Statistics, statistics, and more statistics. Now that it’s snowing again and I am trapped in the house, I have cracked open the revised and expanded edition of Skate’s Art Investment Handbook. This well-informed, astute, efficiently written compendium deserves to be in the library of anyone seriously interested in the art market, investor or not. It has the additional virtue of treating its topic with a healthy dose of skepticism and occasional humor—as could be expected from a Central European author.

The hefty tome turned up in the mail the other day, and, somewhat to my surprise, I actually enjoyed thumbing through it. The work of a team lead by the Russian financier Sergey Skaterschikov, it includes a solid overview of the art and art-services market, along with detailed analyses of the market’s top tier, the 1,000 top-selling works at auction tallied in the so-called Skate’s Top 1000.

The book should delight all cultural enthusiasts who thrill to obscure quantitative trivia. We learn, for example, that:
• Works by 300,000 artists, valued in total at $400 billion, are available to trade at any time on the global art market, resulting in a trading volume of $60 billion per year (with 90 percent of transactions falling under $10,000).
• One million individuals and estates, 50 art funds, and 500 museums buy art regularly.
• The 1,000 most expensive works sold at auction since 1985 were made by 183 artists and are collectively valued at $13.2 billion as of Apr. 30, 2009.
• The world’s museums hold 100 million works of art; 100,000 of these can be expected to come to market annually through deaccessioning.
• Art valuation decreases with size. Read More »

Those living in Europe are sometimes surprised by the shockwaves that private sector economic turmoil creates for Arts Institutions in the US.   If you come from a region where large portions of a Museum’s budget comes from the public purse (in some countries it is all government funded) it can be eye-opening to learn that those well-funded US institutions that out-bid the Europeans at Auction are often largely privately supported.   So an article in this week’s Art Newspaper by our own András Szántó is well-timed.

Private donors remain skittish. Corporate support is hard to find and ever more tightly tethered to marketing priorities. Public funding is jeopardised by imploding budgets and competing needs. Foundations, too, are smarting from losses. Some are rethinking their support for culture altogether. Venerable charities like the Ford and Rockefeller foundations no longer have divisions with “art” in their names. Museum income from tourists, members, publications, shops, rentals and restaurants is stagnant. It has been a perfect storm.

Whilst András is right to highlight the woes of incumbent institutions trying to fit existing plans into shrinking budgets, I wonder if some of this wasn’t inevitable?   The hubris of recent years and the multitude of new small private museums seeded by privately amassed collections has spread curatorial resources rather thin and scattered good works into more buildings.   Maybe we have too many institutions?   András again.

Museums are joining forces more readily on publications and web projects, such as Artbabble, a kind of YouTube for art videos. But while content partnerships are proliferating, museums have stopped well short of the kind of consolidation that reshapes other distressed industries. “There is a pride factor that makes it very difficult to merge,” notes Maxwell Anderson, director of the Indianapolis Museum of Art.

One hears a gentle sigh of relief around the globe, as the financial markets rebound, so this may all soon become academic.   But I wonder…   So what do you think?  A disaster for Art Lovers everywhere?  Or a much needed shake-up amongst our venerable institutions?

So how does it feel where you are? Arriving back in Beijing after 3 months traveling I passed through the requisite temperature checks at the airport (swine flu mania abounds); and so I thought I would do the same for Art markets around the world. I touched base with gallerists, collectors and intermediaries in the US, UK, France and Switzerland. Without wishing to over generalise: the Americans were still mostly doom and gloom; while the response from Europeans was more varied, with some friends reporting good works finding new homes. This is rather at odds with the general Economic environment. I heard more about “green shoots” while traveling in the US than in Europe. But maybe the American collectors had had more money in the game to lose?

So it has been interesting to arrive back in China and talk with friends in Beijing and Shanghai. Unsurprisingly, things are at least a little more positive here. Whilst there has been a general pull back from foreign buyers, young wealthy mainland Chinese buyers seem to be taking up some of the slack. The locals might prefer “decorative” to “difficult” and positive themes rather than negative or political, but they are starting to buy some of the same “big brand” names that the foreigners have made so popular over the last 8 years. And brand names have always been important in China, for all products.

