The last year for Sotheby’s has seen major policy shifts and changes in its company structure in the 281-year-old auction house. From adjustments to its buyer's premium policy to investment from the UAE and major layoffs, the company has gone through a period of tremendous alterations as we cross through the mid-point of the decade. Yet another change seems to be on the horizon for the auction giant as it engages in talks with Pace Gallery that would see Sotheby’s invest heavily in the latter.

Founded in 1960 by American art dealer Arne Glimcher and now by his son Marc Glimcher, the humble art gallery has morphed into a sizable force within the industry, with it having a presence on three continents. 

Rumors have swirled for a while among industry experts regarding some business partnership or more between Pace and Sotheby’s, but the nature of the deal, whether it be a major cash injection, an acquisition by Sotheby’s, or even a merger between these two historic brands, is unclear. It also comes at a time when the art market is sluggish among a downturn in the global economy and recession fears in the United States. 

The news of this deal was first reported by ARTnews with sources indicating to them that this partnership between Pace and Sotheby's will be something "new" and that the terms and nature of this partnership have yet to be hammered out. 

To understand this potential Sotheby's-Pace deal, it is important to understand the context in which both companies currently exist and have existed for the last six years. Talks between Sotheby’s and Pace have been occurring since the COVID-19 pandemic.

Since 2011 the direction of Pace Gallery has been dictated by its CEO, Marc Glimcher. Core to that has been the opening of a new headquarters in Chelsea, Manhattan, which sits tall at 8 stories high and 75,000 square feet, in the fall of 2019. Covered in glass and volcanic stone, the gallery's hub in its global empire was described by Glmicher as “about seizing the moment and knowing what’s relevant to the time.”

However, from a financial perspective, the building has been a financial drain for Pace. Not only was it expensive to construct, but unlike other major galleries that own their own physical space, Pace rents its headquarters. According to ARTnews’ figures, which Pace disputes, they spend US$700,000 a month on rent, roughly US$8.4 million a year. This is combined with the US$98.2 million Pace allegedly spent on the interior and exterior of the building.

The company has also seen trouble in other ventures, having to withdraw from other financial commitments. Last October, Pace had been on track for a major showing at Art Basel Paris, which it withdrew from allegedly because of financial difficulties. Additionally, a series of financial and political difficulties forced Pace to step back from Superblue, an experiential art company in which Pace had a large stake and took a major hit from Glimcher’s resignation from the project.

As such, while Pace may not be outwardly in trouble, the financials and concerns do give credence to this quote: a source familiar with Pace told ARTnews, “I wouldn’t say Pace is for sale, but they certainly have been looking for investors for a long time.”

As for Sotheby’s, their financial situation has also been well-recorded, especially as their last year or so of operations has been somewhat rocky. In early 2024 they unveiled a new buyer's premium scheme, which they reversed in early 2025. In December 2024 they laid off roughly 100 staff members, and in that same year, their credit rating was downgraded. This is all while the company goes on an extensive and expensive real estate acquisition spree, acquiring new offices in New York, Paris, Hong Kong, and Shanghai.

However, from another perspective, they have been at one of their strongest points since their purchase by French telecoms magnate Patrick Drahi in 2019. While Drahi and his CEO, Charles F. Stewart, pursued an aggressive debt-driven strategy for the auction house, one that it is struggling to recover from, it also secured a US$1 billion investment from UAE sovereign wealth fund ADQ, which boosted its bond price. Furthermore, US$800 million of the US$1 billion investment from ADQ has been earmarked for debt relief, which will give the auction house some breathing room for acquisitions and new projects. 

Such moves would not be new to Sotheby's, and it can be argued that one of the auction house's best moves has been its acquisition of a partial ownership stake in car auction house RM back in 2015. RM Sotheby’s has since grown to be the largest car auction house in the world through sale volume, showing that if a similar deal can be reached between Sotheby's and Pace, both brands could see major upsides. 

Additionally, it would not be the first time Sotheby’s and Pace have cooperated in business. Earlier this year, Christie’s and Sotheby’s competed to consign the US$250 million collection of Leonard Riggio, with the latter cooperating with Pace to secure financial guarantees to help secure the deal. Ultimately Sotheby’s lost out to Christie’s, but it's not impossible that the talks between Pace and Sotheby’s are a result of that partnership over the Riggio collection. 

Stewart’s current strategy for Sotheby’s seems to be a massive effort to attract every feasible type of collector into the auction house, with a slate of new offerings in areas such as luxuries, sports, and even experiential art. Partnering with or even acquiring Pace would greatly assist Sotheby’s in its goals, providing it with key market advantages over its competitors. 

Access to Pace means Sotheby’s can tap into a new clientele base in a more direct fashion. They could use it to promote the private sales division, directly generating revenue, but also gain insider information on what pieces and estates may be coming to market, which would provide Sotheby's with long-term benefits when it comes to bringing large collections to the auction floor. 

Additionally, there are benefits for Pace in this deal as well, depending on how it plays out. Access for Sotheby’s into Pace is a two-way street with Pace suddenly being able to tap into the resources and client base of the far larger auction house. 

In this regard, financing is also a key component Pace may be eager to cooperate with Sotheby’s on. Sotheby’s Financial Services (SFS) provides loans to clients on the condition that their art is to be auctioned with the house and treated like collateral. SFS, while developing new investment vehicles, is reliant on the high interest of these loans for their income. However, in a Pace-Sotheby’s arrangement, Pace clients could receive preferred rates on loans made with SFS.

Real estate is another area where Sotheby’s and Pace could work together, alleviating issues that both brands seem to be having on this front. On the one hand, Pace is struggling with its large space and how expensive the new facility is to operate. At the same time, there are doubts that Sotheby’s new office space will be able to accommodate the amount of staff needed for a global headquarters. A deal where Sotheby’s could rent space at Pace would fix both problems.

Alternatively, Pace could take advantage of not just Sotheby’s space within New York to potentially host exhibits but also globally. Pace has a wide range of offices and business networks that span Europe and Asia, meaning that Pace could potentially operate in tandem with Sotheby’s, using its facilities to further improve Pace’s global presence and making use of resources to scale up operations to the benefit of both brands.

It should be noted that an auction house acquiring a gallery is not a new concept. In 2006, Sotheby’s acquired the Dutch gallery Noortman Master Paintings, and in 2007, Christie’s purchased Haunch of Venison. However, Noortman closed its doors in 2013, and Christie’s folded Haunch of Venison into its private sales department directly that same year. Whether this deal between Sotheby's and Pace will materialize or not is still unclear, and if it does what form it takes is also unknown at this point.