March 30, 2008
As contemporary art fetches record prices, artists, dealers and auction houses are quietly tearing each other apart in their fight to control the booming £20 billion business. But now that recession clouds are gathering, is the market heading for a nasty fall?
The Jeff Koons was faltering at £630,000. Simon de Pury, standing at the Phillips de Pury podium and confronting seated ranks of dealers and collectors, was suffused with mock agony. Dressed in a tailored Italian suit, the auctioneer was an expressionist silhouette, his arms out-thrust, fingers stretched, coaxing the music of bidding from the air. A young woman, one of 27 well-groomed individuals sitting on the telephone bank, made a tiny gesture.
“Just in time!” de Pury said breathily. “Six hundred and forty against you, Michael!”
Michael McGinnis, head of contemporary, spoke into his phone. Finally the Koons went for £900,000.
Simon de Pury has been running Phillips de Pury since the 2001 takeover of the venerable, medium-sized London auction house. The house now acts like a feisty pup darting around the grizzled mastiffs, Sotheby’s and Christie’s. This sale was in Phillips de Pury’s new London building, a former post office between Victoria station and Eaton Square.
Immediately behind de Pury, a Damien Hirst “Spin” painting exploded like a round window, giving the auction room the appearance of a chapel. Other trophies hanging in plain view included a “Shadow” painting by Andy Warhol and a “Nurse” canvas by Richard Prince, and a further Koons, a glass sculpture in which the artist is penetrating his former wife, the porn star La Cicciolina, was beside the podium. The artist’s lilac glass buttocks were pointed, doubtless unintentionally, at the art press, who were lined along the left-hand wall.
The contemporary auction at Sotheby’s the night before had been the second most successful in that house’s history. But the auction at Phillips de Pury was more up and down. Indeed, the selling of another Hirst, a huge “Spot” canvas, furnished a classic example of the perils and profits of the auction process. This was one of several pieces put up for sale by the Manhattan developer and collector Aby Rosen. Phillips had secured the consignment by offering fat guarantees, as it had done for much else. Just how fat it isn’t telling, but its low estimate on the
“Spot” piece was £1.5m, its high estimate £2.5m, a risky calculation because Rosen had paid £600,000 for the piece a few years before.
But the bidding sailed merrily up to £1.1m. Then came a lull, like the breeze dropping, until de Pury, whose articulation can put one in mind of Peter Sellers as Inspector Clouseau, got things going again. The piece was hammered down to Philippe Ségalot, an art adviser with arena-rock hair, for £1.76m. De Pury later relived the moment the heart of the Hirst bidding seemed to stop. “As the auctioneer you are totally focused, but at the back of your head you think, ‘My God! Why is it halting? What is going on?’ ” he told me. “And then when things continue, and the price continues climbing, you have an inner sigh of relief.” So was this or was it not a success? True, it barely cleared the low estimate. Yet it was an auction record for a Hirst “Spot” painting and the evening was deemed a success. The Richard Prince “Nurse”, sold at the Barbara Gladstone gallery in 2003 for perhaps $60,000, fetched £2,148,500. Sales totalled £21.9m. Clearly, despite the US recession and sub-prime horrors, the art market was still riding high.
Art has become perhaps the biggest legal economy in the world to be almost totally unregulated, so it should come as no surprise that the art world is the scene of a mighty struggle for control. The principal contenders are the auctioneers and the dealers, with a supporting cast of collectors, art advisers, entrepreneurs, curators and an increasingly active group of über-artists.
But it’s not just about the money, huge though that has become. It’s about how the making of art is being affected by its marketing. It’s about the increasingly wide handprint of contemporary art on the whole culture. Tate Modern had 5.2m visitors last year, making it the most popular museum of modern and contemporary art in the world and second only to Blackpool beach as an attraction in the UK.
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In 2000, CNN estimated the value of the global art market at $4 billion a year. It also reported that Christie’s and Sotheby’s controlled 90% of it. Ed Dolman, CEO of Christie’s, pooh-poohs that. He says the Big Two control “about 70% of the market”. And how big is the global art market now? “I would say it’s probably between 20 and 30 billion, the total,” Dolman says breezily. “And that is a complete guess.”
Both auction houses have lengthy histories, and for much of them they have been content to be what Robin Woodhead, Sotheby’s CEO for Europe and Asia, calls “clearing houses”, selling to dealers, while the dealers worked directly with collectors, institutions and living artists.
