Art Market

I spent several days in September–and even in late August–reporting an article that appeared as the cover of The New York Times‘s Fine Arts & Exhibitions section, which is officially in the Sunday, Nov. 1 paper. It’s called Anatomy of an Auction, and it has been online already since mid-week last week.

The article should clear up any misconceptions that you may have about guarantees, and it also explains how the auction house get consignments (sometimes “to order”) and then work their clients to get them to buy what’s on offer. Many people think this is nefarious–I don’t think it’s any different from what art dealers do–or, for that matter, what many other businesses do.

That’s Jussi Pylkannen, Christie’s star auctioneer and global president, at left.

I had many “outtakes” from my reporting about the mechanics of an auction, a few of which I will post here now. I won’t be in the New York City to watch the big sales. I’m traveling, more about which I will tell you when I return.

• Many collectors, priced out of the market or uninterested in what on the block at times. still attend–like Martin Margulies, whom I quote in the story. They go to network, and then, as he said: “I leave after lot 30. Then I see the prices the next day. I don’t need to stay and sit there through something so boring in a room that gets hot. I like to see some pieces because something is in my collection. But I’m not a seller; I don’t sell very often. After 30 lots, you go to dinner.
• Where to sit, if you go, is very much a matter of personal taste. “I like to sit in the middle back,” said dealer Robert Mnuchin. “Not too close so I don’t get a sense of what is going on, but not too far back where I feel I’m out of it.” Others, like Margulies, do like to sit in the front row. If there, seats on the far aisle are often preferred, because not only can you leave without disturbing anyone, you can also turn around easily to see who’s bidding.
• Some buyer, or dealers like Bill Acquavella, like to sit in the skyboxes, but mostly they go to sellers. “You don’t feel the room” up there, said one art advisor. But another advisor I spoke with does like the skyboxes: “You have to behave yourself on the floor but in a skybox, you can party with friends.”  And, in fact, both Christie’s and Sotheby’s will serve you wine, cheese, or pretty much what you order.
• The skyboxes are quite different at the two auctioneers: Christie’s are more like living rooms, with a couch, table, etc.–you have to go to the windows to watch. At Sotheby’s, they line up seats along the windows in a more formal way and it seemed that’s where the onlookers sit all through the auction.
• Guarantees don’t bother experienced collectors, as far as they would tell me. And Asians seem to be reassured by them–more confident in bidding on guaranteed lots.
• Speaking of Asians, Sotheby’s Asia chief Patti Wong may be the only one at Sotheby’s relaxing during the afternoon of an evening sale, because her clients are all asleep. She goes shopping, and then–when the auction starts–she calls and often wakes her clients. The calls go out to them about six lots before the one they want to bid on.
• As Wong put it: “I call them ten minutes before the lot is up, and we talk about the vibe in the room. So they get an idea [of the dynamics]. It’s a quiet evening or this picture will do very well. So they know what’s coming up. I try to keep calm and be factual, but discuss and remind them why they should be bidding for the picture. As we talked about it.” When they hesitate, she asks  “ ‘Shall we go one more?’ You always want the piece to go to your bidder.”

There’s so much more, but I shall the other outtakes for another time.

I’ll be back here in mid-November.

When Sotheby’s took to the press release in early September, announcing that it “won” the consignment to sell the estate of Alfred A. Taubman–the auctioneer’s one-time owner–it raised a lot of questions. While Christie’s competed for the consignment, Sotheby’s had to win–not doing so would have cost it a lot of face. But in the end, losing it may have proved to be the prudent thing to do–considering that Sotheby’s provided a universal guarantee of $500 million.

Even then, dealers and other experts I spoke with were skeptical; now that highlights have been shown in Hong Kong and London and that a vast amount (if not all, I’m not clear on that point) is on view in New York, I think the skeptics have a point.

I went to look yesterday and saw little that convinced me the sales will reach $500 million. That means that Sotheby’s will be stuck with a lot of unsold art.

Of course there are some good pieces–to name a few:

• Modigliani’s Portrait de Paulette Jourdain, estimated at $25- to 30 million
• Degas’ Danseuses en blanc, estimated at $18 million to $25 million, plus two other Degas pastels (one good at $15- to $20 million, one less so)
• Two Rothkos, one small and colorful ($20- to $30 million); the other large and more somber ($20- to $30 million)
• Frank Stella’s Delaware Crossing, $8- to $12 million
• A couple Picassos, Giacomettis, a Matisse ($12- to $18 million)
• Heade’s The Great Florida Sunset, $7 to $10 million (above left)
• At least two dozen Schiele works on paper
• A so-so deKooning and Jasper Johns
• Several Burchfields and three (or four?) Homers, all perfectly fine but not great; a beautiful Milton Avery, but then others by him, too

And on and on: and that’s the trouble: can Sotheby’s get top-dollar for all the main lots? To my eyes (and others I chatted with), there are very few masterpieces, no matter what Sotheby’ says. Even so, can it then sell the bulk of the rest? There are many mediocre works and some things I’d categorize as worse than that.

I do not know the high-low estimates for the entire estate–Sotheby’s would only provide the $500 million figure–but I think knowing it will be revealing.

Meantime, I’ve posted some pix below from the exhibition, by (in descending order), Avery, Monet, Thiebaud, Vuillard, Carlsen and, finally, von Max.

 

Well, it turns out, the court agrees with me on at least one case filed by billionaire Ron Perelman about the art market. As I wrote here in October, in a legal match-up between art dealer Larry Gagosian and financier Ronald Perelman, neither is a sympathetic character. But I thought then, and still do, that Perelman’s suit about his purchase of a Cy Twombly painting was probably a frivolous case. Some RCA readers disagreed.

Last week, the New York Supreme Court dismissed a Perelman suit against Gagosian filed in 2012 in which he said he had been tricked into paying an inflated price for a $4 million Jeff Koons sculpture called “Popeye.” That suit, which charged breach of fiduciary duty, breach of the implied covenant of good faith and fair dealing, and fraud, has now been dismissed.

It’s hard to keep score on Perelman’s legal maneuvers. But I cite this dismissal because of what the judge said about the market (I’ve cut the case law references):

The parties operated at arm’s length when they negotiated (e.g. over the price of the $10.5 million painting) …Thus, fiduciary obligations did not exist between them… Moreover, even read liberally, the complaint does not establish that defendants exercised control and dominance over plaintiffs – limited liability companies who, by their own description, frequently purchased, sold, and exchanged works of art as investments….

The amended complaint alleges that defendants misrepresented the value of certain works of art and that the values were supported by market data, when they were not. As to the latter,
the complaint fails to state a cause of action for fraud because plaintiffs did not allege justifiable reliance… As a matter of law, these sophisticated plaintiffs cannot demonstrate reasonable reliance because they conducted no due diligence; for example, they did not ask defendants, “Show us your market data” … As to the claim that defendants misrepresented the value of certain art works, statements about the value of art constitute “nonactionable opinion that provide[s] no basis for a fraud claim” …

That “sophisticated plaintiffs” phrase is what counts. That is why I thought, and think, the new suit is also wrong-headed, unless it was filed for other motives.