Theories of the Date of Exodus

The date of exodus is specifically referring to the time when Israelites came out of Egypt. When determining the date of exodus, controversy happened among the archaeologists and historians and the biblical scholars. In the ancient time, people passed down their history and information orally to the next generation and written document was rare at that time.[1] Therefore, part of the history is lost. In order to reconstruct the history and find the date of exodus, scholars were trying to use the bible to recalculate the time. Also, since there were no historical documents and no archaeological evidence of exodus during the time of exodus, historians had a hard time to confirm or even challenge the biblical account. However, we can still be able to get an estimated date of exodus through making deduction based on the evidence that scholars found in the later period of time.

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Even though we can use a mathematic way to estimate the date of exodus, it still came up with two approximated results due to different views of Scripture and method of study. Most people called these two approximated results as early date and late date of exodus. Scholars suggest that the early date of exodus is around 1446 BC (15th century), while the late date is around 1290 BC (13th century). Here, we will examine both biblical and historical support for both early date and late date of exodus and understand how the scholars came up with these two dates.

Early Date

 First, the scholars examined 1 Kings 6:1 “In the four hundred and eightieth year after the Israelites came out of Egypt, in the fourth year of Solomon’s reign over Israel, in the month of Ziv, the second month, he began to build the temple of the Lord.”[2] According to A Biblical History of Israel, Solomon’s fourth year is generally referred to 966 BC. And this verse gives 480 years between the Israelites came out of Egypt and the building of the temple in Solomon’s period.[3] By doing the math, 480 years + 966BC = 1446 BC.[4]

 Besides, in 1 Chronicles 6:33-37, it shows that there were nineteen generations between Solomon and Moses. Assume each generation is about 25 years and by doing the math 19 x 25 = 475 years. The result is very closed to 480 years in 1 Kings 6:1. Thus, some scholars believe that the number 480 should be taken as a scientifically precise number instead of a number with symbolic meaning.[5]

 Second, Judges 11:26 also supports the early date of exodus. In Judges 11:26, “For three hundred years Israel occupied Heshbon, Aroer, the surrounding settlements and all the towns along the Arnon. Why didn’t you retake them during that time?”[6] During Jephthah’s time, the king of Ammonites was trying to dispute and get back the Transjordan area, which was lost to Israel during Moses’ time. And Jephthah replied to him that this place had been taken over for 300 years and he has no point to return back to the Ammonites now. According to The History of Israel, the period of the Judges was from 1200 BC to 1020BC.[7] “Since Jephthah lived about 1100 BC, the 300 years would refer back to 1400BC, the approximate time of the conquest according to the early date hypothesis. And adding another 40 years for the time in wilderness, thus, the early date would be around 1440BC.[8]

 Third, Jericho was the first stronghold that taken by the Israelites after crossing the Jordan. “John Garstang, who excavated Jericho between 1930 and 1936, thought the evidence favoured the early date.”[9] Garstang’s main argument lay in the interpretation of the pottery that found on the mound, which could reveal Jericho was destroyed about 1400BC. However, such interpretation was not widely accepted since Jericho was suffered severe erosion, it disturbed the level of deposits on the mound, which would have a huge influence for the interpretation.[10] An archaeologist, Miss Kenyon mention that the interpretation of the pottery may not support the early date, however, her study of pottery change in Palestine indicates there is a major change in Palestinian culture occurred about 1400BC, precisely at the time when Joshua and the Israelites would have reached Canaan if exodus happened around 1446BC.[11]

 Fourth, Hazor was taken and burned by Joshua and it is recorded in Joshua 11:13. “This site has been extensively excavated by Yigael Yadin.”[12] And he believes the destruction of Hazor would take place during the Late Bronze II period around 1400BC to 1200BC. However, the range is too big, which is included both early date and late date of exodus. Some scholars claim that the bible proofed that the destruction of Hazor and it was happened in the early date.[13] Judges 4:2-3 indicates that the king of Hazor oppressed the Isralites during the time of Judges for twenty years and Deborah and Barak then delivered Israel. Whitcomb places the defeat of the king of Hazor about 165 years after Joshua’s destruction of Hazor. Therefore, it is strongly against the late date destruction since the city was uninhabited between 1230BC and the time of Solomon. Thus, the destruction at Hazor actually favors the early date. And the data from excavation are harmonized with the biblical text.[14]

 Fifth, certainty for the date of exodus is impossible, as we need to face our limitation of knowledge and lack of extra-biblical evidence. However, we can suggest that the time Israel left Egypt was during the reign of Ramesses II and was ready in Canaan by the date of Merneptah Stele, which was about 1220 BC.[15] Egyptian monarchs were never given to recording defeats and disasters, and certainly not the loss of a chariot brigade during the pursuit of runaway Israelite slaves. Because of the silence of Egyptian record, we do not have an external reference to proof the date of exodus. However, we could make a possible cross reference with “Merneptah’s Stele” in 1220 BC.[16] “The stela was originally inscribed by Amenophis III, but was recycled by Merneptah to celebrate his victory over Libya and Syria Plalestine.”[17] “The annals of Merneptah contain the only mention of Israel during the New Kingdom (1550-1070 BC) recovered in Egypt. The annals refer to Israel as a people rather than as a state. The Stela is used to date the exodus of the Hebrews from Egypt to the reign of Ramesses II (1290-1224BC) and the appearance of Israel in Syria-Palestine to 1250 BC.”[18] Some scholars see the Merneptah’s Stele as a distorted reference to pharaoh’s vain attempt to cut Israel off at the Sea of Reeds, with defeat turned into victory for propaganda purpose.[19] Even though the content of Merneptah’s Stele may not reflect the truth, the date could help us to approximate the date of exodus. Since the Merneptah’s Stele is inscribed during Amenophis III period, the actual date of exodus should happen couple generation before Amenophis III, which indicates that early date is possible.

 Sixth, 350 Amarna tablet was found at the Egyptian city of Tell el-Amarna. The tablets were the letters from the Canaanites kings to the pharaohs Amunhotep III and Akhenaton complaining about a group of people “Apiru” who had invaded the land around 1400-1350BC. “Apiru” is used to describe soldiers, mercenaries and salves in several countries during the Ancient Near East period. Some scholars doubt that whether Apiru refers to the Hebrews. If it were so, the date of Amarna tablets would suggest the early date of exodus occurred around 15 century.[20]

 Seventh, Petrovich suggests that there is a compelling argument for choosing 1446BC as the date of exodus. He said the Jubilee cycles actually agree exactly with 1446BC, yet are completely independent of the 479 years of 1 King 6:1. “The Jubilee dates are precise only if the priests began counting years when they entered the land in 1406BC. The Talmud lists seventeen cycles from Israel’s entry until the last Jubilee in 574BC, fourteen years after Jerusalem’s destruction.”[21]

There are some disagreements of the early date of exodus. Some scholars think the 480 years from the exodus to the building of temple is just an approximation and it is not an actual number of day. It could have a symbolic meaning instead.[22] 480 might be a symbolic number that derives from twelve time forty, thus, the author was trying to emphasize that twelve generation had elapsed between Solomon’s fourth year and the exodus.[23] Same situation happened in the time of Jephthah, Jephthan’s speech is only a general reference to state that Israelite took over the land long time ago and the number is not intended to be precise. Also, the text does not focus on number. Also, since he would hardly have access to reliable historical records at that time, the number 300 may represent Jephthah’s rough guess.[24]

Besides, Scholars believes that the lack of Egyptian record to Israel being in Canaan prior to the period of Merneptah is a big problem for determining the early date of exodus.[25]

Late Date

 First, there is another view of 1 King 6:1. Some scholars suggest that the 480 years is a round number for twelve generations and each generation is for forty years. John Bright mentioned that the number forty is a well-known round number to represent one generation in the Bible.[26] However, a generation from birth of father to birth of son in the real world is likely to be about 25 years instead. By calculating it again, 25 years x 12 generations = 300 years. The result gives 300 years instead of 480 years. Therefore, the date of exodus would be around the mid 13th century.[27] Even though this number is not an exact number, it gives a good approximation of the late date of exodus.

