Confused about modern art? Intimidated by the beautiful young women sitting at the front desks of the all-white contemporary art galleries from New York to London? (See Peter Mayes’ mystery “Chasing Cezanne” for a hilarious account of the art world).
Don Thompson, who teaches marketing and economics in Toronto, London and Boston offers reassurance based on a year of research into the art market which he has turned into a book, “The $12 million stuffed Shark,” a reference to a Damien Hirst shark resold by London adman Charles Saatchi to Greenwich (CT) hedgie Steve Cohen. This is an excellent combination of smart reporting with questions informed by a background in business and economics. Tired of trying to reach through long-winded tomes on the aesthetics of contemporary art? Here’s a welcome and information respite.
You can’t understand, or plain can’t stand, most of what you see? He finds that experts in the field of contemporary art think 85 percent of it is crap – they just argue over which 85 percent.
Whew. I was wondering if I was alone in skipping gallery after gallery in the big art warehouses in New York’s Chelsea. After a quick glance through the doors of most, I move on without ever entering. What’s changed in the last decade is the location – I used to do this in Soho with a pretty visually sophisticated friend. I mean, she got weekly manicures and everything. We kept wondering what was wrong.
That intimidating receptionist? Apt to be an art grad whose father is a collector and got her the job. And the gallery? Four out of five contemporary art galleries close within five years, and 10 percent of more established galleries also go out of business. Only one artist out of 200 will ever get their work into the auctions at Christie’s or Sotheby’s. Thompson says London and New York each have 40,000 artists. Of those, 25 are superstars and about 300 are making a decent living. Whew…how do art schools ever persuade student to spend a couple of years and pay tuition to do it?
That puts a lot of the art world in perspective.
Still, the market is active. More than 100 museums have opened in the last 25 years, and each will want to acquire at least 2,000 works of art. Then again, with 40,000 artists in just two art capitals (And where is Paris in this equation? Good question. No mention of the Chinese villages which churn out copies or the growing leagues of accomplished Chinese painters – maybe in the sequel.)
Thompson shows how the art world overlaps with finance, although any reader of artinfo.com will know at least some of this. Steve Cohen, of hedge fund fame, not only buys a lot of art, he provides auction house with insurance – a hedge – against the guarantees they offer major sellers. (see p. 137) Thompson wonders if traders like Cohen will try to time the art market – an intriguing point.
Despite some occasional attempts to regulate the market (auction houses do now have to say when a piece doesn’t sell) the auctions and dealerships pretty much run their own world as regulators fear that stiffer laws will send the business abroad. (For example, the Maastricht fair is a major event, but most of the deals are actually concluded afterwards, in countries that impose lighter tax burdens than the Netherlands.)
“The auction market, as one commentator described it, is a place where consenting adults can indulge in irrational private acts.”
Contemporary art is, or was, a fast-growing market. In one auction, Thompson notes, a Francis Bacon painting at £5.5 million would have paid for two Monets, one Pissarro and a Cezanne auctioned the night before. Meanwhile, in an effort to beat the two top houses, Phillips de Pury has focused on contemporary art and sold more 21st century art that the other two houses combined.
Think these financiers who buy art are so smart? Thompson says that a Jeff Koons piece which brought $4 million at Sotheby’s in November 2006 could have been picked up from a dealer a few blocks away for $2.25 million.
The art market is in furious flux, with art fairs one of the weapons that dealers use against the auction houses. “In 2008 there were 2005 relatively major art fairs scheduled around the world, compared to 55 in 2001.” He has a great description of the way fairs work, with best buyers allowed in early. On opening night half the important work will sell in the first 30 minutes, and half of that in the first 15. Art Basel Miami Beach has become one of the biggest fairs in the world in just a few years, and it is sponsored by UBS. Thompson notes that 5,000 of the wealthiest people in America winter in Florida – which might account for some of its success. (See http://www.artinfo.com for coverage – I wrote about the photography and design satellite shows on artinfo two years ago and had a great time at the fair.) One result of the busy schedule is that artists don’t have time to be original – they have to churn out new work for their galleries and it can be repetitive.
He wonders whether auction houses will replace the dealers, since they can offer higher prices and lower commissions.
Does art make sense as an investment? No. “Eighty percent of the art bought from local dealers and local art fairs will never resell for as much as the original purchase price.”
“In the overwhelming majors of cases, art is neither a good investment nor an efficient investment vehicle.”
Fewer than half the modern and contemporary artists in a Christie’s or Sotheby’s auction catalogue 25 years ago are still offered at any major auction, says Thompson.
The book runs out of steam near the end. Thompson places Thomas Hoving at MOMA – he was at the Met, and he doesn’t probe the economics of museums in much depth. Still, he has interesting anecdotes. The Neue Gallerie in New York went from 800 visitors a day to 6,000 after Ron Lauder paid a reported $135 million for a Klimt painting.
While I can’t claim comprehensive knowledge of art books published in the last year, I would hazard a guess that this is one of the clearer explanations of what goes on in the world of studios, galleries and museums. Artinfo ran an interesting interview with Thompson on his predictions for the art market that is pretty interesting.