SOTHEBY'S is awash with colours. Pink. Turquoise. Orange. Red on the left. Blue on the right. But it is only when you reach the first floor that you hit the bling. Two burnished gold cases hang on the wall filled with manufactured diamonds as big as your thumb, and in the centre of the room the pièce de résistance, “The Golden Calf”, a creamy-coloured bull with a curly pelt and testicles like rugby balls, all lovingly preserved in formaldehyde and crowned in gold, with golden horns, golden hooves and a golden crown.

“It's mind-blowing,” says Damien Hirst, the 43-year-old artist who created the Midan calf and the other pieces waiting to be auctioned at Sotheby's London headquarters in New Bond Street. Dressed fashionably in black, with rings on his fingers and shades on his nose, Mr Hirst is an impish figure with a strong streak of humour. But even he is momentarily silenced before the scale of the display. “There are so many things coming from so many directions. Can't be normal, can it?”

No, it can't. Auction houses like Sotheby's and its rival, Christie's, traditionally sell only art that has been bought and sold before. Even their sales of modern and contemporary art usually exclude anything that is less than five years old. To mount an auction of new work by a single artist and in such quantity—223 lots estimated to bring in at least £68m ($120m)—looks like bragging. Yet on September 15th, in the early evening, Oliver Barker, Sotheby's youthful international specialist, will bring down his gavel on the first lot, a colourful triptych of butterflies and diamonds entitled “Heaven Can Wait” that is estimated to sell for up to £500,000. The auction is so big it will take two days to get through. The accompanying catalogue comes in three volumes, and is encased in its own slipcover. Such a sale has never been attempted before.

Only the brave sell at auction, for it is impossible to control who buys or what price they will pay. Some of Mr Hirst's pieces will sell easily, especially if several bidders descend on the same work at once; others will be knocked down more slowly. Mr Hirst is flooding the market, but he hopes his prices will rise, thereby challenging one of the basic laws of economics. At the same time, he is breaking the art market's traditional rules. For nearly 20 years his dealers have nurtured his career, placing his work in high-profile museums and in the hands of carefully selected wealthy collectors. By going down the auction-house route, Mr Hirst is now preparing to cut them out. “The final frontier protecting contemporary art galleries from the relentless encroachment of the auction houses has been emphatically breached,” wrote Roger Bevan, an art historian and critic, in an editorial in the Art Newspaper when the sale was announced last July.

Mr Hirst's dealers are powerful men who are used to getting their own way. Larry Gagosian, a flamboyant New Yorker who first gave Mr Hirst an exhibition in 1996, controls more art space than any dealer in the world: three galleries in New York, one in Los Angeles, two in London, one in Rome. In October he will take on a temporary space in Moscow, and he also has an office in Hong Kong. If he and Mr Hirst's London dealer, Jay Jopling, founder of the White Cube gallery, should choose to turn against Mr Hirst, lot after lot may fail to reach the prices that his work has come to command.

Mr Hirst is, of course, not the first artist to give his dealers the finger. Picasso did it nearly a century ago. “Le marchand—voilà l'ennemi,” Picasso said of Léonce Rosenberg in 1918 as the first world war was coming to an end. Mr Hirst credits the man he calls his manager, Frank Dunphy, a sprightly 70-year-old accountant, for dreaming up this sale. “Frank has my best interests at heart. Dealers say they do, but they don't.”

Although Mr Hirst and Mr Dunphy had been working on this auction for 18 months, remarkably nothing leaked out before they were ready. By May the time had come to inform the dealers of their plans. Mr Hirst called his old friend Mr Jopling, while Mr Dunphy called Mr Gagosian. “It sounds like bad business to me,” he says Mr Gagosian told him. “It'll be confusing to collectors. It's a bad move.”