When things began loosening up, it was Sotheby’s that made the running. Peter Wilson, the longtime boss, had a vision of an international art market. He swallowed up Parke Bernet, a venerable Madison Avenue auction house, in 1964. Christie’s followed some years later; its first auction was in the spring of 1977. “The duopoly works,” says James Stourton, Sotheby’s chairman. “When we bought Parke Bernet, nothing really started happening until Christie’s opened up in New York too.” Then Al Taubman, a Detroit real-estate magnate with a keen retail brain, took over Sotheby’s in 1983 and targeted private collectors directly, squeezing the middlemen, the dealers. Until then auctions had been for the trade, humdrum affairs where few private collectors would deign to lift a paddle. In media-addled Manhattan, night sales at both houses became plum destinations for fancy folk. The world of event art was being born.
In the spring of 1990, Sotheby’s made another tactical move, forming a partnership with William Acquavella, a Manhattan dealer, to acquire the estate of the dealer Pierre Matisse, son of Henri. This giddy $143m deal was to be financed by the auction house while the dealer would, well, deal. Christie’s had been nosing around the estate too.
Many art dealers were livid that the auctioneers were getting yet more closely involved with their retail business. But then came the collapse of the Japanese real-estate boom and the great art bust of 1990. In London and New York, for several years things remained flat as a kipper. They began picking up in the mid-1990s. Then came a curious turn of events.
Dr Bernardo Nadal-Ginard, the first president of the Boston Children’s Heart Foundation, was a cardiologist with a sheaf of published papers to his credit. He and his wife, Dr Vijak Mahdavi, were also avid collectors of work by younger contemporary artists. They were discerning and acquired tough, cutting-edge pieces by, among others, Jeff Koons, Bruce Nauman, Matthew Barney, Rachel Whiteread, Robert Gober and Kiki Smith. And they were generous with their collection, lending out pieces for exhibition.
But the doctor was a thief. The collecting had been in part financed by $6.5m plundered from the foundation. This was like shooting Bambi’s mother and turning the hide into a nifty waistcoat. The foundation offered the collection to Sotheby’s. Tobias Meyer arrived from London to run the contemporary department soon after. “I thought, wow! It’s incredible material. And I saw an opportunity to really shake up the market,” he says.
At the time, Sotheby’s and Christie’s would routinely open their night sales of contemporary art with tried and true pieces of material, such as an early Calder. “The young stuff was always relegated to the end,” Meyer says. He moved the focus onto the freshest, most controversial pieces. Lot 7, for instance, was Kiki Smith’s Pee Body, a crouching female nude in wax, with long coils of yellow glass beads denoting urine.
Installing the show for preview presented challenges. Displaying older work was fairly routine: put it on the wall or on a pedestal. Contemporaries could be more demanding. The Nauman needed to be hung from wires, the Kiki Smith was not exactly pedestal-appropriate, and the Matthew Barney, which used petroleum jelly and silicon gel and needed refrigeration, at Barney’s request, wasn’t installed at all.
“Now, when we have to install a Damien Hirst,” Meyer says, “the Damien Hirst studio actually comes up and installs it. But at the time the dialogue between artists’ studios and auction houses wasn’t as open as it is now. When we had the Jeff Koons Hanging Heart, the Jeff Koons studio was very helpful.”
The Children’s Heart Foundation sale was on the evening of May 6, 1997. Dede Brooks, Sotheby’s queenly CEO, approached Meyer that day. “She told me, ‘Tobias! All this crap is going to BI!’” he says. Meaning Buy In. Fail to sell.
Brooks was far from alone in her misgivings. But actually the sale was a rip-roarer. “It went through the roof,” Meyer says. Smith’s Pee Body, estimated at between $60,000 and $80,000, went for $233,500. The Barney, estimated at between $100,000 and $150,000, fetched $343,500. The entire auction made $15.2m, and only seven works failed to sell.
The message rang clear as a bell: contemporary art was the new playpen for collectors. A welcome message. A worldwide, decade-long fever of museum-building has been vacuuming up work in traditional collecting fields. Putting together a strong impressionist sale was harder and harder, and even great modernism was vanishing from the marketplace. The success of the Children’s Heart Foundation sale created an instant change. “I realised that this was a different market we were talking about,” Meyer says.
Up to and including the Heart Foundation sale, catalogues normally printed artists’ names in the sort of fiddly little typeface used, for instance, for newspaper photo captions. The catalogue for Sotheby’s next contemporary-art sale that November printed the artists’ names in slush-grey letters 1½in high. Meaning important. The art stars of the 1980s and their successors were walking the Earth again. And now they were bigger than before.
