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Middle Market Sales See 23% Jump in Totals, 40% in Average Price: 2018 Fall NY Mid-Season Contemporary Sales Analysis

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This analysis of the September 2018 Mid-season Contemporary in New York is available to AMMpro subscribers. Recent reports will be available to all viewers initially before going behind the paywall. Monthly subscriptions begin with the first month free. Feel free to subscribe and cancel before you are billed.

The Mid-season Contemporary art sales in New York were smaller this year than either in the Spring or last Fall. Whether that is a harbinger of a slow down in the middle market which has heretofore been a powerful driver of sales activity or simply a reflection of the shift in the broader market toward these types of works, remains to be seen. The marquee sales in November and May have a gravitational pull for consignors. Both day and evening sales have become more accessible to artists and works that might have previously starred in these types of shoulder season sales.

Take, for example, the two top lots among the three houses. One was a Frank Stella geometric painting that sold for $2.66m, toward the low end of the $2-3m estimate. The other was a study for the Kerry James Marshall work that sold for a record $21.1m earlier in the year. In 2017, those top lots were quite different.

The top lot of the 2017 sales cycle was a Milton Avery work that made $3.66m above the $3m high estimate calling attention to Avery's work which would also perform exceptionally well during the Rockefeller estate sales. The second lot of that cycle was a Joan Mitchell work that sold for $3.3m over a $2m high estimate. We've all seen the momentum that continues to drive through the upper reaches of the Mitchell market still.

There are more clues about the meaning of these sales results deeper in the data. But let's first look at some of the top line figures and compare them to a year ago.

***We've had comments from readers about the drop in sales. It is important to remember that there are two ways to look at sales cycles. One is to include all similar works sold during the same period to record the market demand and selectivity. That's what we did with our original report which included single-owner sales at each of the houses. That's what accounts for the drop in sales from 2017 to 2018. Sotheby's had two single-owner sales in the period and Phillips had another where KAWS first demonstrated some of his market momentum that continues today.

The second way is to look at like-for-like sales comparisons. Here it is worth reviewing how the mid-season contemporary sales performed year-over-year with the single-owner sales excluded. Why? Because you can see an important growth trend in the middle market persisting. According to numbers shared with us by Sotheby's, the September sales looked like this:

2018 Premium Total: $57.3m    2017 Premium Total: $46.6m

2018 Average Price: $72.2k      2017 Average Price: $51.5k

Hammer Ratio: 1.03 .                  Hammer Ratio: 1.11

The rise in premium total was 23% year over year. But the average price rose a whopping 40%. The fall in the hammer ration (the hammer price divided by the low estimate) shows that bidding stayed closer to the estimate range. A slightly higher rate of works getting bought in, 24% versus 21% the year before suggests that estimates have finally caught up with the market. The shoulder season sales are no longer bargain bins where collectors, dealers and advisors go to find overlooked works of value.

These numbers are the culmination of a trend that can be seen across the four sales offered in the last two years that saw a progression from the Spring of 2017 where the the premium total was $44.6m and the hammer ratio, 1.19; to Fall 2017's $46.6m, 1.11; to Spring 2018 where the total was still higher at $53m with a 1.07 ratio; to Fall 2018's $57.3m, with a minimal 1.03 ratio. It's easy to see the way the estimates and hammer prices are converging as specialists get a better grip on the market. Curiously, the average prices bounce around the $50k range for three of the four sales cycles. But then the average price jumped this September.

We try to stay out of the horse race between the houses in these sales analyses. But to be fair to Sotheby's who flagged this data, we can look at some differences between the houses. Sotheby's consistently has the higher average prices in the $70k range in 2017 and the low $100k range this year. But Christie's saw the biggest jump in average prices from consistent $50k range to $76k this past season. Christie's also consistently has a hammer ratio below 1 showing their mid-season estimates are aggressive.

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Frieze 2018 Sales Report

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Eddie Martinez, Peach Beach (2018) from Timothy Taylor's sold out solo show of the artist's work

This Frieze 2018 sales report is available to AMMpro subscribers. Recent reports will be available to all viewers initially before going behind the paywall. Monthly subscriptions begin with the first month free. Feel free to subscribe and cancel before you are billed.

Hauser + Wirth

Frieze Masters

  • Arshile Gorky Untitled, Head (1936–1942) Oil on canvas USD 1,600,000  to a U.S. Collection
  • Lucian Freud, The Painter's Mother (1940) Ink on paper USD 155,000
  • Henry Moore, Portrait of Stephen Spender (1934) Pen and ink, chalk, brush and ink, wash GBP 50,000

Frieze London

  • Keith Tyson, Entangled Still Life (2018) Oil on Aluminium USD 100,000
  • Rashid Johnson, Untitled Escape Collage 2018  USD 215,000
  • Lorna Simpson, Blue Earth/Sky 2018 Ink and screenprint on gessoed wood panel USD 375,000 to a British collection
  • Matthew Day Jackson, Flowers in a Vase (2018) Textile, silkscreen, watercolor, woodblock print, pigment print on paper European collection.

