebounded last year in 2025, and the total fine auction sales jumped 13.3 % to$11.7 billion in 2025. So that was great news after a few years of downward trajectory. However, just keep in mind that that's still down from the recent peak of$16.6 billion in 2021. So$11.7 billion versus the peak of$16 plus in 2021. But we're seeing kind of this momentum continuing.

2:15And actually in London, the sales were up 17 % from a year ago. And the Hong Kong sales just now also posted big, big increases from the previous year. So it seems that the auction market is on the upswing.

2:28Katya Kazakina:Yes. So finally, some good news for us to delve into. Maybe then we should do almost a recap of 2025. Because I remember the last time we got together for our mid-year intelligence report, This was an especially bleak moment. There were a number of high-profile galleries that had closed. The sales that you're describing, Hong Kong at the end of March, London as well shortly before that, the November sales, they had not yet come and we were kind of deep in a dark place. So walk us through what happened last year and the trajectory you've seen. Sure, sure. So, I mean, the trajectory has been bad for a while, like for three years.

3:05And I think last year was particularly bad because I think that the reality of the contraction really sunk in and it's been longer than anyone really expected it to be based on the previous financial crisis contraction, which was much shorter. It was kind of like, is this the new normal? The sales were down at auctions. The galleries were really struggling and started closing in very alarming numbers. And it was kind of like an existential moment for the art market.

3:35Katya Kazakina:A crisis of confidence for some segment of people. Huge, huge. For many segments, I think. And just people were questioning, is this model even working? You know, on every single level. a major publication asked me to write an op-ed piece about, is this the end of the art market at the end of the year after our intelligence reports came out? And I was like, wait, let me just collect some more data. And then things turned around, so I never ended up writing it, thank God. But it was a really tough, tough, tough year. And then we broke the news that Leonard Lauder's collection is heading to the market.

4:11And while Leonard Lauder, he died in June of last year, and he obviously is one of the biggest philanthropists of our time, he was known for giving over a billion dollar worth of art of his cubist art. Astonishing collection. Astonishing collection to the Metropolitan Museum in 2013. less known was that he also had these masterpieces of Austrian and German expressionism, an area that was much more associated with his brother, Ronald Loder, who's founded the Neue Gallery. Anyway, we found out that he has these three phenomenal Klimts, or just lovely Klimts, you know, I mean, I don't know how phenomenal they are compared to what's out there, but they had his provenance.

4:56And, you know, as far as the market goes, that was like A++. That's what everybody wants, supposedly. And so that came to the market. And, you know, we talked about it, Andrew, we kind of agree on this, right, that Leonard Lauder saved the heart market.

5:12Katya Kazakina:Yeah, yeah. So you break the story, Sotheby's gets the Lauder collection and puts them up in New York in the new Breuer headquarters for Sotheby's. And things go wild. And also just to note that, of course, the Breuer building is the former home of the Whitney Museum. whose biggest patron was Leonard Lauder. So they absolutely had to get it. As always in these cases, heading into the sale, there were a lot of like kind of evil tongues and they were saying, well, Sotheby's gave so much money for this collection. Definitely I would bid Christie's. Are they going to lose money? Like what's going to happen?

5:50The stakes were super high for them. They opened the Brewer building with the Lauder collection. It was a perfect marketing moment. And they did take risk.

6:00Katya Kazakina:Huge results. the main picture made it was 236 million just doubling the estimates and there were six bidders above 100 million dollar level you know with competition it was really one of those extraordinary auction moments that it's now only second to the da vinci salvador mundi which sold for 450 million almost 10 years ago already right it's astonishing that that was so long ago and we had a kind of drought of these major, major pictures. Nothing came close. Yeah. Tell us more about the reaction in the art world. I mean, you said that Lauder's collection really saved the market. What did you hear out there from people reacting to that?

6:43It felt like it was like just a collective exhale.

6:46Katya Kazakina:Yes. It was just like, oh my God. It was really palpable. Just the relief that it brought to the market. But just to backtrack a little bit, you know, not only auction were down for several seasons for a couple of years, but last year, I remember a moment maybe about a year ago or like heading into May sales and especially after May sales. You know, there is this, I don't know if it's a limiting belief, it's a belief, it's a very strong belief in the market that recent declines are a result of supply, not demand. And that if presented with these indisputed masterpieces, the collectors, the buyers, the investors will rise to their occasion and they will pay extraordinary prices for these works.

7:39I think that last year, at least in my mind, that perception kind of started to crack a little bit. And in May, you remember, of course, Sotheby's got Sheldon Solo's bust by Giacometti that was estimated at$70 million. And it wasn't backed by a guarantee. And it failed to sell. And it was just a huge, huge flop. I mean, Sotheby's didn't necessarily lose money on that because they didn't pay for it. But for the market, it was just like a horrible optics, you know, because that was supposedly one of those great, great, great works of art. And the fact that nobody, you know, stepped up to bid for it was really bad.

