- NEW YORK. "Traditional symbols of stability- New England Chippendale furniture, early weathervanes and primitive portraits- struggled to sell at Christie's and Sotheby's Americana sales."
- NEW YORK. Chinese paintings "sold strong," Hirst "drew no bids" and "value deal" on Richard Prince joke painting at Lehman Brothers auction. "It was the sale of unusual suspects," said Gabriela Palmieri, senior specialist in the contemporary art department.
- LONDON. "Medici "loot" for sale?" The perennial problem of provenance and looting in the antiquities market.
- HONG KONG. "$52m Sotheby's Sale of Traditional Chinese Paintings Hits Market's Sweet Pot." Traditional Chinese art has undoubtedly cemented its place as this season's darling. Contrast with the results of Sotheby's modern Chinese art sale.
- HONG KONG. The sale of an Imperial vase for $32.4m topped the auctions of Chinese art in HK this week proving that "Chinese collectors will pay almost anything for what they like."
Thursday, October 07, 2010
Market News
Below are a few links regarding the art market. The second link covers the Lehman Brothers auction in NYC which I had previously decided not to cover in light of the extensive media coverage it received. However, I have included the link below solely because it may say something about which artists the market is currently craving (Chinese art still oh so hot) or, rather more poignantly, which ones it is not (the "atypical 1993 Damien Hirst cabinet" didn't attract a single bid... but nonetheless sold four days later).
Tuesday, October 05, 2010
BBC interviews Chairman of Christie's International on the art market and the commercialisation of art
Last night, BBC HARDtalk's Sara Montague spoke with Edward Dolman, former CEO and current Chairman of Christie's International, on the state of the art market, the appeal of art as an alternative investment to stocks or bonds and the growing commercialisation of art. At present, a full version of the interview does not appear to be available online but an extract can be found here. Based on my own notes of the interview, this is what Dolman had to say:
On art as an investment: investors are looking for "tangible assets, especially in a period of inflation" but investors must realize that "the value [of an artwork] can go up and down." Acquiring art for investment purposes is "hardly a new phenomenon" though the principal drivers for an acquisition should be whether the buyer "engages" with and is "inspired" by the artwork.
On the top-end of the art market: a very discrete group of people composed of around "100 to 150" investors/collectors with "the East [referring to Russia, the Middle East and China in particular] playing a much bigger role."
On the recession: the top-end of the art market has recovered but other areas are seeing a "slow recovery."Some pre-recession trends have continued: post-war contemporary and Chinese art are "still hot" and at "the very high end." Dolman went on to discuss the "serious competition" faced by Christie's from the new auction houses in Beijing. However, he said the fact that "most great Chinese works are outside China" gives Western auction houses a competitive advantage over their Chinese counterparts.
On the record-breaking Picasso auctioned last May: people at Christie's were "not surprised" it sold for $106.5m given Picasso is widely considered to be "the greatest artist of the twentieth century" and the place the 1932 painting holds within the artist's oeuvre. Picasso, Dolman said, is "as close to a blue chip investment as you can make in the art market today."
On Christie's as a taste-maker: the auction house is not responsible for "creating tastes" but rather "responds to what clients are wanting to collect" and to demand for certain "categories of styles."
On the tastes that drive the art market today: modernism, "objects that remind them [buyers] of their own time." For example, Warhol "has a huge appeal because he mirrors the society a lot of collectors lived in." Dolman also noted the emergence and development of a "global taste" with Hirst and Koons collectors in Asia becoming some of the most imporant for these artists.
On Christie's' new CEO as a symbol of the commercialisation of art (see here for background): Christie's "is a business after all," a global one with shareholders "who expect returns." The auction house will benefit from the "fresh eyes of an outsider" and the former CEO (who had been at Christie's for 15 years prior to his appointment as CEO in 1999) said the fact that Murphy had no prior experience in the art world was of no importance because people at Christie's "already have a lot of the knowledge."
On any misgivings about the commercialisation of the art world: None. "Society's recognition of the art world is fundamental." The fact that it's "seen as having such great importance explains the value assigned to art."
On Jerry Saltz's view that money corrupts the creative process: such a critique represents "a denial of everything that's happened in the last one hundred years;" patrons are "historically behind great art" and "money and art [have been] linked for generations and generations" (Dolman makes a reference to the Medici). It is "unwise to disconnect money from the livelihood of the artist and his ability to create" and art's "[monetary] value has allowed it to be preserved."
On art as an investment: investors are looking for "tangible assets, especially in a period of inflation" but investors must realize that "the value [of an artwork] can go up and down." Acquiring art for investment purposes is "hardly a new phenomenon" though the principal drivers for an acquisition should be whether the buyer "engages" with and is "inspired" by the artwork.
On the top-end of the art market: a very discrete group of people composed of around "100 to 150" investors/collectors with "the East [referring to Russia, the Middle East and China in particular] playing a much bigger role."