 Second, in Exodus 1:11, “So they put slave masters over them to oppress them with forced labor, and they built Pithom and Rameses as store cities for Pharaoh.”[28] The city of Rameses was one of two store cities built by the Israelites. And it is recorded in the Egyptian record and archaeological excavation. And many have equated the city of Rameses with the city of Pi-Ramesses. Betts mentioned “Pi-Ramesses was located at modern-day Qantir near Faqus and is called Tell el-Dabva.”[29] The scholars are very certain that these two cities were built by one of the pharaohs that bore the name Rameses. Hoffmeier mentioned that the name Ramesses documented first in the thirteenth century, which was around Ramesses II’s period in1 1270BC.[30] And it was common to name a city after him in the Egyptian culture.

Ramesses II reigned around 1303BC to 1213BC.[31] And he was a prolific builder and engaged in great building operations.  He had numerous Apiru working as labourers for him. Apiru could mean slaves, which could refer to the Israelite who were enslaved under the Egyptian authority in Moses’ time. John Rea mentioned, “Raamses hardly can be other Per Ramesese, the “House of Ramesses (II),” which has been identified with Avaris-Tanis.”[32] Thus, it seems logical for scholars to make the connection and believe Ramesses II was the pharaoh who was in charge of the construction of the city of Rameses. Therefore, this historical evidence would suggest that exodus could happen during the reign of Rameses II in 13th century, which was around 1290 BC.[33][34]

 Third, there were a group of foreigner known as the Hyksos in Egyptian history around 1700BC to 1550BC. Hyksos were an Asiatic group who ruled over Egypt and their capital was in Tanis in the same northeastern dalta region where the Israelites lived.[35] Thus, scholars thought it would make sense to say the Israelites were the Hyksos group who migrated to Egypt. In Exodus 12:40-41, “Now the length of time the Israelite people lived in Egypt was 430 years. At the end of the 430 years, to the very day, all the Lord’s divisions left Egypt.”[36] Let say we take the earliest date1700BC for the Hyksos control over Egypt and subtract 430 years stayed in Egypt, then it gives 1270BC. It does align with the proposed late date of exodus.[37]

 Fourth, during Joshua’s period, Israelites had invaded three cites. Those cities are Lachish in Josh 10:31, Debir in Josh 10:38 and Bethel in Judges 1:23. According to the archaeological data, these three cities were destroyed and burnt. Through the ash, archaeologists suggest that the data of the demise seems to support 1290BC as the date of exodus.

 Fifth, Nelson Glueck undertook the excavation in Transjordan area in late 1930s. He concluded that Transjordan was largly ininhabited from 1800BC to 1300 BC. Thus, no civilization in southern Transjordan indicates the strong nation such as Edom and Moab were not existed before 1300BC. It means if Moses and Joshua had come to Transjordan before 1300BC, there would be no enemy to oppose them.[38] J.J. Bimson came up with a conclusion that Transjordan was in fact inhabited during the late Bronze period, which was around 1250 BC.[39]

There are some disagreements of the late date of exodus. The archaeology record of the Lachish, Debir and Bethel does not fully align with the biblical text. In Joshua 11:13 mentioned that Hazor was the only city burned by Joshua, therefore, the evidence of destruction may not link to Israelites. Some scholars suggest that the Egyptian could contribute the destruction instead. Moreover, Rendsburg mentioned that many of the sites that have fallen into the hand of Israelite in the Bible such as Jericho, Ai, Arad and Heshbon did not exist during the 13th century. Thus, it suggests that the late date may not be possible since there are not cities for the Israelites to conquer.[40]

In conclusion, the early date of exodus is around 1446 BC during the reign of Amenhotep II and the late date of exodus is around 1290 BC during the reign of Rameses II. Both dates are supported by impressive arguments and evangelicals basically accept both of them. But at this point, the late date 1446 BC appears to be the strongest one and more convincing.

Bibliography:
 

Cole, R. Alan. Exodus; an Introduction and Commentary,. [1st ed. Downers Grove, Ill.,: Intervarsity Pr, 1984.

Bright, John. A History of Israel. 4th ed. Louisville, Ky: Westminster John Knox Press, 2000.

Provan, Iain, V. Philips Long, and Tremper Longman III. A Biblical History of Israel. Louisville, KY: Westminster John Knox Press, 2003.

Matthews, Victor H., and Don C. Benjamin. Old Testament Parallels: Laws and Stories from the Ancient Near East. Fully ed. New York: Paulist Press, 2007.

Wolf, Herbert. An Introduction to the Old Testament Pentateuch. New ed. Chicago, IL: Moody Publishers, 2007.

Cundall, Arthur E., and Leon Morris. Judges and Ruth: An Introduction and Commentary. Downers Grove, Ill.: IVP Academic, 2008.

Collins, John J. Introduction to the Hebrew Bible and Deutero-Canonical Books. 2nd ed. Minneapolis: Fortress Press, 2014.

Matthews, Victor H., and Don C. Benjamin. Old Testament Parallels: Laws and Stories from the Ancient Near East. Fully ed. New York: Paulist Press, 2007.

Dyer, Charles H. “The Date of the Exodus Reexamined.” Bibliotheca Sacra 140, no. 559 (July 1983): 225–43. https://gbtssbc.idm.oclc.org/login?url=https://search.ebscohost.com/login.aspx?direct=true&db=rfh&AN=ATLA0000932041&site=ehost-live.

Glueck, Nelson. The Other Side of the Jordan. Cambridge, Mass.: Eisenbrauns, 1970.

Bimson, John J. Redating the Exodus and Conquest (Journal for the Study of the Old Testament Supplement Series No. 5). 2 ed. publication place: Sheffield Academic Pr, 1981.

Hawkins, Ralph K. “The Date of the Exodus-Conquest Is Still an Open Question: A Response to Rodger Young and Bryant Wood.” Journal of the Evangelical Theological Society 51, no. 2 (June 2008): 245–66. https://gbtssbc.idm.oclc.org/login?url=https://search.ebscohost.com/login.aspx?direct=true&db=rfh&AN=ATLA0001675398&site=ehost-live.

Hoffmeier, James K. “What Is the Biblical Date for the Exodus?: A Response to Bryant Wood.” Journal of the Evangelical Theological Society 50, no. 2 (June 2007): 225–47. https://gbtssbc.idm.oclc.org/login?url=https://search.ebscohost.com/login.aspx?direct=true&db=rfh&AN=ATLA0001591951&site=ehost-live.

Hoffmeier, James K. “Rameses of the Exodus Narratives in the 13th Century BC: Royal Ramesside Residence.” Trinity Journal 28, no. 2 (Fall 2007): 281–89. https://gbtssbc.idm.oclc.org/login?url=https://search.ebscohost.com/login.aspx?direct=true&db=rfh&AN=ATLA0001663030&site=ehost-live.

Wood, Bryant G. “The Biblical Date for the Exodus Is 1446 BC: A Response to James Hoffmeier.” Journal of the Evangelical Theological Society 50, no. 2 (June 2007): 249–58.https://gbtssbc.idm.oclc.org/login?url=https://search.ebscohost.com/login.aspx?direct=true&db=rfh&AN=ATLA0001591952&site=ehost-live.

Waltke, Bruce K. “Palestinian Artifactual Evidence Supporting the Early Date of the Exodus.” Bibliotheca Sacra 129, no. 513 (January 1972): 33–47. https://gbtssbc.idm.oclc.org/login?url=https://search.ebscohost.com/login.aspx?direct=true&db=rfh&AN=ATLA0000730525&site=ehost-live.

Petrovich, Douglas. “Amenhotep II and the Historicity of the Exodus-Pharaoh.” The Master’s Seminary Journal 17, no. 1 (Spr 2006): 81–110. https://gbtssbc.idm.oclc.org/login?url=https://search.ebscohost.com/login.aspx?direct=true&db=rfh&AN=ATLA0001574387&site=ehost-live.