8:21And the question kind of that lingered over the market, is it really true? Do exceptional works of art really command those prices? Or is there something bigger happening in the market? maybe it's you know we've written so much about the transgenerational wealth and the changing of tastes and the changing of generational kind of uh guard like what does it mean for the art market maybe the new buyers new wealthy people just don't care for the Klimts and the Giacomettis and Pollocks and Picassos maybe some they want cause and maybe they want people you know and who knows so I think that there was so much writing on the Lord of Sale because that was like really

9:03Katya Kazakina:quintessential kind of old taste right it was a make-or-break moment for that sensibility 100 and the fact that it did so well you know not just one work there were three climbs and uh they all did very well and uh you know that was a huge boost of confidence and i talked to um remember we uh like very shortly i called jeffrey dutch who's you know i'm glad you're bringing this up because that to me was such an exciting moment. Jeffrey Deitch, longtime dealer, advisor, his reaction when you talked to him was really interesting. He was so excited. He was just like, everything is forgotten. We're flying to the moon.

9:46A loader is to a glimpse to the rescue. There was a sense like, now we can sell anything again.

9:51Katya Kazakina:Yeah, we're good. We're good. And that's my next question. I really am curious. A number of months have passed since November. We've had these pretty solid results in London, Hong Kong. We've had some fairs. And is that energy at that top level translating to an improvement at lower tiers, lower price points? Do you have a sense of that? Undetermined. I think we can't say. Too soon to say. I think the galleries are still on the line and I think it's really unclear. I think that when we talk about the market, we really do need to distinguish between the segments. Like emerging art, I think it's still not great.

10:28I think there's a huge flight towards blue chip and that's why we decided to look at the very very top of the market and how it behaves right for this intelligence report because in the past couple of editions we looked at the galleries and you know of course with our data what was interesting right it showed that when we broke down right the price brackets the biggest increase for the year from 24 to 25 was that very, very top of the market, the works that sold for$10 million or more. Yes. Right? That bracket increased by 36%. And previous year, it dropped the most. It was just clear. Like, there were just, nobody was selling.

11:12Katya Kazakina:There was very little. Very little. As you pointed out. Right, right. And so that's kind of where these private transactions come into play. Yes, exactly. A perfect segue into your cover story in that rarefied realm, dark mode. You looked at the world of private auctions, which to me was almost entirely new. It's been written about here and there, little bits. But you have put together a comprehensive look at how different auction houses, and not just auction houses, dealers, other groups, are creating these private auction mechanisms to sell work at this very rarefied level. Just delve into it for us.

11:51Katya Kazakina:Tell us what you found out when you started digging. It's so fascinating. I've been obsessing over this for a couple of years. The first time I heard about this private auction, and I think, Andrew, that was pretty much like when you started at Artnet. And I remember we haven't seen each other in a long time. You were in Korea. And remember we met in like January. I was covering the Rybalovlev trial. He sued Sotheby's and there was a big trial. And Mity Rybalovlev, he was one of the biggest collectors of the 2010s. And he amassed this major, major collection of masterpieces with the help of a dealer advisor, Freeport operator Yves Bouvier.

12:34And then very famously sued him, Russian billionaire sued his advisor for overcharging him on all of these transactions. And we've covered it to great detail. And where I'm going with this is that in January of 2024, this trial was happening. You were downtown at the courthouse. I was at the courthouse and we met.

12:54Katya Kazakina:We went to Nishnash, I believe. Yes, we had a falafel. Shout out Nishnash. Phenomenal. I know. And Dmitry was testifying that day or the day before, whatever. And then this news broke that he was also just recently sold one of the few remaining works, these crown jewels of his collection, a Rothko, in a private auction. I was just so surprised. but here he was in the courtroom in New York testifying. And at the same time, he was like clandestinely selling this masterpiece through Christie's in a private sale. And I was like, private auction? Like I know about private sales, private auction? Like what the hell is that?

13:37And it just really got my attention. And I was like, what are these private auctions? Like who bids in them? How are they set up? Of course, nobody would tell me anything about them. It's a secret world. And of course, their detective has to know. And so it just was like this little needle that kept needling me for a while. And then people are familiar with this Rothko painting because it is on the cover of Rothko Catalog Resoné. So they've seen this one.

14:08Katya Kazakina:They've seen this one. This is a classic. Oh, it's gorgeous. It's gorgeous. And so it's supposedly sold for$195 million, which is a huge price for Rothko, whose auction record is$86 million. So huge price. And it was very mysterious. One thing I find really interesting about this is the general public. I think many listeners have a sense of how the public auction works. Whether you go to Sotheby's or Christie's or Phillips, they largely work in the same way. Of course, each house has a few intricacies, perhaps around fees. But what you found out is that there are just a variety of models that have been adopted by different houses, different dealers.

14:46Katya Kazakina:Can you walk us through some of the things that people are doing and how they're differentiating their approach to this? Sure. So Christie's kind of pioneered this model of this private auction. And actually, the Rothko was not the first. It started in 2021 with a Frida Kahlo self-portrait called Me and My Parrot from 1941. And it sold for more than$150 million. Wow. My understanding of that sale is that it was a family from South America and they came to actually Sotheby's. A private sale was considered and they came to Sotheby's for advice and then came, I guess, to Christie's just to see the estimate.