But the foreign buyers haven’t disappeared completely; they are just taking a little more time and doing a little more due diligence. Read More »

Amongst all the excitement about new movements (see Ossian’s piece below) I find it hard to get my head out of the markets.  To wit, there is a nice Konigsberg feature in the NYT Online this weekend about the Mugrabis and their buying styles.  The title is slightly misleading (Is Anybody Buying Art These Days?) as it is entirely about the Mugrabis and mostly about their buying history, but it is an interesting read about one of the more focused market-makers of the last 20 years.  Features of their approach include the somewhat indiscriminate purchasing of their favorite artists (supporting the notion that name matters more than quality, at least in a rising market), and their “addiction” to collecting. “We are addicts. That is what addicts do,” Alberto Mugrabi is quoted as saying. Many collectors would recognise that sentiment.

The addiction of art collectors got me thinking about the broader context of contemporary art-market values.  At various points in the article, there are references to buying when cash was in short supply and to extending a collection even when the collectors were nervous about the market.  Even quite recently, works were sold to free up cash for a possible market-downturn buying.  That could be sensible triage, or an indication of how stretched the Mugrabis might be. Which raises a question about how stretched or indebted collectors are overall.

The current global economic woes are debt based. They have to do with the difficulty of companies or individuals who rely upon borrowing to conduct their business or run their lives.  Operating on debt is not necessarily a bad thing. It can simply reflect the cyclicality of cash flows (people or companies needing to spend before they can sell or earn, and therefore needing to borrow to fund that spend).  However, when lending dries up because of losses in another part of the debt market (high-risk mortgages in the current case), then companies or individuals who rely upon debt to conduct their operations run out of fuel.  The only way to then raise cash is to sell existing stock, if they have any to sell.  But when there is less cash to go around, sellers start to outnumber buyers, and prices plunge.

So here is the question: How stretched are the top collectors of the last five years?  In any part of their lives? Read More »

The future of the Los Angeles Museum of Contemporary Art is being decided as we speak. Two scenarios have been preoccupying the press — a LACMA-MOCA merger or a “bailout” by Eli Broad — and the final outcome may be a mix of the two, or something different. This is LA, a city of white knights and twisting plots. Events don’t always follow the predictable screenplay. (I have long been a fan of a Getty-MOCA combo, but that, apparently, is not in the cards.)

Whatever happens, the art world is watching because MOCA’s problems won’t be the last. Museum finances across the country (and the world) are shaky, and some institutions are stretched to the limit. As Warren Buffett likes to say, “It’s only after the tide goes out that you see who’s swimming naked.” But curiously, while much talk in the boom years centered on Faustian bargains that museums make to survive, it is only now, with the protective cover of philanthropic and endowment revenues suddenly removed, that the truly tough choices must be made.

Here might be the silver lining. In a world where Merrill Lynch can be sold in a day, we have yet to read about a single proactive arts merger in the papers. Cities across the nation are dotted with cultural institutions that cannot pay their way and are going after the same benefactors. But mergers and combinations remain options of last resort. That has to change.

The news from LA may also make future benefactors more cautious about building new infrastructure where institutions already exist. The museum landscape of LA is the ultimate example of the principle of “to each patron his own edifice.” Last but not least, if things get worse, we may yet witness a reassessment of government’s role in the arts, as happened on Wall Street.

What do you see as the larger lessons of Los Angeles?

The Art Newspaper leads today with a piece by Louisa Buck about “Artists  Clawing Back Control From Dealers.” If the title is a bit hyperbolic, the article itself is a measured account of how artists such as Kieth Tyson and Gavin Turk have begun hiring financial advisors and forming their own companies in order to maintain better and perhaps more centralized control over, and so creativity in, the production of their work.   For a long time, galleries served this purpose for their artists, functioning as the business and finance arm of their activities, which often meant that a gallery would front significant amounts of money to realize an artist’s particular vision.   (It was Jeffrey Deitch’s financing of Jeff Koons’ Celebration series of sculptures which nearly bankrupted the gallery and ended in Deitch’s temporary partnership with Sotheby’s.)

The sticking point in the gallery-artist relationship comes, of course, when that production money comes with strings attached; namely in claims to ownership of the work or some percentage of it, or, perhaps more difficult for artists to accept, sometimes a say in the ultimate outcome of the piece.    Such is the case with Emmanuel Perrotin’s new venture, ‘Artists’ Dreams’, which will use an outside pool of investment capital to produce works which will then be exclusively consigned to his gallery for sale.

