Christie'S International Plc Business Information, Profile, and History

Company Perspectives:

Christie's success as an auction house is fueled by its two most important assets: renowned expertise and exemplary customer service. Christie's has hundreds of specialists with years of experience evaluating and researching thousands of objects in their respective areas. Many are distinguished lecturers and authors; all have an in-depth knowledge of their collecting field.

History of Christie'S International Plc

Christie's International plc oversees the operations of one of the world's premier art auction houses. Although the company holds regular auctions worldwide, its principal selling centers are located in London and New York City. Dubbed 'the oldest fine arts auctioneers in the world' (rival Sotheby's is 22 years older, but began by selling books), Christie's has been in the business more than 200 years and has set record prices not only for works of art but also wine, scientific instruments, carpet, photographs, cameras, and teddy bears. The company went private in 1998. Soon thereafter, a U.S. Justice Department probe of possible price fixing with Sotheby's rocked the art world and has damaged the fortunes and reputations of both venerable auction houses.

18th-Century Origins

Although documentation on his early life story is somewhat sketchy, it is generally held that James Christie was born in Perth, Scotland, in 1730 to a Scottish mother and English father. After serving briefly as a midshipman in the Royal Navy, he worked for an auctioneer named Annesley as an apprentice in fashionable Covent Garden, London. After a few years, Christie opened his own auction house at Dalton's Print Rooms in the Pall Mall district. These premises also housed what was to become the Royal Academy of Arts. His first auction, on December 5, 1766, which included wine, netted £76, 16 shillings, and sixpence. This sale was the first recorded in a bound log of sales that has survived more than 200 years.

James Christie excelled at auctioneering. In the early years, he sold many things aside from works of art, including chamber pots, loads of hay, and even someone's suddenly unneeded coffin. All of these were proffered with mellifluous and verbose charm, earning Christie the nickname 'The Specious Orator' from satirical cartoonists of the day.

Within only a few years, Christie was handling truly valuable paintings, such as those by Europe's 'Old Masters,' which he picked up on the fashionable Grand Tour, as well as several by promising American artists. Christie eventually moved his offices (and residence) to 125 Pall Mall, becoming next door neighbors with Thomas Gainsborough, the great British painter, who later (like Sir Joshua Reynolds) painted Christie's portrait. (After changing hands several times, Gainsborough's Portrait of James Christie was bought by J. Paul Getty for $26,500 in 1938, Getty's first major painting purchase.)

Moreover, Christie was influential in the promotion of art, displaying the works of new artists at a time when, save the Royal Academy's annual show, there were no other public places to display contemporary works. Many esteemed artists, including Landseer, Rossetti, and Sargent, saw their work pass through the auction house. Increasingly, when an artist who had been helped by a Christie auction passed away, the executors of his estate naturally turned to Christie to sell pictures remaining in the studio.

Christie's reputation as a connoisseur was so esteemed that in 1778 he was called on to sell Sir Robert Walpole's magnificent art collection, which Catherine the Great eventually acquired for £40,000, then a colossal figure. (These pictures were the basis of the Hermitage in St. Petersburg; a few bought by Andrew Mellon made their way to the National Gallery of Art in Washington, D.C.)

Christie's and the London art business as a whole benefited from the emigration of Huguenots from France. After the French Revolution destroyed Paris as the leading art market, the revolutionary government turned to the nation of shopkeepers, and to Christie's specifically, to dispose of La Comtesse Dubarry's 'most superlative' collection of jewels after she was guillotined. The Reign of Terror both removed buyers and flooded the market with paintings, however, making jewelry sales still more important.

Industrial Era Transitions

American tycoons, newly rich from the Industrial Revolution, such as Mellon, Pierpoint Morgan, Vanderbilt, and Kress, began to dominate buying activity in the 19th century. At the same time, Christie's became known as a clearinghouse for country estates, a tradition that has continued for two centuries. Such a sale in 1848, for the Duke of Buckingham's Stowe House, lasted 40 days and realized £77,562. It also brought in a new employee and a future partner, the gatekeeper's son, Thomas Woods, who thoroughly impressed the firm with his knowledge of the house's paintings.