By July, when the formal announcement was made, both dealers were ready to put a brave face on the proceedings. “As Damien's long-term gallery,” Mr Gagosian said through a spokesman, “we've come to expect the unexpected. He can certainly count on us to be in the room with paddle in hand.” Mr Jopling chose to refer to Mr Hirst's much-publicised £50m diamond skull that was unveiled last year, but failed to sell as hoped: “8,601 flawless diamonds notwithstanding, ours has never been a traditional marriage and I look forward to many more adventures to come.”

Sotheby's motives are easy to understand. In recent years both the leading auction houses have aggressively turned their businesses into global operations, chasing new wealth in Russia, China and the Middle East, expanding their services to include “art advice”, finance, shipping and insurance, and moving into the primary market that has traditionally been the dealers' turf. Nowhere is this more visible than in contemporary art.

Primary colours

The past 25 years have seen more than 100 major new museums built around the world, each intent on acquiring, on average, 2,000 pieces, says Don Thomson, author of “The $12m Stuffed Shark”, a new book about the economics of contemporary art. With fewer Old Masters or Impressionist paintings coming on to the market, many of these institutions have focused on buying dramatic contemporary work to make their mark. The number of wealthy collectors has also multiplied 20 times, many of them for the same reasons focusing on the only sector where supply is expanding: contemporary art. Everyone who can afford it wants an iconic work, which explains the constantly rising records.

For the auction houses, primary dealing is an obvious way of expanding. In 2006 Sotheby's paid $56.5m for Noortman Master Paintings, a leading dealer in Old Masters. Less than a year later, Christie's bought Haunch of Venison, another firm with a high profile, which had been founded by two former directors of Christie's contemporary-art department. Noortman gives Sotheby's an entry into the Maastricht art fair, the pre-eminent dealers' fest; through Haunch of Venison Christie's French owner, François Pinault, has become the biggest art trader in the market.

In addition, both auction houses have put considerable effort into becoming brokers, putting together buyers and sellers. Many pieces that fail to achieve their reserve price at auction are quietly sold afterwards in “private-treaty” deals negotiated by the auction houses. In 2007, Christie's chalked up $542m- and Sotheby's $730m-worth of private after-auction sales, ranking the auction houses among the biggest primary dealers in the world.

Sotheby's has always kept very close to Mr Hirst. It cemented the relationship in 2004 when it auctioned the contents of Pharmacy, a once-trendy London restaurant. Mr Hirst had a very small share in the venture, but he provided the paintings that hung on its walls and designed all its fixtures. When the Hartford Group, Pharmacy's then owner, told Mr Dunphy it was preparing to close the restaurant and throw the fittings into a skip, he drove round in a truck and bought everything he could find—the ceiling, doors, windows, flooring, lights, chairs, tables, cutlery, glasses, even the matchbooks—for £50,000.

Sotheby's Pharmacy auction, at which Mr Barker also presided, was expected to bring in £3m; instead it made more than £11m. (A little-known episode in the Pharmacy story that stuck in Mr Dunphy's mind would inspire much of the thinking behind the upcoming Hirst sale. One of his accounting clients cashed in a lacklustre Equitable Life insurance policy in order to buy some Pharmacy eggcups; she failed to get them, but Mr Dunphy never forgot the idea of holding a sale in which there would be “something for everyone”.)

Damien Hirst

Spot the fabricator

As the art market soared, Mr Dunphy, Mr Hirst and Sotheby's Mr Barker kept returning to the idea of repeating the Pharmacy sale. But the moment never seemed right. Then two things happened. In February 2007 Sotheby's sold the first of a batch of paintings it had bought from one of Mr Hirst's earliest and best-known collectors, Charles Saatchi. The paintings were by Peter Doig, an Edinburgh-born artist now living in Trinidad. Mr Doig is hardly a household name, but collectors fight for the chance to buy a work if it comes up at auction. Mr Doig's “White Canoe” fetched £5.7m, nearly five times the estimate, at that time the highest price ever paid for a living European artist. The buyer was Boris Ivanishvili, a mining magnate from Georgia.