So it makes sense that artists who have the means to do so might choose some measure of economic autonomy from their galleries when it comes to questions of production.    But “the means to do so,” as we well know, would seem to exclude a large number of working artists, whose only business outlets are the galleries who stand to profit from the sales of their work, and whose markets and operations are too small to warrant hiring the likes of Frank Dunphy (Hirst’s business manager) or his firm, Hogbens Dunphy, which manages Turk and Tyson among others.

The idea that this move is one of “clawing back control” from dealers is a bit misleading then.   After all, if you can finance it yourself, why would you take on outside obligations?   If you can handle the risk, you get the control.   (It’s actually surprising to me that more artists haven’t made this move sooner.)   I know one artist who finances his own work and then backs those costs out of the sale of his art before splitting anything with his gallery.   Of course, the market for that work had better already be there, or else one may soon be faced with a Celebration-esque economic disaster.   And this question is not limited to the relationship between artists and their dealers.   Many non-collecting institutions underwrite all or portions of the produciton of new works for exhibition.   But often the associated “ownership stake” involves the negotiation of tricky contracts, in which small musuems and kunsthalles have only their prestige to serve as leverage.

So the question is: Are there other options out there that we’re not seeing?   As the economy continues to slide, and production costs become ever more onerous, will the majority of artists working today become ever more indentured to production funds, whether these come from galleries, museums or independent sources?   And might we not also see a change in the scale of operations taken on by artists in the coming months and years as well?

Sarah Thornton’s book Seven Days in the Art World, which documents the frenzied peak of the recent art boom, arrives next week in American bookstores, just as that boom appears to be sputtering out. Some would call this bad timing. In fact, it’s a stroke of good luck. It puts Ms. Thornton, a Canadian-born, London-based sociologist-turned-journalist, in the enviable position of having captured an epic chapter in art-world history in its entirety. It’s all here, a message in a bottle to be consumed now, to reflect on what just happened, or later, when the action heats up all over again, as something of a cautionary tale. Each chapter examines a facet of the art world – auctions, dealers, art fairs, and so on – in a fluid, breezy style that masks some serious heavy lifting. The intrepid author has spoken to “everybody” in the art world. No detail escapes her attention, from the desk arrangements of her interviewees to their designer footwear. Underneath the glossy surface, however, lurks a sociologist’s concern for institutional narratives as well as the ethnographer’s conviction that entire social structures can be apprehended in seemingly frivolous patterns of speech or dress. And clearly, Sarah (a friend of artworldsalon) was having fun. We caught up with her on the eve of her US book tour to ask her some questions about the book:

ARTWORLDSALON: You are a sociologist turned writer. What was your biggest discovery about the art world?

SARAH THORNTON: I never had a Eureka moment. Instead, I experienced unfolding revelations. I think that’s how the book reads, too. One reason the art world fascinates me is because it is so full of conflict. It’s at once idealistic and materialistic, exclusive and open, petty and lofty. Moreover, the art world is so full of warring factions that writing this book has been like walking through a minefield.

Your book appears in the US just as global markets, and it seems the art market along with them, are entering a period of turmoil. How does it change the book’s message?

I see the book as having a handful of themes. It is a social history of the recent past - a remarkable period in which an unprecedented economic boom infiltrated every corner of the art world, even the consciousness of art students sitting in a left-wing conceptual art think-tank in the middle of the desert. It helps to have documented the structures and dynamics of a bull art market, because we forget them so quickly. Read More »

Bloomberg today reported the dramatic drop in prices achieved at all the major auction houses this weekend.

Sales by Sotheby’s, Christie’s International and Phillips de Pury & Co made a combined 59 million pounds ($102 million), against minimum estimates of 106.2 million pounds, according to Bloomberg calculations. They follow a five-day auction by Sotheby’s in Hong Kong this month that raised HK$1.1 billion ($141.7 million), also about half the presale estimate, as buyers shunned some top lots for being too expensive.

