JP Morgan’s Ben Mandel: Going Forward, The Art Market Won’t Grow As Much

CitiGPS Mandel Chart

Citibank has released a report on the global art market. The report features several points of view on various aspects of the market around the world. Benjamin Mandel’s article was the first one we read. He looks forward to 2030 and predicts that the market, which grew at a 13% annual rate over the last 15 years will see declining growth to around 9% over the next 15 years.

China’s emergence and the growing of the top end of the market were the features of the last 15 years. Mandel doesn’t see either continuing to have the same effect going forward. But that’s not entirely a bad thing, he writes. And his conclusions, below, are worth thinking about in the context of this New York sales cycle which seems to recapitulate the same themes:

In many ways the art market has mirrored the global economy, for which the early 2000s was an exceptional period. China joined the WTO in 2001 and deepened its global engagement which, in turn, dramatically altered the landscape of international commerce. Demand from China and its seemingly insatiable investment appetite drove a massive global commodity cycle. Today, the Chinese economy faces the difficult task of pivoting away from an economic model that is widely viewed as unsustainable in the long run. So, too, does the Chinese art market face the fact that years of break-neck growth have run their course. Similarly, the trajectory of top art prices as a reflection of widening inequality must also eventually settle, though economists remain far from agreed on the path of the latter.

While it might seem inherently undesirable for the market to cool off, silver linings abound. The Chinese market’s impending growing pains are symptomatic of a market that has come of age. And a cooling of top auction prices would provide a heathy rebalance from the upper deciles to the middle of the market, which would be a significant positive for the broader industry. Finally, while there does not seem to be any other obvious candidate – like China or inequality – waiting in the wings to give the market its next big leg up, participants in the art market always maintain the option of just enjoying the aesthetics of the thing itself and not worrying too much about that.

CitiGPS: The Global Art Market

Christie’s NY Imp-Mod Evening Sale = $145m

What’s Going On With Christie’s Nurse Sale?

Brett's second post

Brett's comments

Brett Gorvy seems to want to say something about the sale of his Roy Lichtenstein, Nurse. But he cannot decide what it is that he wants to say. First, he posted on Instagram the picture below. Then he posted what appears above declaring the earlier post a light-hearted jape.

Unfortunately, before Gorvy posted about at all, there were questions raised about the sale. The first post seemed to be an attempt to address those questions. By declaring it all an “inside joke,” Gorvy has simply stirred his own pot instead of settling it.Continue Reading

Christie’s PWC Day Sale = $88.8m

Sotheby’s $295m Evening Sale Shows a Contemporary Department Coming Into Its Own

Sotheby's Cont Sale 1115

Just after last night’s Contemporary Evening sale at Sotheby’s, the auctioneer and three leading specialists who helped bring together and manage the sales gathered around a microphone preparing to speak to the press. The tableau looked like the last jubilant scene—sometimes called a Martini Shot—from a comeback movie. Oliver Barker, Alex Rotter, Gregoire Billaut and Cheyenne Westphal formed a perfect arc behind the microphone, smiling with satisfaction. All that was needed were hand waves, confetti and credits rolling down the screen to a catchy song.

After several years of lagging behind their competitor, Sotheby’s Contemporary department set the tone of the market and produced a well-managed, successful sale in a shifting market. It is hard to say ‘cooling’ when the lead item in the sale tops $70m (and is said to have been sold to a big traditional collector.) Certainly the market is shifting toward lower-priced seven-digit works leaving a hole in the $20-50m range that has been created by a lack of supply.

Facing a market where consignors may esteem their works more than the market, Sotheby’s put together a sale around three main works and then worked hard to make sure the rest of the material was well-estimated. Then, close to the sale, they worked even harder to bring out the bidders and managed consignor expectations.

This is something Kelly Crow noticed in the Wall Street Journal:

The house went into overdrive in the hours before the sale, in several cases asking sellers to dramatically lower their secret, must-get reserve prices—or give them up altogether—so that auctioneer Oliver Barker could leverage the works’ firesale price levels at the outset to tease out extra bids.

This was evident in the way they managed the sale of the Jackson Pollock work that had been shopped privately for some time. Judd Tully went into detail on the lot:

Though hardly a masterwork, Jackson Pollock’s signed and dated poured painting “Number 17, 1949” from 1949, in enamel and aluminum paint on paper mounted on fiberboard, sold to another telephone for $22,930,000 (est. $20-30 million). Its appearance was perfectly timed to coincide with the Museum of Modern Art’s “Jackson Pollock: A Collection Survey, 1934-1954,” which showcases the museum’s fantastic holdings, and a major show at the Dallas Museum of Fine Arts, “Jackson Pollock-Blindspots,” corralling 50 of his poured paintings. The work last sold to Larry Gagosian at Sotheby’s New York in May 2003 for $5,272,000. The total for that long ago evening sale is almost more interesting, tallying all of $27.3 million, illustrating how much this market has grown. The Pollock came armed with an 11th-hour backed guarantee.

One of the tent poles of the sale was Stephen Cohen’s Warhol Mao (previously owned by Francois Pinault) which did quite well by making $47.5m and was supported by a guarantee from a third party at $40m. The sale was important to Sotheby’s but even more important to the Warhol market.