James Christie died in 1803, whereupon management of the company was taken up by his son, James Christie II, and later his two grandsons. In 1823, Christie's moved its headquarters to 8 King Street, where it would remain for more than 170 years. The auction room there known as the 'Big Room' is said to have been designed by James Christie in the form of a hexagon to maximize wall space; paintings were hung on these walls all the way up to the ceiling.

In 1831 William Manson joined the firm. Thomas Woods became a partner in 1859, and the firm's name changed to Christie, Manson and Woods. The year 1889 saw the retirement of the last of the Christie family to be associated with the company: James Christie IV. Christie's held the first auction of Impressionist paintings in Britain in the same year.

The Modern Era

After 50 years of passing picture sales on to Christie's in favor of auctioning book collections, Sotheby's management decided to begin auctioning paintings. By 1917, the company was holding regular art auctions. In response, Christie's stopped referring books to Sotheby's, opting to auction such collections themselves. Thus began a competition and rivalry between the two auction houses that would continue into the year 2000.

Although it had begun to broaden its offerings to include books and even fine wines, Christie's focus remained primarily in the picture market. Among its more notable sales during this time was that of the Portrait of Mrs. Davenport, by British painter George Romney. The portrait was sold by Christie's for £360,900 in 1926. Other significant sales in the interwar period included the Russian crown jewels, which realized nearly £250,000 in 1927.

Global economic depression and the world wars were devastating to the art market, and in the 1930s talk began to surface of a merger between Christie's and Sotheby's. Nothing came of the discussions, however, and in the race for the top auction house spot, Sotheby's began to gain ground, having been early to establish a presence in the United States.

In 1940, R.W. Lloyd bought a substantial share of Christie's stock and thus became chairman of the company. Under Lloyd, Christie's became a private limited company, and Sir Alec Martin, who had begun working for Christie's at the age of 12 as an office boy, was named managing director. New management faced several challenges. In addition to its financial concerns, Christie's suffered a terrible blow on April 16, 1941, when an incendiary bomb destroyed the interior of the firm's building on King Street; the premises would not be completely rebuilt until well after the war, in 1953. Another wartime inconvenience was the suspension of wine sales, which did not resume until 1966.

Postwar Crisis and Opportunity

Christie's market grew broader yet again after World War II, as art auctions, previously the domain of the upper classes, gained a more widespread appeal. Television cameras began to crowd into auction rooms, and the public began to hear news reports of important art sales and the money they fetched.

In 1958, Christie's was reorganized as Christie, Manson and Woods Ltd: the new company issued £60,000 worth of capital. Ivan 0. 'Peter' Chance was selected to lead the new company. In order to buy shares owned by Martin and Lloyd (who died in April 1958), the Crown Lease of 8 King Street was sold to the Commercial Union Assurance Co. and leased back to Christie's.

A process of professionalization had begun at Christie's. First, Peter Chance promptly hired consultants to set up a press office at Christie's. Then, the company began focusing on establishing a presence in Europe, becoming the first British auction house to hire a European representative, whom it situated in Rome. Soon offices in other European countries were established, and an American representative was hired. Christie's also began to appoint more specialists in areas such as collectible coins and porcelain. Finally, as competition between Christie's and Sotheby's intensified in the late 1950s, both houses began requiring their managers to read the obituaries daily, looking for estates that might need auctioning. Later, social intelligence gathering would become more sophisticated, all with the end of determining who would control known valuable art collections. Christie's had approximately 150 sales a year in this period.

In 1960 Christie's reported sales of £2.7 million, and the following year that figure had risen to £3.1 million. The company was trailing by a significant margin behind Sotheby's, however, a trend that some analysts attributed to a lack of confidence in Christie's picture department. Nevertheless, Christie's continued to set sales records, recording the highest price paid until then ($27,950) for a Pre-Raphaelite painting, The Lady of Shalott by Holman Hunt.

In 1962, as the Cuban missile crisis was simmering, Peter Chance reportedly made a secret trip to Cuba to consider auctioning property seized when Castro had risen to power in 1959. Although a valuation team arrived to catalog the valuables in what was in many ways a febrile environment, no sales materialized from their efforts. In spite of the bold efforts, Christie's lost £6,000 that year, although it sold only slightly less art than the year before. Five years later, Christie's did succeed in establishing a business relationship with the Soviet Union, selling for £65,751 ($193,308) a 1,700-piece porcelain banqueting service made for Tsar Nicholas I in 1830.