This is of course to be expected as much of the collector market focuses on wealth preservation rather than spending. And galleries in New York have noticed a softening for some time.  Interestingly, though, one normally expects an art market correction 6 to 9 months after stock market crashes.  The question now is whether this is the start of a rout in the contemporary art market or merely a short term, financial market correlated, “correction.”

It also, by the way, raises a question about the other major art story of last week about recent moves by two former senior US museum directors to the private sector. Robert Fitzpatrick moved from the Museum of Contemporary Art Chicago to Christie’s Haunch of Venison, and David Ross moved on from his days at the Whitney and the Museum of Modern Art in San Francisco to be a partner at Albion.  Whilst I fully understand the attractions of better salaries and less stifling boards, I wonder if their timing was all it could be?

Not everyone is worried though.  I have spoken to two collectors this weekend who said, in effect, “finally a correction: maybe prices will come down to a more reasonable level and we can start buying again.”

So what do you think: Short term correction or start of a rout? A good thing or a bad thing?

The topography of Wall Street and the financial system was redrawn over the past weekend. So what’s next? And specifically, what’s next for the art market? In recent months, heightened anxiety about the credit crisis and the meltdown in global finance did not translate into a flight from art purchases. Quite the opposite. Will the current jitters cause collectors and investors to look to art as a safe haven, or will they put the breaks on a long boom that has persisted, with a brief interruption in the early 1990s, for almost a quarter century? What does it mean for nonprofit institutions which rely on donations, and for art sales that depend on loans, guarantees, and credit? Who stands to lose or gain from the next round of transformations? And on the eve of a historic single-artist sale, are we going to witness a turning point in the psychology of the art world and the art business? I invite our panel to submit educated guesses.

Sothebys latest Market Review, issued last night, strikes a slightly defensive but none-the-less optimistic tone, using two key arguments to support their optimism.

The first is their contention that the market of today is unlikely to suffer a crash and sustained down period similar to that of the 1990s. They base this view on the not unreasonable statement that there are more sources of buyers than was the case when Japan was the source of new money bidding up markets in the 1980s. At that time, the argument goes, there was no-one to take their place when the Japanese retreated from the market in the 90s; things are different now. Well, certainly this time we have seen new buyers from Eastern Europe, Russia, China and India entering the fray, in addition to all the new money in the US and the UK. But, as we have seen with the recent US sub-prime driven hiccup, all markets can catch a cold at the same time in today’s globally interlinked financial markets. In addition, that greater diversity of buyers is buying a greater diversity of Art, including contemporary and traditional works from their own regions (China and India being prime examples). They are not just focussed on traditional Western Art markets. So I am not sure there is the greater depth of buyer support for the traditional European and US modern and contemporary markets that Sothebys believes is there.

Their second argument for optimism is that there is a rise in the average price of lots sold over recent months.

From those price increases, however, we can infer a larger market of potential buyers.

Well, from their own figures we can see that over the same period: total sale value has actually fallen steadily since May 2007, and number of lots per sale have also fallen steadily from November 2006. With number of lots sold falling, average price per lot rising, but overall sales value falling, that actualy tells us that a few buyers are paying more money for (presumably) top works, but that fewer people overall are buying, less money overall is being spent and fewer works are being sold. Perhaps there is a larger market of potential buyers. But at the moment it looks like, aside from those at the top end of the market who are generally immune to financial market troubles, there are fewer buyers actually buying, not more.

Still, if it means a return to auctions being about quality of works, rather than quantity, it might make them interesting to attend again…

There is, again, a fair amount of buzz about the health of the Art market these days. Robert Frank at the Wall Street Journal recently raised the spectre of a decline, based on the 50% fall in Sotheby’s share price over the last 6 months. He points a finger at the rise in guarantees offered by Sothebys to sellers over the last year, something we talked about last August, and the potential for buyers to default on agreed purchases. Then Marion Maneker at Slate issued a well argued riposte, pointing out that the rise in debtors on Sothebys balance sheet is consistent with a rise in the value of sales over the same period; i.e. the higher the level of sales, the higher the level of money owed by buyers to Sothebys until the day they actually pay. She also makes the argument that the guarantees are not as big a worry as they might be because “most of the guaranteed paintings do get sold—and quickly” [after the auction].