Naʼaman, Nadav. “The Exodus Story: Between Historical Memory and Historiographical Composition.” Journal of Ancient Near Eastern Religions 11, no. 1 (2011): 39–69. doi:10.1163/156921211X579579.

Rendsburg, Gary A (Gary Alan). “The Date of the Exodus and the Conquest/Settlement: The Case for the 1100s.” Vetus Testamentum 42, no. 4 (October 1992): 510–27. https://gbtssbc.idm.oclc.org/login?url=https://search.ebscohost.com/login.aspx?direct=true&db=rfh&AN=ATLA0000859047&site=ehost-live.

Schipper, Bernd Ulrich. “Raamses, Pithom, and the Exodus: A Critical Evaluation of Ex 1:11.” Vetus Testamentum 65, no. 2 (2015): 265–88. doi:10.1163/15685330-12301194.

Mercer, Samuel Alfred Browne. “The Date of the Exodus.” Anglican Theological Review 10, no. 3 (January 1928): 211–22. https://gbtssbc.idm.oclc.org/login?url=https://search.ebscohost.com/login.aspx?direct=true&db=rfh&AN=ATLA0001747145&site=ehost-live.

Rea, John. “The Time of the Oppression and the Exodus.” Bulletin of the Evangelical Theological Society 3, no. 3 (Sum 1960): 58–69. https://search.ebscohost.com/login.aspx?direct=true&db=rfh&AN=ATLA0000669980&site=eds-live.

Merrill, Eugene H. “Palestinian Archaeology and the Date of the Conquest: Do Tells Tell Tales?” Grace Theological Journal 3, no. 1 (Spr 1982): 107–21. https://search.ebscohost.com/login.aspx?direct=true&db=rfh&AN=ATLA0000792234&site=eds-live.

Hagens, Graham. “Exodus and Settlement: A Two Sojourn Hypothesis.” Studies in Religion 36, no. 1 (2007): 85–105. https://search.ebscohost.com/login.aspx?direct=true&db=rfh&AN=ATLA0001664129&site=eds-live.

Betts, Terry J. “Dating the Exodus.” The Southern Baptist Journal of Theology 12, no. 3 (Fall 2008): 82–95. https://search.ebscohost.com/login.aspx?direct=true&db=rfh&AN=ATLA0001688576&site=eds-live.

[1] Naʼaman, Nadav. “The Exodus Story: Between Historical Memory and Historiographical Composition.” Journal of Ancient Near Eastern Religions 11, no. 1 (2011): 39–69. doi:10.1163/156921211X579579. 68.

[2] 1 Kgs. 6:1 (NIV)

[3] John Bright, A History of Israel, 4th ed. (Louisville, Ky: Westminster John Knox Press, 2000),211.

[4] Iain Provan, V. Philips Long, and Tremper Longman III, A Biblical History of Israel (Louisville, KY: Westminster John Knox Press, 2003),131.

[5] Wood, Bryant G. “The Biblical Date for the Exodus Is 1446 BC: A Response to James Hoffmeier.” Journal of the Evangelical Theological Society 50, no. 2 (June 2007): 249–58. https://gbtssbc.idm.oclc.org/login?url=https://search.ebscohost.com/login.aspx?direct=true&db=rfh&AN=ATLA0001591952&site=ehost-live. 257.

[6] Judg. 11:26 (NIV)

[7] John Bright, A History of Israel, 4th ed. (Louisville, Ky: Westminster John Knox Press, 2000),491.

[8] Herbert Wolf, An Introduction to the Old Testament Pentateuch, New ed. (Chicago, IL: Moody Publishers, 2007),170.

[9] Herbert Wolf, An Introduction to the Old Testament Pentateuch, New ed. (Chicago, IL: Moody Publishers, 2007),173

[10] Waltke, Bruce K. “Palestinian Artifactual Evidence Supporting the Early Date of the Exodus.” Bibliotheca Sacra 129, no. 513 (January 1972): 33–47. https://gbtssbc.idm.oclc.org/login?url=https://search.ebscohost.com/login.aspx?direct=true&db=rfh&AN=ATLA0000730525&site=ehost-live. 41.

[11] Herbert Wolf, An Introduction to the Old Testament Pentateuch, New ed. (Chicago, IL: Moody Publishers, 2007),173

[12] Dyer, Charles H. “The Date of the Exodus Reexamined.” Bibliotheca Sacra 140, no. 559 (July 1983): 225–43. 233

[13] Merrill, Eugene H. “Palestinian Archaeology and the Date of the Conquest: Do Tells Tell Tales?” Grace Theological Journal 3, no. 1 (Spr 1982): 107–21. https://search.ebscohost.com/login.aspx?direct=true&db=rfh&AN=ATLA0000792234&site=eds-live. 116-121

[14] Dyer, Charles H. “The Date of the Exodus Reexamined.” Bibliotheca Sacra 140, no. 559 (July 1983): 225–43. 233

[15] Hagens, Graham. “Exodus and Settlement: A Two Sojourn Hypothesis.” Studies in Religion 36, no. 1 (2007): 85–105. https://search.ebscohost.com/login.aspx?direct=true&db=rfh&AN=ATLA0001664129&site=eds-live. 92.

[16] R. Alan Cole, Exodus; an Introduction and Commentary, [1st ed. (Downers Grove, Ill.,: Intervarsity Pr, 1984),41.

[17] Victor H. Matthews and Don C. Benjamin, Old Testament Parallels: Laws and Stories from the Ancient Near East, Fully ed. (New York: Paulist Press, 2007),97.

[18] Victor H. Matthews and Don C. Benjamin, Old Testament Parallels: Laws and Stories from the Ancient Near East, Fully ed. (New York: Paulist Press, 2007),97.

[19] R. Alan Cole, Exodus; an Introduction and Commentary, [1st ed. (Downers Grove, Ill.,: Intervarsity Pr, 1984),41.

[20] Herbert Wolf, An Introduction to the Old Testament Pentateuch, New ed. (Chicago, IL: Moody Publishers, 2007),176-177

[21] Petrovich, Douglas. “Amenhotep II and the Historicity of the Exodus-Pharaoh.” The Master’s Seminary Journal 17, no. 1 (Spr 2006): 81–110. https://gbtssbc.idm.oclc.org/login?url=https://search.ebscohost.com/login.aspx?direct=true&db=rfh&AN=ATLA0001574387&site=ehost-live. 83.

[22] Hawkins, Ralph K. “The Date of the Exodus-Conquest Is Still an Open Question: A Response to

Rodger Young and Bryant Wood.” Journal of the Evangelical Theological Society 51, no. 2 (June 2008): 245–66. 248.

[23] Hoffmeier, James K. “What Is the Biblical Date for the Exodus?: A Response to Bryant Wood.” Journal of the Evangelical Theological Society 50, no. 2 (June 2007): 225–47. https://gbtssbc.idm.oclc.org/login?url=https://search.ebscohost.com/login.aspx?direct=true&db=rfh&AN=ATLA0001591951&site=ehost-live. 236.

[24] Arthur E. Cundall and Leon Morris, Judges and Ruth: An Introduction and Commentary (Downers Grove, Ill.: IVP Academic, 2008),141.

[25] Wood, Bryant G. “The Biblical Date for the Exodus Is 1446 BC: A Response to James Hoffmeier.” Journal of the Evangelical Theological Society 50, no. 2 (June 2007): 249–58. https://gbtssbc.idm.oclc.org/login?url=https://search.ebscohost.com/login.aspx?direct=true&db=rfh&AN=ATLA0001591952&site=ehost-live. 256

[26]John Bright, A History of Israel, 4th ed. (Louisville, Ky: Westminster John Knox Press, 2000),123.

[27] John Bright, A History of Israel, 4th ed. (Louisville, Ky: Westminster John Knox Press, 2000),123

[28] Exo. 1:11 (NIV)

[29] Betts, Terry J. “Dating the Exodus.” The Southern Baptist Journal of Theology 12, no. 3 (Fall 2008): 82–95. https://search.ebscohost.com/login.aspx?direct=true&db=rfh&AN=ATLA0001688576&site=eds-live. 1.

