Russian-owned auction house tries to distance itself from war

Russian troops had only begun invading Ukraine when managers of the Phillips auction house realized they had a problem.

Public sentiment was building against the oligarchs and Russian interests. Sanctions were imposed, assets frozen. Some collectors expressed concerns that Phillips was owned by two wealthy Russians who also control one of that country’s largest luxury retail companies, Mercury Group.

“We had to make sure people understood which side we were on,” said Ed Dolman, executive chairman of Phillips, which does most of its business out of New York and London. “There was a lot of discussion that took place across the company.”

On February 28, four days after the invasion began, Phillips posted an online statement which condemned the war and displayed the Ukrainian flag. Auction house executives were quick to reassure customers of the company’s financial stability.

Then, a few hours before a big night sale of contemporary art in London on March 3, the company announcement he would donate all his proceeds from the auction to the Ukrainian Red Cross. At the end of the sale, this amounted to $7.7 million in fees.

“They dodged the bullet in the moment,” said Josh Baer, ​​a New York-based art consultant and commentator who brokered sales through Phillips. “They came out in front with their remarks and their gift.”

It is difficult, given the opacity of the art market and the constraints of digging into the financial details of private companies, to say with certainty that Phillips was not damaged by the war and by the appeals of certain to boycott its services. But that’s what the company said, and that’s what the publicly available metrics seem to support, so far.

At auctions in London this month, there was no indication that shippers or collectors had abandoned the business. On March 4, it recorded its highest ever total for a London selling day, and at a charity auction in London this week, all 15 lots were sold.

At the evening sale in London on March 3, five lots were withdrawn, but Phillips said financial, rather than political, considerations prompted shippers to withdraw the lots from the auction, which fetched 40 million of dollars.

The works “did not generate the interest we had hoped for and as a result we advised shippers to opt out early,” Phillips said in an email.

The auction season is far from over, however. In a few weeks, the spring sales in New York will take place, where guaranteed prices for the most expensive items go a long way in determining an auction house’s bottom line.

Matthew Girling, the former chief executive of Bonhams, has urged collectors to boycott Phillips, in a interview with Le Journal de l’Artsuggesting that only this “will attract the attention of the world and the owners of Mercury to hopefully influence Putin to change his current course of action”.

great collector, Andy Hall, agrees, although he was called by a Phillips executive after he reported Russian ownership of the company online. “I don’t think anyone should do business with Russia right now,” he said in an interview.

“The art world likes to present itself as woke and politically in the right place,” he continued, “but here, in my opinion, it’s utter hypocrisy that people are happy to keep buying and to sell art through this Russian-owned entity”.

British-Indian sculptor Anish Kapoor also weighed in. “Putin’s cronies are a legitimate target wherever they are,” he said in an email. “Phillips is as good a target as Chelsea football club,” he said, referring to a football team owned by Russian billionaire Roman Abramovich, whose assets were frozen this month by Britain’s Great Britain. -Brittany. Abramovich is currently trying to sell the team.

The two Russians who own Phillips, and controlling a business empire in Russia – Leonid Friedland and Leonid Strunin – are not on the same plane as Abramovich, however. They are very wealthy, collect art and have a large footprint in the Russian economy, but they are not considered politically influential oligarchs and have not been subject to sanctions. Phillips said its owners “have no political or business ties with the Russian government.” And they have now, with the statement posted on the company’s Instagram page, disagreed with Russian President Vladimir V. Putin.

“At Phillips, we unequivocally condemn the invasion of Ukraine,” said the statement from Stephen Brooks, the company’s chief executive.

“Along with the rest of the art world, we were shocked and saddened by the tragic events unfolding in the region,” the statement continued.

Dolman said the owners insisted the company waive all of its costs from the March 3 auction in London as a donation to the Ukrainian Red Cross.

Friedland now resides in Monaco and Strunin in Cyprus, according to British records. But their commercial presence in Russia is vast and highly publicized. The Mercury Group, which they founded in 1993, is one of the largest distributors of high-end clothing, jewelry and other luxury goods in Russia, and it operates dozens of shops around the country. Their department store, TsUM, is located in downtown Moscow near the Bolshoi Theatre.

During auction season, owners have been known to turn up at sales and hang out backstage, although it’s unclear if they’ll be in New York on May 18 when the hammer first falls. at Phillips’ Marquee Sale of the Year, the evening auction of 20th Century and Contemporary Art. Neither man responded to interview requests.

At the head of this sale, the monumental 1982 by Jean-Michel Basquiat painting of a horned devil, “Untitled,” which is expected to fetch at least $70 million, thanks to a third-party guarantee, making it the most expensive work Phillips has ever sold. The shipment of the work, by Japanese billionaire collector Yusaku Maezawa, was announced on February 28, four days after the Russian invasion, which the society cites as further proof of the art world’s confidence.

Dolman said there were no major withdrawals from that sale, but declined to elaborate. Phillips said shipments, currently about half of last year’s total of 48, are still coming in. Already, total expected sales are expected to exceed the $118.2 million made at the same sale last year, according to the company.

The Phillips team, Dolman said, had not used financial incentives to prevent senders from removing their works. “We have met our standard terms of sale and payment,” he said.

But they worked, he acknowledged, to steer the auction house and its owners away from the war.

“We are obviously aware that the whole world is appalled by Russia and what is happening,” Dolman said. “It would be easy to lump all Russian nationals together. It would condemn an ​​entire nation to isolation.

“Phillips owners,” he added, “are appalled by the events.”

Part of the auction house’s sustainability during the crisis, some experts say, is based on the fact that many in the art world view Dolman and Brooks, who are both former top executives of Christie’s, and their team as the face of Phillips, not the Russians who own it.

Peter Brant, a prominent collector who traveled to the Hungarian border this month to deliver supplies to Ukrainian refugees, said he did not support a boycott of Phillips. Although he hasn’t done much business there in recent years, he said he has a high opinion of the company’s staff.

“If they boycott,” he said, “it will be difficult for them, but they are very resourceful people. They will do everything they can to counter it.

Artist Ai Weiwei said in an email response to a question that he does not support boycotting “a private company just because it is owned by Russians.”

“In fact, this type of boycott is authoritarian and intimidating,” he said, adding that “its core is racism, discrimination and political correctness.”