David Hockney, Sprungbrett mit Schatten (Paper Pool 14)

This look at David Hockney’s market—based upon data from our friends at Pi-eX—is available to AMMpro subscribers. Monthly subscriptions begin with the first month free. Feel free to subscribe and cancel before you are billed.

Today’s announcement that Christie’s have decided to sell David Hockney’s Portrait of an Artist (Pool with Two Figures) during the November sales cycle in New York means the auction house will have two major works by David Hockney in the sales cycle. The works come to market in the midst of an unprecedented explosion in Hockney sales. In 2018, the three top prices for Hockney’s work were set at Sotheby’s. Two of those prices, including the most valuable Hockney sold at auction were later works. One was an example of the paper pool series that made $11.7m, well over the $7m high estimate for the work.

Much of the attention during the sale will be on double portrait being sold by investor Joe Lewis who is looking for a price three times the top auction price for the artist. But the paper pool from Hunk & Moo Anderson’s collection also has the potential to perform extraordinarily well. With so much potential value on the line, it seems smart to look at the history of the auction market for David Hockney’s work … such as there is.

The most striking aspect of Hockney’s market is how few works have been sold at auction. There have only been 56 works sold for prices above $1m. Prior to 2016, the peak number of lots sold in evening sales was 6 in all of 2013. There were no lots sold or offered during an evening sale in all of 2014. In 2015 and 2016, nine lots were offered during the evening sales. So far in 2018, nine lots have been offered and eight have sold.

That’s a very small sample to base any kind of market analysis upon. Nonetheless, dollar volume has exploded since 2015. For the eight years from 20017 to 2014, hammer totals never rose above the low teens in overall auction volume. This despite two important sales in 2009 when the estate of Betty Freeman significantly advanced Hockney’s prices when her large portrait made nearly $8m with fees. Later that same year, another work from the same era sold for more than $5.4m. That second work, California Art Collector (1964) had been bought 16 years earlier for $1m. Contrast that with the unlucky experience earlier in the decade when the Portrait of Nick Wilder (1966) first caused a stir in 2002 when it sold for $2.8m. Unfortunately, the painting wound up back on the auction block a year later costing the owner $500k as it made $2.3m on the rebound.

In 2013, Hockney’s market popped again when four works totaled more than $10m hammer. The two main components of that sales volume were the more than $5m premium price paid for a 1963 work and almost the same amount paid for a Yorkshire landscape. Hockney’s market went into hibernation again for a few years until 2016 when the sales totals rose once again. In February of 2016, two works sold well above their estimates in London, alerting the market to the brewing interest around the Tate’s planned career retrospective a year later. With the market waters sufficiently chummed by the London sales, the auction houses brought a great deal more material to the block in October and November as anticipatory interest in the retrospective was peaking. More than $27m including the premium was spent on the artist’s work that year. More than two thirds of that money in the Fall.

Among the last works to be auctioned was the small study on paper for the big Lewis painting. It doubled the high estimate.

More works came to market in 2017 but most sold within or toward the low end of the estimate ranges. There was only aggressive bidding on two or three of the lots. Even through 2018, the effect of the Tate retrospective and its subsequent journey to New York’s Metropolitan museum of art was not one of reckless demand.

It is true, that the scarcity of auction records makes it difficult for sellers to estimate Hockney’s work. Even so, the the increased volume on the market is its own testimony to demand for the artist. In the first half of 2018, the Hockney market took off in every way possible. The more than $50m in hammer price spent on Hockney’s work came from a range of periods. The most impressive performance was the paper pool offered at $5-7m at Sotheby’s that was bid up to an $11.7m final price. There was a 1995 work that shot past the $3.5m top estimate to make $5.6m. The most significant number was the artist’s record set at $28m for a large California landscape from 1990. And that Yorkshire landscape that made $5m five years ago was resold for a hair under $15m hammer or nearly three times the price in half a decade.

It is tempting to play a little hopscotch on prices. California Art Collector increased five-fold from 1993 to 2009.  A small 24-inch square pool painting from 1965 traded for $2.4m in 2007. It made $3.9m five years later. The Yorkshire landscape doubled in price from 2013 to 2018. Betty Freeman’s portrait was $8m in 2009.

The Portrait of an Artist (Pool with Two Figures) would have been worth significantly more than Freeman’s portrait in 2009. But how much more? And if prices doubled from 2013 to today, what’s the delta on value for the crucial run-up from 2009 to 2013? For argument’s sake, for Joe Lewis’s painting to make $80m, it would have had to trade around $40m five years ago. Does that mean it would have been a $25m painting in 2009? That’s three times what Beverly Hills Housewife, the Freeman portrait, sold for in 2009. Seems possible but not obvious.

The reason Portrait of an Artist (Pool with Two Figures) is so appealing commercially is that it is one of the few large pool paintings on canvas that also happens to be from the very significant series of dual portraits. The pool makes the work a California painting but the subject matter is also the artist’s obsession with his lover at the time. Smart market participants wonder which billionaire—besides David Geffen who already owned the painting for twenty years before selling it to Lewis—is ready to spend $80m on a painting celebrating gay love. Try coaxing a Chinese billionaire to buy it. While we’re discussing expectations in the Hockney market, let’s look at the sales totals versus estimates over the last 12 years. For all of the success of the first half of 2018, overall performance and average lot performance have struggled to keep up with estimates. Yes, the samples are very small and lumpy. But Hockney only runs away in specific cases.

Portrait of an Artist (Pool with Two Figures) is being sold without a third party or direct auction house guarantee. That raises the question of how guarantees influence this market. Below is a chart of the value of works offered without guarantees (NG), with direct auction house guarantees (AHG) and with third-party guarantees (TPG).

This year the value of third-party guarantees dwarfed the Hockney market. The paper pool was back-stopped with a third-party guarantee. So was the record price California landscape Pacific Coast Highway and Santa Monica among other lots. To get a better sense of how that influences results, Pi-eX split out the results from the guaranteed works versus the un-guaranteed works.

Because of the art market’s shift to seeking guarantees on the best lots, there is probably a survivorship bias to these charts. As you can see from the works below that did not get covered by guarantees, performance was way below expectations both in the aggregate and on an average basis.

Survivorship bias means the strong works attract both bids and third-party guarantees. This isn’t always the case in the art market. There’s often an effect where third-party guarantees put bidders off under the assumption that someone smart has already found the right price to own the work or benefit from the ‘greater fool.’ But in the case of Hockney, the guaranteed works attracted bidders and performed squarely within the estimates.