I have concerns about both articles. Firstly I am not sure Frank is right in using Sothebys as a proxy for the Art market as a whole. The stock market clearly doesn’t like something about the numbers at Sothebys, perhaps because of perceived greater risk taking by the auction firm (no doubt related to the larger guarantees and larger accounts receivable), but that doesn’t mean the Art market as a whole is suffering; yet. But Maneker is also a touch too sanguine about those same guarantees because I doubt the unsold works will sell quite so quickly, nor at such “reasonable” prices, if the market was in free fall.

To me the key question that will determine whether the Art market suffers a major correction, as in 1990, or a gentle slowing of the current manic rise is the degree to which there is speculation amongst the current buying community. If the prices being paid for contemporary works in New York, HongKong, London and elsewhere reflect genuine collector passion for the works, then that passion is unlikely to fade just because prices for new works fall. On the other hand, if a significant portion of the current buyers are people buying just because it is ‘cool’ to do be seen to do so, and in addition they think they can sell their new prizes in a year or two for a 50% gain, then many of those same buyers will dump stock into the auction rooms as soon as they get nervous about the direction of prices.

So which do you think it is?

On the 14th, Artforum hosted a panel at the New School with the stripped down and self-evident title “Art and Money.” The panelists included Tom Crow (much esteemed if somewhat dusty art historian currently installed at NYU’s Institute of Fine Arts), Amy Cappellazzo (International Co-Head of Christies ’s Post-War and Contemporary Art department, art world punching bag and proud mother of the auction house as “big box store” analogy), Yinka Shonibare MBE (perhaps the very definition of the post-historical, post-colonial, post-black artist), Kathy Halbreich (former Director of the Walker and now MoMA’s image disciplinarian-cum-Kultur defender) and Jeffrey Deitch (maestro of the art world spectacle who never met a hipster he didn’t like); it was, to say the least, an almost perfectly diverse array of the art industry’s different player positions. Tim Griffin (Artforum’s soft-spoken editor) moderated the event.

The house was packed, no doubt in anticipation of the rhetorical grenades that the panelists, antagonists all, would lob into one another’s laps. But once again, “politesse” was regnant (see Andras Szanto’s dispatch from the ADAA/MoMA Panel back in February). Here is a brief rundown of the more and less interesting of the panelists’ comments:

Deitch opened with an astute statement on how the artworld had become the newest “platform” upon which “creative people” from all disciplines gather, adding that “people at the top of their game like to meet one another,” which sounds a lot like celebrity culture entering a plea of Innocent.

Shonibare noted that a “bigger market” makes room for “bigger thoughts.” As to whether those thoughts are actually better, he withheld judgment, but did add that bigger work continues to run the risk of appearing “superficial.” Read More »

This thought in from Steven Kaplan in Manhattan

Thomas Krens will step down after nearly twenty years as director of the Solomon R. Guggenheim Foundation, and the search for his successor has officially begun. This announcement is barely two days old, but the art pundits are already circling like hawks high above the Frank Lloyd Wright rotunda, gliding over the thermal gradients for indications of future trends, while also hunting smaller anecdotal tidbits to feast upon.

If the age of Krens is soon to recede in our collective rear view mirror, how will it be remembered? As a period when the establishment of a coherent aesthetic identity for the museum took a back seat to the art of the deal? When international franchising and corporate sponsorship became overriding determinants of exhibition content? When fashion, architecture and other borrowed interests reigned at the expense of the art itself? Or did Krens manage to create a system of patronage and power that will endure? Was he in fact a visionary, an advocate of his own peculiar manifest destiny: always expanding, always seeking out new funding, always ready to open his doors if the price was right, while placing greater and greater financial demands upon his board of trustees, who perhaps finally had
no choice but to mutiny?

Part of the answer will be determined by the policies and personae of his successors. In particular there remains the legacy of the Guggenheim Abu Dhabi, the jewel of his franchising effort, “35 percent larger than Bilbao”. A major mission for Krens (and starchitect Frank Gehry) is the completion of this monolith in the desert. It is the fulfillment of his expansionist dream and his ultimate expression of museum realpolitik. Because when domestic benefactors such as Peter B. Lewis balked at the huge cost of funding the satellite projects, Krens did an end run and appealed directly to the oil-rich sheiks — in much the same way that the banks have recently looked to UAE money to bail them out of the mortgage crisis.