Warhol has been a bedrock of the Contemporary art market. The rise in his market has tracked the rise in the Contemporary art market. Warhol market waxes and wanes like any other market. But this season is the first point at which many have noticed a marked weakness. They’ve also noticed that the Mugrabi family have pulled back some of their market support.

Katya Kazakina makes it explicit:

The evening’s casualties included three paintings by Warhol, with the combined low estimate of $10 million. At Christie’s on Nov. 10, four paintings by Warhol failed to sell.

Alberto Mugrabi, whose family owns the largest private Warhol collection and is known to support his market at auction, said there were a lot of weak pieces by Warhol at auction this week.

“Of course we still support the Warhol market, but I can’t buy every painting that comes up,” he said.

The Mugrabis did bid on a Warhol at Sotheby’s and they’ve been happy to sit out plenty of lots before. So the issue is more one of perception than fact. One also ought to remember that the Mugrabis are not the only market makers in Warhol. More to the point, the role of a market maker is buy when prices are down and sell or step back when prices are up. The Warhol market might be right in the middle of that, neither hot enough to sell nor cold enough to buy. This comment from one buyer to Judd Tully combines the two themes

“I think the market in general is plateauing,” said New York art advisor Allan Schwartzman of Art Agency Partners, which bought Warhol’s “Diamond Dust Shadows” from circa 1979 for $2,290,000 (est. $1.8-2.5 million). “The market has sent out a very clear message of what it is prepared to go to and didn’t go beyond that for the most part.” Schwartzman also characterized the sale as “solid and sober with what they had.”

Many others made similar comments, and we’ll get to those below, but one of the puzzling events of the sale was the failure of one prominent Basquiat and the success of two others not well-rated by observers. Scott Reyburn and Robin Pogrebin tried to get to the bottom of it:

“Those works that are not priced well won’t sell,” the collector Larry Warsh said. Basquiat’s 1982 “Hannibal,” for example, which failed to sell at a low estimate of $8 million, “was a very good painting,” added Mr. Warsh, one of the earliest collectors of that artist, “but it was priced too high.” Basquiat’s “Untitled” from 1987, by contrast, sold for more than three times its high estimate, bringing $8.3 million with fees, despite being what many described as inferior.

Judd Tully pointed to one of the lots chased by Basquiat veterans:

Tony Shafrazi and Jose Mugrabi were the dueling underbidders.

The youngest member of the Nahmad family, Joe, played a central role in the two lots that surprised so many observers by being the focus of dogged bidding. He bought one. Both works were offered by the Basquiat estate which several seasoned veterans were surprised to learn still had work to sell. Having no previous owner surely added to the appeal of the works. But Larry Warsh identifies a far more compelling trend, size. Here’s what Warsh said:Continue Reading

The Night They Said No: Christie’s $331m PWC Sale

Felix Gonzalez-Torres, Untitled (L.A.) 7.66m USD
Felix Gonzalez-Torres, Untitled (L.A.) 7.66m USD

Much of the response to Christie’s Postwar and Contemporary Evening sale’s disappointing $331m performance—as you’ll read below—is to wonder about the health and state of the art market. By that, most commenters mean whether there is sufficient and aggressive demand for art.

But last night’s sale brings up more questions about Christie’s, its strategic aims and ambitions in the art market, than it does about the state of the overall market itself. For the last several years, Christie’s has embarked upon an aggressive campaign to transform the art market through the Contemporary art category. Using a phalanx of business-getting talent, seemingly unrivaled access to the best property and an industry-dominating guarantee book it has inspired shock and awe among collectors and its rivals.

Christie’s dominance in Contemporary art toppled the management of its main rival and emboldened the firm itself to reject its own internal “change agent.” At the time, too many commentators insisted the change in leadership at Christie’s would bring an aggressive drive toward profit. But so far this week, the evidence points in the other direction.

Over the last two nights, Christie’s has used its guarantee book to subsidize the top end of the market. In an effort to manage its risk, it laid off to third parties the profits that might have come from selling the Modigliani nude. Yet it was still able to take a bow for having achieved the top five prices ever made at auction, four just in the last year.

Christie’s has sold more than $800m in art over the last two nights. Nonetheless, any observer has to wonder about Christie’s strategic goals. The top was achieved last season. Now that the sales totals are retrenching, there are not many outward signs that it is focusing on profits over market share.

Had Christie’s stuck to a PWC and Imp-Mod Evening sale formula, the Lichtenstein Nurse and Crying Girl would have have added much needed strength to the sale. Perhaps it would also have allowed the firm to avoid the no-man’s land of $40-50m works that seems to have developed in the market.

Instead, the public had the opportunity to observe some unnerving behavior. Less than a week before the sale, when Christie’s would have a had a clear sense of what kind of interest was being expressed for the night’s top lot, Andy Warhol’s Four Marilyns, Brett Gorvy told the New York Times the work had been undersold by Phillips fewer than three years before.

The bravado was impressive … until the work was further undersold.

