Tad unclear

Sotheby's new CEO brings needed broad-brush talent

Tad Smith is going from hockey to Hockney. The new Sotheby's chief executive, most recently boss of the Madison Square Garden sports and entertainment empire, isn't an obvious fit for the rarefied world of fine art. His time at McKinsey and elsewhere, however, suggests the generalist may be just what the $3-billion auction house needs.

First off, Smith has aggressive investors to satisfy. Activist Dan Loeb of Third Point was added to the board last May, along with two fellow nominees. Mick McGuire of Marcato Capital is another vocal owner. These and others want a more shareholder-friendly approach to the deployment of capital, including potentially additional distributions of cash.

Loeb et al are hardly pushovers, but Smith has been dealing with the Dolan family at MSG - not to mention an activist hedge fund there, too - and may consider the owners of Sotheby's stock easy to handle by comparison.

Then there are the collector and dealer clients, as well as the many subject experts within the company. In the hot area of contemporary art, for example, Sotheby's trails arch-rival Christie's in securing the most prominent lots for sale. Here there can be big egos to handle, but if necessary Smith can rely on in-house cognoscenti like Domenico De Sole - the ex-Gucci boss who, with a split of the top two roles at Sotheby's, will now chair the board rather than just serving as lead director.

Beyond that, Loeb and others have questioned the auctioneer's digital strategy and its approach to geographical expansion in, say, China. There may be new ways to trade on the Sotheby's brand, too. These are issues that could suit a CEO with a background in management consulting and media.

On the other hand, an outsider boss from the media world, Steven Murphy, made a surprise exit from Christie's in December. And the absence of much share price movement suggests Sotheby's investors aren't sure what to make of Smith. In an internal memo, he calls his lack of art world experience the "elephant in the room." His first job will be to make a convincing shift from selling arena hot dogs to Jeff Koons Balloon Dogs.