The Art Market Lifecyle

The Miami Herald draws a neat little narrative out of a few well-placed characters to explain how dealer, collector, auction house, curator and museum all conspire to make an artist’s career:

The path of an artist from starving newcomer to international superstar typically begins with reasonable prices at lesser-known galleries or nonprofit spaces, said Robert Manley, head of the New York Post-War and Contemporary Art department at Christie’s. The artist might move on to better-known galleries and see their work increase by 10 percent or 20 percent with each exhibition, he said.

“As the works get sold, the market starts to be created,” Manley said. “And very quickly, the laws of supply and demand kick in.”

When demand grows to the right level, an auction house such as Christie’s might step in and let the bidders dictate the final price — which could change the game altogether.

“At auction, listen, anything can happen, and sometimes [prices] can be pushed to almost unsustainable levels,” Manley said.

When that happens, early adopters of some artists can find themselves priced out of future sales.

Adam Sender, a hedge fund manager who will host a private exhibition at his Miami Beach home this week, said the art market has exploded since he started collecting in 1998.

“Things that were easily attainable 14 years ago have moved to another level, so you try to find the next artist that’s undervalued,” he said.

When an artist’s popularity takes off, experts say, prices can get out of whack. Miami gallery owner Gary Nader said the key to valuing art should always be the quality of the artist’s work and their “curriculum,” or the number of shows they have appeared in, where those shows were and which important galleries, museums or collectors acquire their work.

To boost an artist’s curriculum, collectors sometimes loan their own pieces to museums — a practice that can benefit cash-strapped arts institutions.

But critics often point out that while the donor is doing the museum a favor, the museum is also doing a favor for the donor, said Carol Damian, director of the Frost Art Museum at Florida International University.

“I’m validating that collection,” Damian said. “You’re always walking a fine line when it comes to exhibiting work and what the repercussions are. All of this contributes to the value of art.”