Business

The Art of Auctions: Christie's CEO Edward Dolman

Sotheby's $104.3 million sale of the Alberto Giacometti statute Walking Man I this month showed that despite the recession, the art market is far from dead. As the head of Sotheby's archrival, Christie's CEO Edward Dolman couldn't agree more. Dolman joined Christie's, the venerable London-based auction house, as a porter before becoming a furniture expert and auctioneer. As CEO since 1999, he's led Christie's expansion as the art market has gone global. In the latest in his series of interviews as part of NEWSWEEK's partnership with the Kaplan University M.B.A. program, NEWSWEEK chairman Richard M. Smith spoke with Dolman about the challenges of selling artwork during a recession. Edited excerpts:

Smith: What did you learn as a porter?
Dolman: As a porter, you're a neutral observer between the specialists, the experts, the business getters, the dealers, and the collectors. You're moving around almost anonymously in this world, picking up the way people discuss things, what motivates people, how the dealers work, how our specialists think. And of course, I learned exactly how much antique furniture weighs.

How challenging was it when you shifted to running the business?
It was enormous, frankly. I had started work at Christie's because I loved art. I loved economics as well—this was a perfect blend. But I had to discover the vocabulary and mechanics of running a business, which I had no idea about at all. I enrolled in some business-school classes, and I went to the Institute of Directors in London and did a course in company direction, which was absolutely fantastic—it gave me the tools and the vocabulary.

As you were coming up, do you recall saying, "If I were running this department, I would never do it that way"?
Yes. Here's an example. When people started at Christie's in the late '70s or early '80s, they were given a certain amount of pencils they could use. And they had to take each pencil back after it had gone down to a certain size, and then they would issue you a new pencil. There was this fascination with the minutia of cost control, while people completely ignored the big picture in the broader market.

During the recession, Christie's sales have declined from more than $6 billion to less than $3 billion. How do you manage that?
We prepare ourselves for it. We knew the art market has been so cyclical because we've been in the market for so long. So after the Lehman Brothers collapse in September of 2008, we had a whole series of actions that were ready to go. We'd made decisions before that about whether we should continue to invest in Asia, or look for strength in our postwar modern department, or whether we should be growing and absorbing other types of businesses.

Asia and the Middle East have become important art markets. How have you changed Christie's to respond to global growth?
We introduced auction sales in Dubai three or four years ago. We've significantly invested in our Hong Kong sales base, which was very small when I became CEO. Our Asian works of art department is now the single biggest revenue-generating part of our business, superseding impressionist and modern pictures, postwar and contemporary art. We've also started up a business in Beijing called Christie's Forever that increases our access to this burgeoning new client base.

For very expensive pieces, you're dealing with a very small client base. How do you manage those relationships?
At the top, there are relatively few potential buyers—it's probably 100 for the most expensive things. But their numbers have increased exponentially in the last 10 years. The amount of wealth in individuals' hands would have been unimaginable 10 or 15 years ago, particularly in Kazakhstan and Moscow and Ukraine and the Middle East and China. The secret to interacting with them is our ability to offer the best possible advice. So they can pick up the phone and speak to the guy at Christie's who knows the most about that particular market, who's in it, and who's out of it, and whether it's a good buy.

As difficult as the downturn has been, are there bargains out there?
I wouldn't say "bargains." Our market has always been driven by the three D's: death, debt, and divorce. No matter what the state of the market, divorce happens, people die, and debt has to be paid. And so even with the lack of confidence that's been in the market the last year, we've seen some amazing works of art come up for sale. And when those things come up for sale, they are not inexpensive. We go to some of our top new clients and tell them this is the best they're going to get in the next 20 or 30 years, and they fight it out. We've seen some huge prices. So there's more availability, but at a full price.