An Auctioneer's Lot
by Damien MatthewsEntries Posted Weekly on Fridays
This Little Piggy
Christies & Sotheby, the acknowledged big boys of my business – even stating this seems the waste of words – tend to get first pick of the crop. Everyone else, myself included, gets the leftovers. Occasionally treasures fall through the cracks, that’s the great thing. One never knows what’ll turn up, or when. But having two market leaders of such dominance makes it worthwhile to notice an observation – their branding power. And pitfalls of same for the buyer. Especially so since they’ve both recently announced they’re going to ‘focus on the middle market’. By that, they primarily mean Contemporary Art in the €400,000 – €700,000 price bracket. I know, a fair distance from where this auctioneer generally plays, but hear me out.
For over two hundred and fifty years both auction rooms were an old boys club. Christies, peopled with staff from the second and third sons of the establishment in the hope that by doing so they’d get consignments in from the first. Occasionally I’d meet a Christies man and literally stand in awe, wine glass askew, trying to figure out how such a mumbler got to be where he was. In a gently conversing tone it would be ever so softly given over that he was in fact third cousin removed from the Queen, etc. And so on. Over and over they’d turn up. Don’t get me wrong, they can be great fun sometimes. But as a rule, they’re just deadwood on the water with pretty names. Never would a string be tugged so hard as the day Lord David Lindley, Princess Margaret’s son, was made chairman. I actually met him on the first day of his appointment at a party held that evening in Christies. In all heartiness I congratulated him. Shook the hand of the queen’s cousin as he stood new boy in a room of two hundred art pros he barely knew. Not too disgracefully soon afterwards Christies were honoured to announce the disposal of the collection of Her Royal Highness …………… (I think you can fill in the gap). To be fair to him, David Lindley is an accomplished furniture maker and retailer.
Regularly in this duopoly of auctioneering, those who have served their purpose are dispatched soon after. Sometimes brutally. In all honesty, you couldn’t have them round forever, they’d drive you batty. Once, while out on a long lunch, I stumbled over a newly discarded minor aristocrat. His particular department recently wound down (originally set up, unbeknownst to him, with the sole purpose of keeping him occupied until a fairly major family Constable came Christies way). “Damien, I don’t think they quite understand, I’m David Dimple-Bottom of Dimple-Bottom Hall”. His ego simply couldn’t take that he was used. Generally though, they tend to get the message and move along. Capitalism, art world style, doesn’t hang about. For some though, the ‘betrayal’ can become life-long obsession; that stiff upper lip quivering with bitterness at the unfairness of it all. But wasn’t it unfairness that got them in there in the first place. Live with it – the dogs may bark but the caravans move on. Selling billions of pounds of art & antiques each year is no easy task – I understand both auctioneer’s position, even from my more earth bound perch.
Sothebys, while populated by the same establishment, would, more often than not, allow merit to prevail. But here too, a double barrel would still occasionally leapfrog into pole position. In Christies, not too long ago, a very capable but unconnected man, made it nearly all the way up the greasy pole. In-house he was rather cruelly referred to as ‘the barrow boy’. Sad thing was, he played their game rather than his own. He tried to fit in. But in a world of invisible tells it was never going to happen. Despite cultivating interests in opera, shooting, wine, travel, etc. they had him bagged from the moment he opened his mouth. Was it Graham Green who wrote that ‘all Englishmen are branded on the tongue’. He got it bang on.
This week’s blog isn’t about all that. I’ve been waylaid. It is about an ever-shallowing pool of quality at the very top end of the market, as well as the general top end, and even the genuine middle market. And what the two big boys have done over the past fifteen years to (dangerously for the buyer) help fill that gap. Not only what they have done, but now, by their own admission, what they are gearing up to do even more intensively.
The owner of Christies since 1998 is Francois Pinault, a master of branding and owner of myriad companies, including several high-end fashion houses; Gucci, Stella McCartney, Alexander McQueen, Yves Saint Laurent, etc. By dint of this exquisite talent for branding, he has made mass produced goods appear exclusive, luxurious. And priced accordingly. Wealth signifiers for those who are of the opinion that they can buy taste, and status. He has done much the same with Christies since his tenure.
But what happens if the branding of Contemporary Art becomes too strong, and the goods offered for sale too weak? The whole, recently created, Contemporary Art at Auction scene (by this we mean works produced within the past twenty years) has been a major, major income boost for the two main auction rooms. Less so for Philips & Bonhams – who, even though they’ve revamped and relocated their rooms, simply don’t have the branding power. How so? Put simply, if Christies or Sothebys states that a particular artist’s work is worth €400,000 – €700,000, then it’s generally accepted by the rest of the art market that it is. They have that kind of branding power. All others in the fine art business now greedily follow that lead. Not the other way round – as was the case, up until recently. These two auctioneers had been, prior to this new departure, servants to the market – not the creators of it. And especially so with contemporary art. Just like the rest of us. What Christies & Sothebys have done is turn it around with wanton abandon. Breaking this sacred rule of auctioneering for their own financial ends. They have created a market, quite simply, out of thin air. One that didn’t previously exist in any similar form even twenty years ago. A dangerous, dangerous situation for an inexperienced buyer to find himself ‘investing’ in.
