Sotheby's : the ultimate inside story !

<Nate Freeman - Artnews>

T​here was little fanfare when bidders arrived at Sotheby’s headquarters at 1334 York Avenue May 9 for the auction house’s Impressionist and modern evening sale. Reporters murmured about the catalogue’s bloat and lack of buzzy eight-figure works, as did the few specialists who, before working the sale, stopped by a pub a block away from Sotheby’s, called, appropriately, Murphy’s Law.After some introductory gavel-rapping from Oliver Barker, Sotheby’s cochairman of Europe and the evening’s auctioneer, there came a strong opening salvo: Maurice de Vlaminck’s Sous-Bois (1905) sold for $16.4 million and Paul Signac’s Maisons du port, Saint-Tropez (1892) for $10.7 million, solidly within their pre-sale estimates. But when Barker opened the bidding for André Derain’s Les Voiles rouges (1906), the proceedings stalled at $12.5 million, well below the work’s $15 million low estimate. The auctioneer implored the room full of wealthy collectors to throw him—and Sotheby’s—some mercy. He hung on to the figure, repeating “twelve-point-five-million,” sometimes softly and sometimes loud, his intonations getting graver, and scanned the room, pulling out all the stops as he wrenched his body forward in a pique of desperation. After almost a full two minutes, he proclaimed it a pass. Watching the rest of the sale was cringe-inducing, and as one lot after another was left out to dry, collectors streamed out of the room. Barker’s serene British lilt betrayed concern, if not anger. The atmosphere in the room turned sour, and bidding slowed. After every other lot, Barker repeated, like an incantation, “It’s a pass, it’s a pass, it’s a pass.”

In the end, the sale netted only $144.5 million, a full $20 million under the low end of its estimate. More than 20 lots were left unsold, a considerable amount of debris for a May evening sale in New York—and a dismal sell-through rate of 66 percent. It would have been a bad sale for any auction house, but for a beleaguered one, especially, it was a blow to morale, and if there was no rebound during the post-war and contemporary sale two days later, it could strike another blow—to the company’s share price. These were dire times for Sotheby’s.

A few months earlier, Sotheby’s had put a record $515 million guarantee on a sale of the estate of the company’s former chairman A. Alfred Taubman (the guarantee was later brought down to $509 million after the estate removed a few lots). The sale flopped. Shortly afterward came voluntary buyouts and the exit of 80 core employees. (Sotheby’s has said the sale’s failure and the buyouts were unrelated; art market insiders claim otherwise.) Some of them left for archrival Christie’s; others just left. This situation especially stung for Tad Smith, Sotheby’s CEO, who had been on the job less than a year at the time of the Taubman sale. His arrival was the result of dubious corporate restructuring: A botched “poison pill” failed to prevent activist investor Dan Loeb from becoming the majority shareholder in Sotheby’s stock and shoehorning three of his people onto the board—the deal went through only when he insisted he’d stop meddling in the firm’s internal goings-on. Specifically, he agreed to stop writing public letters demanding the firing of much-loved CEO and chairman Bill Ruprecht. Loeb and Ruprecht even did a few joint interviews, as if they were buds. They were not buds. In November 2014, Ruprecht was out, and a few months later, the board looked to Smith, the CEO of Madison Square Garden, a man with zero art-world experience.

This past January, with the Taubman debacle still an open wound, Smith announced that he’d spent $85 million on a two-year-old advisory firm founded by Amy Cappellazzo—former head of contemporary art at Christie’s—and Allan Schwartzman, a seasoned adviser and onetime journalist. Cappellazzo and Schwartzman were made heads of the fine art division, giving them authority over all the chairmen worldwide. What would happen? An auction house buying an outside firm and effectively handing them the keys to the castle was unprecedented. With new leadership across the board, enormous monetary losses, and the auction house trying to figure out how to continue competing with the lately dominant Christie’s, Sotheby’s looked to be in the middle of one of the most cataclysmic upheavals in its nearly 300-year history.