[30] Hoffmeier, James K. “Rameses of the Exodus Narratives in the 13th Century BC: Royal Ramesside Residence.” Trinity Journal 28, no. 2 (Fall 2007): 281–89. https://gbtssbc.idm.oclc.org/login?url=https://search.ebscohost.com/login.aspx?direct=true&db=rfh&AN=ATLA0001663030&site=ehost-live. 287.

[31] John J. Collins, Introduction to the Hebrew Bible and Deutero-Canonical Books, 2nd ed. (Minneapolis: Fortress Press, 2014),117.

[32] Rea, John. “The Time of the Oppression and the Exodus.” Bulletin of the Evangelical

Theological Society 3, no. 3 (Sum 1960): 58–69. https://search.ebscohost.com/login.aspx?direct=true&db=rfh&AN=ATLA0000669980&site=eds-live. 61

[33] Herbert Wolf, An Introduction to the Old Testament Pentateuch, New ed. (Chicago, IL: Moody Publishers, 2007),171.

[34] Schipper, Bernd Ulrich. “Raamses, Pithom, and the Exodus: A Critical Evaluation of Ex 1:11.” Vetus Testamentum 65, no. 2 (2015): 265–88. doi:10.1163/15685330-12301194.  282.

[35] Mercer, Samuel Alfred Browne. “The Date of the Exodus.” Anglican Theological Review 10, no. 3 (January 1928): 211–22. https://gbtssbc.idm.oclc.org/login?url=https://search.ebscohost.com/login.aspx?direct=true&db=rfh&AN=ATLA0001747145&site=ehost-live.213.

[36] Exo 12:40-41 (NIV)

[37] Herbert Wolf, An Introduction to the Old Testament Pentateuch, New ed. (Chicago, IL: Moody Publishers, 2007),173

[38] Nelson Glueck, The Other Side of the Jordan (Cambridge, Mass.: Eisenbrauns, 1970),125-134.

[39] John J. Bimson, Redating the Exodus and Conquest (Journal for the Study of the Old Testament Supplement Series No. 5), 2 ed. (publication place: Sheffield Academic Pr, 1981),70-74.

[40] Rendsburg, Gary A (Gary Alan). “The Date of the Exodus and the Conquest/Settlement: The Case for the 1100s.” Vetus Testamentum 42, no. 4 (October 1992): 510–27. https://gbtssbc.idm.oclc.org/login?url=https://search.ebscohost.com/login.aspx?direct=true&db=rfh&AN=ATLA0000859047&site=ehost-live. 513.
 

Sotheby’s Largest Sale to Date: The Sotheby’s Acquisition

Abstract
Sotheby’s has always been considered to be one of the major contenders in the global art markets, a close second to Christie’s Auction House. It has successfully brokered many multimillion-dollar deals, and in 2019 Sotheby’s made its largest sale to date – selling the auction house itself, to Patrick Drahi. Since the acquisition, Sotheby’s is now a private company able to contend with Christie’s and Phillips on an equal level and continue on a path of growth and success. Clients, critics, and art business enthusiasts all have the same question in mind: whether Sotheby’s will be able to find sales success by going private.

