It has not been specified how the pricey 1943 painting, "Le Marin (The Sailor)", was damaged, but it was reportedly an accident that occurred during final preparations on Friday.
An interesting aspect to this incident is the fact that this is the second time one of the owner's - casino magnate Steve Wynn - highly-valued Picasso paintings had been damaged. Two outside conservators have now been consulted and have made recommendations for the successful restoration of the painting.
The self-portrait, named Le Marin (The Sailor) was set to go to the highest bidder at NY auction house Christie's, along with another work by the artist-a 1964 portrait of a woman with a cat named Femme au chat assise dans un fauteuil.
For "Le Marin", Christie's had assured the seller of a minimum price and found a third-party guarantor to bid for the piece at auction.
Christie's did not specify what the nature or cause of the damage to the work was, but assured it has a "very high standard of care" for the objects sold on its premises.
According to Christie's auction house catalogue, "As it would have been clearly understood at that time - the flowers were a come-on, she was actually a prostitute".
In 2006, the billionaire accidentally poked an elbow through Picasso's 1932 "Le Reve", while showing it off to guests in Las Vegas.
Last week Christie's withdrew another Picasso, "Femme au chat assise dans un fauteuil", which is also reported to have been owned by Wynn. It was restored and the hedge fund tycoon Steve Cohen purchased it for $155 million in 2013.