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Sotheby’s announced its financial results for the first quarter of 2013, which ended March 31. The auction house’s first quarter total revenues were $101.7 million, a $3.2 million decrease from 2012. The decline was mainly caused by a reduction in auction commission margin from 18.1% to 15%. However, the quarter’s net auction sales increased 23% compared to last year’s first quarter.

High-grossing categories, including Impressionism as well a Modern and Contemporary Art, remained highly competitive. In an effort to enhance revenue and strengthen auction commission margins, Sotheby’s changed its buyer’s premiums structure rate on March 15, 2013. Buyers now pay 25% on the first $100,000 of a work’s selling price; 20% on the portion of the price above $100,000 but under $2 million; and 12% on any remaining amount about $2 million. Since most sales for the first quarter of 2013 took place before this shift occurred, it did not have a substantial impact on Sotheby’s results for the first quarter of 2013.

Due to the nature of the auction seasons, first and third quarters tend to bring in lower revenues than the second and fourth quarters. Typically, first quarter results are not an accurate gauge of expected full year results. Sotheby’s Chairman, President and CEO Bill Ruprecht said, “The first quarter showed a solid increase in auction sales compared to the prior year, but the results illustrate how competitive the market is for the highest value consignments. That competition resulted in lower commission margins, which is reflected on the bottom line.”

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In 2006 The Cardsharps was sold to the late collector and scholar Sir Denis Mahon for just over $65,000 at an auction at Sotheby’s in London. At the time of the sale, Sotheby’s identified the work as being by a “follower” of the Italian master, Caravaggio (1571-1610). However, after his purchase, Mahon identified the work as a Caravaggio original and obtained an export license for the work that put its value at $15.5 million according to a claim filed at London’s High Court of Justice.

Due to their failure to identify The Cardsharps as an authentic Caravaggio painting, Sotheby’s is being sued by Lancelot William Thwaytes, who consigned the work to the 2006 auction. Thwaytes is now seeking unspecified damages, interest, and costs relating to the price difference between the painting’s 2006 selling price and what he believes it was actually worth on the open market that year had it been properly attributed to Caravaggio. Thwaytes claims that Sotheby’s was negligent in its research prior to the work’s sale, leading to its extraordinarily low selling price.

However, Sotheby’s stands behind its belief that the painting is a copy and not a work by Caravaggio’s hand, citing Caravaggio expert Professor Richard Spear and several other leading scholars. Sotheby’s added that their view was supported by the market’s reception to the painting when it was put up for auction.

Mahon, who passed away in 2011, donated 58 works from his collection worth around $155 million to various U.K. galleries.

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