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Although there are benefits of going private, Patrick Drahi is taking a real financial risk trying to make Sotheby’s more profitable. Critics believe that Sotheby’s will do more business and may attract new clients, but even so it may not make more profits, as competition with Christie’s means already-low margins. Nonetheless, the public remains curious to see how privatization of the auction house will change the future of the art market.
I. INTRODUCTION
Sotheby’s Auction House
Sotheby’s Auction House is one of the leading destinations for auctions and private sales and is one of the world’s largest brokers of fine and decorative art, jewelry, real estate and other collectibles.[1] Sotheby’s was founded in 1744 and is an internationally recognized corporation of fine art auctioneers, headquartered in New York City. Sotheby’s is lauded as a pioneer in the art business world in many ways. In 1955, Sotheby’s became the first international auction house when it expanded from London to New York.[2] It introduced the format of the evening event auctions, which is now the cornerstone of today’s art market. Additionally, it was the first auction house to use satellite transmission to allow for simultaneous bidding in London and New York in the 1960s.[3]
Sotheby’s has continued to unite art enthusiasts, collectors and investors from around the world ever since. Sotheby’s operation is divided into three segments: auction, dealer, and finance. The auction itself, as the agency segment, earns commissions by matching buyers and sellers of authenticated works of art through the auction or private sale process. The dealer, as the principal segment, earns revenues from the sale of artworks that have been purchased by Sotheby’s. Lastly, Sotheby’s offers collectors the resources of Sotheby’s Financial Services, the world’s only full-service art financing company, as well as the collection advisory services of its subsidiary, Art Agency Partners. [4] The finance segment earns interest income through art-related financing deals and activities which include, making guarantees or loans to certain collectors and dealers that are secured by works of art.[5]
Today the 275-year-old auction house conducts auctions in ten different salesrooms, including major cities such as New York, London, Hong Kong and Paris. Sotheby’s operates in a network of 80 offices and continues to remain as a dominant contender in the art market which is reflected in the company’s annual report of worldwide sales, currently an excess of $4 billion.[6] As ownership and management shifted throughout the years, so did Sotheby’s status as a private or publicly owned company. In 1988, Sotheby’s went public for the second time and was listed on the New York Stock Exchange. Ever since it went public for the second time, Sotheby’s has claimed the title as the oldest company listed on the New York Stock Exchange, and the only public company focused on the art market. However, in the fourth quarter of 2019, after more than three decades as the oldest company listed on the New York Stock Exchange, Sotheby’s has once again gone private.
II. THE MAN BEHIND THE DEAL
Who is Patrick Drahi?
Patrick Drahi, a French-Israeli entrepreneur and telecom tycoon, is the man behind the $3.7 billion acquisition of the auction house.[7] Patrick Drahi, the founder of Dutch telecommunications giant Altice, and chairman of the branch in the United States built his company with over 20 acquisitions of lagging transactions of cable and mobile operators and has expanded further with highly leveraged deals.8Through Altice, Drahi owns the majority shares, around 75%, of Numericable, France’s largest cable operator. In June 2017, Altice USA had a $1.9 billion IPO and was one of the most-watched IPO’s, and shares were up 5% on the first day of trading.9 Arguably, Drahi is the man behind some of the largest telecom deals of this decade.10
Patrick Drahi has founded and continues to lead some of the most successful communications, media and digital companies in the world. With multiple acquisitions under his belt, it is no surprise that the media and telecom magnate is back on the acquisition trail. In June 2019, there was discussion of BidFair USA, an entity owned by Drahi himself, planning to acquire Sotheby’s in a $3.7 billion deal, that would take the auction house private.11
Drahi’s Vision for Expansion in United States
It is clear that from his acquisitions and investments in France alone, Drahi is no stranger to multibillion-dollar acquisitions. Drahi hoped to find more success and dreamed of expanding his telecom empire in the United States, his “vision is to do the same in the United States, but bigger”.12 Before the Sotheby’s deal, Drahi made his mark in the United States back in 2015, when Drahi, through Altice, bought a 70% stake in the cable operator Suddenlink.[8] It is no surprise that Drahi was only getting started, and in 2016, Drahi acquired Cablevision for $17.7 billion, making Cablevision the fourth-largest cable provider in the country.[9] In 2019, before his plans to acquire Sotheby’s, through Altice USA, he acquired a startup called Cheddar, a millennial news streaming site, for $200 million.[10] Known for his success as a telecom, and digital media giant, it was surprising that Drahi’s bid for Sotheby’s ranks the most surprising, as he dives into the art world and prepares for the Sotheby’s takeover and investment. His interest in Sotheby’s only further demonstrates Drahi’s vision for expansion of his family and empire in the United States. Additionally, apart from offering a way to ensure his legacy, acquiring Sotheby’s will only diversify Drahi’s fortune away from the communications assets that dominate his holdings.
III. THE ACQUISITION
Announcement of Acquisition
On June 17, 2019, Sotheby’s announced that a definitive merger agreement was made and signed by the Board of Directors to sell Sotheby’s to Patrick Drahi. Drahi announced that through BidFair USA, an entity owned by Drahi himself, he would be acquiring Sotheby’s Auction House for $3.7 billion.
Prior to the announcement of the sale, Sotheby’s shares were underperforming and had shockingly fallen 39% over the previous year.[11] However, after the announcement was made, Sotheby’s shares spiked up nearly 60%. Under the terms of the agreement, Sotheby’s Board of Directors, shareholders, and employee shareholders, will receive $57 in cash per share of Sotheby’s common stock, representing a 61% premium on the stock’s closing price, and a 56.3% premium to the company’s 30 trading-day volume weighted average share price.[12] The deal was expected to close in the fourth quarter of 2019, pending shareholder approval.[13]
Shareholder Pushback
As with any decision, there was some pushback from a handful of shareholders who were against the decision to sell the company. Since the announcement of the proposed acquisition in June, multiple shareholders have filed lawsuits in federal court in New York and Delaware, to block BidFair USA’s purchase of the auction house. Shiva Stein, Michael Kent, and Phillip Stevens have all tried to block the sale on the grounds that Sotheby’s has filed insufficient information about its cash flow with the Securities and Exchange Commission.[14]
On July 17, Shiva Stein filed a lawsuit against Sotheby’s and fourteen of its executives over plans for the company to be acquired by Drahi for $3.7 billion.[15] On July 19, Eli Goffmna filed a nearly identical lawsuit, and both Stein and Goffmna claim that Sotheby’s recently filed preliminary proxy statement, a document used to solicit shareholder votes, contained materially incomplete and misleading information about the merger.[16] They alleged the proxy statement failed to provide enough information regarding financial projections, including cash flows, earnings before income-tax deduction and that it omits material information about a financial analysis performed by Sotheby’s advisor, LionTree.[17]
On July 23, Michael Kent filed a lawsuit against Sotheby’s in the U.S. District Court in Delaware. The complaint also alleges that the information provided to shareholders regarding the sale was false and misleading and that a document Sotheby’s filed with the United States Securities and Exchanges Commissions omits material information about the initial plans for the deal and the transaction with BidFair USA.
On August 1, Phillip Stevens filed a lawsuit in New York County with similar claims as the earlier lawsuits filed by the other shareholders. His complaint claims that Sotheby’s violated securities laws when the Board of Directors authorized the filing of a materially incomplete and misleading proxy statement to convince the shareholders to vote in favor of the proposed transaction.[18] He further alleged that Sotheby’s failed to disclose certain material information that is necessary for shareholders to properly assess the fairness of the merger considerations to the shareholders of the proposed sale.[19]
The proposed deal to acquire Sotheby’s seemed to have come to fruition very quickly. Therefore, it is understandable that shareholders would question the validity of the statements in the proxy statement to ensure that they have not been misled by the Board of Directors, who eagerly approved to sell to billionaire Patrick Drahi. That being said, I believe that Drahi made a generous offer because at the time of the proposed sale, shares were declining. Even with this knowledge, Drahi offered $57 in cash per share of Sotheby’s common stock which represents a 61% premium on the stock’s closing price.
In response to the lawsuits, Sotheby’s expressed that the vast majority of all public company mergers over $100 million are the subject of shareholder litigation.[20] Therefore, despite the multiple lawsuits, Sotheby’s continued to make preparations to follow through with the sale. Since Sotheby’s believed that the lawsuits filed were expected and routine, it did not expect the lawsuits to have any impact on the targeted closing date in the fourth quarter of the year. Just as Sotheby’s predicted, all lawsuits were voluntarily dismissed, and it proceeded to meet the targeted closing date.
Shareholder Approval
On September 5, Sotheby’s shareholders officially approved the merger and acquisition at a special meeting that took place in New York.[21] With the shareholder’s approval, Sotheby’s was able to announce that all regulatory approvals required for acquisition had been obtained. Following this announcement, Sotheby’s reported that the expected closing date of the merger will be on October 3, 2019. [22]
How will the acquisition be funded?
The acquisition was funded by financings arranged and underwritten by BNP Paribas as well as with equity provided from Patrick Drahi’s personal funds.[23] The financing was split between an equal sized bond and loan offerings.[24] Drahi ultimately financed the purchase with $1.5 billion of his money and assumed Sotheby’s existing $1 billion debt. [25] Drahi has sold $550 million of bonds through BidFair MergeRight Inc., an entity set up as part of the buyout of the auction house, and the loan issued included a $2 billion equity component.[26]
Although Drahi may be financially capable of comfortably running the auction house, there is some concern over the methods Drahi will implement in order to pay back the debt. For example, employees are especially concerned and fear salary cutbacks.[27]
Closing the Deal
On October 3, 2019, Sotheby’s announced that ownership of the company had officially transferred over to Patrick Drahi. It was a momentous occasion because the 275-year-old firm returned to private ownership after 31 years on the New York Stock Exchange.
