'The Offer-You-Can’t-Refuse Market'
Overheard during the recent Sotheby’s, Christie’s, and Phillips de Pury & Company auctions:“I don’t know what to make of it.”“I’ve never seen anything like it.”“I’m mystified.”“Bewitched, bothered, and bewildered am I.”So what happens now that billions of dollars were spent recently, including $72.8 million for a Mark Rothko and $71.7 million for an Andy Warhol, at the sales?Is the sky the limit? How high is up? When will the bubble burst? Or will it?From Chelsea to China, from Mumbai to Moscow, those are some of the questions you hear wherever art is bought or sold.Last year at least 810 works of art were sold for over $1 million at auction, according to Artprice.com, which added that we should keep in mind that “until the end of the 1990s only 100 to 200 auctions per year broke through the million-dollar threshold.” At least 200 works went for more than $1 million at the recent auctions.We’ll never know, of course, how many more works were sold in dealers’ back rooms, front rooms, and at art fairs, as Carole Lieff, a Los Angeles–based art consultant, wrote in her newsletter recently.“After all,” said one dealer who has sold many works for way over $1 million, “since the private market is significantly larger than the auction market, I’m convinced that way over 1,000 works were sold privately last year for more than $1 million.” So the worldwide total at auction and in private sales is more than 2,000? “Absolutely” was the reply.We should also keep in mind that Forbes magazine, which annually reports on the billionaire boom, found a record 946 billionaires throughout the world, with 415 from the United States. Last year the figure was 371. There were 176 newcomers, including 19 Russians, 14 Indians, 13 Chinese, and 10 Spaniards, as well as the first billionaires from Cyprus, Oman, Romania, and Serbia.But according to Richistan, a fascinating and entertaining book about the new rich by Robert Frank, the Rich List Company, which keeps an eye on the wealthy, has a list of more than 1,000 billionaires. And then there are billionaires we don’t know about.So whatever the number, what does all this mean for the art market? “You lose touch with what a million dollars is when you make a billion dollars,” said one observer in touch with billionaires.“We clearly have an audience with unlimited finances,” said Arne Glimcher, chairman of PaceWildenstein. “This is the offer-you-can’t-refuse market.”So how high is up? “There’s no amount of money that’s unreachable in this market,” said another observer.Look at the ’80s, suggested still another. “Ten million dollars for a Jackson Pollock was a lot. Now you can’t get a Doig for that.” A Peter Doig painting was sold at Sotheby’s in London last February for $11.3 million, placing him with Lucian Freud and Gerhard Richter as one of the most expensive living European artists.Observers of Pollocks and Doigs were among the collectors, dealers, auctioneers, museum directors, curators, and consultants interviewed by ARTnews correspondents in 22 countries for the 17th annual ARTnews 200 (and the Top Ten), our list of the world’s most active collectors.Back in the second half of the 15th century, Lorenzo de Medici, who was known as Lorenzo the Magnificent, headed the list of the world’s top collectors because he supported Botticelli, Leonardo, and Michelangelo, among others. Although he was not so magnificent in his later years, since he misappropriated state funds for his own needs, Lorenzo was “typical of the avid collector” of the time because of “his craving for luxury, his pleasure in objets d’art for their own sake, his appreciation of quality and of authorship, his expert judgment and his egotism.”At least that’s what the late historians Rudolf and Margot Wittkower wrote in their book Born Under Saturn.The Wittkowers also noted that “more and more Florentine citizens indulged in projects of extravagance and splendour. A sober observer noted in his diary for the year 1489–90: ‘Men were crazy about building at this time, so that there was a scarcity of master-builders and of materials.’” The sober observer listed a number of buildings, including the Palazzo Strozzi, begun for the banker Filippo Strozzi. The Wittkowers called it “one of the great monuments to civic pride” and a “telling example of the new style of living.” But Strozzi never saw it finished.Globalization has generated many avid collectors. According to a Sotheby’s official, 20 percent of the bidders at the February sale in London were first-time buyers at auction.Just about everyone contacted by ARTnews said they were convinced that despite the highly publicized emergence of collectors from Russia, China, and India, as well as the much quieter arrival of a small number of art buyers from Singapore, Indonesia, Korea, and Abu Dhabi, the international art market is still dominated by Americans. The figure is usually 60 to 70 percent.However, at one recent sale of Impressionist and modern art at Christie’s, 29 percent of the buyers were American and 48 percent were European. A key reason: the weak U.S. dollar.What else is new? “There are people who want to build collections whose budget per item is up to $5 million, and they can’t get anything—they’re priced out of the market,” said Michael Findlay, a director of Acquavella Galleries in New York. “In 20th-century works of art, it’s difficult to satisfy them.“The last time the market rose dramatically—between 1987 and 1990—the entire market rose in equal proportion. Paintings of lesser quality and value went up, and paintings of moderate quality and value went up, and the top quality went up on the same curve. There was a tide, which brought everything up. Now you have the top quality, which has gone through the roof. The next level down is very far down.”Findlay continued: “The paintings that were $10 million or $15 million are now $50 million. The paintings that were $2 million are not necessarily $20 million, because you’ve got a smaller amount of people with a huge amount of money who are chasing the same type of trophy pictures—a Tahitian Gauguin, a van Gogh portrait, a Cézanne still life, a Cubist Picasso, a Jackson Pollock drip painting, a Warhol disaster.“Contemporary art, which used to be a kind of what-the-kids-did-following-the-Impressionist-and-Modern-sales, is now giving those sales a run for the money.”What about those hedge-fund CEOs?“I don’t know whether the profile of the ubiquitous hedge-fund collector is matched anywhere in the world,” Findlay said. “They combine the means, the aggression, the enthusiasm, and access. They play hard. It’s another forum to demonstrate the same kind of acumen.”So how do today’s collectors differ from Lorenzo the Magnificent? “They have to have a short memory,” said Neal Meltzer, a private dealer and former head of contemporary art at Christie’s.How come? “The way prices have been escalating so much, you have to have a short memory to stay in the game.”Are there any clouds? “I don’t see anything on the ground, only in the collective imagination of people who have been in the business a long time—collectors and dealers,” said a cloud watcher. “People talk about it, but there’s no evidence.”Glimcher sees evidence of a different kind of cloud. The market, he said, “is dangerous because of the high prices that are being achieved for young artists. If their show is a sellout, there are collectors on a waiting list who are waiting for works that looked like the last show. Early discovery inhibits experimentation and growth. It’s a question of not succumbing to fashion and money, and being true to yourself. Poverty is not noble.”So will the bubble burst? Some folks don’t consider it a bubble, and, furthermore, they said, the universe of collectors keeps growing. Hogwash, said Lieff and others who stress that the art market is not immune to downturns. The consensus is that there will be changes, but no one is predicting when.Milton Esterow is editor and publisher of ARTnews.