Tad Smith has jumped ship from Madison Square Garden to take the reins at Sotheby’s, which is under pressure from activist investors to increase its performance. (Photo: MSG)
The move caught both the art and sports world by surprise.
Smith, who will replace outgoing CEO William Ruprecht on March 31, was only in the Madison Square Garden job for a year. The stock market reacted, posting a 1.4 percent drop in MSG shares, while Sotheby’s gain a percentage point.
“Smith brings what shareholders want, broad-reaching ‘business’ experience rather than luxury or art experience which is what the brand and experts already have,” David Schick, a Stifel, Nicolaus & Co analyst, wrote in an investment note.
Smith is well known in New York City’s sports, media and entertainment business, where he’s spent the last 25 years of his career.
He previously worked for Cablevision Systems Corp, which provides cable service on Long Island. Owner James Dolan is also chairman of Madison Square Garden, which owns the NHL’s Rangers and the NBA’s Nicks.
Smith was apparent attractive to Sotheby’s because of his experience at Starwood Hotels & Resorts Ltd. where he headed up online operations.
The catalyst for the move is apparently activist investor Daniel Loeb. His hedge fund Third Point LLC is currently Sotheby’s largest shareholder.
He’s also pressuring the company to raise cash by selling its lucrative headquarters building on Manhattan’s posh Upper East Side.
In that regard, Smith will likely be expected to move quickly to institute changes.
Ruprecht, a 35-year Sotheby’s veteran, has served as chief executive since 2000.
The auction house also said it had separated the roles of chairman and CEO. Lead independent director Domenico De Sole is the new chairman, according to a statement.