Just days after Sotheby’s sale to BidFair USA, Patrick Drahi did not waste any time and made his mark on the direction of the company when he made changes to Sotheby’s executive leadership. Drahi has replaced Sotheby’s CFO, Mike Goss, and Executive Vice President, John Cahill, with Jean-Luc Berrebi, the current CEO of Drahi’s family office.[28] This change in leadership brings more of Drahi’s allies into the auction house for ultimate control of the behind the scenes operations.
In the following weeks, Drahi continued to reorganize Sotheby’s leadership. On October
28, Sotheby’s made another announcement stating that CEO Tad Smith would be replaced.[29] Drahi replaced Smith with Charles. F. Stewart, the former CFO and Co-President of Altice USA, which is one of several telecommunication companies Drahi owns and has major stakes in.
Although some critics believe the restructuring of Sotheby’s leadership may have occurred too quickly, I believe Drahi’s decision to make these changes was smart and just the right motivation and revitalization that Sotheby’s employees desperately needed. By making these internal changes, Drahi is making a statement to the art world that Sotheby remains a dominant figure and under new management the newly privatized auction house will only grow.
IV. WHAT THE ACQUISITION MEANS FOR SOTHEBY’S FUTURE
What are Auction House Guarantees?
Guarantees ensure that artwork is pre-sold at a minimum amount. Artwork for auction is either backed by the auction house itself, as a house guarantee, or by a third party. If a third-party guarantee is agreed upon, the third party receives some of the upside should the work sell for more, typically 20%-30% of the overage above the guarantee. [30] Guarantees are essentially a form of gambling, and it is believed that the more risk a third party takes on, the higher the potential reward.
For example, after negotiating with other auction houses, if a collector chooses to work with Sotheby’s, a consignment contract will be executed with the following terms: price guarantee, upside split and auction estimate.[31] A handful of artworks auctioned are backed by guarantees because collectors dealing with large sums of money who guarantee works at $30 million or more, want to know with certainty that the artwork that they are selling will sell for a good price. However, price guarantees are extremely risky because a price guarantee is the minimum amount of money that Sotheby’s guarantees to remit to the seller after the auction and the consignor is entitled to this minimum price no matter what happens in the sale. Therefore, the risk of a successful sale is now transferred from the collector to Sotheby’s.
With every sale, Sotheby’s is always hoping to sell work for a hammer price of more than the price guarantee given to the collector. If an artwork is sold at a higher price, an upside split determines how much of the profit from a sale of work will be divided between the consignor and the auction house. To try and ensure that the hammer price meets at least the price guarantee, Sotheby’s may give an auction estimate. An auction estimate is a way for Sotheby’s to communicate to potential bidders that it believes the artwork will sell for a hammer price at the auction estimate listed.
The Modigliani Incident
Many of the biggest art deals involve auction houses guaranteeing a minimum sale price to consignors, and in the case when the art fails to sell at the guaranteed price, Sotheby’s not only loses money but also the prestige that brings further sales.[32] As a public company, Sotheby’s was required to be transparent about their financials including all losses from a sale.
Third party auction guarantees have made some people very rich but may be bad for the market in the long run because large guarantees not going according to plan will result is huge losses. In November 2018, Modigliani’s painting Nu couché, was auctioned with a price guarantee and estimated to sell for $150 million.[33] However, it was sold for only $139 million to the third-party guarantor, which forced Sotheby’s to take the staggering loss and pay the consignors large sums of money.[34]
At the time, Sotheby’s was required to uphold a high level of transparency and was forced to disclose the loss and other major buyer defaults on payment or large guarantee deals not going according to plan. Now, as a private company, Sotheby’s no longer has to have their financials exposed. As a result, it can avoid tarnishing its reputation with situations such as this.
Taking Sotheby’s Private
To many shareholders and employees, taking Sotheby’s private is the best option, because many believe that strict financial reporting standards associated with being a publicly-traded company have constrained Sotheby’s market goals. Since Sotheby’s no longer has to be subject to public scrutiny and have their accounts and financial details published regularly, Sotheby’s can now contend with Christie’s on an equal playing field. Sotheby’s may now take the same liberties as Christies’ and provide covers and security for consigners, protect details of guarantees and enforce discretion of single-person owners among other collectors.
In August 2018, Sotheby’s released its second-quarter financial results, which showed a decline in profit despite higher overall auction sales. [35] The report reflected that behind these lavish sales, pricey auction guarantees equate to sinking profits. Recently, Sotheby’s announced a loss of $27.8 million in the third quarter of this year, a 19% drop from just a year ago.[36] The current third-quarter loss was 55 cents per share, 10 cents more than the third-quarter loss in 2017.[37] Therefore, in a highly competitive business, vulnerable to rising interest rates, taking Sotheby’s private may be beneficial for its financial success in the long run.
This acquisition is predicted to change the global art market, as it is the end of auctionworld transparency in an otherwise opaque market. There is this perception that being a publicly owned company hampers the ability to conduct business successfully. Many shareholders and employees believe that strict financial reporting standards associated with being a publiclytraded company have constrained Sotheby’s from reaching their market goals. Sotheby’s going private is significant for the art market because Sotheby’s and Christie’s are influential powerhouses and have accounted for 46% of $29 billion in global auction sales in 2018.[38] As a private company, Sotheby’s influence on the art market may be recognized and reflected as it can now compete with Christie’s and Phillip’s.
Benefits as a Private Auction House
Sotheby’s, Christie’s and Phillips are now all privately-owned auction houses. This means that each auction house is now on an equal footing to prove it’s the most profitable and relevant in an otherwise challenging market.[39]
However, the earnings report released quarterly by Sotheby’s, which the company had been required to make as a publicly-traded company, shined some light and transparency into the art world. The public earning reports provided sellers, collectors and investors reliable information for art market valuation and investment purposes in a way that private sales do not.[40] As a private company, Sotheby’s will no longer have to make their reports available and be able to make deals with priority clients at their discretion, through backdoor deals far away from public view. Additionally, Sotheby’s may now avoid public scrutiny of its reputation when taking a financial loss, as it did in the Modigliani incident.
As a private company, Sotheby’s may now take the same liberties as Christie’s. Securing major consignments requires making major concessions to sellers and Sotheby’s couldn’t make the same promises as to its historic rival Christie’s. Sotheby’s may provide covers and security for consigners, protect details of guarantees and enforce discretion of single-person owners among other collectors.[41] Additionally, Sotheby’s no longer has to yield to slow decision-making time because, while many decisions can be made by the Board of Directors, some decisions also required shareholder approval as well.
V. PATRICK DRAHI’S PLAN FOR SOTHEBY’S
With Great Risks Comes Great Reward?
The acquisition may provide Sotheby’s with the opportunity to accelerate growth initiatives and implement a successful program to achieve certain financial goals, in a more flexible private environment. Although there are benefits of going private, Drahi is taking a real risk trying to make Sotheby’s more profit. Sotheby’s may do more business, but the risk is that it may not make more profits, as competition with Christie’s may mean already-low margins.[42] Drahi’s reputation for aggressive cost-cutting and using leverage to buy undervalued assets is certainty taking effect. There is some speculation that Drahi may have to leverage Sotheby’s respected prestige at a lower price point, without diluting the brand, to earn profit and remain as a contender against Christie’s.[43]
Drahi has a mind for innovation, challenging business norms and taking smart risks. This is reflected in his successful track record of driving financial growth in a multitude of companies he has acquired. Therefore, with his success rate, it is predicted that Drahi will make the proper changes to help Sotheby’s meet its financial goals. Some critics believe that this is already evident in his prompt restructuring of management, which may imply that he is making serious decisions to help the company grow and that he is the ideal person to create value for Sotheby’s and its clients.
However, others are skeptical about the changes of privatization having any impact at all, because most people don’t believe there is much difference between Sotheby’s and Christie’s consignment and buying approaches. Nonetheless, competitors, sellers, collectors, and investors are all curiously waiting to see if the auction house will succeed under Drahi’s control, and whether or not it will attract more wealthy clients and investors with the appeal of backdoor deals.
Cost Savings at the Auction House
Given the company’s new private status, it is expected that there will no longer be stock payments. With this in mind, I wonder whether the stock payment funds will resurface as another form of compensation within the company. Drahi has broad plans for cost-saving at the auction house, and whether the cutbacks materialize plays into investors’ concerns about leverage.[44] Investors are primarily concerned about Drahi’s approach to financing the acquisition and his vision to introduce complexity and reorganize Sotheby’s structure.[45]
Drahi plans to attain $66 million in cost savings at the auction house.[46] This amounts to 43% of adjusted earnings before interest, taxation, and depreciation and amortization in the second quarter.[47] In addition to cutting costs, Drahi has expressed plans to reorganize Sotheby’s into three separate entities to save money and to entice investors. For example, the auction house would be its own entity, and would be the issuer of the loan and bond.[48]
Sotheby’s real estate, including buildings in London and New York, would be located in a new division, and Sotheby’s would lease back the property.[49] However, Drahi’s decision to reorganize Sotheby’s structure into three separate entities has raised concerns for some investors because there is a heightened risk of Sotheby’s $1 billion debt which Drahi has assumed.[50]
Asset separation is an interesting approach and safeguard. If Sotheby’s were to run into difficulties, creditors may be prevented from having a claim on proceeds from any property sales. The benefits of asset separation are something future lenders and investors would seriously consider especially in an unstable art market, where there are already signs of business slowing down. Sotheby’s low estimate for its Fall auction season is $522.3 million, which is 24% less than last year.[51]
