The accounts

Sotheby's restarts, but the debt knot is not untied

Profit and revenue growth in 2025 driven by top auctions, but cash flow and leverage continue to weigh on the auctioneer's profile

by Maria Adelaide Marchesoni

20 April 2026

«Portrait of Elisabeth Lederer» di Gustav Klimt

3' min read

Translated by AI

Versione italiana

Key points

The debt node and cash flows
First quarter 2026

3' min read

Translated by AI

Versione italiana

In 2025, Sotheby's returned to profit after several years of losses, but the structural problems associated with its financial situation, in particular its high level of debt, remain. The results - released by the Financial Times - show a pre-tax profit of $53m, a marked improvement on the previous year's loss of $190m, when changes to the commission structure (later revoked) had made the auction house less attractive to sellers.

Asta inaugurale di Sotheby’s dell’8 febbraio 2025 a Diriyah, vicino a Riyadh in Arabia Saudita

At the end of 2025, turnover grew by about 20% to USD 7.1 billion. The core auction business recorded an increase in revenue of 26% to almost 1 billion, while total revenue stood at 1.4 billion (+21% year-on-year).

The rebound reflects a moderate recovery of the art market, which grew by 4% after two years of contraction, according to the Art Basel & UBS Global Art Market Report. Auction sales were the main driver (+9%), with demand concentrated at the top end, above $10m. Sotheby's "Portrait of Elisabeth Lederer" by Gustav Klimt, which fetched $236m in New York, the second highest auction price ever, was emblematic.

«Portrait of Elisabeth Lederer» di Gustav Klimt, aggiudicato a New York per 236 milioni di dollari

The Knot of Debt and Cash Flows

Despite the operational improvement, critical issues related to debt and the refinancing of USD 765 million of bonds maturing in 2027 remain. Following the entry of Abu Dhabi's sovereign wealth fund ADQ, which had injected USD 1 billion in 2024 (partly earmarked for the repayment of lenders), Sotheby's has now opted for a new bond issue of USD 825 million for the refinancing operation maturing in 2031 to enable it to manage its upcoming commitments. The bonds, placed these days at about 99 cents per dollar, offer a yield around 8.5 per cent, at the high end of initial indications, according to rumours. The company's outlook has improved, however: Moody's has revised the rating to 'positive', while S&P has raised it to 'stable'.

If the refinancing grants a respite on the equity front, cash flow management remains under scrutiny. This is the context of the decision - which recently emerged - to offer sellers an interest rate of around 7% to accept deferred payments under the so-called 'extended settlement terms'. The programme, which was introduced in 2025, allows contributors (typically above USD 5 million) to receive the proceeds in several tranches instead of according to the standard schedule.

Pressures on liquidity are also emerging from a lawsuit filed by Cushman & Wakefield, which accuses Sotheby's of failing to pay a $10.2 million commission in connection with the $510 million sale of its former York Avenue headquarters. The real estate company claims it played a key role in the transaction and was entitled to a 2% commission; Sotheby's has rejected the allegations, calling them 'baseless'.

First Quarter 2026

In the first three months of 2026, revenues were between USD 289 million and USD 309 million, up sharply from USD 206 million in the same period of 2025. Turnover is estimated at around 1.45 billion, of which 1 billion came from auctions. Sales were driven by RM Sotheby's, which specialises in collector cars, the Old Masters auction in New York in February, and sales of modern and contemporary art in Hong Kong.
In forecasts provided by Sotheby's to the rating agencies, it said that the group expects to improve commission margins in 2026 as a result of cost savings, although it expects revenues to fall by 1% in 2026. Sotheby's strategic focus on higher profitability categories, coupled with already implemented headcount reductions and ongoing cost optimisation initiatives, supports the forecast for S&P Global Ratings adjusted EBITDA margins to increase to 30.9% in 2026 and around 31% thereafter (S&P Global Ratings adjusted EBITDA margins in 2025 of 30.3%, up from 16.6% in the previous year).