Galerie Ropac

  • Robert Longo Untitled (Forever; Hydrangea, Beethoven's Love Letter #9), 2018 sold for $800,000
  • Tom Sachs  Luggage (Rimowa), 2016  sold for $160,000

Artnet's Julia Halperin had these sales:

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The Market’s Missed Thiebaud Opportunity

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This look at Wayne Thiebaud'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.

Barney Ebsworth's art collection is going to light up the November sales this year bringing some extraordinary examples of American Modern and Contemporary art to the market. Yet for all of the excitement that will surround the sale, one lot bought by Ebsworth for an astonishing and record price in 1997 will be missing. It hasn't been sold privately; it won't appear in a later auction; it hasn't been donated to a museum; it appears to be work Ebsworth's heirs are attached to.

With an overall value targeted around $300m, Ebsworth's collection doesn't need Wayne Thiebaud's 1962 Bakery Counter — which could easily carry a $20-25m estimate — to generate a significant fortune. Ebsworth's heirs won't feel a loss but the Contemporary art market might.

The art market thrives when an artist with a substantial body of work sees a broad increase in value. This process is often provoked by redefining the sale of a particularly good, sought-after and impressive work of art. The markets for Rothko, Richter, Basquiat, de Kooning  and many others were similary transformed by the sale of single exemplary work.

We used to use the term masterpiece to describe these types of works. It would not be out of line to call Bakery Counter Thiebaud's masterpiece. This post will look at the last 12 years of Thiebaud's auction sales. Before we get there, though, it is worth recounting some of the sales history of Theibaud's great work.

A good deal of the appeal of Bakery Counter lies in its substantial size, early date and the fact that the image depicts Thiebaud's echt subject matter, cakes and pastries. The artist's work is far broader than that. Nonetheless, the painter's taste for sweets sits at the confluence of art history and popular appeal.

One reason Thiebaud's market has lagged many of his peers is the fact that his work was long considered regional or of minor interest. It took until 2001, when the artist was 80 years old, for the Whitney's retrospective of that year to have an impact upon his reputation in the wider art world. 

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Thin Trading in the Hockney Market Makes $80m Hard to Predict

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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.

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How the Zao Wou-ki Market Took Off

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This look at Zao Wou-ki market over the past 12 years—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. **The original version of this post contained some charts with erroneous data. We have since had the data cleaned and corrected. The substance of the analysis has not changed.

In late May we published a brief post about the Zao Wou-ki market prompted by some claims on Instagram that the Chinese artist's market had been jump-started by a joint show of his work alongside the work of Willem de Kooning organized by Lévy Gorvy in January 2017 before it traveled to Hong Kong. This prompted a bit of angry email from some readers. They stated, rightly, that the Zao Wou-ki market was not the product of a show comparing the artist to one of the West's great abstract artists.

We promised, at the time, to offer a more detailed analysis of the Zao Wou-ki market that would continue to make clear that Asian buyers were not taking their cues from New York gallerists. Before we get to some charts, let's examine the boldest claim on Instagram. Brett Gorvy used the post hoc prompter hoc fallacy to suggest that his January 2017 show had provoked the successive sales of four works just below or above $20m. In his post, Gorvy described it in this way:

  • This show was followed with a succession of record prices at auction, with Zao Wou-Ki consistently breaking the US$20 million mark over the past year especially

The word consistently is misused here. Used properly, consistently would mean that all of the Zao Wou-ki works sold in the year after the show would have achieved prices above $20m. What Gorvy means is that Zao's work has continually or regularly been able to break the $20m barrier.

Was that caused by Lévy Gorvy's masterly presentation of Zao as a peer of Willem de Kooning? There's no evidence to support such a claim.

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Sotheby’s Earnings Down on One-Time Setbacks

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This look at Sotheby's earnings for the first half of 2018 is available to AMMpro subscribers. Monthly subscriptions begin with the first month free. Feel free to subscribe and cancel before you are billed. 

Sotheby's earnings call and financial filings this morning offered their usual periodic window into the company's inner workings, priorities, successes and weaknesses. The headline from the call which had an impact on Sotheby's stock (BID) knocking 10% off the price as trading opened before recovering to around the $50-level for the rest of the day.

The stock was impacted by the news that although sales were up (22%) for the first half of 2018 over 2017's total, income was down (26%.) More to the point, Sotheby's commission margins, which had been improving steadily over the last three years, dropped from 16.7% last year to 15% this year. Sotheby's was upfront that the fall in commissions could be attributed to two works sold in the first semester of 2018.

It didn't take much to surmise that the two works mentioned were the Modigliani sold in New York and the Picasso Marie-Thérèse sold in London. On the call, CEO Tad Smith was quick to point out that one of the works made the company money even if it had an out-sized influence the commission margin while the other was simply mis-priced. (That's a polite way of saying the company made a mistake.)

This is startling level of transparency from an auction house about their guarantee book. Those who pay attention to the auction houses might be asking themselves why. 

