By SOUREN MELIKIAN - AP
Published: May 5, 2010

NEW YORK — On Tuesday night, a painting dashed off by Picasso in just one day in 1964 became the most expensive work of art ever sold at auction as it rose to $106.5 million.



It took Christopher Burge, Christie’s premier auctioneer, eight long minutes to raise the picture, dubbed “Nude, Green Leaves and Bust,” above the hitherto unattainable $100 million barrier. Mr. Burge opened the bidding by calling out $58 million and raised the stakes by $1 million increments. From $77 million, four new bidders, sitting in the room or operating over the phone, jumped into the fray. From $86 million on, the contest was confined to two telephone bidders. They fought it out until Mr. Burge brought down his hammer on a $95 million bid made under the paddle number 1709, which, with the sale charge, raised the full price to $106.48 million, to be precise.

Spectacular as it may seem, this figure was not entirely unexpected. Only moments before the auction began, Christie’s specialists were confidently quoting an estimate set at $70 million to $90 million. That estimate had not varied for weeks. This is in marked contrast with what often happens in the auction world, when excitement grows among potential buyers as the auction day approaches, leading auction houses to revise their expectations upward.

Indeed, there was a precise reason for the unwavering assurance displayed by the auction house specialists. A full “third party guarantee” had been negotiated by Christie’s that duly warned prospective bidders, as the law requires. This legal phrase means that the minimum price demanded by the owner consigning the work of art, which remains undisclosed, will be paid to the consignor whether the work sells or not. The financial commitment is made not by the auction house, but by the “third party” willing to have a flutter at the poker game that auctions have become. If the work sells above the guarantee, the difference is shared by the auction house and the third party in question according to variable proportions. These are freely negotiated before the sale and specified in the contract signed by the auction house and the third party, but they are never disclosed to the public.

This complicated arrangement alters the nature of the auction. It is no longer a free contest where the vendor takes his chances and the buyer fights off spontaneous competitors equally wanting to acquire the work.