The battle for the year’s big consignment was Smith’s first real test at Sotheby’s, and it came just a few weeks after his hiring. On April 17, 2015, Taubman, a Midwestern shopping mall tycoon, died of a heart attack at his mansion in Bloomfield Hills, Michigan, at the age of 91. As chairman of Sotheby’s, Taubman had helped orchestrate a price-fixing scheme with Christie’s that roiled the art market and landed Taubman in jail in August 2002. He was sentenced to a year and a day, served nine and a half months at the Federal Medical Center in Rochester, Minnesota, and wrote a memoir once he was out that was feted with a party at the Four Seasons in 2007, attended by, among others, his pals Henry Kissinger and Donald Trump.

Whatever Taubman’s dealings, the family had a formidable estate—hundreds of works, from Impressionist and modern icons to stellar contemporary paintings, blanketing the walls of houses in Michigan, New York City, Southampton, London, and Palm Beach. Sotheby’s and Christie’s vied for it for months. According to some Sotheby’s employees, the Taubman heirs were playing one bidder against the other just to gin up the price (a tactic familiar to auctioneers trying to hit a record price in the saleroom). If they were indeed playing both sides, it worked: Sotheby’s secured the estate of its former leader only after it offered to guarantee it for $515 million.

Sotheby’s was always going to go one higher. Sources inside Sotheby’s said that to lose the estate to Christie’s would cause irreparable damage to the house’s dignity and status—especially if Christie’s sold the Taubman lots for headline-grabbing prices. Sotheby’s was not about to lose the estate of the man who bought and revived the company in the ’80s (he made it public in 1988) and, drawing on his retail savvy, ushered in a golden age of sky-high sales.

“Sotheby’s couldn’t have lost that sale for Sotheby’s as a brand,” Amy Cappellazzo told me during an interview in her eighth-floor office at the York Avenue headquarters. Since she came on board, the Sotheby’s brass has trotted her out in front of potential clients around the world. She’s become, to a certain extent, the face of the new Sotheby’s.

“They had their back to the wall, and you feel like, if anyone ever has a gun to their head, it’s at this time,” Cappellazzo said of the Taubman consignment. “It was a sort of a necessary—I’m not gonna say necessary evil—but it’s sort of something you have to do.” (She was quick to add that she wasn’t at Sotheby’s at the time—though negotiations with Art Agency, Partners took place in the summer of 2015, right before the estate was landed—and was looking at the situation as an outsider.)

Though Taubman ended up incarcerated for how he did business as chairman, many at Sotheby’s remain loyal to him, calling him the fall guy who had to take the punishment when his counterparts at Christie’s escaped—CEO Christopher Davidge landed immunity by cooperating with the Justice Department, and then absconded to India with a young specialist in the Southeast Asian department; Anthony Tennant, the Guinness chairman who swapped price tags with Taubman over posh London breakfasts and was indicted in the United States, fled to England, where price-fixing is not a crime, so he could avoid extradition.

Beyond the enormous risk of guaranteeing any sale for more than $500 million, Sotheby’s was taking a gamble in assuming that Taubman’s Imp-mod classics, most of which had been hanging for years in Taubman’s various mansions, would have buyers flocking.

“We took a position that the Taubman guarantee was a risk, but it was something that, given our relationship with him, we were happy to do,” said Simon Shaw, cohead of the Sotheby’s Impressionist and modern department. With his team, Shaw had to sort through the large amount of work on auction and quickly assemble a cohesive, balanced sale. Because there would be a regular Impressionist and modern evening sale the same week as the Taubman auction, he was effectively tasking his team with doing twice the work. “It was in addition to our day jobs, as there was so much property,” Shaw went on. “It doubled the amount of Imp-mod on the market—it was maybe the most on the market ever.”

In addition to the hefty guarantee, Sotheby’s increased its revolving line of credit in June 2015 by $485 million, bringing its borrowing base to $1.335 billion. Smith assured the shareholders in the November 9 public earnings report that Sotheby’s was keeping their investment in mind, and were beholden to the stock price, not the heirs of their former chairman. (Smith did not agree to be interviewed for this story.)

