Author: Michael Chappell

Arguably the most buzz during this buzz-filled couple of weeks in the art world has been about the initial round of sales of works from the estate of late shopping center and auction house magnate Alfred Taubman. With $377million premium inclusive racked up at Sotheby’s-  the saleroom he purchased, took public, chaired, and then spent 10 months in prison for- there is still a long way to go to cover the $500 million net of premium guaranteed by Sotheby’s to Taubman’s estate. Will that guarantee be reached? This must come under the waiting with baited breath category, as the works sold to date did not sell all that well, yielding slightly more than the cumulative low auction estimate. One wonders to what extent Sotheby’s, whose loss on the quarter just concluded totaled nearly $18million can weather a charge for an unrealized guarantee.

It is interesting to note that Sotheby’s loss was less than the $28 million in red ink engendered in the same quarter last year, moderated, it seems, by the earnings booked in its finance unit. In fact, interest income is growing and commission revenue is declining. As I had written a few blog entries ago, if the objective was to achieve revenue enhancement in its core auction business by freeing up cash for potential additional purchases with the hypothecation of clients’ owned artworks, that strategy hasn’t worked.

However, if as it appears the objective was, with the addition of accrued but unrealized finance revenue the dilution of the operating loss, this hasn’t worked too well either.  Skate’s has accurately characterized Sotheby’s strategy of a huge and liberal guarantee and ostensibly liberal credit extension in its finance wing as ‘all-in’, and ponders the scrutiny the company’s board audit and risk management committees are giving this. Other people are apparently concerned as well- Sotheby’s stock declined nearly 7% in yesterday’s trading.

This month’s Apollo contains an article by Alistair Brown discussing the enormous amount of artwork held by public institutions that goes unseen. That this is a situation well known to anyone in the art and heritage industries is without question, but for those who seek to serve the wider public, this phenomenon is sinfully akin to hoarding treasure that, if sold, could generate revenue for other ill defined but generally considered more worthy, and more immediate, public uses.

During the recent troubles of the Detroit Institute of Arts, with tremendous pressure to sell off its collections to pay mostly for the city’s unfunded public pensions, I had written that, in light of the city’s shrinking population and the now limited numbers of those who darken the museum’s threshold, a sale of its collections didn’t seem a bad idea. Moreover, nothing like this is historically precedent setting, as what most public collections hold was gathered from somewhere else, and usually that somewhere else contained a provenance of some previous, and now long-defunct, collection.

Something that’s certain, though, is the reason much of the fine and decorative art objects public collections hold in storage and deign not to put on display is because, face it, the pieces are not worthy of display. And herein lies the tale- public collections are burgeoning because items are often taken in willy-nilly with no particular accession plan or objective. In my experience, what’s acquired is often a function of who’s offering it, rather than what is offered. Far be it from any museum director or curator or accessions committee chair to risk offending a local grandee who seeks a tax deduction in exchange for a selection of quilts or matchbook covers.

No question, public institutions are often treated by the great and the not so good as their personal artistic fiefdoms. One of our local institutions, on the ropes financially for many years, nonetheless was inveigled by one of its so-called benefactors to enter into an arrangement of patronage with an artist who was a pet of the benefactor. That he sought to ensure a living for an artist was laudable; that the benefactor used the museum as means to store and display the artist’s work- in which the benefactor held a large stake and with the objective of using the museum as a shill for the making of a market for the artist’s work – was at the very least reprehensible.

Still, this happens time and time again, and it is with death that public collections are able to offload donations they really didn’t want in the first place. Several years ago, I was invited to look at an overlarge piece of furniture acquired by a well-known museum using funds contained in the bequest of a deceased estate, the testator a Hollywood celebrity equally well known. Displayed for a few years as something from the workshop of Thomas Chippendale, it was taken from view by a subsequent curator who had doubts about the piece, which doubts were profoundly underscored by me. The piece was soon thereafter deaccessioned and sold- for I might add fractionally its cost of acquisition just a few years before.

For those public institutions that can afford to- Tate Britain and Tate Modern are notable examples- items from their permanent collections are rotated frequently, a bit frustrating in the case of the Tate galleries, as one might have made a special trip to see something to find its been taken down, but for the institution, an expensive proposition involving staff time to move, remove, store, adjust lighting, and all often for just a few days’ showing.

For very many public collections, much of what might be on display isn’t- and never will be. Given that narrow criterion, it might be argued that for those pieces held in store, arguably the preponderance of most public collections, a better use would be for them to be deaccessioned. However, this too cannot be considered wholesale. Just a couple of weeks ago, the Metropolitan Museum sold through Christie’s a large selection of English furniture from its collections, to the great delight, I must say, of private collectors. Many of these pieces had notable provenance, were featured in the literature, and had in years past been prominently on display. Perhaps in the years since the Met were given them better examples were acquired, but one also wonders, though, with a perception that period material both in the fine and decorative arts is slightly out of fashion if that didn’t inform this disbursal. A public institution, while it must certainly be discreet in its acquisitions, must never the less let the solecism of following fashion interfere with connoisseurship in the management of its collections.

