One of the distinct features of the art market, one that separates it from other market-based businesses, is the attitude that those deeply invested in the industry have toward their own industry. As this comment from Australia’s Michael Reid shows, no one could be more jaundiced in their views of the way the art market works than an art dealer.
Many, many years ago now, I had the dubious distinction of bringing the term “ramping” into the Australian arts industry lexicon. It was a word that I pulled somewhat out of the hat, live on radio, to encapsulate the then-growing phenomenon that saw entrepreneurial art galleries manipulating a painting’s value via the art auction market.
Times they have not a-changed. Ramping the value of contemporary artists’ work through the auction system – that is, the practise of a gallery consigning and then publicly buying back an artist’s painting for a new auction benchmark – still takes place. Let me tell you just one way this is done.
Hypothetically speaking, of course, let’s assume that a gallery places the contemporary artist on a retainer of, let’s say, $110,000 per annum, on a four-year contract to produce twenty-five paintings a year. At a buy price of $4,400 a painting, the gallery sells the work at exhibitions for $12,000. The profit pool of $7,600 per painting is then put aside and “reinvested” by the gallery in the auction system.
Having a pool of money to play with, the gallery then consigns a number of the artist’s paintings across several of the auction houses, subsequently bidding-up and, more often than not, buying back the work. Surprise, surprise: the contemporary artists in question, whose paintings carried, let’s say, a pre-auction estimate of $8,000-$12,000, achieves in excess of $30,000 per painting at the auctions.
Within weeks of the auction, the artist’s new and escalated sale prices are recorded and published, sometimes by the media, but far more importantly, by a swag of industry sales digests. And this makes it true. After all, it is in print.
At first glance this may seem a rather protracted and costly gallery practice – not to mention very, very illegal. However, the rewarding end game of all these shenanigans is to create an inflated and false auction floor price, a deceptive benchmark both in public and in print; a benchmark used by the gallery to justify their asking price for that artist’s work. The dealer points to the public auction price printed in the sales records and raises – across the board- the value of that artist’s work to $30,000-plus per painting. By the by, the gallery has a substantial holding of the artist’s work, newly marked-up and ready for sale.
Without naming artists or galleries, I can point out a number of ramping tell-tale signs for which a collector can look out.
The scam works best when the gallery enlists the services of an embittered mid-career contemporary artist – a painter with a minor reputation who feels that he or she has been unjustifiably overlooked by the market, and thus has few ethical qualms in partaking of a little market manipulation. Although the artist in question could be an emerging contemporary practitioner, it does help to whip up the all-important buyer enthusiasm if at least some of the public have heard of the artist’s name. So generally, look for minor mid-career artists.
In order to attract public attention, the gallery will take out a large colour illustration in an art auction catalogue. This is a big give-away, for it is highly unlikely that a private collector would fork out – in addition to the auction house sales commission of up to 20 per cent and insurance of 1.5 per cent, transport costs and so on – the significant expense of say, $900 for a full-page colour illustration. Paintings that carry pre-sale estimates under $20,000 do not deserve such a selling outlay. Do the maths: the return for the private collector on a possible low estimate sale of $8,000, after expenses, would be around $5,500.
It’s true that illustrations sell paintings, so a couple of hundred bucks could well be spent by a private owner paying for a quarter-page art auction illustration – but $700? No way. However, the $700-plus illustration cost is small beer to the Machiavellian gallery.
Finally, there you have all these mid-career nobody artists, with full-page colour illustrations, carrying sale estimates of $8,000-$12,000 in the holy-of-auction-house-holies – the first eighty lots of the sale. This is another dead give-away. As much as is physically possible, the auction houses place only important certain sellers in the first tranche of a sale. This is designed so that every lot sells, creating where-ever possible, a selling rhythm that will hopefully hold up throughout a many hundred lot sale.
From over two decades of art auction house experience (both with Christie’s and as a client thereof), I can assure you there is no way an auction house paintings’ specialist would put such a low value painting by a minor nobody into the first hour of the sale – (that is what part two sales are for) – unless of course they were fairly confident that, come hell or high water, a buyer would be found.
But then again, the auction house specialist may just have an inkling that the eventual buyer of this mid-career contemporary artist’s work, of modest value with a full-page colour illustration coming up in the first hour of the sale, could well be the seller