“In the interest of clarity for all our shareholders, I thought it made sense to repeat what I said in the first earnings call about this policy and then speak specifically on the Taubman guarantee,” Smith said on the earnings call, which a publicly traded company such as Sotheby’s must hold each quarter. (Christie’s is wholly owned by French billionaire François Pinault and is not required to report earnings to the public.)

“Here is what I said on the call: ‘We will not roll dice in the auction room with shareholders’ money,’ ” Smith went on. “At the same time, guarantees on high-profile trophy lots can be important marketing investments and potentially generate positive momentum and product scope within our categories. Strategy, opportunity, judgment, and sensible risk management will guide our use of these guarantees.”

The first sale of works from the Taubman collection was set for November 4, 2015. 1334 York Avenue was plastered with images of its star lots—Modigliani’s Paulette Jourdain (1919) and Frank Stella’s Delaware Crossing (1961)—as paddle wielders entered the building clad in tuxedos. The sale’s dress code was black tie, a flashy display of hubris. There was even a pre-party, a lavish cocktail ceremony with champagne, caviar, and foie gras canapés. The billionaires in bowties bumped into each other, looking like off-balance penguins in the crowded anteroom.

“I don’t have a comment, but you can get a drink,” Smith told me before the sale, as he stood with Sotheby’s chairman Domenico De Sole and Alfred Taubman’s son, William. “And caviar!” Taubman chimed in.

The bubbly proved premature. Though the aforementioned Modigliani passed its presale estimate of $35 million, selling for $42.8 million, and the Stella set a record for the artist by going for $13.7 million, the sale was not the bonanza that Sotheby’s specialists—and shareholders—were hoping for. It barely scooted by its low estimate, pulling in $377 million. There was a sense that the house had grossly overvalued Taubman’s holdings and had been mistaken in imagining that the artworks would sync with the tastes of today’s collectors.

“I think that they perhaps pushed the boat out a little too far, which means you have to have high estimates,” David Nash told me after the sale. Nash, one of the founders of the New York gallery Mitchell-Innes & Nash, headed the international Impressionist and modern division at Sotheby’s in the 1990s, while it was owned by Taubman.

“The estimates had to catch up with the guarantee, and perhaps this intimidated a lot of people,” Nash went on. “There was little opportunity to buy anything, in the sense that the estimates were already so strong.” Or, as collector and dealer David Mugrabi could be seen mouthing to his family after the sale: “Embarrassing.”

“I think it was traumatic for this organization,” Cappellazzo told me this past June. “The fallout of what happened—well, I wasn’t here, I don’t know exactly, but I knew there was trauma. The good thing is, it’s over. And it’ll never happen again. It’s safe to say that, right?”

The Taubman estate ended up totaling $462 million after another sale of the collector’s Old Masters in late January. “Are we disappointed that it didn’t go better? Of course,” Shaw said. “Could it have gone worse? Much, much worse.”

In November and December, more than 80 employees took a buyout, such a high number of volunteers that mandatory layoffs were not necessary. By mid-February, the stock price of the company had fallen to $18.86, down from a high of $46.71 in June 2015, right after a successful spate of London sales. Sotheby’s would later post a loss of $11 million in the fourth quarter of 2015 and another of $25.9 million in the first quarter of 2016. The first quarter of 2015, by comparison, had yielded a $5.2 million net income.

Still, Sotheby’s maintained that the Taubman consignment would eventually make it to $509 million through private sales of works that were passed over during the live auctions. In an earnings call on February 26, Smith said the projected loss on the guarantee would be just $3 million.

“The sense of loss through that deal has been grossly exaggerated,” Schwartzman told me, looking at it as a long game, as an adviser would. “It was a risk, but the art market always involved faith and daring, so I don’t think risk is a dirty word. It’s about the intelligence of risk.”

But the narrative that was harder to control was the hemorrhaging of the world’s best auction veterans from the house’s ranks. Each week seemed to bring a new slew of high-profile departures from the company.