Christie’s wasn’t laggardly. Its contemporary sale in London on December 8, 1998, included 130 pieces from the Saatchi Collection, listing them in a hefty spiral-bound catalogue. Ed Dolman is proud of the effort. “But it’s amazing how few of those artists went on to become big names. Damien Hirst, Gonzalez-Torres, Rachel Whiteread were all there. But an awful lot didn’t go anywhere,” he says.
Sotheby’s attempt to penetrate the clandestine world of dealers continued. In 1996, André Emmerich sold his gallery to the auction house and became a senior vice-president there. And in September 1997 it acquired half of Deitch Projects, one of Manhattan’s edgiest galleries. So the auctioneers were again flexing their muscles. But this time the dealers had a weapon. Art fairs.
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At last year’s Art Basel, I was outside in the sun with Samuel Keller, the outgoing director. Shiny-pated, in an open shirt and a chocolate-coloured suit, Keller was speaking about the auctioneers and the dealers. “The art world is an ecosystem,” he said. “It’s not the shark eating up all the fish, because that means they will starve tomorrow. So the galleries are providing the auction houses’ living. Which is the artists who have a career. And only if you have a career and a reputation do you have a secondary market.”
Under Keller, Basel had become the kingpin among fairs, but it was not the earliest. That had been Art Cologne, which was launched in 1967 but which let in middling dealers and indifferent work. It sagged. Ernst Beyeler, the Swiss megadealer and collector who launched Art Basel two years later, saw to it that only the cream of dealers were invited. It was a success from the beginning. Other cities spawned competitive fairs: Paris, Madrid, Berlin. The Chicago Art Fair, America’s first, was launched in 1979. It was a hit, but these were dealers’ fairs. Glamour had touched the auction houses in the 1980s, but the fairs remained as nuts-and-boltsy as any other trade fairs. And they too suffered through the early-1990s doldrums.
In 1994, four Manhattan dealers, Pat Hearn, Colin de Land, Paul Morris and Matthew Marks, came up with a way of gingering up the market by the equivalent of what the rag trade calls a “trunk show”. Avant-garde dealers from around the world were invited to show their wares in rented rooms in New York’s Gramercy Park hotel. Jay Jopling, for instance, brought in the young Tracey Emin. I remember her sitting on the bed, talking and making spidery drawings. There were parties that attracted collectors as well as dealers. “And that made it a little more social,” says Patrick McMullan, Manhattan’s ubiquitous party photographer.
In 1999 the organisers checked out of the Gramercy and transferred to a succession of more spacious venues. It was now The Armory Show, a name borrowed from the exhibition set up in 1913 and best remembered for tossing out the Duchamp urinal. And as Manhattan again sprinkled its media pixie dust, the Armory too became part of the world of event art.
Samuel Keller had been watching. In 2000 Art Basel bought up the Miami Art Fair, a small fair with a corner in Latin American art. Its December 2, 2001 opening was naturally cancelled. But when it opened the following year, it was at once apparent that the Basel fair had acquired a flightier twin.
London was next. Matthew Slotover and Amanda Sharp launched Frieze the following year, naming it after their magazine, which was itself named for the show Damien Hirst put together after leaving Goldsmiths. Frieze, being set in a city where artists were bold-faced names in the tabloids, was soon clobbering the Berlin fair, as the Armory had deflated Chicago.
Fairs are a mixed blessing. “I think art fairs are actually revolting. It’s like going to Florence and seeing 87 churches. It’s just a blur,” the London-based American dealer Kenny Schachter told me. “But you can’t function in the art world without them.” This has not been lost on the auctioneers. In June 2006, Sotheby’s bought a Dutch dealership, Noortman Master Paintings. Robert Noortman was a founder of the Maastricht Art Fair, and a powerful presence within it, so when Sotheby’s asked that its new subsidiary be allowed to continue to do business there, the committee agreed. Christie’s then let it be known that if it wasn’t allowed entrance to the fair, it would go to Maastricht anyway, even if it meant putting up a marquee in the town square. The committee knuckled under.
Maastricht focuses on old masters but will show anything of tiptop quality, including works of contemporary art. For art dealers it is sacred turf. Most were appalled. Rene Gimpel of Gimpel Fils had been at a Hong Kong fair where Christie’s had a stand some years ago. The stated reason for their presence was that clients buying western art might feel unsure of themselves. “So Christie’s were there to reassure them,” he says. “But that, of course, made one feel that one was in the grips of the goodwill of Christie’s. We joked about it.”
The art economy is information-based. A dealer can be successful with just two or three clients and guards them jealously. A Manhattan dealer, a friend, quivered when I ran into him in an airport bar. He was with such clients. Dealers worry that the auctioneers frequent fairs to fatten up their dossiers. “But we don’t have booths in the auction houses during their big auction weeks,” Gimpel says. “We need to maintain our separate spheres.”
