Art Market Monitor

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What’s the Market Narrative for Keith Haring Without the Never-Paid Record Price?

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The Keith Haring work that Anatole Shagalov failed to pay for was not simply any other lot offered in an Evening sale. When it sold in May 2017, the work set a record price for Haring, an artist whose market has been long-anticipated to take off. The 1982 painted tarpaulin measuring nearly 10 feet square was a solid candidate to reset the Haring market.

It almost doesn’t need to be said. But the art market takes its pricing cues from prominent public sales. When the untitled tarp made $6.5m at auction, it should have recalibrated expectations for potential buyers in the public and private markets. It would also have sent signals to owners of Haring’s work who might want to offer their works for sale.

Following on that point, it is important to remember that the public records of the sale remain in place despite Shagalov’s failure to pay. Thus the market has a false narrative of demand for Haring’s work and the prices collectors are willing to pay. Now that we know more about the fate of this sale and the value of its resale, let’s take a look at Haring’s market over the last several years.Continue Reading

The Other Shoe in That Haring Case

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Bloomberg has delved into the filings on the Shagalov case to unearth the other issue in the case. Sotheby’s resold the Haring tarp for $4.4m to the third-party guarantor after going back to the other bidders. Shagalov complained that the work was being sold below market value. He made that claim based upon a letter of intent from a Spanish buyer:

Two months after Sotheby’s sued, Shagalov says he found a potential buyer for the Haring work on his own — Marco Mercanti, founder of the Madrid-based art firm Oblyon. Mercanti conditionally agreed to pay $5 million through a financing agreement with JPMorgan Chase & Co., according to court papers. Shagalov says that offer — memorialized in an October letter filed in court — is evidence that Sotheby’s failed to get the best possible price on the resale.

Unfortunately, the letter offered seems to have been back-dated to before Sotheby’s demands for payment from Shagalov. That has raised a a separate set of issues about the lawyers. But on the point of the reasonable value of the work, Mercanti seems to have evaporated as a serious buyer once the legal issues surrounding the work were revealed to him and his firm.

There’s a deeper issue here that Bloomberg points out that Shagalov’s lawyer, Mathew Hoffman, has been remarkably frank about. As the art market continues through nearly a decade of steadily rising values, there are more and more buyers out there who engaged in highly leveraged art-trading.

Shagalov’s business, based in Great Neck, New York, is “always the same, which is borrow money, buy art, sell art, pay loans back,” his attorney, Hoffman, said at a Jan. 9 hearing, according to a transcript. “This was an ordinary course of business transaction for him.”

One has to wonder how many art buyers out there are equally leveraged.

Sotheby’s Battles N.Y. Art Dealer Over Keith Haring Winning Bid – (Bloomberg)

Sotheby’s Sues Shagalov for Non-Payment on Haring Sale

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Sotheby’s is suing Anatole Shagalov for payment over a Keith Haring work sold in May of 2017 for $6.5m. That’s the simple version of what’s going on court right now as the above filing from last week details.

There might be more to the story. But it will take time before the art world knows. What we do know is that there hasn’t been a major market correction in either the art or financial markets. As such, there has been little counter-pressure on the misbehavior in the art market.

With art values still rising, buyers are able to bid with the intent to resell the work or re-finance it before flipping it to another buyer. That could be what happened here. Even if that wasn’t the motivation, it seems clear the resale and art financing markets are making it easier for bidders to get themselves into the deep end of the financial pool.

Sotheby’s court filing may be a much-needed reminder that a winning bid is a serious financial matter.

Is Tepid Hong Kong Sale of Warhol’s Mao a Sign of the Chinese Market’s Lack of Interest?

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Warhol, Mao (1973) (12-15m USD)

Did it work? Did Sotheby’s decision to bring Western Contemporary art to Hong Kong (since Asian buyers are very active in the London and New York sales) stimulate sales there this week? The South China Morning Post’s excellent arts reporter, Enid Tsui, delved deeply into the question:

on Sunday, demand for Western art valued at above US$1 million was tepid. Warhol’s Mao, executed in 1973 and one of his many works of the former Chinese leader, was estimated at HK$90 million (US$11.6 million) to HK$120 million (excluding fees) before the sale, and Sotheby’s laid the groundwork to help it sell. The eye-catching portrait in red was one of three works in the evening backed by a guaranteed, irrevocable bid and even chief executive officer Tad Smith chipped in to make a bid at HK$84 million on behalf of a client.

This led Tsui to the conclusion that, “A portrait of Mao Zedong by Andy Warhol sold for less than its pre-sale estimate and a work by Keith Haring failed to sell at Sotheby’s modern and contemporary art evening sale in Hong Kong on Sunday, casting doubt on Asian collectors’ appetite for top-end Western contemporary art.”

But the story isn’t pat, as Tsui tells:Continue Reading

Haring Collectors Sue a Year After Miami Show Battle

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Haring Miami Image

Since we’re covering a lot of authentication issues today, let’s add the lawsuit against the Keith Haring Foundation filed late last week. You might remember the incident a year ago in Miami where the Keith Haring Foundation fought with a group showing works by the artist that were not authenticated.

Now some of the owners are suing the foundation and suggesting the rejections were motivated by a desire to limit the number of legitimate Harings and thereby increase the value of those works (an odd argument but a common one nonetheless.)

The lawsuit, filed in Federal District Court in Manhattan, argues that the foundation’s actions have “limited the number of Haring works in the public domain, thereby increasing the value of the Haring works that the foundation and its members own or sell.” […]

In 2007, a dealer working with Elizabeth Bilinski, one of the collectors, submitted photographic transparencies of several dozen of the works and letters of provenance to the foundation’s authentication committee, which rejected the works as “not authentic,” without explanation, according to the suit.

In March 2013, the plaintiffs exhibited works at a Haring show in Miami; the foundation sued the show’s organizers, claiming that the overwhelming majority of the works in the show were fake and that many had been found “not authentic” by the foundation in 2007, when Ms. Bilinski submitted them.

The lawsuit on Friday seeks $40 million in damages and says the plaintiffs lost sales because potential buyers were deterred by the foundation’s statements and actions.

Collectors of Keith Haring Works File Lawsuit (NYTimes)

 

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