Among those who left Sotheby’s in a period of just a few weeks were: Anthony Grant, vice chairman of the Americas and international senior specialist in contemporary art; Cheyenne Westphal, worldwide head of contemporary art; Henry Wyndham, chairman of Sotheby’s Europe; Alex Rotter, global cohead of contemporary art; David Norman, vice chairman of Sotheby’s Americas; and Melanie Clore, European chairman and worldwide cochairman of Impressionist and modern art.

“Yes, we lost a lot of people, and yes, it was very difficult,” said Grégoire Billault. The current head of contemporary at Sotheby’s, and a former director at the Sotheby’s offices in Paris, Billault exudes a loose, off-beat charm; during our interview at 1334 York Avenue, he had on Japanese kabuki mask cufflinks. “It’s just, it’s Sotheby’s—it [was] created in 1744, so if you think you’re going to bring down that institution in a few months . . . ?” He trailed off and shook his head. I asked whether people really told him they thought Sotheby’s was going under. “Bring down Sotheby’s? I heard it so many times,” he said.

Something had to be done to stanch the bleeding, and to rebuild the departments in time to pull off a string of miracle sales in New York in May, and in London in June. Consignments were scarce amid wobbly global markets in January, and when they appeared, no one was there to claim them—some key specialists who had spent decades developing the old boys’ club–style relationships with collectors had departed. It was time for a Hail Mary.

Enter Art Agency, Partners, the art advisory firm that Cappellazzo and Schwartzman founded with attorney and investment banker Adam Chinn in early 2014. Multiple people at Sotheby’s referred to these three as the Triumvirate. Cappellazzo is a behind-the-scenes operator in a niche corporate enterprise who was nonetheless profiled in Vogue. She held the position of director of the Rubell family collection starting at age 30 in 1998, but her career really took off once she started working alongside Sam Keller to establish the colossally successful art fair Art Basel Miami Beach. She then settled in for 13 years at Christie’s, where she spearheaded online sales and was a rainmaker with private deals, snagged a seat on the New York State Council of the Arts, and ran the postwar and contemporary department with her now rival, Brett Gorvy.

Schwartzman has no such built-in house-against-house rivalry. He began his career as a founding staff member of the New Museum before he had even graduated from Vassar. From there he became director of Barbara Gladstone Gallery. Schwartzman then moved into reporting, contributing to the New Yorker and the New York Times before Dallas collector Howard Rachofsky, impressed by his writing, asked him for help selecting the objects from his formidable collection to put in a house he would bequeath to the Dallas Museum of Art. Schwartzman went on to advise some of the world’s top collectors, including the Brazilian Bernardo Paz. He teamed up with Cappellazzo in 2014, and now he works alongside all the suits he spent his life avoiding.

The third partner, Chinn, is an Oxford-educated attorney who left his partnership at a blue-chip law firm to start a boutique investment firm that advised Capital One on its $9 billion acquisition of ING Direct, among other ten-figure deals. Prior to joining Art Agency, Partners, his art-world experience was exactly zero. He’s now executive vice president of worldwide transaction support at Sotheby’s, which means he’s an unlikely person to be on the floor bidding, but there he is.

It makes sense that Sotheby’s, a grand machine of different art-market gears all working together but independently, would have an advisory component as well, perhaps even in a powerful position. Schwartzman noted, as did Cappellazzo, that it’s a fairly common arrangement on Wall Street. “Now we’re just a big transactional organization that has an advisory division, kind of like Goldman Sachs and UBS and all those guys,” Cappellazzo said.

She continued this line of thinking, saying that the wave of banking regulation following the Stock Market Crash in 1929 could point to how an art market flush with capital might have to operate in the future, under more market scrutiny and government pressure: phasing out the Old World handshake-agreement aspect, in favor of a more efficient, business-oriented model.

