The chatter came about partly because Sotheby’s and Pace made a joint bid for the
Riggio estate, which meant that a number of Sotheby’s staffers and some other participants in the process saw the Glimchers attend the pitch meetings. It’s easy to imagine how that metastasized into rumors of an acquisition, especially since Sotheby’s owner Patrick Drahi and C.E.O. Charles Stewart traditionally keep their cards very close to the vest. I’m told the issue came to a head recently when Sotheby’s staffers confronted Stewart, who told
them there was no deal to acquire Pace. No one questioned Stewart’s interest in the primary market, which led him to hire Art Basel’s Noah Horowitz for a yearlong sabbatical. He’s also been looking for ways to scale Sotheby’s business. In this context, that might mean Sotheby’s and Pace collaborating on ways to tap into Sotheby’s
client base to sell Pace’s artworks, or Pace giving Sotheby’s a way to hold exhibitions in Chelsea. Whatever the connection might ultimately look like, it’s still very much in the talking stage. 

How Sotheby’s would raise the money to buy Pace was always the real conundrum. In order to secure nearly $1 billion from ADQ, the Emirati sovereign wealth fund, Drahi had to reinvest some of his own cash into the business to maintain control. And while Pace may be the smallest of the four
global galleries—behind Zwirner, Hauser, and Gagosian—it’s still a nine-figure enterprise. A potential acquisition would have required more ADQ cash, inevitably tipped the balance of equity toward the Gulf, and exacerbated the 11 percent dividend that Sotheby’s is already paying. And one can only imagine the further blow to morale if it turned out that the auction house, which recently completed a brutal round of layoffs, was sitting on dry powder. Though, the company did say at the time of
ADQ’s investment that some of the money would go toward growth initiatives.

Also: Why would Pace want to be acquired? For the past year, there’s been a lot of talk that galleries all throughout Chelsea are experiencing cash-flow problems amid the market pullback. No one seriously thinks that the Glimcher family is having financial troubles, but that doesn’t necessarily mean that the gallery wouldn’t enjoy a cash infusion on its balance sheet. “Marc needs cash?” one private dealer texted
me after the ARTnews story ran. “That’s the worst kept secret in the art world right now.”

“Despite the challenging economic conditions of the past year and a half, which have affected the entire art market,” a Pace spokesperson responded when I asked about the rumors, “Pace is financially stable. We have navigated the ups and downs of the market successfully for the past 65 years and continue to do so.”

Whatever the case, it seems very unlikely that either Glimcher would choose
this moment to write the end of the Pace story by selling the firm to Sotheby’s. And yet, the rumors kept coming back even after the Riggio estate went to Christie’s. The noise level really started to rise late last week—reports even started coming back to me that Glimcher had been speaking to artists to make sure they’d heard from him first. (Artists, who spend a lot of time working alone, can jump at the chance to share something worth talking about…) I’m told that Glimcher called one artist
to say that something was going on but he could not talk about it. Still, the message was that Pace is Pace, and whatever was in the works wouldn’t change anything. Glimcher also assured the artist that there was no financial issue.

In that context, the ARTnews story reads like an attempt to take the temperature down from a boil to a simmer. That’s a good thing. The announcement of a major transaction could have had a destabilizing effect on the market. People are nervous: The
mood has shifted very quickly from a sigh of relief in Los Angeles to gallows humor in New York. One dealer told me Friday night that he had previously hoped that one silver lining to this year’s political news was that the economy would remain strong, and art buyers might become more bullish. Now he’s grateful for every sale and watching the news through splayed fingers over his eyes.

Gladstone’s will created a number of different trusts. Her gallery trust contains her ownership position in her namesake business; another trust was set up for her art. Max Falkenstein, senior partner in the gallery, was named trustee for the ownership stake along
with lawyer Michael Stout and art advisor Allan Schwartzman. But only Stout and Schwartzman were deemed trustees for the art. 

According to the will, Gladstone wanted the art sold to benefit her heirs, which include her children and grandchildren. The will provides for the fact that Falkenstein and Schwartzman might have conflicts of interest given their roles. But there doesn’t seem to be a provision for the possibility of another conflict
of interest between the two trusts. That shouldn’t be a problem: Ideally, Gladstone Gallery would handle the sales of Gladstone’s personal collection. After all, the gallery knows the markets for these artists better than anyone else, and selling privately would protect against potentially damaging downdrafts in pricing. And, of course, the company would earn fees on those sales, which would benefit the gallery owners and the heirs.

So why are we hearing reports that the art is
being dangled in front of the auction houses? It appears that much of the value of the art in the estate lies in works by Richard Prince that Gladstone owned. Prince’s market has been on an upswing lately. Yet, at least one art advisor casually told me that he thought the gallery undersold
Harbor Nurse (2003) at Art Basel in Miami for a reported $4.5 million after other Prince nurses sold at auction for higher prices—one for $5.6 million in October and another $6.7 million in November. The Gladstone estate also includes a Mike Kelley Memory Ware work, according to Kazakina, which could be very desirable on the open market. It’s been a while since Kelley’s Memory Ware works were auctioned for $3 million or more. But there’s also been a
major retrospective of Kelley’s work mounted in London and Paris each year for the past two years. 

Of course, we don’t know which works were being discussed at the auction houses. Was it just the Princes and Kelleys, for which the heirs will very much want to see a fair market price? Or is it all of the art, including the artists the gallery still represents, who might resent seeing their work flogged publicly? With Gladstone herself gone, there’s an obvious tension between the
interests of the heirs and those of the artists and gallery. Could the Artnet story have been the result of an internal struggle?

According to the will, Falkenstein has no control over how the art trust disposes of the works, which must be frustrating. It’s not clear whether Schwartzman has a conflict of interest. Presumably, he does if he is taking a fee to represent the art trust as an art advisor in relation to the auction houses, and he does not if he is simply acting as a trustee of
the art trust. Curiously, Kazakina’s report mentions neither Falkenstein nor Schwartzman. She does say she tried to reach Stout for comment. That makes sense: He’s the key to all of this, because it’s looking like he’ll have to be the one who decides what’s best for both sides. When I reached him by email this afternoon, he replied that the estate’s administration remained a confidential matter, but: “No complete strategy decisions have been made as of this writing.”