On St Valentine's Day this year Sotheby's held an auction for RED, a third-world charity, in New York. The sale attracted celebrity buyers from all over the world, raising more than $40m in one night. One of the two movers behind it was Mr Hirst. The reason so many world-class artists (among them Howard Hodgkin, Jeff Koons, Willem de Kooning, Jasper Johns and Robert Rauschenberg) had donated work was that three months earlier Mr Hirst had written to each one by hand. No one refused.

Mr Ivanishvili's unexpected purchase of Mr Doig's “White Canoe” proved that new money was finally ready to spend squillions on contemporary art. The success of the charity auction also proved that no contemporary artist had more pulling power than Mr Hirst, whose own work sold for nearly $20m that night. The moment to repeat Pharmacy had come.

If the timing and reasoning behind Sotheby's decision to go ahead are obvious, the reasons Mr Hirst wants to risk his reputation for a one-off fire sale are more subtle. Much of it has to do with his natural impatience, his wish to break rules and break down boundaries. Although he has benefited from the contacts and clout that his dealers provide, he is irked by their habit of making potential new buyers prove themselves by waiting before they are allowed to purchase a work of art. “Dealers are gatekeepers who permit artists' access to serious collectors,” explains Mr Thompson. Auction rooms, by contrast, are more democratic. Anyone with enough money can buy what they want—immediately. They just have to be prepared to make that final bid.

“I want artists in the future to think I'm cool,” says Mr Hirst. “It's like you see this doorway, and you've just got to go through it. My whole career's been like that.” As his British dealer and long-time friend, Mr Jopling, says: “Damien has always been a mould-breaker.” Michael Joo, a New York artist of Korean extraction who participated in one of Mr Hirst's earliest shows and also contributed to the RED auction, says: “This is not vampire-like, life-draining greed; it's another example of Damien maximising things to their fullest.”

Ask Mr Hirst if he would rather paint the “Mona Lisa” and have it hanging in the greatest museum in the world or a postcard of the “Mona Lisa” for every student bedsit, he chooses both. “Because you're getting into people's minds more.” Inspired by Mr Dunphy's client who traded in her Equitable Life policy in hopes of buying eggcups, the forthcoming Sotheby's auction includes Hirsts of every category, led by “The Golden Calf”, estimated at £8m-12m.

Death and fear

Ever since 1988, when he curated his first show and drove his own beaten-up car to pick up Norman Rosenthal, the secretary of the Royal Academy of Arts, to ensure it was seen by the right people, Mr Hirst has produced five basic categories of work. The “natural history” pieces include the sharks in formaldehyde that first caught Mr Saatchi's eye over 20 years ago and made Mr Hirst's name as an explorer of death and fear.

This sale includes two lots of sharks, a calf, a black sheep, a zebra and four skinned cows' heads, as well as a pony dressed up with a plastic narwhal horn to look like a unicorn. There are also examples of the long-running “cabinet series”, of cigarette butts, pills and medical packages (estimated to fetch up to £2m), “spin” paintings (up to £600,000), “spot” paintings of different sizes (£700,000), and cathedral windows of butterfly wings (£900,000). At the bottom of the scale is a small, six-inch-square butterfly estimated to fetch at least £15,000 and the pen and ink drawings that start at £10,000. On one Mr Hirst has written: “Everything he touches turns to gold and it kills him in the end.”

The fact that Mr Hirst—in sharp contrast to Mr Doig, who produces only six or eight paintings a year—has been able to produce enough work to fill 223 lots has to do with the fact that he is no longer an artist, in the normal sense of the word, but the head of a global brand selling instantly recognisable work that is made in factories.

In London Mr Hirst presides over two large industrial units producing the butterfly-wing pictures and his photo-realist paintings. In the Gloucestershire countryside he leases two wartime aircraft hangers for the manufacture of the spot paintings, the spin works and the formaldehyde tanks. He also has a large workshop and an exhibition studio. More than 180 people work for him, creating Damien Hirsts. Two specialists oversee the formaldehyde unit, which on a visit in July contained four dead ponies, a wild boar, an upended cow and, in good “Godfather” style, a horse's head in a plastic bag.