Hoping to ease investors’ concerns, Drahi has proposed to offer improved pricing on loans, tighter covenants, a requirement for a quarterly investor call, and a limit on payments like dividends that could potentially disadvantage debt holders.[52] Although he has yet to address the need to reduce leverage in an unstable market environment, it is apparent that Drahi is confronting the financial concerns and trying to find real solutions.
Digital Development?
Drahi is predicted to streamline and modernize Sotheby’s, by cutting back costs at the auction house and emphasizing Sotheby’s digital platform and development.[53] It is no surprise that Drahi may be tempted to bring his technological expertise to improve Sotheby’s operations. Drahi has plans for ensuring the company’s growth by taking full advantage of technological innovation and expanding services like shipping and financing artworks and aims to double its turnover over the next five years.[54]
Many have criticized the art market and recognized that it is overdue for the type of digital reformation that has transformed other industries. Therefore, it is no surprise that the auction house has struggled to keep up with the latest technology. In fact, five years ago Sotheby’s had no mobile app, no online sales, and no online consignment platform. Recently, there has been a push towards digital developments within the company. Sotheby’s current mobile app allows users to make bids on their phones around the clock in online auctions.[55] Also, Sotheby’s has invested in Thread Genius, an image recognition software that suggests art to users based on their past purchases.[56] However, due to poor management, the money spent on digital efforts were viewed as missteps.
If Drahi can continue to expand Sotheby’s digital platform and prove that under new management digital developments and forward-thinking can be accomplished, I believe it would be an investment that he would not regret. Digital developments may include cataloging artwork in a digital database and improving the interface that allows users to bid on artwork, to help buyers purchase artwork with ease at the simple push of a button. Sotheby’s would benefit from a digital overhaul, by making auction sales more accessible and familiar to millennials living in this emerging digital generation.
However, this vision is met with some hesitation by art business experts, and this caution stems from Sotheby’s experience. Management has applied standard business practices before, without producing significant results.[57] Therefore, some believe that Drahi is not thinking outside the box and therefore may face continued challenges. Also, there is a fear that Drahi is considering using digital automation to cut back on Sotheby’s biggest expense—salaries.[58] After Drahi purchased Cablevision, he made his views on salaries clear when he stated that he preferred to disburse as little as he could.[59] Although there is a possibility that Drahi has plans to use digital automation to cut back on salaries, I think he will quickly reconsider.
Running an auction house is different from a telecom company and this is something I think Drahi will realize. Auction house business is driven by building relationships. Interpersonal relationships between sales representatives provide an intimate experience, that a customer may not receive digitally. Although Thread Genius keeps track of users’ preferences and past purchases to suggest other works that they like, building a relationship with an actual sales representative is critical for the art market because representatives are trained to know what art buyers want and may suggest pieces a buyer would never have considered before. Most importantly, maintaining these relationships builds trust. Trust is critical to ensure smooth business transactions— buyers want assurance that they are purchasing authentic work and sales representatives want assurance that buyers are credible and can fulfill the payment. Therefore, I believe Drahi will have to think twice about using digital automation for cost-saving purposes.
VI. PATRICK DRAHI’S FIRST AUCTION SEASON
Drahi Has Taste of Unpredictable Sales
Auctions are unlike any other business, and in November, during Sotheby’s busiest season, Drahi had a realistic introduction to what he has signed up for— the fickleness of the art market and its unpredictable sales.[60] Early November, Sotheby’s noted a 40% drop in its Impressionist and Modern art sales, compared to the same sale last Summer.[61] Later that same week, Sotheby’s brought in a whopping $270.6 million from its Contemporary art sale, however, that too was lower than the total in Spring by 28%.[62]
Drahi continued to experience the realities of the art market and auction business when Sotheby’s struggled to sell “She Gets Angry at Him”, a painting by Ed Ruscha, and meet its $2 million estimates.[63] Ultimately, reappearing in the final lot, Sotheby’s sold the painting for $1.7 million, taking a loss.[64] To make matters worse, within the same week, Christie’s reached an auction high of $52.5 million for “Hurting the Word Radio #2”, a painting by the same artist, Ed Ruscha.[65]
However, during Sotheby’s Contemporary art sale later that week, Sotheby’s caught a break when a fierce bidding war for Kerry James Marshall’s “Vignette 19” sold for well over its high estimates, and when a single private collector purchased two of the night’s biggest lots totaling $54.4 million. That night, Sotheby’s ultimately netted a solid $270.6 million.[66]
Drahi has quickly experienced the highs and the lows of running the auction house and has faced the reality of unpredictable sales. I believe art business cannot be equated to any other business. Therefore, Drahi may have to approach managing Sotheby’s differently than he would have managed a telecom carrier. He must remember that Sotheby’s is selling fine art, not stocks and bonds.
The example of the Ed Ruscha sales has provided Drahi with plenty of evidence showing why the art market continues to defy sales predictions which makes it difficult for collectors to rely on.[67] However, the art market is a resilient one, because, despite unpredictable sales, one must remember that collectors have an insatiable appetite for purchasing art and are still willing to pay extravagant prices.[68]
Drahi may now realize that art may be easy to purchase but not always so easy to sell. The most recent results of Sotheby’s and Christie’s contemporary sales are interesting to consider. Out of the whole lot sale, only four of Sotheby’s lots were unsuccessful. The rest of the lots brought in hammer prices 70% above their low estimates.[69] As a private company, Sotheby’s was able to provide significant covers and security for major consignors, which they could not have done before. This is important because auction houses are dependent on the quality of consignments to bring in larger sales. Sotheby’s stands on equal ground as Christie’s and the race to see which house dominates has begun.
Dealing with Sotheby’s Debts
When Drahi acquired Sotheby’s he assumed an extraordinary amount of debt of $1 billion. As a result, some have speculated the methods Drahi may have to implement to effectively address the debt. One strategy involves selling and leasing back properties, which would be a short-term way to pay off some of the debt.[70]Sotheby’s used this method to pay off some of the debt back in 2002.[71] At the time, the financially troubled auction house sold its Manhattan headquarters for $175 million and planned to lease the building from the new owner.
However, this led Sotheby’s to be caught in a price-fixing scandal with Christie’s, which Sotheby’s was fined for entering into an anti-competitive agreement from 1993 to early 2000.[72]
Another strategy involves leverage. Organic growth, for an auction house business in an unpredictable market, is impractical.[73] Therefore, the real challenge for Drahi is to effectively leverage Sotheby’s, possibly by stretching the brand even further, without tarnishing its prestigious reputation. However, some fear that Drahi intends to run the business for profits and not just for its prestige.[74]
Earning profits is an obvious priority for businesses, however, it would be a shame if during the process Drahi disregards Sotheby’s reputation. The history and prestige of Sotheby’s is an extremely important factor when collectors, sellers, and investors consider selling or purchasing work. Some may even argue that Sotheby’s business relies on its prestige.
Charles Stewart, Sotheby’s new CEO, provides some reassurance that preserving Sotheby’s rich history is also a priority. Stewart has a good reputation for being very sociable and understanding the importance of building and maintaining business relationships to achieve success. Therefore, his voice may be critical in balancing both interests – earning profits and maintaining prestige.
VII. CONCLUSION
The question remains as to whether Sotheby’s new management and return to private sales will be a significant development for the art market as a whole. Investors and collectors speculate whether private sales will equate to a decreasing competition, while others question whether or not privatization is necessary for these respected auction houses to survive in the market and to continue to thrive.
I predict that the art market will significantly change now that Sotheby’s has gone private. Although the public may not see obvious changes, I believe that behind the scenes the culture of auction house sales will shift and in turn affect the market. As a private company, Sotheby’s is potentially open to backdoor deals and this will significantly affect the auction business. Sotheby’s will likely benefit financially from backdoor deals, however, as an art enthusiast, what concerns me is that more artwork will be negotiated and purchased behind the scenes and artwork that would normally be subject to public view, in auction settings, will remain out of the public eye. Therefore, with more backdoor deals and more secrecy in an already opaque industry, I believe the art market will slowly begin to change.
Also, I predict that under Patrick Drahi, there will be a decrease in auction house guarantees and this once-popular method will not be implemented during as many sales. In an age influenced by millennials, the art market is one of the many markets that face an influx of “new money”. The art market has become another way for younger and wealthy generations to take risks and enjoy the unpredictability of an auction sale. Therefore, I believe that guarantees may continue to be executed but by fewer, experienced auctioneers who have a deeper knowledge and appreciation for the market. As a result, if fewer works have guarantees, or bids in place before an auction begins, the art market will surely become a lot less predictable.
Therefore, I believe Sotheby’s return to private sales will have an impact on the art market.
One thing to keep in mind is that nobody truly expects Patrick Drahi to reinvent the auction house entirely. Just as Christie’s has pushed for private sales, Sotheby’s can simply be seen to have also increased private sales to expand revenue beyond what is offered at traditional public auctions. Since Sotheby’s essentially has a corporate structure, I believe Drahi is the ideal person to put Sotheby’s back on track and help scale up its operations on a global playing field and pursue long-term strategies. In the years to come, it will be interesting to monitor Sotheby’s progress to see if Patrick Drahi will rise above and prove his critics wrong, or crumble under the pressures of an unpredictable art world; we will just have to wait and see.

