Art Auctions: Theater With a Winner

It was eight minutes of thrilling world-class entertainment: a tense, suspenseful struggle from which only one individual would emerge victorious, with tens of millions of pounds and a precious object of beauty at stake. When it was all over, the spectators burst into spontaneous applause.

This wasn't a beauty pageant, or a boxing match; it was an auction at Sotheby's London headquarters, where on Feb. 3, 10 rich, committed, and competitive art collectors battled over a life-size sculpture by Giacometti, which ultimately sold for just over £65 million. Those lucky enough to be there witnessed events that were, in their way, every bit as dramatic as the Frasier-Ali "rumble in the jungle" or the epic bout between Priscus and Verus at the opening of the Flavian amphitheater.

And, indeed, there is something gladiatorial about the salesroom, where auctions are an adversarial form of shopping. As the lot approaches, one's heartbeat quickens, the mouth grows dry, the body tautens. Occasionally, I buy watches at auction from Bonhams and Christie's, and the only thing I can liken the feeling to is the moment that gamblers find so addictive: that tantalizing time when an event, whether a race between horses or the spin of a roulette wheel, is in train and cannot be stopped, yet where the outcome is still in doubt.

The auction house offers a unique blend of entertainment and spectator participation: you can sit back and watch or join the game. And like in entertainment and sports, the results from salesrooms are relayed instantaneously around the world. Auction houses throw lavish parties, not unlike film premieres, with the paparazzi gathered in bunches outside. "The auction world is much more theatrical than it used to be," says Lord Linley, chairman of Christie's in London. "The drinks parties alone are works of art."

Good auctioneers are much more than salespeople. They are performance artists with their own style and fan base: in the world of watches, Aurel Bacs of Christie's in Geneva has an international cult following, while Paul Maudsley of Bonhams in London has launched a watch brand under his own name. In March the BBC aired a documentary called The Man With the Golden Gavel, about Simon de Pury—sometimes known as the Mick Jagger of auctions—chairman of the eponymous house. I have seen him galvanize a room: back in the 1990s he took Jeff Koons to Geneva to present some slides of his work. At the time, Koons's work was pretty raunchy, and several collectors left midway through the evening, then rang de Pury the next day to express their outrage. But while excoriating de Pury, some of them said they had works of art to consign and wanted him to handle the sale, proving the maxim that sex sells.

The modern glamorization of the auction business began in 1958 with the Goldschmidt sale, an auction of seven very good impressionist pictures at Sotheby's, where black tie was mandatory. However this was a more or less isolated event; when Henry Wyndham, the Sotheby's boss who brought the gavel down on the Giacometti, started working at Christie's in the early 1970s, auction houses still served more as wholesalers to the trade than as retailers. Wyndham recalls the first sale he took as a young man in 1977, a lot of drawings attended by just two bidders. "They had to get the porters in to swell the crowd from two to five," he says with a chuckle.

What filled the salesrooms was the boom in contemporary art and the emergence of living artists as celebrities. The blockbuster sale of Damien Hirst in 2008, held as Lehman Brothers collapsed, marked the high point of an era of trophy hunting, defined by trophy art, trophy wives, and trophy purchases in general. The accession of the auction house to the premier league of luxury retailers was marked by the purchase of a controlling stake in de Pury's house by the Moscow-based luxury-goods Mercury Group.

Then, of course, the world fell off a cliff. In February 2009 the Sotheby's sale of modern impressionist works numbered a mere 29 lots, 22 of which sold for a total of just over £32 million. By contrast, the year before the corresponding sale realized some £116 million. However there are signs that the auction market is bouncing back. At the end of last year, Christie's earned a record price for a Rembrandt—just over £20 million—and just under £30 million for a Raphael drawing, the highest sum ever paid for a work on paper. And it is not only investors in art who find auction houses a good bet: in March, after Sotheby's announced its best quarterly profits in 18 months, the share price rose higher than expected.

I have a theory as to why the show must go on. In the climate of neopuritanism that discourages people from spending even if they have the money, only a totally insensitive fool would splurge on a new jet or a flashy holiday villa. However, purchasing art has the benefit of bestowing a cultural and intellectual halo on the shopper: one is more likely to be seen as a connoisseur rather than a fashion victim.

Auction houses have been clever in creating comfortable luxury experiences for people who would have shunned the salesroom a decade ago. The atmosphere is somewhere between a cocktail party, a premiere, and a high-end boutique. As Linley explains, "The theater starts when you walk in and are greeted, seated, and given a paddle. When the great auctioneer gets to the stand, the room goes into a hush—rather like the opening night of an opera—and for the next hour or two it is his job to entertain, and to get bids out of people who may be wavering." Just as a high-end fashion retailer will extend private shopping services to good clients, so an auction house will go to great lengths to treat its special customers well. Linley holds discreet lunches for collectors and experts in his King Street boardroom, and will on occasion allow customers to borrow a piece and see if it fits the space they have in mind. But, beneath all the sophistication and schmoozing, there runs the visceral current of competitiveness. Says Linley: "The only way to get to the bottom of what a piece is really worth is to get a lot of people in the room and watch them fight it out."