A couple of notable staff additions helped bolster Christie's ailing reputation in its picture department, as did initial moves to divide the company's departments into areas of specialty. Moreover, the sale of the Cook collection of Old Masters in 1965 proved Christie's was a force to be reckoned with; Rembrandt's Portrait of Titus (his son) sold for $2.2 million, a price that surpassed all expectations.

In 1965, Christie's acquired White Bros. Printers for £38,000, a purchase that helped the company to produce its considerable volume of catalogs more efficiently. Interestingly, the company used an old-fashioned letterpress system until 1979, when it converted to offset lithography (which also required using union labor for the first time). In 1980 White Bros. began printing all of Christie's Park Avenue catalogs as well.

To celebrate its 200-year anniversary, Christie's held a tremendous Bicentenary Exhibition in January 1967. About 60 important drawings and paintings that had passed through Christie's rooms over the years were lent back for the display, which raised about £3,000 for the National Art Collections Fund. Together, the works, which included Gainsborough's Portrait of James Christie, were valued at approximately $5 million.

During this time, Christie's European operations, based in Rome, were being hindered by Italy's strict art export laws. In response, Christie's established a new subsidiary, Christie's International S.A., which was incorporated in Geneva in 1967 to oversee European business. Switzerland, moreover, did not have the import taxes of Great Britain. A program of international expansion included a host of new Christie's auction houses in Australia, Japan, and Canada, as well as an American headquarters move to a new facility on Madison Avenue in New York.

New Leadership for a New Era

Christie's went public in 1973, strengthened by three years of good results and expansion. Pretax profits had grown tremendously in the prior five years: from £139,000 in 1968 to £1.1 million in 1972. In two years, after practically doubling 1972's profits, Peter Chance announced his retirement as chair of Christie, Manson and Woods, although he would remain chairman of Christie's International plc for two more years.

Jo Floyd took up Chance's former duties just in time to be met by a worldwide economic recession. To cope with dwindling profits in London, both Christie's and Sotheby's introduced a ten percent buyer's premium in the early 1970s. This new policy was not met with enthusiasm on the part of London's art dealers, several of whom began litigation against the auction houses.

In autumn 1974, Christie's acquired Debenham and Coe in South Kensington, for the purpose of handling lower value lots more efficiently than was possible at its King Street facility. At the end of the decade, Christie's bought Edmiston's, a Glasgow auction firm.

In 1977, Christie's opened a New York salesroom in the Delmonico Hotel, a 1920s era skyscraper at 502 Park Avenue. American sales were becoming increasingly important to the British-based firm; by 1983, New York sales had surpassed those from London. In 1978, a second New York showroom, dubbed Christie's East, was opened in a six-story East 67th Street garage. Christie's reputation in America seemed to be cemented when in 1980 Henry Ford II chose the firm to sell ten of his excellent Modern and Impressionist paintings. A painting that had performed so impressively for Sotheby's in 1958, Van Gogh's Le Jardin du Poete, Arles, was sold by Christie's for a record $5.2 million (£2.2 million) in London. Overall, the paintings brought in $18.3 million in one evening. Other great sales during this time included that of Coco Chanel's wardrobe, a huge production that earned £43,250 for 40 dresses and brought in an even more impressive amount of good publicity.

In 1987 several records were set at Christie's, for paintings ($39.9 million for Van Gogh's Sunflowers), jewels ($6.4 million for a 65-carat pear-shaped diamond), and automobiles ($9.8 million for a 1931 Bugati Type 41 Royale). Christie's marketing efforts, aimed at broader audiences, helped sell large collections, such as the Nanking Cargo, consisting of gold bars and porcelain from a freighter sunk off the coast of Java in 1751. Human interest helped elevate the price to £10 million. Such valuable collections attracted interest from all walks of life, and in 1984 a group of armed robbers stormed into a jewelry auction at King Street, wielding a shotgun and a sledgehammer. Fortunately, the truly valuable pieces were overlooked.

In 1990 Christie's set a record for furniture; $15.1 million was offered for the Duke of Beaufort's Badminton cabinet. Then, the record for all works of art was broken with Christie's sale of Van Gogh's Portrait of Dr. Gachet, which went for $82.5 million. These records represented only the cream of many Modern and Impressionist paintings that Christie's handled during the late 1980s and early 1990s. Christie's was holding approximately 1,400 sales per year in the late 1980s.

