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Art Market Slump Leads Sotheby's to Offer Interest to Sellers for Deferred Payments
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In response to the slump in the art market, the Financial Times reported, citing sources, that Sotheby's, the auction house owned by French-Israeli billionaire Patrick Drahi, is facing a heavy debt burden and plans to introduce new measures to ease funding pressure, including an "extended settlement payment option" launched in mid-last year. According to one source cited in the report, if sellers allow Sotheby's to retain part of their proceeds for at least six months, the auction house was willing to pay 8% interest on auction proceeds exceeding USD30 million. However, following rate cuts by the US Federal Reserve, the company has lowered the interest rate offered. Another person familiar with the company said Sotheby's had previously retained some clients' funds beyond the period stipulated in its terms. Patrick Drahi acquired Sotheby's through a leveraged buyout in 2019, and the auction house has since been grappling with a heavy debt load amid continued weakening demand for artworks. According to a report by Art Basel and UBS, the global art market contracted by 16% between 2022 and 2024, with only modest growth of 4% recorded last year. Sotheby's pre-tax loss for 2024 more than doubled to USD248 million. Its annual accounts showed outstanding "amounts due to customers" of over USD1 billion, down from USD1.7 billion at the end of 2023. Total sales in 2025 reached USD7.1 billion, up from USD6.0 billion a year earlier. Due to its heavy debt burden, Sotheby's credit rating has been classified as junk. In November last year, S&P warned that the rating could be downgraded further if the auction house "fails to address its upcoming debt maturities in a timely manner." Sotheby's responded that the "extended settlement payment option" is one of several innovative measures designed to provide clients with "greater choice and financial flexibility." It emphasized that its financial position remains very strong and that it led the art market in 2025, while consistently following long-established market and industry practices in offering a range of settlement options to clients. (hc/u) This article was automatically translated by AI, the Chinese version should be considered the authoritative version. AASTOCKS.com Limited does not guarantee its accuracy or completeness and accepts no liability for any damages or losses arising from the use of this translation. Auto-translated by AI AASTOCKS Financial News |
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