“In the ’30s the stock market was like the Wild West, and that’s what the art market was—with Larry, with Acquavella,” she said, referring to Larry Gagosian and William Acquavella, two of the world’s most powerful and successful dealers. “But markets always become smarter over time. So now a lot of people make money on the information arbitrage. That’s been the nature of the business for so long, that it was opaque. But markets never stay inefficient.”

And the new fluidity of market roles, in which the rigid boundaries of the past have eroded—where an attorney can become a Hollywood power agent who represents visual artists as if they were movie stars; where auction houses work in private secondary and even primary market sales—has created a revolving door that spins players between jobs in museums, at auctions, in galleries, in private advisories.

“The [Art Agency, Partners] acquisition proves the valuable role that private advisers play in the contemporary market—providing truly independent expertise as it relates to issues of curatorial and financial value for new and established collectors,” said Benjamin Godsill, who is now director of the advisory firm Darrow Contemporary and previously worked at Phillips auction house and, before that, at the New Museum. “I know from my own experience that I am able to forge more meaningful connections on behalf of my clients with gallerists, museums, auction houses, and artists than I was able to as part of a large bureaucracy with its own agenda.”

And yet the apprehension over Sotheby’s paying that much money—$50 million in cash, plus another $35 million in to-be-received bonuses—may have caused, or at least coincided with, another spate of defections, especially in the contemporary department. One current Sotheby’s employee referred to Cappellazzo’s hiring as “not very gentle.” Shortly after joining, she visited Sotheby’s London salerooms and irked some of her brand-new British colleagues by marching in front of them and saying that, in effect, she’d be the best boss they’d ever have.

Cappellazzo said she understood that some people would be compelled to leave after such an unprecedented acquisition on the part of Sotheby’s, and the uncertainty of the sales ahead.

“There was a lot of turbulence in the spring, and we went through a battle together,” she said. “We’re the new kids on the block, so there was probably a bit of animosity. . . . And I knew people would be uncertain about what the future would hold, that there would be this whole new way of working. I fully expected that. You can never have a quiet revolution,” she added.

But despite the unorthodox arrangement—though it’s one that is common in Dan Loeb’s finance environs—Cappellazzo maintained that she and her fellow conquistadors knew exactly what they were doing. They didn’t come there to blow up the place. “We’re not like ISIS or something,” Cappellazzo said. “You can say a lot of things about us, but not that we’re stupid.”

How the Triumvirate operates within Sotheby’s is complicated, as the principals essentially have two different jobs, a separation defined by the maintenance of two different offices: one on the eighth floor of Sotheby’s headquarters at 1334 York Avenue, and the other in the old Art Agency, Partners space, on West 25th Street. These two jobs are quite similar. Cappellazzo and Schwartzman head up the fine art division at Sotheby’s, which also dabbles in private sales and art investment through guarantees, third-party or otherwise, and maintains an advisory service through its specialist-collector relationships. Cappellazzo and Schwartzman are also the operators of Art Agency, Partners, an advisory service that does essentially what Sotheby’s does, just on a much smaller scale, more discreetly, and without the live auction component. The amount of overlap is still being figured out. (During the June sales in London, Adam Chinn, phone in hand, secured Picasso’s Femme assise (1909) for an Art Agency, Partners client to the tune of $63.7 million, a record for a Cubist work at auction. The underbidder was Cappellazzo’s, also by phone.)

The separate operations means that, on occasion, the Triumvirate will buy a work for a client from Christie’s, even if that sale directly benefits the Sotheby’s nemesis. Schwartzman confirmed that the company was bidding on lots at the rival house in May, and that that was kosher with the brass.

