From the press (2)

The Economist - What crisis? (click here)
IHT - The dangerous game of pushing up prices higher and higher (click here)
Art News Blog - Hirst buys Bacon (click here)

Sotheby's stock crashes

A few days ago, Sotheby's had a "disappointing evening". The biggest failure was the buy-in of one of Van Gogh's last paintings. Yesterday, Sotheby's had to announce that it lost $14.6 million on auction guarantees at the sale. Last week's events led to a plunge of the Sotheby's stock.

Nuance gives way to shock

Souren Melikian comments on a shift in taste.

From the press

Artinfo - A Matisse goes for $33 million (click here).
The Economist - The modern art of finance (click here).
NY Times - Telltale art: fall auctions (click here).

Lot 377

Last Friday, a small English auction house sold a painting attributed to "a follower of Rembrandt". The painting was estimated at around 1000 GBP. Fifteen minutes after the bidding for lot 377 started, it sold for more than 2 million GBP. The bidding frenzy was fueled by beliefs that the work is a real Rembrandt. "If the portrait is accepted as a genuine Rembrandt the buyer will have got a bargain." And what if it isn't?

The fund factor

This summer, Art + Auction published its annual investment guide, edition 2007. Next to must-read articles on fakes, art indexes and auction room practices, it also featured a short interview with Chris Carlson, one of the founders of the Art Trading Fund. The fund "buys and sells pieces directly through its own network of artists, dealers and auction houses, (...) providing downside protection by taking short positions in securities with a high correlation to the art market (think Sotheby's and luxury goods)". Yes, a hedge fund. Carlson: "To say the art market can be made look like another financial market is wrong. To say that we can look at art over time and understand the way in which returns have been generated (...) is absolutely accurate." The minimum intial investment is about $200,000.

Small collectors

Well, very small.

Buy Warhol, sell Richter

Artnet predicts some trends:
- "Is this the season where prices for blue chip art finally stop going up? The answer is no. What’s more likely to happen is that prices for works by younger artists, which appear in part two of the day sale sessions, are going to stop going up."
- "The market will decline, this season or next, for Chinese contemporary art. The price rise in Chinese contemporary is a sucker bet based purely on speculation rather than on the quality of the work itself."

The article also gives some advice, after saying that "given the inflated state of the market, every artist should be a 'sell'". Anyhow, the author's opinion can be summarized as follows:
- BUY: De Kooning, Johns, Lichtenstein, Warhol
- HOLD: Bacon, Basquiat, Fontana, Rothko
- SELL: Christo, Doig, Freud, Gursky, Haring, Hirst, Koons, Prince, Richter, Tuymans

Give me a call when you sell your Richter, alright?

Heart of gold

Bloomberg reports: "A nearly 9-foot-tall, stainless- steel heart by Jeff Koons, estimated to sell for as much as $20 million, could set an auction record for a living artist at Sotheby's contemporary art sale on Nov. 14 in New York." The current auction record for Jeff Koons is $5.6 million. Reflecting on the upcoming auction, Sotheby's head of contemporary art, Tobias Meyer, said: "Whatever the market will be, the market will be. No one will know until that night, but this is great and I'm confident." You can watch a movie on the heart and its sale here.

(The heart weighs around 1600 kilograms, "as much as a compact Mercedes".)

Autumn in New York

From Artinfo.com: "Two major works by Pablo Picasso, a bronze head of his muse Dora Maar and a 1931 canvas, La Lampe, will go under the hammer in New York on November 7, Sotheby's auction house said Tuesday. Sotheby's expects the painting, which comes directly from the artist's family, to fetch $25 million to $35 million, and the 31.5-inch high sculpture Picasso made in Paris in 1941 will bring $20 million to $30 million."

Yes, November is going to be an exciting month for the art world and for Sotheby's New York in particular.

Sketchy sale?

In December, Christie's London will auction a "forgotten" Rubens. The auction house values 'Two studies of a young man' at 8 to 12 million USD, but probably hopes the piece to sell for a lot more. In 2002, Sotheby's estimated 'Massacre of the Innocents' at 8 to 10 million USD. It ended up selling for 76 million USD (still a record for an Old Master) and is now on display in The National Gallery in London. Clearly, this oil sketch is not of the same quality, but "in an art market currently dominated by contemporary art, an old master oil sketch by Peter Paul Rubens can still cause a stir."

