This commentary by Marion Maneker is available to AMMpro subscribers. (The first month of AMMpro is free and subscribers are welcome to sign up for the first month and cancel before they are billed.)
Is There Anything New About the KAWS Frenzy?
The thing about that KAWS story where there was supposedly a feeding frenzy in KAWS’s market because of the recent auction sales is that it’s not really a new thing. The same story confirms twice that KAWS sold out at last year’s fair but the price went up:
- “They always sell out and as soon as they sell out the price goes up,” said Anna Becker, 44, of Los Angeles, who arrived too late at 11:20 a.m.
- Helen Schorsch, 26, managed to add her name to the list Wednesday, recalling that a portfolio of 10 prints by KAWS, at $40,000 apiece, sold out at last year’s fair.
What’s Holding the Asset Art Lending Business Back?
It’s hard to tell whether The Art Newspaper’s big story on art lending is meant to be an exposé or an advertisement. The sub-head of the story claims without evidence that “the rapid growth in the number of loan providers […] could transform the art market’s relationship with the financial markets.”
How that might be is hard to see. The overall size of the art loan business is tiny (indeed, one can make the case that an asset-backed art finance business has failed to emerge after five years of real trying); in relation to the financial markets, art loans approaches something on the level of a quantum. So, as a function of art being treated as an asset, the financial markets aren’t worried. Neither should the art market be.
Setting aside the private bankers at US Trust, Citibank and Emigrant, who are just using art to market more loans to their banking customers (not that there is anything wrong with that), and turning to the non-recourse lenders there’s not too much to see. Look at TAN’s own evidence. A sleuth had the smart idea to go through the UCC filings, presumably in New York State. But what the story calls “a wide spread of owners who have leveraged works” is more like a small smattering.
Either the researchers didn’t look very hard or there’s not a lot of non-recourse lending going on. Here’s what TAN found:
- “The Turkish trader Yomi Rodrik, for example, has borrowed against nine works by the likes of Rudolf Stingel, Anselm Kiefer, Takashi Murakami and Jean Dubuffet from Athena Fine Art Financing”
- “Omanut Holdings borrowed against 25 works, including Keith Haring, Mark Grotjahn and KAWS, from TPC Art Finance”
Additionally, TAN found four dealers—Pace, Mitchell-Innes and Nash, Kasmin and Gagosian—with liens against their art. Dealers getting liquidity out of their stored inventory is a smart financial move. Why have all of your capital sitting in the storage racks when you’ve got payroll, shippers, art fairs and others to pay. Quickly paying off a work when there’s an interested buyer, or substituting another work as collateral, is a great way to reduce the capital needs of running a dealership. The question is why more dealers don’t finance their inventory this way? Or why they can’t?