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Art Agency, Partners comments on the Richter market in their inaugural newsletter. Under the heading ‘Misreadings,’ AAP says:
One of the major stories in 2016 was the looming scepter of art market collapse both in general and for specific artists, which, ultimately, proved exaggerated while the reasons for reticence were misunderstood. Take the Gerhard Richter. In the first half of the year, two mature abstracts of large scale for which there had been substantial financial expectation were withdrawn from auction. Based on this fact, there was widespread talk of a pullback in the Richter market.
AAP goes on to object to the idea that there has been a pullback in Richter’s market calling such a view “premature talk of a nonexistent stall.”
It’s not entirely clear what AAP is trying to say here but AAP does link to our post on the announcement of the third Richter sold by Eric Clapton. So we’re going to assume the writer has conflated our discussion of the market for large Richter abstracts with talk of an art market collapse (which would be very hard to find on these pages.)
Further below, we’ll address AAP’s argument. But to understand the market for large Richter abstracts, let’s look a chart (above.) These are the paintings that have driven much—but far from all—of the interest in the artist over the past few years. More to the point, the abstracts, in general, and the large works of five feet or more, in particular, have accounted for a substantial portion of the artist’s auction volume.
Over the course of two distinct periods, you can see from the chart above, the market for large Richter abstracts grew in price, frequency and volume.
By early 2015, when the record price for a Richter was paid, the market had already begun to tighten. In mid-2015, $28m was paid for a large work. Then the public market for these bellwether canvases abruptly shut. A year later Christie’s withdrew a large abstract from a London sale in June seemingly signaling that demand had fallen off.
It is true that there had been a brief pause—and a rare casualty—in the late spring sales of 2014. For the most part, though, there had been remarkably steady sales of large Richter abstracts for approximately five years.
You can see on the chart that from May 2015 until October of 2016, there were no large abstract works on the market. Smaller works were sold. Indeed the market for lower-priced abstracts proved quite strong as buyers shifted from the big trophies to more domestically-scaled works. Prices for those works even seemed to appreciate.
You can see, too, that the pause came shortly after a massive record price was paid for one of the large abstract paintings. That price was the culmination of several important sales—including the first of Eric Clapton’s three works originally purchased as a triptych—that reset the market for Richter abstracts.
As often happens in advancing markets, record prices are followed by consolidations and pauses. Something of the sort seemed to take place during that 17 month hiatus in the public sales of large Richter abstracts.
Arguing against this view, AAP wants us to believe that “insiders had been bullish” on these works during the hiatus. Why? One would expect the advisory firm to adduce private sales of the large abstracts that refute or explain the public pause. Reticence might have made sense in that context. The buyers would have seemed to be quiet on the auction market while buying large abstract paintings privately.
They might have pointed to their ability to line up irrevocable bids for the large abstracts in the Ames estate. But those were slightly below the estimate range.
The AAP newsletter claims that Marian Goodman’s strong sale of primary market material in May of 2016—deep into the large abstract market hiatus—proved the health of the Richter market to those in the know. Instead of buying eight-figure paintings from the 80s and 90s, these ‘reticent’ buyers were gobbling up fresh works from two or three decades later for prices in the low seven-figures at best.
The problem with that line of thinking is Goodman’s pricing which values her primary market material substantially below the secondary market. She also places work with favored clients who are expected not to flip the works for fast profit. If demand were weak for discounted works by the pre-eminent living artist with the largest public sales voluem, the art market would indeed be experiencing the signs of a collapse that AAP wants to argue against.
The primary market for Richter’s work is not what was at issue. In fact, the market for smaller abstracts and other works by Richter was not the issue either. The main concern was whether the top of the Richter abstract market had lost its internal momentum.
It’s hard to know what AAP’s motivation is in trying clear up what they perceive to be a ‘misreading’ of the Richter market. Do AAP push Richter on clients and must now defend the market? Is the advisory firm trying to support the auction house’s ability to attract more Richter consignments in the wake of Sotheby’s success with the Ames Richters?
Sotheby’s did very well with the Ames estate. But most of the Richters sold off the irrevocable bids with no competition. A.B. (Still) did see two bidders push—one said to be the holder of the irrevocable bid—the painting to the high estimate. At Christie’s, the third of Eric Clapton’s Richters also saw some competition but not enough to push it appreciably above the previous work’s price. Christie’s surely would have wanted to see a price on closer to A.B. Still‘s.
As we point out in a longer analysis for subscribers, Richter has taken over market leadership in Contemporary art from Andy Warhol and the market for large Richter abstracts is an instructive sub-market of the artist’s work. More relevant here, Richter’s market total was very high in November but his works taken together barely beat the low estimates.
Finally, AAP concludes their take on the Richter market with a mention of the outsized returns Eric Clapton on his 2001 purchase of a Richter triptych. They even go as far as to say that confidence in the Richter market was re-affirmed by these sales. That may be so.
But to get Eric Clapton’s returns would require a time machine to go back and buy in 2001. Anyone who has acquired a major Richter abstract in the last 3-4 years would be lucky to get their money out if they tried to sell today.
Reading the art market (Art Agency, Partners)