On the recession: the top-end of the art market has recovered but other areas are seeing a "slow recovery."Some pre-recession trends have continued: post-war contemporary and Chinese art are "still hot" and at "the very high end." Dolman went on to discuss the "serious competition" faced by Christie's from the new auction houses in Beijing. However, he said the fact that "most great Chinese works are outside China" gives Western auction houses a competitive advantage over their Chinese counterparts.
On the record-breaking Picasso auctioned last May: people at Christie's were "not surprised" it sold for $106.5m given Picasso is widely considered to be "the greatest artist of the twentieth century" and the place the 1932 painting holds within the artist's oeuvre. Picasso, Dolman said, is "as close to a blue chip investment as you can make in the art market today."
On Christie's as a taste-maker: the auction house is not responsible for "creating tastes" but rather "responds to what clients are wanting to collect" and to demand for certain "categories of styles."
On the tastes that drive the art market today: modernism, "objects that remind them [buyers] of their own time." For example, Warhol "has a huge appeal because he mirrors the society a lot of collectors lived in." Dolman also noted the emergence and development of a "global taste" with Hirst and Koons collectors in Asia becoming some of the most imporant for these artists.
On Christie's' new CEO as a symbol of the commercialisation of art (see here for background): Christie's "is a business after all," a global one with shareholders "who expect returns." The auction house will benefit from the "fresh eyes of an outsider" and the former CEO (who had been at Christie's for 15 years prior to his appointment as CEO in 1999) said the fact that Murphy had no prior experience in the art world was of no importance because people at Christie's "already have a lot of the knowledge."
On any misgivings about the commercialisation of the art world: None. "Society's recognition of the art world is fundamental." The fact that it's "seen as having such great importance explains the value assigned to art."
On Jerry Saltz's view that money corrupts the creative process: such a critique represents "a denial of everything that's happened in the last one hundred years;" patrons are "historically behind great art" and "money and art [have been] linked for generations and generations" (Dolman makes a reference to the Medici). It is "unwise to disconnect money from the livelihood of the artist and his ability to create" and art's "[monetary] value has allowed it to be preserved."
NY State's version of UPMIFA is "more donor-favorable than perhaps any in the nation"
The New York State statute (the "Act") enacting NY's version of the Uniform Prudent Management of Institutional Funds Act ("UPMIFA") will undoubtedly impact the way not-for-profit institutions manage their endowment funds. The Act makes significant changes to the decades-old New York Not-For-Profit Corporation Law, providing, among other things, that institutions such as museums and universities are no longer required to seek a court order prior to invading the principal of an endowment fund when it is "underwater" (previously there was a bright line rule against doing so without first obtaining court approval). This gives trustees increased flexibility to manage endowment funds though governing boards are "still required to balance historic market performance and the need for current income against inflation, preservation of capital, and a number of other factors." The adoption of the Act also requires that major gifts be given "more attention than in the past and some charities will need to revist their investment strategies for these gifts."
Although not-for-profit institutions generally fall outside the scope of this blog, I nevertheless decided to cover this piece of legislation because several commentators have expresssed concern about how the Act will affect charitable donations, an issue pertinent to many art collectors in New York and elsewhere. Lee Rosenbaum, for example, has said that the new law will encourage "disregard for donor intent." However, according to Nixon Peabody, the Act is "more donor-favorable than perhaps any in the nation" i.e. DC and the 47 other states that have already enacted their own versions of UPMIFA. The Act contains detailed notice requirements under which donors are given special notice prior to "court-ordered and other modifications of restrictions" and charities will need to obtain donor consent to release or modify "certain restrictions in a gift instrument." For more information, click here to read Simpson Thacher's thorough analysis of the Act.
Although not-for-profit institutions generally fall outside the scope of this blog, I nevertheless decided to cover this piece of legislation because several commentators have expresssed concern about how the Act will affect charitable donations, an issue pertinent to many art collectors in New York and elsewhere. Lee Rosenbaum, for example, has said that the new law will encourage "disregard for donor intent." However, according to Nixon Peabody, the Act is "more donor-favorable than perhaps any in the nation" i.e. DC and the 47 other states that have already enacted their own versions of UPMIFA. The Act contains detailed notice requirements under which donors are given special notice prior to "court-ordered and other modifications of restrictions" and charities will need to obtain donor consent to release or modify "certain restrictions in a gift instrument." For more information, click here to read Simpson Thacher's thorough analysis of the Act.