A shift of interest from subtle to brutal

Souren Melikian of Art + Auction on an important work by Jean-Honoré Fragonard - a study for Le Verrou (see picture) - that didn't find a buyer at the Sotheby's Old Masters evening sale in London two monts ago:
"If proof were needed that art cannot be an investment based on calculated risk, this is it. For the one thing that can never be forecast on the basis of rational arguments is the evolution of what we call taste or fashion."

The news that's fit to print

I finally got hold of the article on my research in Eindhovens Dagblad.

'Prijzen van kunstwerken zijn erg aan mode onderhevig'

Wetenschapper op zoek naar waarde van kunst

TILBURG - 'Valuation and appreciation of art.' In het Nederlands: 'Taxering en waardering van kunst'. Dat is het onderwerp dat de Vlaamse onderzoeker Christophe Spaenjers in de Tilburgse universiteit mag gaan onderzoeken voor zijn promotie tot doctor in de bedrijfskunde.
Spaenjers is een van de 41 jonge onderzoekers die door de Nederlandse organisatie voor Wetenschappelijk Onderzoek (NWO) zijn verblijd met een speciale 'Toptalent'-promotiesubsidie. "Dat geld krijg ik niet zelf", verzekert de wetenschapper. "Het is bedoeld voor de universiteit om mijn werkzaamheden te bekostigen."
Spaenjers gaat de rol van kunst onderzoeken als financiële investering. Hij gaat bekijken hoe opbrengsten en risico's voor de diverse stromingen in de kunst zich op de internationale kunstmarkten hebben ontwikkeld in de afgelopen honderd jaar.
"Het gaat bij het bestuderen van kunst als investering om twee aspecten", licht Spaenjers toe. "Enerzijds heb je het rationele aspect, waarbij je in eerste instantie kijkt naar de financieele waarde van een kunstwerk, niet alleen de huidige waarde, maar ook de verwachte toekomstige waarde. Het is een investering, tenslotte."
"Maar daarnaast speelt ook een irrationeel aspect een rol en dat is 'smaak', niet alleen die van de verzamelaar, maar ook die van de markt in het algemeen. En hoe die zich ontwikkelt, is niet altijd eenvoudig te voorspellen."
Op grond daarvan kun je twee groepen verzamelaars onderscheiden, meent de onderzoeker. "Enerzijds heb je mensen die kunst in de eerste plaats kopen omdat ze het mooi vinden. Maar daarnaast heb je ook een groeiende groep die kunst vooral koopt als investering. In een aantal gevallen gaat het zelfs om kunstfondsen die door bijvoorbeeld banken en verzekeringsmaatschappijen worden opgericht om speciaal in kunst te investeren."
Of dat altijd verstandig is, vraagt Spaenjers zich af. "De kunstmarkt is nogal inefficiënt", zegt hij. "Voor de leek is hij erg onoverzichtelijk. Je moet echt de weg kennen in een betrekkelijk klein wereldje van experts."
"Daarnaast is de ontwikkeling van prijzen op de kunstmarkt erg aan mode onderhevig. Een veranderende smaak van het kunstkopende publiek kan het werk van bepaalde kunstenaars in betrekkelijk korte tijd sterk in waarde doen stijgen of dalen. Je ziet op het ogenblik bijvoorbeeld dat kunst van na de Tweede Wereldoorlog sterk in waarde stijgt omdat er een generatie liefhebbers opkomt die niet alleen in die kunst is geïnteresseerd, maar zich haar ook kan veroorloven."
Kunst als investering blijft dus een heikele affaire. Maar Spaenjers is optimistisch. "Het lijkt erop", zegt hij, "dat de kunstmarkt zich langzaam maar zeker wat efficiënter begint te gedragen en meer begint te lijken op een 'normale' markt."
Maar helemaal 'normaal' zal de kunstmarkt wel nooit worden, veronderstelt de onderzoeker. "Een kunstwerk zal wel nooit een gewoon economisch goed worden. Als een schilderij van een bepaalde kunstenaar ineens duur verkocht wordt, zie je over het algemeen dat dan ook plotseling al het andere werk van die kunstenaar veel meer waard wordt. Zulke ontwikkelingen zijn niet goed voorspelbaar."
Daarnaast kan de waarde van kunstwerken nogal worden opgedreven doordat de kunstmarkt een speelterrein is voor wat Spaenjers 'ultra high net worth individuals' noemt - in gewoon Nederlands steenrijke mensen. "Dat is een sterk groeiende groep waarvan een aantal leden heel veel geld overheeft voor kunst. Voor hen is het bezit van dure kunst ook een statussymbool."

