Sotheby’s Lifts the Curtain on New Galleries

Tours of Sotheby’s new New York gallery spaces have begun; Athena Art Finance has been sold to YieldStreet; Visit Art Cologne virtually with Vernissage TV; Early Art Cologne sales.

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Sotheby’s has begun to show journalists its new galleries that transform the company’s headquarters on York Avenue and create a series of impressive exhibition spaces that could change the way the firm does business. The former grand space on the 10th floor of the building will now become office space uniting various departments to collaborate. The grand show spaces for auctions and private sales begin a few feet from the front doors where visitors will enter. There, beneath the escalators that lead to the heart of the exhibition space, a few short steps lead to a double-height room that will host cars, art and other objects for previews and potentially act as a second auction space. Up the escalators, there is a self-contained double-height space with internal wallspace that can accommodate a large show which might easily over-flow into galleries across the hall or into the capacious hallways that can also be hung with art. On the third floor, the fun really begins. Here the bulk of the floor is gallery space. Two different double-height rooms contain vast expanses of wallspace, there’s over 5400 linear feet of wallspace in the new galleries. Some of these present the opportunity to show works larger than any institutional space in Manhattan could. One wall is 106 feet long; another has 1200 sq feet of display space. Finally, the fourth floor holds an octagonal gallery that has already become a focus of competition among departments for its appeal as a selling space and series of enfiladed galleries that could easily hold a small, specialized art fair. These two spaces are joined by a long gallery hallway that will remind some of the great houses of Europe. It’s easy to be cynical in the art market. It’s hard to maintain that flinty attitude after walking through these new spaces which the public will be able to do starting May 3rd.

A post shared by Art Market Monitor (@artmarketmonitor) on Apr 9, 2019 at 4:15pm PDT

Athena Sold For Portfolio Value

The long-rumored sale of Athena Art Finance has finally been announced in the Financial Times today. The buyer is a new platform for wealthy individuals to find greater yield for their money.

The business was sold for $170m or the value of the loan book. The FT also reveals that the firm had made $225m in loans over its four-year lifespan. Art loans run for a short duration. So these numbers tell us that Athena had a long ramp to build a portfolio. At $170m the firm was surely behind plan but accelerating in loan volume.

One issue was surely educating the art market, especially dealers, to use the capital locked up in their inventory more wisely. Another was most likely the low interest rate environment which means there have been a number of different ways for art market participants to fund their businesses. Collectors also have too many other ways to raise funds that would make asset-backed art loans an item low on an action list when looking for shorter-term cash.

The FT’s story also gives us one other relevant piece of information starting with the acquirer:

“YieldStreet is also a start-up, launched in 2015 by three Wall Street entrepreneurs, which has said its mission is to ‘democratise’ investments usually reserved for institutional investors, hedge funds and rich family offices including Soros Fund Management.”

One of the operating assumptions around Athena’s launch was that a larger, more professionally run lending operation with access to cheaper capital could crowd out some of the mom-and-pop players in the art loan market who were acting as intermediaries between wealthy art owners in need of cash and wealthy capital holders in need of return. What this means in practice is that someone with valuable art would go to the lenders; on a case by case basis, the lenders would go to a pool of wealthy persons and raise capital.

Carlyle and Pictet, the original backers of Athena, had access to lots of cheap capital to get Athena launched. The hope was the firm would build a book much larger than $170m that could then be syndicated out to other backers thus reducing the cost of capital.

The YieldStreet deal is something of a return to the earlier model, though possibly on a more industrial scale. YieldStreet says “We connect accredited investors to asset-based alternative investments with 8-20% target returns.” Asset-backed art loans cannot charge much more than 10% without running into too much competition from other funding sources. That doesn’t leave YieldStreet a lot of room to play.

If YieldStreet has some secret tech sauce that enables it to assemble capital from wealthy investors at very low operating costs, it might be able re-create the cottage industry on an industrial scale while eking out a small profit. But it still has to pay for sourcing those art loans which isn’t an automated process. Nor is it cheap.

Art Cologne with Vernissage TV

Vernissage TV has been making condensed videos of art fairs for a number of years now. In general, they’re an interesting and effective way to experience an art fair without attending. Their Dziga Vertov, “Man with a Camera”-style of film-making (in this case it is a woman with a camera) generally captures the chaotic, incomplete multitude of mini-narratives that an art fair visit spawns. Here the Vernissage TV team seem to have decided to experiment with You Tube Live and created an hour-long tour of Art Cologne in real time. It ends rather abruptly. And it will be interesting to see if they produce an edited version from the footage. Nonetheless, to have a real-time look at an art fair on another continent is a privilege we should be grateful for.

Early Art Cologne Sales

Hauser & Wirth brought a solo booth of new works by Rita Ackermann. Sales included five paintings (USD 95,000 to USD 120,000) and several drawings by the artist priced at USD 20,000 each.