In 1989, the late Greek shipping magnate and devoted collector Stavros Niarchos paid $47.85 million for the 1901 Yo, Picasso, which wasn't quite Blue Period (it is more like Picasso used Toulouse-Lautrec as a stepping stone en route to Blue). But it was close enough.

Also in 1989, Japanese businessman Tomonori Tsurumaki bought the decidedly Blue Period Les Noces de Pierrette (1905) for $51.3 million. (In one of the wackier notions about connecting art and entertainment, the picture was to be displayed in a museum alongside his Nippon Autopolis racetrack. Tsurumake subsequently went bankrupt, the painting wound up under the control of Japan's Lake Financial group, which in turn was acquired by G.E. Capital, which has been selling Lake's art holdings through Christie's.)

And in 1997, an unknown collector, bidding by phone, paid $48.4 million for Le Reve, a 1932 lyrical painting of soft curves picturing the artist's amour fou, Marie-Therese Walter. The price was a shock, largely because nothing from the '30s had ever approached that value. But it was also sold in the Ganz sale, which, in a tectonic shift, moved the market for Picasso's works two or three steps ahead of what it had been.

So up comes Femme Assise, an image of the tempestuous, intense Dora Maar. One Japanese man, previewing the Sotheby's sale, innocently asked his companion, "Did Picasso go crazy when he got older?" The painting is as dense, agitated and spiky as the Marie-Therese pictures are lyrical.

And the reason the price was such a coup lies in the consignor, Robert Saidenberg, and the deal Sotheby's cut to win the consignment. Saidenberg is the son of the late Eleanore and Daniel Saidenberg, who were Picasso's New York dealers from 1955 to 1973, when Picasso died.

The works on offer at Sotheby's -- 46 paintings, drawings, prints, sculptures, pots and plates, 44 of which sold at the auction for $70.3 million -- were just a portion of Eleanore's estate. Months before the auction, Saidenberg had put together a list of art in the estate and gave copies to three people: New York dealer William Acquavella of Acquavella Galleries; London dealer Desmond Corcoran; and Tel Aviv investor Gabriel Safdie. He asked each man to make an offer for the works individually and for the group as a whole. If the offer for the whole shooting match was up to his standards, he would sell it en bloc. If not, he might agree to sell some of the works individually.

Apparently, the offers didn't meet his expectations, but they did prove useful. "He gets a free appraisal and takes it right to the auction houses and says, 'Match this'," said one dealer, in disgust. Christie's and Sotheby's fought bitterly over the group of works, largely for its plums, Femme Assise and La Statuaire, a 1925 painting that ended up fetching $11.83 million (presale estimate $12 million-$18 million).

Sotheby's obviously won the right to sell the collection, and did so by offering a guarantee -- a pre-auction promise that the seller would get at least a certain (undisclosed) sale price, even if the auction house had to buy the painting itself. Guarantees are risky, since the houses don't want to be stuck with a painting that bombs publicly. But in return for taking on the risk, they get an additional cut of any sale price beyond the agreed minimum.

Such deals require disclosure in the catalogue that the auction house has a financial interest in the work, and this often puts people off a painting, particularly if the estimate is high.

So Sotheby's came up with a clever plan that it had used before. It slid by the notification requirement with a "third-party guarantee" -- getting a client willing to buy the painting to make the guarantee (the practice is also called a guaranteed bid). The unknown guarantor would own the painting for $40 million if there were no bids, get the $2 million between $40 million and $42 million if it did sell, plus 50 percent of the amount over $42 million. And because the firm wasn't directly involved financially, it didn't have to disclose a guarantee.

Word of the deal got out, as it usually does (the arrangement was first reported in the ARTnewsletter on Oct. 5, 1999). Sotheby's was on edge: would news of the deal, not to mention Saidenberg's shipping the painting to three potential buyers, kill the sale?

The coup was that it didn't. The painting proved irresistible, and it got hammered down for $45 million (the final price of $49.5 million includes with the auction house's buyers premium).

The bidding on the painting was telling. Auctioneer Tobias Meyer started things at $30 million and moved it along on his own to $39 million. At that point, Sotheby's co-director of Impressionist and modern paintings worldwide, Charles Moffett, put in a bid of $40 million. Sotheby's chairwoman Diana D. Brooks took another bid, which Meyer registered at $42 million, skipping over $41 million entirely. In the end, it was Brooks' bidder that got the painting.

The night was a victory for the anonymous guarantor, who presumably made $3.5 million simply from having promised to buy the painting if no one else did. And it was a victory for Saidenberg and for Sotheby's. Each may have been hoping for more, but the buzz in the trade was that the painting's estimate of $40 million was a stretch to begin with.