Brett Gorvy—Cappellazzo’s former colleague at Christie’s, the primary architect of that house’s current success, and, one might surmise, the person Sotheby’s hired Cappellazzo to destroy—declined to comment for this story. A communications rep cited “Christie’s policy not to comment on the competition.” But Gorvy’s Instagram, which has an improbably high 40,000 followers, is a constant source of veiled and not-so-veiled digs at Sotheby’s, as well as shade thrown at his former colleague, with whom he used to appear on power lists and host sales preview brunches. This past May, he posted a picture to his Instagram with a caption that boasted of securing the Basquiat consignment for Christie’s that had broken that artist’s record at auction when it sold for $57.3 million on May 10. In the caption, he wrote, after a passing reference to Sotheby’s 66-percent-sold Imp-mod sale the night before, “We spent much of the day making sure collectors were not put off bidding by the perceived weakness of the market, as well as catching hand grenades thrown at art works by a few irresponsible members of our competition as they desperately tried to dissuade buyers from participating. Who said the art world was a cosy [sic] collective?” Could there be any doubt that “few irresponsible members of our competition” referred to the team at Sotheby’s?

This rivalry gets more complicated when certain conflicts of interest come into play. One of Cappellazzo’s closest clients during her Christie’s days was none other than Dan Loeb. Curiously, Cappellazzo said Loeb was uninvolved with the Art Agency, Partners acquisition, but she said they still work together—meaning if Loeb wants a piece that’s on auction at Christie’s, Cappellazzo could buy it from Christie’s. (Loeb would not comment for this story.) “We buy things through auctions,” Schwartzman said, matter of factly. “We go where the art is.”

The Triumvirate was tasked with organizing Sotheby’s May sales, almost singlehandedly, and with an enormous amount of pressure placed on them—the auction house was banking on a string of successful evening sales to ratchet up its plummeting stock. Working with a limited staff, the sales, the fine art heads explained to me, would have to be leaner and more streamlined, as collectors were acting conservatively in the bleak economy of January and February. But this tactic is also a diversion: if they couldn’t get the high-price fireworks that can distract from the ways in which the overall sale was actually a failure, they would have to try to calibrate an auction with a high sell-through rate.

“There was a deliberate position to say we only want to take in property we have confidence we can sell,” Schwartzman said. “I think it was very clear shortly after we entered Sotheby’s that everyone understood that it was more important to have successful sales than to have high numbers, and that the fight for winning property at any cost was not the approach. This is a business—this is a public business that has shareholders that we have a responsibility to. As a goal, we have to make money for the company.”

Two days after Sotheby’s disastrous Impressionist and modern flop in May, the scene on York Avenue for the contemporary and modern sale was innocuous enough. The three heads of the Mugrabi family—Jose, David, and Tico—rolled up to the revolving doors together, prompting the doorman to proclaim “Mugrabi!” and give them high fives. Leonardo DiCaprio and his entourage shuffled up to the skyboxes. Tad Smith settled into his perch near Cappellazzo, who would be, for the first time since joining Sotheby’s, truly on the job, as nearly all her clients focus on contemporary. She smiled at Smith, and then, moments later, the gavel smacked the wood.

Then something strange happened: people started bidding. A lot of people started bidding. There was bidding from the phones, bidding from the room, a flurry of bids that shot up like Whac-a-Moles for Barker, the auctioneer, to swat away. The first lot was Adrian Ghenie’s Self-Portrait as Vincent Van Gogh (2012), and there were still a dozen hands in play when the bidding flew past the high estimate of $300,000; by the time it was all over, the painting hammered at an astounding $2.6 million.

The hits kept coming. A Calder mobile went for $8.3 million, more than double the high estimate. A Francis Bacon diptych, Two Studies for a Self Portrait (1970), sparked an extended back-and-forth between Sotheby’s specialist Alex Branczik and a man in a velvet smoking jacket and Mohawk, who was later revealed to be Glenn Fuller, who works for London gallery Gladwell & Patterson. Fuller couldn’t quite outwit the auction house: after Branczik and Fuller wrested the lead away from each other, the Sotheby’s specialist bought it on behalf of a client on the phone for a $31 million hammer price, $35 million with buyer’s premium. One Cy Twombly went for $36.7 million, another for $15.4 million.

