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Sotheby’s has reported an 88 per cent plunge in its core earnings and a 25 per cent decline in auction sales, as a chill in the art market hits one of the industry’s most famous brokers.

The first-half figures at Sotheby’s main auction business reveal the extent of the financial pressure the group came under before it struck an investment deal with Abu Dhabi earlier this month.

Weaker luxury spending in China is among the factors weighing on demand for fine art and affecting both Sotheby’s and historic rival Christie’s.

One of Sotheby’s marquee auctions fell short of expectations in May, when the winning bid for a Francis Bacon portrait of his lover George Dyer missed the low end of its $30mn-$50mn estimate.

Abu Dhabi-based sovereign wealth fund ADQ agreed to take a minority stake in the auction house earlier this month, through a $1bn capital raise funded with its present owner Franco-Israeli billionaire Patrick Drahi, who has been looking to cut debt across his business empire.

Ahead of the deal, Sotheby’s told lenders that its earnings before interest, taxes, depreciation and amortisation (Ebitda) plunged 88 per cent to just $18.1mn in the first half of 2024. Even after it stripped out further costs — such as severance pay and legal settlements — from this earnings measure, Sotheby’s adjusted Ebitda fell 60 per cent to $67.4mn.

It also booked $558.5mn of revenue in the first six months of 2024, a 22 per cent fall on the $712.3mn recorded in the same period last year, according to an earnings report shared with its lenders.

The results cover Sotheby’s main auction business and do not include earnings generated under other arms of parent company BidFair, such as its financial services division that makes loans to art collectors.

Sotheby’s declined to comment.

The slowdown at Sotheby’s follows Christie’s last month publicly reporting a similar 22 per cent drop in auction sales over the same period.

Sotheby’s results also reveal that it intends to use $700mn from the planned capital raise to “reduce the company’s leverage”, with the deal with ADQ expected to close in the fourth quarter of 2024.

Founded in 2018, the ADQ sovereign wealth fund is tasked with fuelling development in the oil-rich emirate of Abu Dhabi and is chaired by the UAE’s powerful national security adviser, Sheikh Tahnoon bin Zayed al-Nahyan. An Abu Dhabi branch of the Louvre museum opened in 2017.

Sotheby’s reported more than $1.8bn of net “long-term debt” at the end of June, suggesting that it will still carry over $1bn of such debt even after the capital raise is completed. The company’s total liabilities stand at $4.3bn.

The wider Sotheby’s group has also borrowed money through creative means this year, with its financial services affiliate in April raising $700mn through new bonds backed by loans the auction house provides to art collectors.

Drahi took over Sotheby’s in a leveraged buyout in 2019, returning the centuries-old auction house to private ownership three decades after it listed on the New York stock market and bringing him into direct competition with French billionaire François Pinault, who owns Christie’s.

The deal handed Drahi a trophy asset alongside his Altice business empire, which he transformed from a niche cable company into a global telecoms conglomerate through a decade-long acquisition spree.

Now faced with rising interest rates and market jitters over a criminal probe into one of Altice’s co-founders, Drahi has been increasingly selling off assets in a bid to tackle his group’s over $60bn debt pile.

Earlier this month, Drahi agreed to sell a stake of nearly 25 per cent in BT Group to Indian billionaire Sunil Bharti Mittal’s conglomerate, having borrowed heavily from banks to buy up shares in the British telecoms operator in previous years.

Additional reporting by Josh Spero in London

A historic journey ended in tragedy this week when a Viking replica ship capsized off the coast of Norway, killing an American archaeologist who was part of its international crew.

The six-person team had been piloting the open wooden ship, named Naddodd, on a roughly 1,000-mile trip from the Faroe Islands to Trondheim, Norway.

“This expedition, honoring the Viking navigator Naddodd, aims to preserve Viking culture and navigational skills for future generations,” Sail2North expeditions, which organized the voyage, said in an Instagram post in May.

The team — made up of four Swiss, one Faroese and one American — departed on Saturday from Suðuroy, the southernmost of the 18 Faroe Islands, for what was expected to be a several-day journey.

But on Tuesday evening, met with stronger-than-expected winds and high waves, it capsized off the Norwegian coastal town of Stad.

