Ramtin Naimi

I would say they make the most.

Auction houses, you would think...

They have no costs except for marketing and displaying the art.

And then they take anywhere between a 15 to 26% commission depending on the value of the art.

And then I started realizing that's actually not the case.

They have competitive dynamics also.

When Paul Allen passed away a few years ago, his entire collection became available for sale.

And I think it was at Sotheby's.

The collection sold for, I think, well over a billion dollars in cumulative sales.

When someone like him dies or he's an extreme example, but there's plenty of people that have collections worth $50 million, $100 million, $300 million.

And it's usually the estates of those people that the auctions want.

And it's part of the reason that the estates actually have to go to the auctions because obviously you have a finite amount of time before you have to pay the taxes.

And the quickest way to sell everything is to send it to auction.

That's when the auction houses start competing with each other over commission split and guarantees.

It's more along the lines of, hey, we will guarantee you at least $500 million for this collection.

We'll guarantee you at least $100 million for this collection.

We will reduce our commission from, you know, 26% to 13%.

We're going to give half the commission back to you.

And there's no shortage of stories where they guaranteed too high to compete with the other auction house and they ended up losing money or their net margin on it ended up being two or 3%.

I don't think the auction houses have huge market caps.