Then Christie’s bought Haunch of Venison in February 2007. Haunch is a leading London gallery with spaces in Berlin and Zurich. Many other dealers hated this, but kept their feelings off the record – François Pinault, the owner of Christie’s, also being an enormous collector.
The selection committees at art fairs are made up of dealers and, in themselves, constitute one of the new powers in the art world. Not all loathed the Haunch sale. “I don’t know how an art gallery can be owned anyway,” says Gavin Brown, a Manhattan-based British dealer who is on the selection committee of Frieze.
“A contemporary art gallery is its artists. It’s only inventory that can be owned. You can’t make an artist stay somewhere if they don’t want to. If they don’t care, it doesn’t really matter, does it?”
Haunch of Venison failed to make the cut at either Frieze or the Armory, though. And the Basel twins? “Our regulations are very clear. We have never allowed galleries that are owned by auction houses to participate. There is a clear conflict of interest,” Samuel Keller says. “André Emmerich was almost one of the founding members of Art Basel. He was a longtime committee member. And when his gallery was bought, immediately it was not allowed in the fair. We were very strict. We would not allow Jeffrey Deitch as long as he was with Sotheby’s. Art Basel has always had a very clear line. Nothing has changed. Nothing changes for us.”
Things are changing elsewhere, though. Sotheby’s is now working directly with artists. They commissioned artists to create sculpture for Beyond Limits, a selling exhibition of sculpture at Chatsworth last autumn.
“I participated in that exhibition with a piece by Zaha Hadid,” says the dealer Kenny Schachter. “Sotheby’s did one of the most beautiful catalogues I have ever seen.”
The cover showed a marble sculpture of Kate Moss-as-contortionist by Marc Quinn. “It was a piece that I was making already that I consigned to them for that show,” Quinn says.
Clearly the art world is in a state of advanced meltdown, with the players – dealers, collectors, auctioneers, curators and, yes, artists – morphing into each other as in the final passage of Orwell’s Animal Farm. “I’m one of the contrarians. I think that the more they blur things, the more interesting the prospects are to come up with something more innovative,” Schachter says. “But sometimes it gets a little precarious. In terms of conflict-of-interest situations, it gets pretty close to the edge of the envelope.”
Christie’s opened an art gallery, King Street Galleries, at its London building 18 months ago. Could the auction house see itself managing living artists? “We handle living artists’ work through our subsidiary,” Ed Dolman says. “What Sotheby’s have done at Chatsworth we would do at Haunch of Venison.”
Sotheby’s worked directly with Damien Hirst over the auction of material from his defunct restaurant, Pharmacy. Could Robin Woodhead see other such large-scale collaborations with über-artists. What about Takashi Murakami?
“We’re in a changing world,” Woodhead says. “We’re in a new world which requires substantial capital backing. It is a much more global business than it used to be, and the costs of doing that business are much greater. And the auction houses will take advantage of that because of our international distribution networks.
“If you look at the work Pierre Bergé did with Yves Saint Laurent, it’s interesting. Yves Saint Laurent had his own line, his own fashion house and his own financial genius behind him. Then you think of Damien Hirst and his business.”
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The reaction of artists to the increasingly naked whirring of the machinery of the industry for which they supply the essential product is as varied as one would expect. When the 1980s overheated, certain art stars took to consigning their works directly to the auction house from their studio, cutting out their dealers.
This is happening again. “I was having a conversation with an artist last night. And he said, ‘Well, I’m thinking it would be quite interesting to consign a work direct to auction. Wouldn’t it?’” says Nicholas Logsdail of London’s Lisson gallery. “I said, ‘You want to do that? Then you had better leave the gallery. Because otherwise there’s no basis on which the services that you enjoy and the career-building that the gallery has given you will continue.’”
Another effect of the boom has been the shrinkage in the time between a work leaving the studio and popping up at auction. Several pieces at the Heart Foundation auction had been acquired from dealers in 1992 – including the Barney and the Kiki Smith – but a five-year gap was considered okay. “Even five years is not a long time. Because work has to ripen,” says Barbara Gladstone, the Manhattan dealer who represents both Barney and Richard Prince. “But now you see things from 2006. It’s dangerous. Artists who are represented by responsible galleries are placed very carefully when they are young and popular. And obviously not everybody can get a work.
“But if a collector feels that he can’t get the work from the primary gallery, he might feel it’s worth it to pay well over the going price at auction. Just to have it. And of course the artist doesn’t participate in the auction price. So one can understand that an artist would resent this.”