In looking at Magnus Resch’s shall we say interesting notions of how galleries can succeed, it is also worthwhile to consider, two years after launch, his website ‘Larry’s List’. With the objective of becoming the Dunn & Bradstreet of prominent collectors of all stripes, it seeks to provide galleries and dealers a compendious resource to allow for focused marketing.

Hmmm… I wonder who and to what extent dealers have been taken in by any idea that direct marketing to the highest of the high end can be successful? In our experience, nearly all of the exclusive collectors are also the most elusive, and they like it that way. If it were any different, if their collecting interests were widely known, this would also provide significant insight into their own net worth, and every Tom, Dick, and Harry would be keen to market everything including car flocking directly to them.

Mind you, there are a few flash types whose high profile spats with auction houses, or those with names on the side of public galleries make it apparent to anyone with eyes to see that they are, on and off, buyers. But these people are, despite some well-publicized exceptions, also on matey terms with salerooms, the artists’ themselves, and a very few dealers whose transactions with them are highly confidential and typically involve a thin margin of profit for the selling party. Trust me on this- in an age of litigiousness, the high profile executives in the financial markets, the backbone of the buying cadre, do not wish to have their compensation packages called into question when they are seen to be splashing out in the 7, 8, or occasionally 9 figures on a work of art.

Whenever I write about the dust biting fate of any dealer who specializes in period material, invariably I receive a number of responses about changing tastes, with a contemporary focus on, wait for it, contemporary art and design. One would presume, therefore, that those marchands whose specialty that is would, perforce, be thriving. Such is not the case, however. An article in Art + Auction discusses at great length the fate of contemporary galleries in New York, Paris, London, New York, Beijing- and all point to the same thing- business is crap, and very many, including venerable dealers like Jerome de Noirmont, Valerie Carberry, and Yvon Lambert, have closed their public spaces and chosen, like my own self, to trade privately.

No one wants to admit that being closed to the public is a money saving maneuver, but of course it is. Rents are ruinous, and at least for high profile contemporary material, it is nearly impossible to compete with the major auction houses. Although my loyal cadre of blogophiles will doubtless remember my writings about the struggles, yet ongoing, of the major houses, at least for the moment their purses are a bit longer than that of the typical independent gallery. The internet, pop up spaces, and art fairs are stop gap efforts to stay afloat and in front of clients, but these, too- save the internet- are expensive. With booth space at any of the better fairs running from $200 to $1,000 a linear foot, plus lighting, plus décor, plus advertising, to say nothing of the cost of transporting you and your stock in trade, $50,000 to $100,000 is not unreasonable to budget for a decent four to seven day fair.  With dealers particularly of emerging artists offering most pictures and sculpture at prices well below $5,000, it takes lots of opening of the order book just to break even.

And that’s the problem- very many are not and those that are, are just keeping their heads above water. In his Management of Art Galleries, author Magnus Resch reports survey results that indicate for those galleries that are profitable, their profit percentage is only 6-1/2% of revenue. As this was the result of a voluntary survey, with most galleries privately owned, it is hard to verify this data, but suffice to say, any notion that the wild acclaim with which contemporary art is currently fraught is hardly borne out by its profitability in the art trade. By the way, Resch does have some suggestions on how to improve the bottom line. One of them for those who represent emerging artists- pay the artists less. Hmmm… For those of my readers who operate galleries, let me know how this works out for you.

Most of the cognoscenti are aware of the pending sale of a fair amount of the stock in trade of venerable Munich dealer Bernheimer. Trading since 1864, current pater familias Konrad Bernheimer will consolidate a portion of their stock of old master paintings into London based Colnaghi, the equally venerable Bond Street dealer of which he is chairman, with the rest sold-  including the family’s castle Bur Marquartstein.

It is impossible to imagine this decision was not arrived at sans a monumental weeping and gnashing of teeth. Purportedly bowing to the desire of Bernheimer’s daughters to limit dealing activities to exclusively contemporary art and photography, it beggars belief that, following the family’s herculean efforts to recover and rebuild their fortunes following the unparalleled predations of World War II, a generational change could accomplish such an effect.

The sad conclusion I’m left with is that the family needed the money, and with the sale of even their family seat, they appear to be, to coin a phrase, tapped out. It will be interesting to follow the fortunes going forward, to judge whether and to what extent the Bernheimer marque will contribute to the contemporary art market.