Sam Francis’s Summer #1 (1957) came onto the block, and after a little more than a minute, all but two of the bidders dropped out: Simon Shaw and megacollector Eli Broad. Broad kept bidding beyond what he had intended to pay—he would shake his head each time Shaw’s bidder raised the price $100,000, and then after a few seconds mouth the words “one more.” Finally Shaw threw in the towel and Broad bought the piece for $11.8 million. A Sotheby’s staffer told me the bidding match—a wheelchair-bound, L.A.-based Broad coming to New York to bid at a sale himself, in the room, and going over the self-imposed high limit—was, for Broad, almost unheard of.

By the time bidding ended, the sale had raked in $242.2 million, clearing its low estimate of $201.4 million, and securing a sell-through rate of 95 percent. “All the rumors of the demise of the market were premature!” dealer David Zwirner told me after the sale wrapped. “I was very impressed by the energy here tonight.”

At the news conference, the specialists in charge of the sale could hardly contain their glee, having convinced enough collectors that these works, at this beleaguered auction house, were worth all those millions of dollars. “We saw a fundamentally different room than we did in the last few months,” said Billault, the head of contemporary art, beaming.

And then, after some coaxing, Cappellazzo came to the microphone, adjusting it down from the height her male colleagues had used (she was wearing flats). She cleared her throat, but no one could hear her amid the clapping and popping of champagne corks that echoed through the halls of Sotheby’s. “By the time we walked in here,” she said, looking at Smith, “we knew what was going to happen.”

The Sotheby’s comeback was made official during the June sales in London. Suddenly, the auction house that some thought was on the verge of collapse was looking like the industry bellwether. The week after the record-breaking Picasso at the Imp-mod auction, Sotheby’s totaled $67.8 million at its contemporary sale, solidly over its high estimate despite the panicked markets in the days following Brexit. More good news came when the house announced that Eric Shiner, the director of the Andy Warhol Museum, would be joining Sotheby’s. “Warhol is like Apple stock—if you wanted one leading point in how the market is doing, Warhol is one you’d glance at,” Cappellazzo told me. “And Eric knows where the Warhols are.”

Even as the art world entered the doldrums of late summer, Sotheby’s continued to reshape itself. In addition to beating out Christie’s to secure the Steven and Ann Ames collection (albeit to the tune of a $100 million guarantee), Sotheby’s announced in July that Taikang Life Insurance, whose biggest shareholder is the auction house China Guardian, would acquire 13.5 percent of the company’s shares—more than those held by the previous largest shareholder, Dan Loeb. Market mouthpieces chattered about the potential reasons behind the blockbuster deal. Could it lead to a decisive win in China Guardian’s very Sotheby’s-versus-Christie’s-style competition with archrival Poly Auction? Was it a need to place Chinese assets in an industry more reliable than banking and real estate? A desire to tank the stock price in order to acquire the whole company? What’s clear is that such a move will alter the way an auction house operates in today’s breakneck-speed globalized painting bazaar. (The hiring of Shiner happened to coincide roughly with an exodus of top staff at Christie’s, with several top executives departing at the end of July.)

Then, on August 8, Tad Smith announced in his quarterly earnings call that, even though net auction sales are down 16 percent compared to the second quarter of 2015, Sotheby’s pulled in a net income of $89 million, well over the net total of $67.6 million brought in over the same period last year. And Sotheby’s also had a major presence at Art Basel in Switzerland this past June, despite not having any sanctioned sales or events. On the fair’s opening day, I was writing a story at the bar of the Ramada hotel when I heard a familiar voice behind me. It was Cappellazzo.

“You want a scoop?” she asked. One of the most talked-about works at the fair, Paul McCarthy’s Tomato Head (Red), 1994, had sold for $4.75 million just minutes into the opening. How did she know? Because it was bought by Amy Cappellazzo. But which Amy Cappellazzo? Was it bought for a Sotheby’s client? An Art Agency, Partners client? None of the above? All of the above? Or, given that now-famous payday, did she buy it herself? When I asked for the identity of the buyer, she stepped away to make a phone call and told me the following, which may indicate how Sotheby’s will be buying and selling works—at auctions, at fairs, and elsewhere—for years to come. “You can say it was bought for an American collection,” she said. “On behalf of Art Agency, Partners.”