Cecily Brown, a Manhattan-based British artist, has had a fine auction career, but loathes the process. “I was in auctions as early as 2001,” she says. “I had only been showing for two years. Thank God, it didn’t go through the roof, so I didn’t get a lot of attention for being one of the crazy, crazy, crazy people. But of course I was very upset. And I did what a lot of artists say they do. Once somebody puts something at auction, the gallery, Gagosian, knows I don’t want that person to be able to buy my work any more.
“For a younger artist, for a living artist, it involves a total loss of control. You’ve worked out your prices with your dealer. You have done this very carefully. You feel you’re controlling it. And then once things start going mad at auction, you just feel there’s nothing you can do about it.”
So auctions affect the careers of living artists? “I find them really insidious, an unhealthy and rather a gross time in the art world.”
Gavin Turk, a founding YBA, was less heated. “I’m in two minds,” he said. “It’s a very convenient way of getting the market going – moving art and money around. And I think it’s impossible to separate art from the financial element. It’s not really something that artists should dwell upon too much. I think it’s important as an artist that you show your work to the maximum capability you’re able to. And if that involves a certain amount of hype or financial credibility, then so be it.”
Turk also pointed out that the auction concept is now thoroughly embedded in the culture at large. “Everybody talks about eBaying this and eBaying that, which is essentially the same sort of thing. Everybody’s up to speed on it. Somehow there’s a collector for everything now.”
Could Turk imagine working directly with an auction house? “I don’t know.” He paused and added: “I could imagine it. I haven’t done it. But I could imagine it.”
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There were pieces by both Gavin Turk and Cecily Brown at the Phillips de Pury sale.
Both sold, the Brown canvas for over £600,000.
I went on to a party given by the London collector and dealer Ivor Braka. The mood at the party was exuberant, but the signals were mixed. As we had gone into the February auctions, it seemed ever likelier that America was sliding into recession, and things seemed none too rosy in the UK either.
There are two conventional wisdoms about the art market. One is that seven “up” years are followed by three “down” years. Another is that when the broader economy – real estate, in particular – gets into trouble, the art market will go flat between six months and two years later. So it was with the art bust of 1990. Can things be so different now?
Some believe so. “History is not always an indication of what is going to happen in the future,” says Robin Woodhead of Sotheby’s.
Ed Dolman of Christie’s speaks of “30 or 40 individuals” who have come into the market from Russia, Asia, the Middle East. He predicts that in the future, 30-35% of the market will be Asian. And some feel that these cultures have a traditional faith in alternative investments that will also cushion the art economy.
“If you listen to American buyers, they will tell you that they are priced out of the market,” Tobias Meyer says. “They don’t want to buy things at these prices. They will say, ‘Hey! I bought my Rothko in 1980. I paid $8m. I don’t want to spend $60m!’ But we have huge buyers of contemporary art in Asia. Enormous buyers of contemporary art in Russia. All over the world, new buyers are entering the market at any moment. So it’s become global. And that’s very hard to predict. But I know that the great works of this century and the 20th century will be more and more expensive. That’s an unstoppable trend. When we look at the accumulation of capital all over the world, and the decreasing number of great works of art, there’s your equation!”
There are, as always, changes. “There’s a winnowing-out of all these fairs. And there’ll be a handful left. And the ones that really matter will matter even more so,” says Kenny Schachter.
Haunch of Venison will be opening in New York in the autumn in the handsome 20th-floor space where Christie’s put on a museum-quality Donald Judd exhibition in 2006. The gallery will be run by the former Christie’s private-sales team.
At the party Braka was joyously looking ahead to the next round of auctions in New York. “Well, I mean, it’s roll on May. Isn’t it?” he said. “Things are getting better and better.”
A guest, François Chantala, who works with the London dealer Thomas Dane, was less sanguine: “It’s like the Titanic. The orchestra keeps on playing. We are in denial,” he said.
James Stourton remembers that when he joined Sotheby’s, just one staffer, Mr Wilder from the prints department, had been there for the crash of 1929. They asked what it had been like. “Mr Wilder said it was like the man bitten by a tarantula,” Stourton says. “He was in his nineties. We thought he’d lost it. We said, ‘Yes! Yes! But about 1929?’
“He said, ‘Exactly! A spasm of violent activity. Followed by sudden death.’”
Well, the market will not be wholly tarantulaesque. Seasoned art-worlders have internalised another wisdom. Just as what goes up must come down, so what comes down – the best of it anyway – must surely come up again.
