How Does This Man Control the Australian Art Market?
Rod Menzies is under fire in Australia for his business practices. As the owner of two of the countries largest auction houses, with a 60% market share and turnover of A$60 million versus Sotheby’s A$51.4 million, the charges are no laughing matter. Though the complaints will be familiar to anyone who has followed the auction business where present and former owners like Bernard Arnault, Alfred Taubman and Francois Pinault are also often frequent buyers and sellers of art. Here’s how the The Age puts it:
It’s hard to compete with a man with a big cheque book who can go out and buy high-profile works to flaunt on the cover of his art catalogues and in the news, as Menzies regularly does. Among his top “gets” last year was The Olgas for Ernest Giles, by the late Brett Whiteley, which he bought from businesswoman Sally Browne for an undisclosed sum, believed to be more than $2 million, and which he sold for $3.48 million (including buyer’s premium), setting a new record for the artist. The painting’s buyer was never revealed.
A more recent example was Pablo Picasso’s Sylvette, which sold for $6.9 million, including buyer’s premium, at Deutscher-Menzies’ Sydney headquarters in June. The sale represented almost half the night’s takings. The Deutscher-Menzies art catalogue did not indicate that Menzies himself was the owner and seller of the Picasso — not that Menzies made any secret of it on this occasion, spruiking his upcoming Picasso sale to the media.
If you’re thinking this is a provincial matter, read this description from The Australian and see if it doesn’t apply to the rest of the art world:
The Australian art auction sector is one of the few remaining unregulated industries. With a turnover of more than $160 million in 2007, it lags behind the real estate market in terms of official scrutiny. The buying and selling of art, however, commands public attention. The art boom has seen many new buyers enter the marketplace. Established collectors have been encouraged to become more active in their buying and selling. It was inevitable the community would start asking questions about how the industry works, who decides the prices, who are the genuine bidders and whether all provenance information relating to artworks is accurate. [Emphasis mine]
For those genuine buyers determined to own a painting, the pitfalls are many. The big problem is that most works are one-offs. In other markets, Fels says, consumers have the option of close substitutes. In the art market, he says, “people will not accept substitutes. They become locked in on a single item and that means they’re prepared to pay more. This creates an opportunity for the seller to raise the price far more than if it was in a market with competing substitutes. Even Coco-Cola can’t raise its price too much because some people will switch to Pepsi. Art seems unique.”
While we’re in Australia, let’s check in on the local art market to see what’s going there. John Brack is an Australian artist who’s work is reaching significant numbers. A series of nudes he painted in the late 1950s is the latest focal point for his market. One of them, The Boucher Nude is about to go on the block:
Auction house Deutscher and Hackett has put an estimate of between $1.4 million and $1.8million on the painting. Recent results for John Brack’s paintings sold at auction, including last year’s $3.36 million for The Old Time, suggest this is a conservative price tag. But the auction house says it is determined to be cautious while the economy is taking such a hit.
Leading Brack expert Sasha Grishin describes the nude as “a middle-aged woman, not particularly attractive, of very slender proportions, and with short, cropped hair, a woman who appeared particularly incongruous and out of place — like a naked housewife — in the artist’s somewhat spartan North Balwyn suburban living-room”.
Brack, who died in 1999, used a vivid lemon-green shade for the woman’s body. “It’s like a raw acid; it gives you an electric jolt when you see it,” auctioneer Chris Deutscher said yesterday.
Mr Deutscher and his business partner Damian Hackett have kept in touch with the painting since it was last sold at auction in 1998 for $220,000. Before that, it was owned by the same family that bought the work from Brack’s original 1957 Melbourne exhibition.
Picture Perfect Industry (The Australian)
An Art Dealer in the Frame (The Age)
Nude In the Sitting Room Stimulates Art Market (The Australian)