The sniping with rivals is irrelevant to the bigger issue. Last night’s sale of the Four Marilyns for $36m after being guaranteed for $44m cannot help shore up confidence in the Warhol market which seems to be quite weak right now. As most market participants agree, the Warhol market has been an essential pillar of the Contemporary art market. A fact that might have made others tread with more caution.

Nate Freeman at Artnews seems to have zeroed in on the saga. First, he quoted Gorvy hinting at the motivation for bringing this particular work (which the buyer is said to have bought to flip and was happily shopping around privately.)

“I don’t think there’s a correction in the market,” Gorvy went on. “I think it’s just about the objects—we went into the season with less of these $40 to $50 million objects.”

Then Freeman went into detail on the Warhol:

“When things come back to auction quickly, sometimes that affects their desirability,” Gagosian said upon exiting the auction, where he purchased Jeff Koons’ Balloon Swan (Yellow) for $14.7 million, but did not bid again on the Warhol he had previously purchased.

When Tico Mugrabi […] was approached following the sale […] he said “It’s the third time it came to auction in the last few years, that’s why!”

“Frankly,” Gorvy said of Four Marilyns, in the press conference, “It was a fantastic buy tonight for the buyer.”

[…] two other Warhols with high estimates in the eight figures crashed and burned on the podium, with auctioneer Jussi Pylkkänen imploring David or Tico Mugrabi to make a bid to save his hide, but they did not. They were passes.“They were overpriced,” Tico said later, shrugging.

The signaling here is more important than the sale. For now, at least, the Warhol market is on its own. Left to its own devices, Warhol seems to be doing just fine. Late in Christie’s sale, a little green Electric Chair was sold for $11.4m. It had been estimated at $6-9m and sold without a guarantee.

As far as the broader market for art goes, it would seem that the tone varies from wanting to block any doubts with strong statements to a nervousness. Judd Tully spoke to Christophe van de Weghe and got the former type of quote:

“I tried for two things,” the dealer said later. “This market is very strong and there’s nothing else to say.”

Robin Pogrebin and Scott Reyburn gave us a bit of the latter:

“There’s plenty of money around at the very top of the market, and these people all want the same things,” said Heinrich zu Hohenlohe, director of the Berlin branch of the art dealership, Dickinson. “The middle range is softer — if you can call $10 million the middle range. The market is a bit more nervous than it was. You can’t overestimate things that aren’t top quality.”

Katya Kazakina got a little of the same:

“There is a general unease in the market,” said Kristine Bell, a partner at David Zwirner gallery in New York and London. “People are waiting for the other shoe to drop. We’ve been talking about this for a while but now it seems like a real possibility.”

Finally, Kelly Crow focused on the big surprise of these sales which may be a testament to Christie’s reach in the Chinese market. As with the Modigliani the night before, Chinese buyers emerged in surprising places to make big market-supporting purchases:

A Chinese telephone bidder took home Lucio Fontana’s yellow, egg-shape “Spatial Concept, The End of God” painting from 1964 for $25.9 million, or $29.2 million with fees. The work was estimated to sell for $25 million. (Estimates, unlike final sale prices, don’t reflect commissions.)

Another Chinese bidder paid Christie’s $9.5 million for Alexander Calder’s hanging mobile, “Vertical out of Horizontal,” one of a group of Calders being sold by the estate of Arthur and Anita Kahn that proved a hit with bidders. […]

Elsewhere in the sale, six other record prices were smashed for artists like conceptual artist Felix Gonzalez-Torres, whose row of refillable green candy, “Untitled (L.A.),” sold to a phone bidder for $7.7 million with fees.

Christie’s $331.8M Postwar Auction Offloads a Record Bourgeois—and an Undervalued Warhol—En Route to Modest Total Sales (ARTnews)

Softening Warhol Market Vexes Christie’s Post-War and Contemporary Sale  (BLOUIN ARTINFO)

Mixed Night in ‘Strange’ Christie’s Contemporary and Postwar Sale  (The New York Times)

Warhol’s ‘Four Marilyns’ Tops Christie’s Sale Showing Restraint  (Bloomberg Business)

Christie’s Sells $331.8 Million Worth of Art  (WSJ)

Phillips Day Sale (Highlights)

Wojciech Fangor Dies at 92

Wojciech Fangor has died at 92:

Mr. Fangor, who was known for his blurred circles, amoebas and cloud shapes in dense, saturated colors that seemed to throb and swirl, first became known in the United States in the 1960s, when his work was included in two group exhibitions at the Museum of Modern Art in New York. In 1970, he had a one-man show at the Guggenheim Museum.

His work, perched midway between Color Field painting and Op Art, dazzled critics, notably John Canaday of The New York Times, who reviewed the work in rapturous tones.

“As a colorist he has extended the limits — and keeps on expanding them — of the simplest optical laws,” Mr. Canaday wrote, calling him “the great romantic of Op Art, working not by rule but by a combination of intuition and experiment, appealing not to reason but to our yearning toward the mysterious.” In Mr. Fangor’s hands, he wrote, the visual trickery of Op Art became “a portal opening on to new experiences of color in space.”

Wojciech Fangor, Painter Who Emerged From Postwar Poland, Dies at 92  (The New York Times)