Felix Salmon is very keen to be seen as an expert on the art market. He rushed out one of his occasional newsletters to comment upon the sale of Leonardo’s Salvator Mundi.
In the process, he made some assumptions about facts of the sale. Salmon thinks that the sale of the painting was provoked by Dmitry Rybolovlev’s discovery a few years ago that he had been paying different prices from what his art advisor, Yves Bouvier, paid to source the works:
When Rybolovlev found out how much Bouvier made on the deal, he was furious, and basically gave up art collecting entirely. His decision to sell the painting was made in anger, out of pique that he had been ripped off. Now it seems he has made more money off one painting, in four years, than most art collectors dream of making in a lifetime. There’s probably a moral here, but I have no idea what it is.
The truth here is more illuminating about the art market. It also helps explain why last week’s sale was so much higher than either of the sales involving Bouvier and Rybolovlev.
One of the key features of the first sale of Salvator Mundi, conducted through Sotheby’s, was the lack of confirmation. Basically, the consortium of owners who found, cleaned, researched and restored the painting had moved mountains to get the work recognized as a Leonardo. Their crowning achievement was inclusion in the National Gallery’s Leonardo show in 2011.
That, in and of itself, wasn’t enough for enough buyers in the market to be willing to take the risk. Yves Bouvier’s initial advice to Rybolovlev was to avoid the Leonardo because its buyer would be seen as a laughingstock.
Bouvier was anticipating the kind of backbiting we’ve seen since the sale where the remarkable consensus of scholars has been ignored in favor of the baseless repetition of doubts about the work being by Leonardo. But he was even more accurate because the circumstances of Bouvier’s transaction made Rybolovlev look foolish.
Why? There were simply no buyers for the Leonardo. The consortium was asking $200m but willingly let the work go for $80m (still a huge victory) rather than sit on the work. The lack of competition also allowed Bouvier to present himself as a hero when he claimed the price was $127m, that’s still 35% below asking.
Some have wondered why a museum didn’t buy the work if it was so obviously a Leonardo. Unfortunately, that’s not how institutions work. By their very nature, institutions are low to act and risk adverse. One might easily suspect the consortium leapt at Bouvier’s $80m offer fearing their only other options might be a much lower price from an institution that would take years to complete the process.
More to the point, once Bouvier’s transactions became public, the Salvator Mundi painting was effectively unsellable, a tainted punchline of billionaire folly.
In unwinding his relationship with Bouvier, Rybolovlev has been eager to sell his tainted works both to distance himself for the aftermath and establish his fraud case against his former advisor. Earlier this year, he unloaded a number of works at Christie’s and went to Bloomberg to publicize the losses.
Even then, it is fairly clear that no one thought to try to unload the Leonardo. The work remained radioactive.
What changed all of this was Loic Gouzer’s off-the-wall idea to bolster Christie’s offering of a massive Warhol Sixty Last Suppers with the Leonardo. Even then, getting the work from the fertilizer king took a Summer’s worth of deal-making. After all, Rybolovlev had to sign on for a substantial loss. No one was going to guarantee the work for $127m. Central to making the sale attractive was getting the work on the block for a price closer to what Bouvier paid than what Rybolovlev paid.
Finally, the Russian consented. What happened next wasn’t pique or plan. Perhaps because there were now three demonstrable sales settling around $100m, the asset value of the work seemed to have a more stable floor. Nonetheless, the marketing of the work deviated from the initial plan. The Warhol dropped out of the equation; the crowds moved up in the calculation of value.
Among the smart moves Christie’s made was bringing the work to San Francisco where there were lines around the block to see it. More importantly, Christie’s got calls from major Silicon Valley figures who had previously been tough to contact. (For those wondering who bought it, there’s a greater chance it went to someone with crazy tech money than someone in Asia.)
Finally, let’s address the idea that Rybolovlev is done with art collecting. One of the ways Rybolovlev confirmed his own suspicions that he was being overcharged by Bouvier was to go to art advisor Sandy Heller.
Since then, Heller has taken over the role of advisor. And though we have only seen in the press that Heller is involved in negotiating the recent sales, it is highly unlikely that Heller’s only job is to divest the Bouvier mistakes.
Now, with $400m to spend, Heller is probably putting together a shopping list.
Nota bene #10 (Felix Salmon)