Sotheby’s named Madison Square Garden Co. executive Tad Smith as its new president and chief executive on Monday, turning to an art-world outsider to repair ties with restive shareholders and navigate global shifts in collectors’ shopping habits.
Mr. Smith, 49 years old, assumes a role held for 14 years by William Ruprecht, a 35-year Sotheby’s veteran who agreed to step down last November after activist shareholders publicly campaigned for a leaner, more-profitable company.
The concert-arena executive will have to manage shareholder concerns while coming up with fresh ways to speed up an auction industry that relies heavily on lifelong friendships nurtured over long lunches. His job will also require him to keep up with the ever-shifting tastes of new international bidders—many of whom shop for art online—while keeping the insular art establishment happy.
In an interview Monday, Mr. Smith conceded he knows little about art, but he called himself “a passionate novice” who admires Dutch old master paintings as well as contemporary artists Ai Weiwei and Damien Hirst. He said he recently bought a photograph of a floating ballet dancer by JR, a French street artist. The image hangs in his living room.
Mr. Smith has spent the past year as president and chief executive of Madison Square Garden Co., whose businesses include major sports teams like the New York Knicks and Rangers and the MSG regional sports television networks. Its entertainment division organizes and hosts live events in venues such as Manhattan’s Radio City Music Hall and Madison Square Garden, one of the country’s biggest arenas. Revenue for its fiscal second quarter ended Dec. 31 rose 7% to $542.5 million compared with the same period a year earlier.
At MSG, Mr. Smith isn’t in charge of negotiating team salaries or show lineups at these venues, but he manages the company’s financials and oversaw development of Radio City’s new Rockettes show, “Spring Spectacular,” now in previews.
Before that, Mr. Smith was president of local media sales for Cablevision Systems Corp. under Executive Chairman James Dolan, whose family spun off the publicly held MSG from Cablevision five years ago. MSG said it would begin an immediate search for a successor, with Mr. Dolan overseeing the company’s activities in the interim.
Mr. Smith’s departure from MSG comes at a time when the sports and media company is exploring breakup scenarios—including separating its entertainment businesses from its media and sports operations—but Mr. Smith declined to discuss future moves. Instead, he pointed to an earlier calling card: While at Cablevision, he said he led a team that created a system that allowed the cable company to tailor the ads it broadcast to its 2.5 million households, with dog owners getting more dog-food ads and new homeowners getting additional home-improvement store ads.
He said he was drawn to Sotheby’s because the auctioneer needs to seek out its own creative technology platforms to bolster sales and capitalize on its “incredible, enduring” brand. Sotheby’s plans to launch a site within eBay that will allow bidders to watch a live stream of Sotheby’s auctions—and bid in real time. An earlier, slightly different iteration in 2002 failed after a year and was closed, but rival Christie’s has had success with its own online bidding platform.
Also on Monday, Sotheby’s board promoted its lead independent director, former fashion executive Domenico De Sole, to be chairman—a title once held by the departing Mr. Ruprecht. Mr. De Sole said he played a role in hiring Mr. Smith, praising the executive’s savvy as a strategist and a brand builder. “Tad understands what brands can do, and he’s as comfortable with technology as I’m scared by it,” Mr. De Sole said.
In a realm where art-loving elites hold sway, Mr. Smith may be regarded initially as a sports-loving outsider. But the North Carolina native who grew up in Colorado also studied business at Princeton and Harvard. And he is well-traveled, having previously worked in the e-commerce division of Starwood Hotels. He was an executive at Reed Elsevier Group PLC, a business-information company that owns LexisNexis research software and New Scientist magazine, among other entities.
Once he starts March 31, Mr. Smith will need to launch a charm offensive on shareholders and collectors alike. Sotheby’s, the oldest company listed on the New York Stock Exchange, with 90 offices in 40 countries, has had a roller-coaster year. Sales at the New York-based auction house climbed to $6.7 billion last year, a company high—and over the same period its profit grew 9%, to $142.4 million, or $2.03 a share.
But the company is still recovering from a costly, two-year shake-up led by its largest shareholder, activist investor Dan Loeb of Third Point LLC. In the fall of 2013, Mr. Loeb criticized Mr. Ruprecht’s leadership of Sotheby’s directly in a letter he released publicly before eventually reaching a truce with the company. He joined its board last spring, but only after the company ousted a few key members of management and its chief auctioneer, Tobias Meyer.
Mr. Loeb has since fallen quiet, even serving on the committee that hired Mr. Smith. Yet other major shareholders, such as Marcato Capital Management LP, remain agitated by Sotheby’s performance. Last month, Marcato urged Sotheby’s to buy back $500 million in stock but the company held off, saying it wanted to find a new CEO before making any capital-allocation decisions. Marcato declined to comment on Mr. Smith’s hiring.
Mr. Smith and Mr. De Sole said they, along with the board and management, intend to come up with a five-year plan for the company and find ways to allocate capital to shareholders.
As CEO, Mr. Smith will also need to steer Sotheby’s through its centuries-old rivalry with the larger, privately held Christie’s International PLC. Thanks to its blistering sales of contemporary art, Christie’s sold $8.4 billion in art last year, compared with Sotheby’s $6.1 billion. Mr. Smith called contemporary art a “critical part of our business,” and said he would be monitoring performance of its New York sales in May—but he didn’t offer any immediate remedies.
Instead, he intends to spend the time meeting with the dozens of departmental specialists who glean many of Sotheby’s major consignments, mainly by nurturing close ties to big collectors. Mr. Smith said he will ask his new staff to introduce him to heavyweight clients who can decide on a whim to buy or sell multimillion-dollar paintings and sculptures. “I’ll look to the experts to bring me in,” he said.