NEW YORK—The financial crisis is beginning to be felt in the art world, as gallery owners report fewer buyers coming in and a lower volume of sales. “People are holding back,” said Gerald Peters, who owns galleries in Dallas, New York and Santa Fe, N.M. “It’s not overwhelming . . . yet.” Despite “a few months in the red,” however, he does not expect the year 2008 to result in a loss.
Hollis Taggart, a Manhattan gallery owner, told ARTnewsletter that “buyers are in a state of suspension,” postponing decisions to purchase works. “I have a number of deals that are in suspension, and deals that were pending have been put in the suspension category.”
Several experts pointed to a drop in overall volume as well as uneven demand at recent Asian art auctions and midmarket American sales as signs that the market is beginning to slow (see story, page 3).
Dominique Lévy, co-owner of L&M Arts, New York, also reported fewer buyers and longer deliberation time for each sale, and described the situation as “less frenetic. There’s more time to talk about the art.” The past summer’s sales, she noted, were very strong, but the month of September was quieter both at L&M Arts and at the art fairs—the Biennale des Antiquaires in Paris and Showcase Singapore—in which the gallery participated. “We did okay at these fairs, we covered our expenses,” Lévy said, “but we did nothing like we had done a year earlier.”
Roland Augustine, co-owner of Manhattan gallery Luhring Augustine and the president of the Art Dealers Association of America, told ARTnewsletter that he expects “a significant amount of contraction within our industry,” which he predicts will be particularly hard on “younger, newer dealers and emerging artists.”
Too Soon To Tell?
London dealer Leslie Waddington said that “it’s a little early to tell if and how the chaos in the banking world will affect the art market,” but he noted that his gallery has been quieter than usual over the past month, and said that he has seen more interest in collecting from North American buyers than from Europeans. “I think we’ll know after the next few important art fairs. People save up their money for major art events, and we’ll have to see where we’re at then.”
Some buyers have used the slowdown in gallery sales as an opportunity to press harder for lower prices and discounts. “The nice way to say it is that this is a buyer’s market,” Peters said.
While some dealers believe art fairs will play an even bigger role in sales in the months ahead, others are skeptical. Michael Findlay, a director of Acquavella Galleries, New York, expressed doubt that the art fairs will effect great changes. “I don’t think there are hidden pockets of great wealth that will rescue the art market,” he said.
Findlay thinks the upcoming November auctions of Impressionist, modern and contemporary art will be a better indicator of the true state of the market. “If good things don’t sell, it tells us something,” he said. “Of course, if good things do sell, it might tell us nothing.”
He added that the recent strengthening of the dollar in relation to the euro may diminish the willingness of Europeans to buy art in the United States. Demand from European buyers has been a major factor in the strength of auction and art-fair sales in recent seasons.
Some museums are retrenching or restructuring. The Detroit Institute of Arts, for instance, announced a $17 million budgetary shortfall for 2008 and is projecting another shortfall for next year. For several years, the museum has been operating in the red—with revenues lagging behind expenditures in the $12 million to $16 million range—and making up the difference by dipping into funds raised in its ongoing capital campaign. The Claremont Museum of Art in California, which opened in 2007, has also experienced a shortage of revenues, as has the Milwaukee Public Museum, whose directors considered declaring bankruptcy last year.
The Downeast Heritage Museum, Calais, Maine, which opened just four years ago and had been operating under Chapter 11 bankruptcy protection since 2006, filed for Chapter 7 liquidation on September 30, and the University of North Florida is taking over the Museum of Contemporary Art, Jacksonville, which has an endowment of $600,000 but sizable debts.