Sunday, October 03, 2010
Title insurance "still not broadly accepted"
A New York Times article this weekend on avoiding "legal pitfalls when buying art" (the usual suspects: title and authority to sell an artwork, whether it is subject to I.R.S. liens and/or security interests for unpaid loans and the need for contractual protections) interestingly mentions the market's persistently lukewarm reaction to title insurance. Although hedge funds have shown some interest in purchasing coverage, high-net worth individuals have generally opted not to get insurance. The reason for this seems to be that insurance is not inexpensive (1-5% of the value of the work) and a one-time premium is required to be paid upfront as a lump-sum rather than in installments. Furthermore, coverage is usually limited to title defects and excludes otherwise fraudulent sales.
Donn Zaretsky once referred to "the fundamental weirdness of art title insurance" (insurance traditionally covers future not past events) and the unusual disparity of information between the insured and the insurer. Though I appreciate the legitimate concern regarding the insured's possible exploitation of the insurer, I personally don't think the nature of art title insurance is a major factor accounting for its relative lack of success. In any case, one could interpret the risks covered by title insurance as being future events since breaks in a chain of title technically only become problematic if and when claims are brought in the future against a new owner (and even then, statutes of limitation often bar claims though the bringing of a claim would pose a problem in itself if the buyer wished to resell).
Donn Zaretsky once referred to "the fundamental weirdness of art title insurance" (insurance traditionally covers future not past events) and the unusual disparity of information between the insured and the insurer. Though I appreciate the legitimate concern regarding the insured's possible exploitation of the insurer, I personally don't think the nature of art title insurance is a major factor accounting for its relative lack of success. In any case, one could interpret the risks covered by title insurance as being future events since breaks in a chain of title technically only become problematic if and when claims are brought in the future against a new owner (and even then, statutes of limitation often bar claims though the bringing of a claim would pose a problem in itself if the buyer wished to resell).
The fate of a fake
If you want to know what happens to "fakes" when they're recovered by the FBI or the U.S. Postal Service- the two federal law enforcement agencies that handle most cross-border counterfeit art frauds- click here.
The distortions that result from forgeries being traded in the market are twofold: (i) the historical record is distorted both directly and indirectly by potentially leading to the rejection of the most unusual (and often most informative) artworks for fear of inauthenticity and (ii) the market's price allocation mechanism is distorted by artificially inflating the supply of works by a given artist. These distortions combined with the fact that fakes are notorious for making their way back into the market make it pretty clear that what federal and state law enforcement agencies should do with a recovered fake is "shred it, incinerate it, [or] stamp it so that no one will be fooled again," as Catherine Begley, a former special agent in the New York office of the FBI, said. However, as the article rightly points out, this is not always possible as a result of judicial control over the destruction of counterfeit property (a court order is required) and the overlap between stolen works and fakes (the law generally requires that a stolen artwork, even if fake, be returned to its righful owner).
The distortions that result from forgeries being traded in the market are twofold: (i) the historical record is distorted both directly and indirectly by potentially leading to the rejection of the most unusual (and often most informative) artworks for fear of inauthenticity and (ii) the market's price allocation mechanism is distorted by artificially inflating the supply of works by a given artist. These distortions combined with the fact that fakes are notorious for making their way back into the market make it pretty clear that what federal and state law enforcement agencies should do with a recovered fake is "shred it, incinerate it, [or] stamp it so that no one will be fooled again," as Catherine Begley, a former special agent in the New York office of the FBI, said. However, as the article rightly points out, this is not always possible as a result of judicial control over the destruction of counterfeit property (a court order is required) and the overlap between stolen works and fakes (the law generally requires that a stolen artwork, even if fake, be returned to its righful owner).
LINKS
PARIS/ LOS ANGELES. Below are a number of links drawing attention to the growing importance of the contemporary art markets in Paris and LA which highlight how the competition between New York and London is slowly being replaced by an increasingly globalised art market (Asia, and Hong Kong in particular, being the other emerging hot spot).
- Sotheby's contemporary art sales in June of this year made "a total of €13.8m, flying past the €7.3-10m estimate." Six months earlier, Sotheby's impressionist and modern art sales had also exceeded high estimates by generating €10.8m.
- Larry Gagosian's ninth gallery will open later this month on the Right Bank with shows of Cy Twombly and Prouvé.
- "I want Paris to be the capital of the art market," says one of France's leading antique dealers.
- "Endowment funds flourish in France."
- Dominique Levy of L&M Arts says they decided to expand the New York-based gallery west to LA rather than to London or Berlin because LA has “a creative energy comparable to what happened in the ‘50s in New York.” See also Artnet's coverage of the gallery's LA opening alongside an account of LACMA's new Renzo Piano pavilion.
- NY Armory Show operator, Merchandise Mart, plans to launch new LA art fair in late 2011.
- MOCA reached deep into the New York art market to find its newest director- Jeffrey Deitch- though not without controversy. Conflicts of interest dictated that Deitch at least divest himself of his commercial commitments (notably the two Lower Manhattan galleries housing Deitch Projects, critically acclaimed for broadening aesthetic horizons) leaving a not insignificant dent in the New York market.
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