Supplied, 4 January 2011

While First East Auction Holdings Ltd's (FEAL) interest in Leonard Joel, Melbourne is to stay with FEAL (chaired by Mr Tim Goodman), its wholly owned Bay East is to go with Sotheby's Australia to the new consortium headed by Mr Geoffrey Smith.

Not all high value works from Leonard Joel found their way to Sotheby’s Australia. Last year in Melbourne, Leonard Joel sold Max Oppenheimer's Still Life for $158,600 against the modest estimate of $8,000 – 10,000

Bay East has been operating under licence from Leonard Joel (LJ) and therefore might have been expected to go to Mr Tim Goodman alongside LJ.

The licence, however, has only a short term (two years) to run and the Joel name is still a long way from being established in Sydney and it would not surprise if this were  not renewed.

The acquisition of Bay East by Sotheby's Australia also surprises, writes AASD's special correspondent, in that the announcement of the Sotheby's deal stressed the new investors' keenness to  identify with the high end of the market.

Bay East specialises in the lower end.

The strategy suggests the new investors are very anxious to have a conduit for the occasional higher value stock that is so precious on today's market that comes in with the normal dross of a general auction house.

This stock has not always been sifted out, however, in the Sotheby's group especially at Leonard Joel in Sydney, where only last year The Flower Seller painted by British painter Henry Kennington (1888-1960) estimated at $1800 to $2500 was sold for $48,000, and in Melbourne, against a similar modest estimate Max Oppenheimer's Still Life  for $158,600 *

Companies under pressure of high debt (Sotheby's Australia was so identified by a report to the New Zealand Stock Exchange by Mowbary Collectables in November) cannot always be broken up on the best laid down plans and principles.

The new arrangements incidentally mean that while the happily Sydney-resident Mr Goodman may be occasionally auctioning for Sotheby's Australia and its associate Bay East in Sydney his principal stake in the auction industry will now be in Melbourne.

Devoted to his Sydney family, and statedly selling out for lifestyle reasons, he may have to do a bit of travelling to Melbourne where FEAH in which he has a 65 per cent interest, has an interest of two  thirds of Joel's.

Both Joel's and Bay East appear to have been trading exceptionally well so it is in one way no wonder the new investors should look to keep an interest in at least one of them.

The cash flow is good even if the turnovers are small.

Bay East has, however, has also been run very successfully by one of Mr Goodman's most loyal supporters, Ms Anne Phillips, and it is hard to imagine the operation without one or both of them involved in some way.

Leonard Joel is also professionally managed by John Albrecht who has a one third equity in the property and also employs Warren Joel, so room for executive or other pro-activity will be much restricted.  

Re-branding of Bay East has caused some unnecessary confusion along the way but the site from which Bay East now operates, after a few years in Waterloo, is rooms long identified with Mr Goodman.

But then venturing up market to "national" art auctions two decades ago Mr Goodman seems long to have sought to go posh.

His acquisition of Sotheby's Australia in October 2009 was the result of an ambition that went back to the musty storeroom of F R Strange's auctions where he began his career.

Yet he has appeared just as happy pottering around at the lower end, boasting of the high clearances at Bay East.  Even through confusion of the re-brandings Bay East, its name reflecting the suburb, Double Bay, where it was born, has continued to be haunted by Mr Goodman's persona.

Returning last year from Waterloo, Bay East has returned to the old fire station continuously occupied by Goodman's and adjacent to premises which where it started in an old Woollahra council chamber depot and where the council's garbage trucks used to park.

Hot to identify with the top end of the market, the new investors in Sotheby's, who include the very loyal-to-Goodman, Mr Sam Cullen, obviously also believe that old Yorkshire maxim that there is money in muck, even at one remove.