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Fractional Art Buyers Might Be in for a Shock

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Colin Gleadell offers some background on the Andy Warhol work being offered for fractional ownership by Maecenas, the blockchain-driven art syndication company. The idea of pooling assets to buy works of art is nothing new in the art market. Formal and informal funding arrangements underpin thousands of works held privately.

Gleadell's close look at the Warhol work's market and sales history suggests that Maecenas is relying more on the novelty and enthusiasm surrounding cryptocurrencies to attract investors than the long-term appeal of the work itself.

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A Brief Look at Market Share in 2018’s First Half

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This look at the first half of 2018 market share by artist was prepared with data from Blouin Art Info. It is available to AMMpro subscribers. Monthly subscriptions begin with the first month free. Feel free to subscribe and cancel before you are billed. 

Blouin Art Info has done some calculations to conclude that Christie's, Sotheby's and Phillips together have sold $5.682bn in art during the first six months of 2018. It's worth noting that Arttactic has separately released numbers that put the combined figure of the three auction houses at $6.911bn:

ArtTactic said Christie’s and Phillips have gained market share in the period: Phillips reported auction sales rose to $511.8m (£386m), up 59% from the same period a year ago, while Christie’s grew 27% to $3.6bn, and Sotheby’s rose 11.3% to $2.8bn.

We're not here to referee between the two calculations when we can simply wait until both Sotheby's and Christie's release their numbers on the first half sales. For our purposes here, we can all agree that sales totals are up across the board.

As a general rule of thumb, the art market does more business in the first half of the year than the second, primarily because the first half contains more sales cycles with London hosting March and June events and New York's Spring event often featuring the most ambitious lots.

This year saw the additional sales 'season' of the Rockefeller collection in New York which might further skew the sales figures toward the first half of the year. The Rockefeller estate also seems to have had a strong effect on Christie's overall sell through percentage for the first half. This is worth noting simply because Christie's has made a point of corporate strategy to increase sell-through rates as a way to demonstrate value to buyers. Though of the three houses, Phillips seems to have posted the best sell-through rates, no doubt a feature of their small and targeted sales.

Blouin's numbers offer us the opportunity to run some quick market share calculations:

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High-Value Lots But Only One Per Artist: London Contemporary Auction Analysis

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This London Spring 2018 Contemporary sales analysis is available to AMMpro subscribers. Subscribers get the first month free on monthly subscriptions. Feel free to cancel at any time before the month is up. Sign up for AMMpro here.

The London Contemporary art auctions were up substantially—65% in total sales—from 2017 to 2018 despite Christie's decision to remain on the sidelines as far as mounting an Evening sale. There was a 40% increase in the number of lots offered in 2018. And the average lot value increased 19% from 2017 to 2018.

How do we explain these increases against a market mood of auction fatigue and the overall decline of artists who previously were the engines of market growth? From the data we combed through from our friends at Live Auction Art, it begins to look like the transition in the Contemporary art market is now in full swing. For a number of years, the Contemporary art market was a masterpiece market like the Impressionist and Modern market. It recently became a broader market of a greater number of artists who may rise and fall in market share by the season but also now attract significant value. 

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Does Christy MacLear’s Departure Impact Sotheby’s Strategy?

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This discussion of Sotheby's strategy and Christy MacLear's departure from Art Agency, Partners is available to AMMpro subscribers. Subscribers get the first month free on monthly subscriptions. Feel free to cancel at any time before the month is up. Sign up for AMMpro here.

Late on Friday before a holiday week, ARTnews published the news that Christy MacLear, a high-profile hire at Art Agency, Partners, the advisory division of Sotheby's, had left the company quietly. Normally in these situations, a Summer Friday news dump, the news is coming from a corporation looking to minimize the coverage and allow all parties to move forward with minimal embarrassment.

This particular new dump didn't seem to come from Sotheby's, though. The initial reports were instigated by ARTnews. Sotheby's response suggested they were caught unawares on Friday afternoon which caused executives from the firm to provide on-the-record quotes Monday.

If the goal was to minimize MacLear's departure, the strategy didn't work. If the goal was to maximize the coverage or put MacLear into the best light, that didn't seem to work either. Though a near real-time response came on Twitter from an art market gadfly engaged in a long-running quixotic battle with the auction houses.

Everyone is being frostily polite in the news reports. MacLear, who is the more likely party to have alerted ARTnews, finally provided the site with a quote:

It has always been my honor to work on planning legacies of artists—I took the leap to AAP/Sotheby’s to verify the need and then innovate in the field. We did that, and now it is time for me to work on behalf of artists independently after my non-compete period.

Sotheby's countered with this from AAP's Allan Schwartzmann:

The business is moving forward in several directions in a healthy way—we are just beginning a second phase consultancy for several prominent artists of different generations regarding major museum placements; gallery affiliations; funding programs; and long-term legacy planning. There is increasing demand for our artist advisory services.

In other words, Schwartzmann and MacLear are signaling a footrace to sign up more estates. Which brings us back to the gadfly's question: Is Sotheby's APP strategy succeeding? Servais's critique isn't very clear and it is unlikely that we'll get a more articulate expression of that critique beyond the implicit argument that the auction houses are an expansionary threat to the art market eco-system.

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