In the workshop three women were talking about the “Hedgehog”, a device attached to a Hoover. It is a small plastic tube with 20 holes cut into it in which are inserted cut-down cigarettes, some ringed with lipstick. Switch on the Hoover and, hey presto, instant cigarette butts for lot 134 (top estimate, £300,000). In another workshop, three fabricators were painting precisely measured round circles at regular intervals on a white background. These are the famed spot paintings that Mr Hirst says were inspired by playing snooker. The fabricators choose which colour each spot is to be, and use ordinary household paint to apply the shades. The butterfly pictures are made by fabricators who are given the dimensions needed, but are otherwise left to themselves to choose the colours and designs they want. Having given his final approval—sometimes, one fabricator says, only by looking at a photograph—Mr Hirst signs and dates the back of the work.

Mr Hirst may differ from other brandmakers calling themselves artists, such as Gianni Versace, only because fashion houses don't sell £8m-12m dresses, but the similarities are there. Great efforts have been made to stretch the Hirst brand to reach (nearly) every pocket. Through a company called Other Criteria, Mr Hirst publishes artists' books. He also makes pyjamas and a line of jeans with Levi's, which echo the diamond-encrusted skull and cost $4,000 a pair. A small shop next door to Sotheby's will start selling Hirst prints shortly after the sale on September 15th. Another, bigger one, is being fitted out at a site behind nearby Oxford Street.

All these activities have made Mr Hirst a wealthy man. His fortune has been estimated at £200m; his last exhibition at White Cube fetched £138m. Thanks to Mr Dunphy, he retains 70%-90% of the galleries' sale prices, rather than the normal 50%. When in London, he lives on a Chelsea houseboat or at Claridge's. He likes to travel by car, drawing in the back of his chauffeur-driven Audi. His art collection, which is owned by a company called Murderme, is extensive and growing. It includes work by other artists as well as his own. In the year to April 2008, Murderme's assets were valued at £119m, up by more than half on the previous year. Mr Hirst owns a home in Devon and another in Mexico. He also has properties in London that he is waiting to develop and a 300-room Georgian Gothic mansion, Toddington Manor, in Gloucestershire, which he wants to turn into a gallery and showing space.

Mr Hirst is as famous for being rich and famous as he is for his art, which may be part of his appeal. Certainly Sotheby's hopes so. The artist and the auction house have made a concerted effort to market the sale on YouTube, making presentations at the Oberoi hotel in New Delhi, in Kiev, the Hamptons and Aspen, Colorado. The fact that the record price for a Hirst at auction, £9.65m for a medicine cupboard called “Lullaby Spring”, was paid last year by Sheikha al-Mayassa al-Thani, the 25-year-old daughter of the ruler of Qatar, showed Sotheby's this was the right route to take. All this week select British and foreign collectors have been given private viewings of the sale and entertained to lunch in Sotheby's smart new dining rooms.

The auction house is keen to head off any notion that the sale might not succeed. A report last month that White Cube was sitting on 200 unsold works by Mr Hirst has been stamped on as “not up to date”. The leaked stocklist on which the report was based, the gallery declares, includes “items from Mr Hirst's personal collection that are not for sale, two pieces from the last show that are being kept for museums and at least 30 pieces that have not been made and perhaps never will be.” Similarly, saleroom analyses showing that the number of Hirsts that fail to sell at auction always climbs as recession bites (30% of the pieces in the year after September 11th 2001, and more pieces this year than last) are brushed aside.

On September 5th Sotheby's opened the sale to public view. A week later it threw a party for 1,500 people, serving champagne and foie gras wrapped in gold leaf. On the invitation the dress code was “glamorous”. “Our biggest challenge,” says Mr Barker, “is to match the scale of Damien's ambition.” For that, Sotheby's is killing the fatted calf.