The Guggenheim is presently committed to building their satellite in Abu Dhabi. But as the museum reassesses its priorities, considers its post-Krens identity, and examines its finite resources, one can imagine a revision of this decision. Especially in light of the Emirates’ policies of not allowing entry to Israeli passport-holders and their censorship of gay content and nudity in the art to be exhibited.

The final decision of whether or not to proceed is reserved to the museum’s board of trustees. But I would pose the following questions to ArtWorld Salon readers: Should institutional initiatives be reconsidered in light of new economic realities and new leadership? Should the leftover projects of an old regime be cleared out, to allow the new director a “clean slate”? And might the fate of the Guggenheim Abu Dhabi give us some indication of how museums will operate in a post-Krens era?

As we ponder who has been buying what at Miami, this has come in from Michael Hatch in Beijing.

The markets for Western contemporary art and Western modern art are often assumed to be universally engaging across national and ethnic borders, but I’d wager the vast majority of buyers are caucasian, reflecting the dominance of Euro-American artistic traditions, and reflecting the historical dominance of Euro-American economies.

The market in Indian art, however, is said to be driven almost entirely by Indian collectors; and the main buyers for both classical and modern Chinese art are Chinese or Chinese diaspora. Though the spectacular growth in prices for contemporary Chinese works has been largely driven by Western buyers, one hypothesis is that some of the mainland Chinese currently investing large sums in real estate and stocks might soon turn their attention to chinese contemporary art and become the dominant force in this market.

I wonder, therefore, to what degree ethnicity, nationality or cultural affinity play a role in driving particular art markets? Are particular markets dependent on those who have a cultural affinity with those works? If so, are the movements of any given art market only really affected by the economic movements of the home market? If that is the case, will the predicted downturn in the Western art markets that is supposed to follow the current economic doldrums in America affect the markets in Chinese or Indian art?

Thoughts anyone?

Calvin Klein, Tamara Mellon, Donna Karan, Laudomina Pucci, Vivienne Tam, Kenzo, David LaChapelle, Doug Aitken, Jack Pierson, John Currin, Kehinde Wiley, Terence Koh, Dennis Hopper, David Byrne, Keanu Reeves, Steve Martin, Russell Simmons, Lou Reed, Jerry Speyer, Eli Broad, Steve Cohen, Peter Brant, Beth Rudin DeWoody, Aby Rosen, Larry Gagosian, Mary Boone, Andrea Rosen, Barbara Gladstone, Lisa Phillips, Tom Krens, Michael Govan.

What do these people have in common? They’re all going to Miami, of course.

“In ten days,” as fellow Salon writer Steve Kaplan wrote in our recent thread on why people collect, “this culture (or sub culture) will descend in all its sound and fury upon Miami. The attendant rituals of conspicuous consumption, of snubbing and embracing, of preening and prowling, of “perilous journeys across the seas separating the small islands”, might even give the Trobrianders pause. And one can only imagine what an observer with the sensitive antennae of a Malinowski or a Levi-Strauss would make of it all, trudging down Collins Avenue, notebook in hand.”

So, why are YOU going? What are you expecting to get out of Art Basel Miami Beach? What are you excited about? What are you dreading? What are your must-go exhibits, special events, parties? What’s your strategy for making it through the fair and how will you make sense of it all? Please send your thoughts and best advice.

As artist Yue Minjun reaches new highs in HK (during recent sales at Sothebys that set new records in jewels, ceramics, and paintings both traditional and contemporary), Richard Polsky over at ArtNet is predicting a decline and fall for Chinese Contemporary Art. (Which makes NY real-estate and art investor Howard Farber’s disposal of most of his Contemporary Chinese collection tomorrow at Phillips look well timed.)

But Polsky goes further, stating flatly:

“There’s nothing innovative here. In fact, other than its specifically Asian content, the work is totally derivative of Western art”.

Kriston Capps over at grammar.police calls the over generalisation “baseless”, which is maybe going too far the other way, but he raises a good question at the end of his comments: what will survive the inevitable fall? His question refers specifically to the Chinese market, but I am curious about contemporary more globally.