15:35And then Christie's turned around and said, well, we can do one better. We can do it better than a private sale. We can do a private auction. Again, nobody will confirm anything. So this is just my reporting. That private auction was so successful for Christie's. I don't know if they tripled it or they doubled it and they got their upside was so humongous. if they had to let's keep doing this but obviously it's not something you can do every day or even every year perhaps you know because for christy's and i talked to adrian meyer one of their top executives involved in this he said that just by definition a very rare occasion so they have done he said only like a handful of these auctions so we know of three okay so we know frida carlo we know of the Rothko for 195.

16:27And then there was also actually Kenny Schachter, Artnet's columnist, wrote that there was a Vincent van Gogh painting, Zouave, that sold for about$200 million. So we know of those three. If somebody knows of more, please let us know.

16:42Katya Kazakina:Write to Katya. I think she'll take DMs as well. I'll take DMs. We can get you her phone number.

17:08Katya Kazakina:this is really fascinating background about this thing that as you said has been for christie's wildly successful and i can imagine some reasons why this might be appealing to people discretion for various reasons. But you found, I think, there were many things that were attractive about this to bidders and sellers. What did you find out? Why are people doing this? The secrecy is incredibly attractive. So basically what Christie's is doing, they are reaching out to their top clients they think might be interested in this particular work. And it could be a handful, maybe two handfuls at most. I think the number is like between four and nine people.

17:48So these are the wealthiest, the most sophisticated buyers in the world. And they're being kind of invited to this very secret, very exclusive event. It has all the bells and whistles of the top art auction. So there are books, catalogs published. There's all the research done, obviously. And then Christie's like sets its sales room as if for a regular like evening auction with specialists on the phones and with video streaming and the whole thing. But there's nobody else in the room, just Christie's staff and all the bidders who commit to bidding. So whoever's in the room is going to bid, which creates this urgency and this like competitive dynamics for these alpha, alpha, alpha people of the world.

18:34And so they don't know, obviously, who else is there, but they know how many people are there. And so each one gets a protected, secured link, can call over the phone or online, and they can bid directly or through their representative or whatever. But sort of you participate in this live auction at the highest, highest level. And so I think the urgency is very important. The competitiveness is very important so they can capture that kind of theater.

19:04Katya Kazakina:So for a seller, for a consigner, this is an ideal theater that's being created. Because also if for some reason it doesn't sell, basically except for these people who are involved, nobody knows it even took place. They don't know what was the estimate. They don't know what is the work. unless somebody leaks it, but, you know, it's been pretty tight. Not, you know, bulletproof tight, but it's been, it's taken a while for this information to come out. Not when the art detective comes to town, yeah. Well, you know, when I talked to Adrian about this, I said, well, you know, like for me as a reporter on the art market who's trying to get this data and this information, I'm like, we've had decades when the art market has become more transparent and we were able to tell better stories.

19:48And this is like, it's creating like this alternative universe of these private sales? And he's like, yeah. And that's why everybody wants to do it. Right. I thought that it was a con, but he's like, no, it's a huge pro. Like, that's what people want. The only thing that they don't capture, and Adrian agreed with me on this, is that, you know, sometimes, and we've seen it over the years, there is a new entrant into the market. Somebody from one of the emerging economies or somebody who wasn't collecting art at that level, just somebody who is not known to the auction house. and this person will stand in the back of the room with the paddle and will set a world record for a Picasso.

20:25It has happened. And so they will not know of this person until this person manifests him or herself. And if they don't know, they can't invite that person to the auction. So the new buyers who want to make a mark and who want to get the publicity associated with, like think about Yusaku Maezawa when he bought the Basquiat, like classic example. he was, I don't know, a billionaire in Japan. Nobody heard of him. And all of a sudden, he became like the best known person in the art world literally overnight because he bought the best cat for, you know, $110 million at Sotheby's. I mean, I'm sorry.

21:00Katya Kazakina:I don't mean to be disrespectful to Mr. Maezawa. But, you know, but my point is that buying these masterpieces at those levels gives people just an incredible publicity. So one potential downside is some untapped demand. You could leave some money or some bidding energy on the table. Yeah, you just don't know who you're leaving out. So that's the biggest con. I'm really interested from the bitter side as well about why it might be appealing to be involved in this. And you talked to Hugo Nathan, who I thought had a really interesting point about this. Great point. He said, you know, we live in such a world of have and have nots.

21:36You know, there's such a divide that, you know, it may be like tone deaf to be seen both buying and selling art. for these outrageous prices.

21:48Katya Kazakina:Yeah, not a great moment. Not a great moment necessarily to telegraph your extreme wealth in this way. So I think that it is appealing to bidders as well. Nobody will know. Yeah. To kind of do a behind the scenes journalistic question. I mean, when there is this level of secrecy, how did you go about reporting this? How did, to the degree you're able to share, what was your method for finding out about what had happened? Well, you know, I can't take credit for discovering any of these sales. Unfortunately, the person who broke the news was Jeremy Hodgkin from the canvas. And Kenny Schachter reported on that, too.