The Norwegian Joint Rescue Coordination Centre (JRCC) told CNN that the boat sent out a distress signal at around 5:45 p.m. local time, but when rescuers arrived, crew members signaled that they were safe.

They issued another distress call around 8 p.m. local time, at which point local civilian boats got to the scene and saw the ship had capsized. Five members of the crew managed to board an inflatable life raft and were airlifted to safety within an hour, the JRCC said, but one person was trapped beneath the boat.

Emergency responders battled tough conditions, including 40-knot winds and 16-foot waves, according to a video posted to social media by Norway’s Sea Rescue Society.

The following morning, once conditions improved, rescuers found a body beneath the capsized boat.

On Friday, Sail2North identified the victim as 29-year-old Karla Dana, whom it had previously described as “the youngest member of our crew and embodies both the curiosity of a field researcher and the boldness of an adventurer.”

Dana, an archaeologist and field researcher, had worked in a number of countries, from Costa Rica to Germany to Morocco to Taiwan, according to her LinkedIn page. She was a member of the prestigious Explorers Club, and was pursuing a master’s degree in archaeology at the University of the Highlands and Islands in Scotland.

In a joint statement shared with Sail2North, Dana’s sister and her fiancé said she “tackled every adventure with a smile on her face and a twinkle in her eye.”

“She always made life look easy,” Alejandra Dana and Grant McDaniel wrote. “She created a light that illuminated everyone around her everywhere she went. If you ever had the opportunity to know her, consider yourself one of the luckiest people on this planet.”

Dana had shared on LinkedIn earlier this year that she was looking forward to participating in the Viking expedition.

“Thrilled to be a part of this crew, fearlessly embarking on this Nordic voyage on a Viking ship replica across the North Sea, pushing through physical and mental limits to sail into history,” Dana wrote.

Dana also authored several posts for the expedition’s blog, which is now password-protected.

“It’s hard to keep excitement from turning into fear when you see those waves casually tossing around huge modern boats like toys,” she wrote in a post published Wednesday, according to the BBC. “But there’s a wild beauty in the North Sea, a reminder of nature’s raw power, and I feel incredibly lucky to be part of this adventure.”

Authorities believe a strong wave was likely responsible for the capsizing, which they are viewing as a “tragic accident” rather than a criminal matter, according to the Associated Press.

Sail2North said on Friday that its crew was made up of “highly experienced explorers who undertook extensive training” and “took every precaution to ensure their safety.”

The other crew members include the 56-year-old captain and expedition leader, a 54-year-old artist and seaman who holds a Guinness World Record for rowing across two oceans in the same year, a 37-year-old extreme sports aficionado, a 41-year-old photographer and a 50-year-old engineer.

“Despite their diligent efforts and adherence to these measures, the outcome was unforeseen and deeply upsetting,” it said, adding it is committed to supporting Dana’s family and honoring her legacy.

A spokesperson with a public relations firm representing the organization told NPR over email that the rest of the crew is traveling home to be with their families and “continues to receive support from a dedicated care team.” It anticipates providing further updates next week.

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The Federal Reserve’s preferred measure of inflation held steady at 2.5 per cent in the year to July, according to data released on Friday that paves the way for the US central bank to start cutting interest rates next month.

The personal consumption expenditures index compared with economists’ expectations of a 2.6 per cent rise and June’s figure of 2.5 per cent. The Fed’s target for headline PCE index is 2 per cent a year.

“Core” PCE — which strips out volatile food and energy costs — remained at 2.6 per cent, below the forecast 2.7 per cent.

The figures from the commerce department come after Fed chair Jay Powell said last week that the “time has come” to begin cutting rates as inflation eases and the labour market slows.

Powell’s comments at the annual Jackson Hole conference made it all but certain that the central bank will lower its main rate from its current range of between 5.25 and 5.5 per cent at its next meeting in September.

Much of the debate among Fed watchers has now shifted to whether the central bank will cut by 0.25 or 0.5 percentage points in September, and how steep the reductions will be for the rest of the year.

US government bond prices were little changed following the publication of the data. The yield on the two-year Treasury note, which rises when prices fall, was up 0.03 percentage points on the day, at 3.93 per cent.

Stock futures suggested the S&P 500 was set to rise 0.5 per cent compared with immediately before the release.

This is a developing story