[1] Matus Kubala, Sotheby’s: Going Nowhere Since 1989, SEEKING ALPHA (Sept. 4, 2015), https://seekingalpha.com/article/3491506-sothebys-going-nowhere-since-1989.
[2] Sotheby’s Celebrates 275 Years of History & Innovation, SOTHEBY’S (Mar. 11, 2019), https://www.prnewswire.com/news-releases/sothebys-celebrates-275-years-of-history–innovation300809674.html.
[3] Id.
[4] Sotheby’s Celebrates 275 Years of History & Innovation, supra.
[5] Sotheby’s: Going Nowhere Since 1989, supra.
[6] Sotheby’s Celebrates 275 Years of History & Innovation, supra.
[7] Ruth Bender, Little-Known French Billionaire Circles U.S. Cable Market, THE WALL STREET JOURNAL (July 10, 2015), https://www.wsj.com/articles/little-known-french-billionaire-circles-u-s-cable-market1436495497.
[8] Michael J. de la Merced, Robin Pogrebin and Scott Reyburn, Why Sotheby’s Agreed to Be Bought by a
Telecom Executive for $3.7 Billion, THE NEW YORK TIMES (June 17, 2019), https://www.nytimes.com/2019/06/17/business/sothebys-patrick-drahi-bidfair.htm
[9] Id.
[10] Id.
[11] Annie Armstrong, Sotheby’s Shareholders Vote to Approve Acquisition Deal, with Plan to Go Private by End of 2019, ARTNEWS (Sept. 5, 2019), http://www.artnews.com/2019/09/05/sothebys-shareholders-patrickdrahi/.
[12] Sotheby’s Is Getting Acquired by Billionaire Media Mogul Patrick Drahi, supra.
[13] Katya Kazakina, What Going Private Under Patrick Drahi Might Mean for Sotheby’s, BLOOMBERG BUSINESSWEEK (Sept. 12, 2019), https://www.bloomberg.com/news/articles/2019-09-12/what-goingprivate-under-patrick-drahi-means-for-sotheby-s-bid.
[14] Helen Holmes, Ongoing Struggle Over Sale of Sotheby’s Has Shareholders Agitated, OBSERVER (Aug. 7, 2019), https://observer.com/2019/08/sothebys-sale-shareholder-lawsuits-patrick-drahi/.
[15] Bob Van Voris and Katya Kazakina, Sotheby’s Investors Sue to Block $2.7 Billion BidFair Offer,
BLOOMBERG (July 19, 2019), https://www.bloomberg.com/news/articles/2019-07-19/sotheby-s-holders-sueover-2-7-billion-bidfair-acquisition
[16] Id.
[17] Id.
[18] Id.
[19] Id.
[20] Ongoing Struggle Over Sale of Sotheby’s Has Shareholders Agitated, supra.
[21] Margaret Carrigan, Sotheby’s Shareholders Approve $3.7bn Sale to Telecoms Tycoon Patrick Drahi, THE ART NEWSPAPER (Sept. 5, 2019), https://www.theartnewspaper.com/news/sotheby-s-shareholders-approveusd3-7bn-sale-to-telecoms-tycoon-patrick-drahi.
[22] Id.
[23] Id.
[24] Molly Smith, Drahi Borrowing $1.1 Billion to Finance Sotheby’s Deal, BLOOMBERG (Sept. 18, 2019), https://www.bloomberg.com/news/articles/2019-09-18/sotheby-s-borrowing-1-1-billion-to-finance-buyout-bydrahi.
[25] Peter S. Green, Can Sotheby’s Find Sales Success by Going Private?, FORTUNE (Sept. 6, 2019), https://fortune.com/2019/09/06/sothebys-sale-drahi/.
[26] Drahi Borrowing $1.1 Billion to Finance Sotheby’s Deal, supra.
[27] Anna Brady, Sotheby’s at the crossroads: new owner, new chief executive, new era, THE ART NEWSPAPER (Nov. 25, 2019), https://www.theartnewspaper.com/analysis/sotheby-s-at-the-crossroads.
[28] Helen Holmes, Sotheby’s Replaces CEO With Longtime Ally of New Owner Patrick Drahi, OBSERVER (Oct. 28, 2019), https://observer.com/2019/10/sothebys-new-ceo-charles-f-stewart-owner-patrick-drahi/.
[29] Id.
[30] Anna Brady, Guarantees: the next big art market scandal?, THE ART NEWSPAPER (Nov. 12, 2018), https://www.theartnewspaper.com/news/guarantees-the-next-big-art-market-scandal.
[31] Id.
[32] Id.
[33] Id.
[34] Eileen Kinsella, Sotheby’s Quarterly Financial Report Shows That Behind Flashy Sales, Pricey Guarantees Are Sinking Profits, ARTNET NEWS (Aug. 6, 2018), https://news.artnet.com/market/sothebys-secondquarter-results-hit-guarantees-competition-top-lots-1329101.
[35] Id.
[36] Eileen Kinsella, Sotheby’s CEO Tad Smith Warns of a ‘More Subdued’ Art Market in 2019, ARTNET NEWS (Nov. 1, 2018), https://news.artnet.com/market/sothebys-posts-wider-third-quarter-loss-1384981.
[37] Id.
[38] What Going Private Under Patrick Drahi Might Mean for Sotheby’s, supra.
[39] Helen Holmes, Sotheby’s Replaces CEO With Longtime Ally of New Owner Patrick Drahi, OBSERVER (Oct. 28, 2019), https://observer.com/2019/10/sothebys-new-ceo-charles-f-stewart-owner-patrick-drahi/.
[40] Kathryn Graddy, Sotheby’s and Christie’s expand private sales, VOX (Sept. 21m 2019), https://voxeu.org/article/sotheby-s-and-christie-s-expand-private-sales.
[41] Anna Brady, Guarantees: the next big art market scandal?, THE ART NEWSPAPER (Nov. 12, 2018), https://www.theartnewspaper.com/news/guarantees-the-next-big-art-market-scandal.
[42] What Going Private Under Patrick Drahi Might Mean for Sotheby’s, supra.
[43] Id.
[44] Id.
[45] Id.
[46] Three Sotheby’s developments on the art market’s radar, BUSINESS MATTERS (Nov. 22, 2019), https://www.bmmagazine.co.uk/in-business/three-sothebys-developments-on-the-art-markets-radar/.
[47] Id.
[48] Id.
[49] Id.
[50] Billionaire’s light-touch approach at Sotheby’s faces first test, supra.
[51] Id.
[52] Id.
[53] Sotheby’s at the crossroads: new owner, new chief executive, new era, supra.
[54] Id.
[55] Debt King Drahi’s Bid for Sotheby’s Puts the Art World in Play, supra.
[56] Id.
[57] Id.
[58] Id.
[59] Billionaire’s light-touch approach at Sotheby’s faces first test, BLOOMBERG (Nov. 1, 2019), https://www.crainsnewyork.com/arts/billionaires-light-touch-approach-sothebys-faces-first-test.
[60] Scott Reyburn, For Auctions, It’s ‘No Froth,’ but ‘Steady.’ That’s the New Normal, THE NEW YORK TIMES (Nov. 15, 2019), https://www.nytimes.com/2019/11/15/arts/design/for-auctions-its-no-froth-butsteady-thats-the-new-normal.html?login=smartlock&auth=login-smartlock.
[61] Three Sotheby’s developments on the art market’s radar, supra.
[62] Id.
[63] Scott Reyburn, Fall Art Auctions See Significant Declines, THE NEW YORK TIMES (Nov. 13, 2019), https://www.nytimes.com/2019/11/13/arts/design/auction-sothebys-christies.html.
[64] Id.
[65] Id.
[66] For Auctions, It’s ‘No Froth,’ but ‘Steady.’ That’s the New Normal, supra.
[67] Id.
[68] Sotheby’s at the crossroads: new owner, new chief executive, new era, supra.
[69] Id.
[70] Edward Robinson, Debt King Drahi’s Bid for Sotheby’s Puts the Art World in Play, BLOOMBERG (June 23, 2019), https://www.bloomberg.com/news/articles/2019-06-23/debt-king-drahi-s-bid-for-sotheby-s-putsthe-art-world-in-play.
[71] Andrew Osborn, Sotheby’s fined 13m for price-fixing scandal with Christie’s, THE GUARDIAN (Oct. 31, 2002), https://www.theguardian.com/uk/2002/oct/31/arts.artsnews.
[72] Id.
[73] Sotheby’s at the crossroads: new owner, new chief executive, new era, supra.
[74] Id.