In both Western and Asian contemporary markets pundits are predicting corrections. In the US for macro-economic reasons and excessive exuberance. In Asia because of speculative buying by new enthusiasts, and over production of works by the big names. In both cases some artists, and collectors, will suffer more than most. Any views on whom? And how much?

August jitters yield to back-to-school confidence—at least for now. After a rash of premature obituaries, the art market is humming briskly again and news of epic sales fills the air. Even Damien Hirst’s diamond skull has found buyers (including, so it is rumored, the artist). Its fate as the shimmering emblem of early 21st-century excess is now sealed.The question now is whether the art market is headed even deeper into record-breaking territory as the last refuge of investors and speculators, á la 1989, or whether it is already on a sliding path toward a landing—soft, hard, or otherwise? It is a delicious moment, pregnant with wildly opposing possibilities.

Reading the posts of the last few weeks, one longs for clearer metrics. Are there more reliable early indicators of yet another exuberant season of sales? Or conversely, are some “canary-in-the-mineshaft” indices registering advance tremors of a downturn?

Our debate on guarantees offered few clues. Reluctance to offer guarantees would parallel the lending caution that engulfed the financial markets in late summer, but our panel found no proof of such reluctance (auction guarantees this season are, in fact, expected to run into the billions). Daily reports of new gallery openings and museum ventures similarly belie prognostications of impending doom.

The problem is that some indicators of change can be interpreted as harbingers of squarely opposing trends. What exact conclusion would be drawn from evidence that dealers are getting more calls about placing works quietly, or taking pictures back on consignment? If a spate of exceptionally high-quality pictures were to come to market, would that be seen as a sign that sellers are trying to slip through a closing window of opportunity? Or would it be seen as evidence of the health of a market that is coaxing even the most beloved masterpieces off people’s walls? What is the exact interpretation of trimmed museum acquisition budgets? What can we read into shorter or longer waiting lists? Are dipping or spiking art school applications advance indicators of growth or decline?

As we begin a season of many likely surprises, can this panel suggest clear signs of what’s ahead?

I wonder if anyone is getting guarantees out of the auction houses these days? In a financial market turning south it is a common strategy to buy “put options” before everyone else notices; i.e. contracts to lock in now, a right to sell something in the future, to someone else at a price fixed now, when you think the market as a whole is falling. An Art market equivalent would be to agree with an auction house now to sell a collection later in the year, on condition of sale price guarantees, set now, at current pricing. Always a risk for the auction house (ask Phillips de Pury), in a real down market it can be a disaster. The smart auction houses understand this, of course. If they are nervous about market values, they stop giving guarantees. Perhaps only in some markets. Perhaps in all.

So I repeat my question: does anyone know if auction houses are still offering sales guarantees this year?

I’ve been meaning for a long time to write about the way in which the artworld talks about collectors who made their money from hedge funds. In fact, I’d rough-drafted a post two months ago, but newsier topics (and my hectic life) interceded. A comment posted by Olav Velthuis in response to Ian’s “Contemporary: what real value?” post prodded me to pick up that draft again. Because I often wonder if artworld insiders haven’t started to treat hedge-fund buyers as their handy whipping boys, blaming them for everything that makes people uneasy about the art market as it progresses into uncharted territory. Let’s start with the case against hedge-funders. [UPDATE: Olav says I misread the above. See comment #1 below. ] Olav wrote:

The new players on the market are hedge fund managers who have on the one hand an enormous reputation deficit (they are considered the parasites of the financial system, much more so than the Wall Street traders that flocked the art market in the 1980s) and on the other hand an enormous surplus of capital (again, much more so than Wall Street in the 1980s or, for that matter nowadays).

In April - when I wrote that rough draft - two pieces published in the same week likewise touched on hedge-funders in the current art market. Both pieces noted the wariness with which many regard those collectors (albeit while happily taking their money). In the New York Sun piece, “Art Market Shifts With Players” Marion Maneker wrote: “Many in the art world [are] nervous that their market is beginning to resemble the volatile financial markets. The presence of many hedge-fund managers — the puppet masters of the herky-jerky stock market — among the new breed of art collector has many dealers on edge.” Likewise in an item I contributed to a small part of New York Magazine’s blowout package on “hedgies,” I quoted a dealer saying: “The big fear is that if the market turns, they’ll get out of art just as fast as they came in.” Read More »