Sotheby's reduces art price guarantees

An auctioneer brings the gavel down during a Sotheby's auction in Zurich May 27, 2008. REUTERS/Arnd Wiegmann

LOS ANGELES (Reuters) - Sotheby’s, one of the world’s largest auctioneers, said on Thursday that because of current global financial volatility, it will reduce the use of auction guarantees, following a loss of $15 million (9.29 million pounds).

Auctioneers like Sotheby’s and archrival Christie’s guarantee minimum sales prices as a way to attract sellers.

But amid signs of cracks in a multiyear bull market for art, Sotheby’s in a U.S. securities filing reported the loss and said it was the result of artworks failing to sell or fetching less than the guaranteed price.

As of Thursday, the London-based auctioneer reported nearly $300 million outstanding auction guarantees. That is down 50 percent from a year ago.

Last week, Sotheby’s raised 22 million pounds while Christie’s sold property worth 32 million pounds at their post-war and contemporary art auctions. Both auctioneers remained positive about their sales despite faring lower than presale estimates.

The auction houses are currently gearing up for their key sales in New York this November, even as the global economy teeters.

Despite some signs of weakness, plenty of high-end art is selling. In May, a Francis Bacon triptych fetched $86 million and a Lucian Freud painting sold for $34 million in New York. In London. a Monet water-lily painting went for $81 million in June and a Damien Hirst collection for nearly $200 million in September.

Reporting by Syantani Chatterjee, editing by Peter Henderson, Gary Hill