The art market may be disguising its health in a contraction; Don’t Blame the Mugrabis for KAWS (or give them too much credit for Warhol); LACMA is getting Ai Weiwei’s Zodiac Heads

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.)

Christie’s Imp-Mod Evening Sale = $191m

Zodiac Heads Joining LACMA’s Permanent Collection

The collection of animal heads cast by Ai Weiwei that were on display at LACMA nearly a decade ago will be returning to Los Angeles for good, a person close to the artist says. As part of the collaboration with Budi Tek’s Yuz Museum, LACMA will receive an edition of the work to be displayed permanently in the museum’s sculpture garden when the building project is finished a few years from now.

The gift has not been announced yet.

Misunderstanding the Mugrabis

We couldn’t help notice this sentence in an art market analyst’s report today on the KAWS phenomenon:

The auction success of his work owes in no small part to the significant position in it taken by the Mugrabi family, the powerful dealer-collectors who arguably move the Warhol market more than anyone.

There’s no evidence that the KAWS market owes anything to the Mugrabi family’s interest. It is true that they have been beneficiaries of the artist’s growing demand. Their sales may have even fed into that demand and the rise in prices. But the way the Mugrabi family came by their supply of KAWS’s work had no demonstrable effect on on the market. They did not buy at auction during the rise in prices. They have not participated heavily as underbidders to push the artist’s market.

Indeed, there have been several other strong participants in KAWS’s market long before the Mugrabi family arrived. There is also organic demand in a market, Asia, where the Mugrabi family isn’t known to be especially active or influential.

Also, is it arguable that the Mugrabi family moves “the Warhol market more than anyone”? It has been several years since the Warhol market has been meaningfully active and the Mugrabis stopped supporting the Pop master’s market a few years before that. It may be true that he family still owns a significant number of works by Warhol but few believe those works to be especially valuable or sought after at this point.

Surely the Mugrabis did well selling Warhol. But they were hardly alone in that market. Gagosian, Peter Brant and a number of other dealers were active buyers and sellers of Warhol over the 15 year period that his work led the Contemporary art market. There were others, like Gagosian, who also visibly defended the artist’s market at auction. There was also a lot of demand for Warhol’s work. It was hardly something masterminded by a single family.

Giving the Mugrabis too much credit for the market rise of Warhol, KAWS, Condo, Basquiat, Hirst or Prince obscures how markets for artists actually work. In the case of both Warhol and KAWS—whether you think much of their work or not—the depth of demand is demonstrably not the product of a hidden, manipulative hand.

Is the Market Down?

Two stories previewing auction week in the Wall Street Journal and Bloomberg over the weekend were fixated on the smaller sales totals this season. The Journal bemoaned the lack of a nine-figure art work in these sales and compared the sales two years ago when Leonardo’s Salvator Mundi made $450m like that was something could be expected to happen every Autumn.

Bloomberg had previously expressed concern that Sotheby’s new owner might not be able to service the company’s new debt because headline sales figures were projected to be down by nearly a quarter. In their pre-auction report, they compared these sales to the post-financial crisis sales of 2009.

All this worry was presented without taking much stock of the fact that the very top of the market where aggressive deals whittle gross margins and the auction houses had already begun to step aside to let the sellers transact on their platforms without taking on any risk.

Meanwhile, the number of lots on offer in the Contemporary sales estimate between $1m and $5m seems to have gone way up this season. That gives the auction houses much more sale value in the so-called middle market where full-fat margins are meant to be higher than those on the skimmed-off top.

It should also be noted that reports of the death of the third-party guarantee seem to have been greatly exaggerated. 50 of the 126 Contemporary art lots at all three houses with low estimates above $1m were guaranteed directly by the auction house and most already had third-party backers by the time catalogues went to bed. That means 40% of the lots over $1m are carrying guarantees with a total value by low estimate of $296.5m. That’s 52% of the total value of lots over $1m.

Here are Bloomberg’s numbers:

• Christie’s evening sale of Impressionist and modern art on Monday has a low estimate of $148.3 million, down 51% from last year. The bottom estimate for a similar sale at Sotheby’s on Tuesday is down 34% to $186.8 million.
• Estimates for contemporary sales are also lower, with an expected 17% decline at Christie’s and 23% for Sotheby’s.

The auction market is clearly down right now. Whether that’s due to market weakness or market stability is anybody’s guess. There’s some indication that stable prices have made it easier for works to transact privately and dealers seem to have fully bounced back from the embattled position they were in six years ago.

There’s also the aforementioned strength of the middle market to contend with. It’s entirely possible for market volume to contract while the overall market broadens its base and recovers through rotation into a new set of valuable names. There was some indication of that in London during Frieze. Whether it continues later in the week when the Contemporary sales rev up will be the focus of a lot of attention.