Before resigning in 1989, Jo Floyd had secured a new 125-year lease for expanded premises on King Street. Christopher Davidge, whose grandfather had worked as a clerk at the firm, assumed the role of Christie's CEO after becoming managing director four years earlier. Davidge had previously worked his way up the ranks at White Brothers, Christie's printing company. He made effective communications and standardization throughout the organization two of his top priorities. As the art market lapsed into a recession that would last from 1991 to 1995, he also streamlined the staff and aggressively cut commissions to gain sales.

A long-term pattern of competing over market share with Sotheby's&mdash one firm underpriced the other--would depress profits and lead to stagnant stock prices. Because there was so little art on the market during the slump of the early 1990s, the big sellers were able to negotiate zero commission deals in exchange for their business. Entering new categories of selling, such as rock and roll memorabilia, helped, but did not generate enough profits to offset the loss of commissions from the high-end art market. In March 1995, Davidge announced a new two percent commission on sales of more than $5 million. A few weeks later, Sotheby's followed suit, with the result that neither auction house lost business to the other. Even when Christie's passed Sotheby's in market share for the first time in more than 40 years, its profits were clipped by escalating marketing costs. In 1997 the two rival firms and more than a dozen New York art dealers became the subject of a U.S. Justice Department investigation about possible collusion to depress prices, but the inquiry seemed to peter out, leaving only a patch of bad publicity.

Lacking a majority owner, Christie's also found itself the target of takeover bids. Late in 1997 a Swiss investment bank, SBC Warburg, entered into talks with Christie's about purchasing the firm. The talks eventually stalled, but a short time later, in May 1998, French tycoon Francois Pinault bought Christie's for $1.2 billion. After buying such interests as Chateau Latour wines, Vail Resorts in Colorado, and Gucci, Pinault was known to analyze a new purchase during the first year, then change management. It was a difficult time for Christie's, which was losing employees to Sotheby's and Internet sites looking to sell art and collectibles.

In December 1999, after 34 years with Christie's, Davidge was terminated and replaced by Edward Dolman, the head of the U.S. operation. The next day, Davidge handed Dolman a package of documents that included meeting minutes and handwritten notes of phone conversations that implicated top management of Christie's and Sotheby's in an effort to fix commission fees. After lawyers reviewed the material, Christie's turned over the information to the U.S. Justice Department. Davidge provided more information to the government, and in exchange for their cooperation both Davidge and Christie's received conditional immunity from prosecution. Sotheby's executives were not so fortunate. While its chairman, A. Alfred Taubman, chose to fight the charges, Davidge's counterpart, Diana D. Brooks, pleaded guilty in October 2000 to conspiracy to fix commission rates for auction customers.

Christie's did not escape unscathed, however. Aside from tarnished images, Christie's and Sotheby's both faced a European Union inquiry and dozens of U.S. class action suits, which eventually would be settled at a cost of $256 million for each firm. Overseas suits looked to haunt the auction houses for years to come. The task of restoring the company's image was daunting enough for Christie's, but perhaps of greater concern was the need to question how the auction business was run in general. Godfrey Barker wrote in the Wall Street Journal: 'Sotheby's and Christie's are the luxury toys of men who see their real businesses elsewhere. ... The auction houses are jewel boxes for their wives and fantasy stage sets for the owners themselves, places to meet people beyond their social reach and throw great parties--not companies dedicated to making serious money. ... It cannot last much longer, though. A revolution is bound to come.'

Principal Subsidiaries: Christie's Great Estates, Inc.; Christie's Education; Christie's Fine Art; Christie's Images; Christie's Publications.

Principal Competitors: Sotheby's Holdings, Inc.; Phillips Auctioneers.

Chronology

• Key Dates:

• 1766: James Christie founds company.
• 1803: Christie dies and his son, James Christie II, assumes control of the company.
• 1823: Company move headquarters to 8 King Street, its current home.
• 1889: Christie family involvement in the company ends.
• 1940: R.W. Lloyd assumed chairmanship of Christie's, which becomes a private limited company.
• 1958: Company is reorganized as Christie, Manson and Woods Ltd.
• 1973: Christie's makes a public offering of its stock.
• 1998: Francois Pinault acquires company and takes it private.