Bloomberg News

Auction House Phillips Expands as Chairman De Pury Quits

January 15, 2013

Simon de Pury

Simon de Pury, chairman of Phillips de Pury & Co.Photographer: Charles Ellena/Bloomberg

Auction house Phillips is expanding in New York and London after changing its name and chairman.

The former Phillips de Pury & Co. announced the departure of Simon de Pury, 61, a flamboyant auctioneer who has led the company since 2000. The auction house has now reverted to its original name, derived from its 18th-century British founder Harry Phillips.

Phillips, which specializes in contemporary art, design, photography and limited-edition prints, has been developing its salerooms and offering guarantees to sellers to compete with its bigger rivals Sotheby’s and Christie’s International.

“We’ll be making some dramatic changes that will increase our visibility,” chief executive officer Michael McGinnis, 42, said in an interview. Next month, the auction house will add 11,500 square feet (1,068 square meters) of offices and 10,000 square feet of gallery space to its headquarters at 450 Park Avenue.

“Guarantees are a fact of the market,” McGinnis said. “We have a pool of third-party guarantors happy to buy the works they support. We just need to broaden the participation.”

Simon de Pury, together with his wife and senior director, Michaela, stood down on Dec. 21. The couple left following the sale of de Pury’s remaining interest in the company to the Moscow-based Mercury Group, which acquired a controlling stake in October 2008.

Remaining Equity

“I felt this was the perfect moment for us to step down, having both spent 12 exciting years, and me having just completed the sale of my remaining equity in the company,” de Pury told Bloomberg News in an e-mail. De Pury wouldn’t divulge the size and value of his final shareholding.

Mercury, a private Russian company that also owns the TSUM department store and the Barvikha Luxury Village in Moscow, doesn’t report or comment on its auction house.

De Pury’s theatrical style on the rostrum was one of the most distinctive aspects of Phillips.

The Swiss-born former chairman, a keen amateur DJ, released a Euro-pop version of the Pete Seeger and Lee Hays hit “If I Had a Hammer” in 2009, complete with a video showing him in his trademark double-breasted suit conducting flash-dancers in an auction room.

“We haven’t quite allocated that person yet,” McGinnis said of the auction role. “We’re going to continue to look for talented auctioneers and business-getters.”

Golfing Handicap

McGinnis, who worked for Christie’s before founding Phillips’s contemporary-art department in 1999, is a father of three daughters and a talented 11-handicap golfer who has had two holes-in-one.

McGinnis was appointed chief executive in September 2012, replacing the former Stasi agent, and head of Conde Nast Germany, Bernd Runge. McGinnis said he wasn’t surprised by de Pury’s departure.

“The finalization of selling his shares seemed a natural point of change,” he said.

Evening and day sales of works by postwar and living artists at the three auction houses raised a record $1.1 billion in New York in November. Phillips’s share was $90 million.

Nine out of the 10 most expensive works in Phillips’s $80- million sale of contemporary art on Nov. 15 2012 had been guaranteed minimum prices.

Bernard Arnault’s LVMH Moet Hennessy Louis Vuitton SA group sold Phillips to de Pury, then in partnership with the dealer Daniela Luxembourg, in 2002 after unsuccessful guarantees on Impressionist paintings racked up about $400 million of losses.

Guarantee Profit

Back then, the company itself provided the finance. Now auction houses aim to transfer the risk by using “irrevocable bids” from third parties to ensure sales. Typically, if the guarantor is outbid, he or she is entitled to a percentage of the sale fees.

“When an auction house uses guarantees it gives away a large part of the upside of its business,” Todd Levin, director of the New York-based Levin Art Group, said in an interview. “The profit line is relatively narrow on these works. They function as loss leaders that attract other lots into a sale.”

Phillips achieved a record $16.3 million for Jean-Michel Basquiat’s 1981 crucifixion painting, “Untitled,” in May 2012. Entered by the collector Robert Lehrman, it was one of 11 guaranteed works in the 44-lot sale.

McGinnis declined to confirm to Bloomberg News that the auction house has acquired premises in the Mayfair district of the U.K. capital, less than half a mile from Sotheby’s (BID:US) and Christie’s.

Berkeley Square

Phillips has paid more than 100 million pounds for a 52,000 square-foot building at 30 Berkeley Square, the U.K.’s Estates Gazette magazine reported on Oct. 6 last year.

The auction house acquired the seven-story block from PRUPIM, part of the M&G Group. It plans to turn the basement, ground and first floors into a London headquarters that echoes its flagship premises in New York.

Tenants will be sought for the upper floors of the building, the magazine said.

Phillips has been holding its London auctions in a former Post Office sorting station at Howick Place, Victoria, since 2008. Though an elegant space, the location has proved too inconvenient for some clients, dealers said.

Muse highlights include Richard Vines on food and Ryan Sutton on New York restaurants.

To contact the writer on the story: Scott Reyburn in London at sreyburn@hotmail.com.

To contact the editor responsible for this story: Manuela Hoelterhoff at mhoelterhoff@bloomberg.net.


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