Hot Bacon

Next to the Van Gogh of the story below, Sotheby's New York will also auction two important works by Francis Bacon in November. The one depicted here, 'Study for Bullfight No.1, 2nd version' (1969) is estimated to sell above $35 million. As the press release notes: "The offering of these paintings follows the success of last season’s sale of Bacon’s Study for Innocent X, 1962, which sold at Sotheby’s New York for $52.7 million, a record for the artist at auction, and his Self Portrait, 1978, which sold at Sotheby’s London for $43 million, the second highest price achieved for a work by the artist." In other words, Francis Bacon is extremely hot right now.

The auction sensation of the century?

According to The Independent, Sotheby's will soon auction one of Van Gogh's last masterpieces, namely The Fields: "The Fields will be unveiled at Sotheby's in London on 7 October and sold at auction in New York a month later with an estimated list price £17m. But due to its extraordinary provenance and the booming art market, it is likely to provoke one of the heaviest bidding wars in the auction house's history and greatly exceed this price. When the painting was exhibited in Amsterdam in 2001, as a privately owned work, there was an immediate, if vain, rush by buyers to place offers." The Independent already speaks of the "auction sensation of the century".

In a related article, one of Britain's most fashionable "young" artists, Tracey Emin, comments on the piece.

Update: Sotheby's released a press statement concerning the sale.

Investment, not art

An update on yesterday's story. Apparently, Damien Hirst is part of the investment group that bought his diamond skull for about 100 million USD.

The sale keeps Hirst in the news, reinforces the demand for his work and makes everyone who spent money at White Cube feel good about their investment. This is all about investment, not about art collecting.

Diamonds are forever?

Reportedly, Damien Hirst has recently sold his "diamond skull" - last summer on display in London - for about 100 million USD. To an investment company. Click here to read more.

Rothko & co

On Tuesday May 15, Sotheby's New York has its Contemporary Art Evening Sale. Although works from Lichtenstein, de Kooning, Pollock and Warhol are all expected to fetch high prices, most attention will go to Mark Rothko's White Center (1950). In this video, Tobias Meyer (worldwide head of Sotheby's contemporary art department) says: "What is so extraordinary about this picture: there is nothing we need to explain about it - it is so beautiful". Exceptionally, Sotheby's does not give a public estimate for the painting.

The auction will be interesting in another respect as well. It will be streamed live via the Sotheby's website.

London calling

From June 17 until July 14, I will be in London. I will take part in the summer course Art & Its Markets, organized by Sotheby's Institute of Art.

"This course looks at a number of different art market sectors (such as old masters, contemporary art and wine) and examines how their respective objects are identified and catalogued and how quality and value is assessed. Students also study how auctions are marketed, organised and run."

Good news

"The valuation and appreciation of art. That research area was allocated a grant for Christophe Spaenjers by the Netherlands Organisation for Scientific Research, the NWO. This grant of 180.000 euros is one of the grants in the NWO Toptalent round of 2007. In September, Spaenjers will start his research project under supervision of Prof. Luc Renneboog (dept. Finance) as a PhD student, researching the evolution of returns and risk in art markets over 100 years."

Source: Tilburg FEB News (April 13, 2007)

Drab mediocrity

The January issue of Art + Auction comments on the big November sales of both Sotheby's and Christie's. Although the Sotheby's evening sale of Impressionist and modern art was one of the most successful of all time, "the impression that the viewing left on most connoisseurs was one of drab mediocrity". According to the editor, there is now such a widespread desire to buy art that "there's no longer much of a correlation between price and artistic merit". More than $8.5m for a minor work of Henri de Toulouse-Lautrec doesn't raise eyebrows anymore.

One day later, Christie's had its big evening sale, dubbed "a crazed frenzy" by Art + Auction. World auction records were set for Gauguin ($40m), Kirchner ($38m) and Klimt ($88m). Perhaps even more astonishing was, again, the prices paid for some other works. One of the best examples is perhaps this small charcoal-on-paper sketch by Piet Mondriaan (picture). It fetched no less than $3.3m. Art + Auction concludes: "Had aesthetics been the predominant concern that week, certains coups here and there would not have been possible."