It’s perfect from their perspective. The Contemporary Art at Auction scene is populated with relatively new status-conscious buyers. Those who lack the experience to realise that the art market, especially the Contemporary Art market, is totally unregulated. And always will be. Other than its cultural importance, an art work has no value in, or of, itself. You can’t eat off it, you can’t sit on it, and you can’t saw a tree down with it. Financially it has absolutely no value other than what someone else is prepared to pay for it, or be ‘coaxed’ to pay for it, on any given day. That is, if the system isn’t being tampered with from within.
Circumstances, sentiments and fashions change – a fact of life and time. But unlike jewellery or gold – which have a defined and fixed market worth before sentiment kicks in – Contemporary Art stands alone as a philosopher’s stone of a market. If this particular sector of the art market we’re concerned with is being consistently manipulated for an auctioneer’s continual gain, what then? Does it become fraud? Or is it still the same game of unregulated high jinks. I think that we, as auctioneers, servants of the market, have a responsibility to the buyer. Once we start putting our own values on lots that suit our financial year ends, then we have a big problem. And this is what’s being done cynically, slickly, and very covertly, by the big two.
So what, you may say. Can I offer this hypothetical example to possibly show more clearly what I mean. Imagine you wish to buy a jewel. You go to the jeweller whom you think is the best. He says to you, “Well, madam, we have this new stone, it’s not the diamond you originally thought to buy but it’s got a lovely grey colour and we want a million dollars for it”. You’re impressed by the crimson-clad linen walls and the fine thick catalogue. It’s illustrated within it, along with four pages of accompanying text informing you of how wonderful and important a stone it is.
Based on this you, go and buy it, trusting all the time the two hundred and fifty year old name of the jeweller. Years later – or even just a year later – you return, wishing to re-sell. Perhaps realising, after the jeweller’s hype has cooled, that it is, in fact, just a common stone that can be picked from the soil of the land.
“I’d like to re-sell this stone I bought from you please”.
They reply, “I’m very sorry madam but that particular stone we were all so enthused about never really took off, we’ve stopped accepting them for sale. Perhaps try a lesser auctioneer, they might get you something for it”.
Both auction houses, even now, are beginning to refuse the re-offering of those artists bought in the first great wave of the Contemporary Art at Auction boom. If they actually do accommodate a re-sell it’s with extreme caution towards self preservation. Only offering one work by that artist in each auction. Their explanation, a wish not to ‘stress’ the ‘market’. Their reality? If a piece previously sold is re-offered and fetches a lesser price, or worse – doesn’t sell, this now publicly recognised loss becomes a problem, a ‘real’ problem – stratified in the sales records, showing factual losses, a complete No No of the Ponzi scheme. It would deter prospective purchasers presently basing their ‘investment’ from skewed previous sale data. By these auctioneers not re-offering art works previously sold they side-step the problem entirely. Beautifully in fact.
This successful selling of common stones as diamonds can only continue to happen if a proportion of the money gained from the enterprise is being invested into keeping the dream alive. Which it is. Both houses employing an army of fresh-faced journalistic savvy PR girls putting out the auction house spin for every sale. Every Contemporary Art auction is preceded and post-ceeded by smoothly worded press hand-out sheets. This is branding to a level unseen in any business, and with near full press complicity. Eagerly the press transcribes the auction’s tallies and records. Those ‘minor’ works in the €400,000 – €700,000 bracket rarely remarked upon. But this is where the real juice is for the auctioneers. And both houses fully intend to squeeze for more of it over the next few years, their paymasters demand it. But then it’ll stop, and the quiet unregulated financial carnage of the purchasers will truly begin.
How did this skewed customer unfriendly policy about? Available works of real quality for sale in the auction market (those created pre-1980) had become too scarce and could not be relied upon any longer to drive profits upwards. The Christies auction machine, taken over by Pinault, had been re-hauled, repainted and primed by him for bigger business. It needed stock to sell if it were to expand profits. Sothebys the same. Over the past fifteen years since their owner Alfred Taubman was jailed (for other offences) they too have spent fortunes overhauling the old lady of Bond Street.
Unfortunately as things stood at the time, there were only so many (properly) ‘Important’ paintings out there still to be sold. Works of true quality and importance, from any era, simply aren’t there anymore, not in any numbers to support these new profit centers. Most of the important things are gone forever, into the burgeoning museum sector, never to be traded again. An auctioneer’s nightmare.
There had been, and still is – as a stop-gap – the dressing up of second rate works by first rank masters, to help sate this profit craving. Putting these ‘master works’ on the front cover of the catalogue with fold-outs of text accompanying the image, as well as illustrating more important examples in public museums beside the image of the piece to be offered for sale had, and still do, sort of hoodwink the buyer into thinking he/she is genuinely buying something of importance. A good strategy, and it works. But even with this policy, there were only so many of these works that could be padded out.
Another possible solution. Previously ‘ignored’ sections of an important artist’s career (and most for proper reason) have dolled up in efforts to further fill that revenue gap – Picasso’s very late period Cavaliers comes to mind. Dreadfully messy things of below little importance. But with both auction rooms pushing ‘the scarcity’ angle some now fetch prices in the $10,000,000 to $20,000,000 bracket. Seriously risky business and future financial carnage awaiting recent buyers.
Even with all these goings on they still didn’t have a viable business proposition. And especially so if you’ve spent many millions pimping up your auction room as a profit machine.
What has been done by Pinault and Sothebys was logical, and a fair conclusion – had they not abused the position to such financially cynical ends. Simply put, they’ve over-filled the revenue gap through this new Contemporary Art at Auction sector (by art world historical timelines its practically still got the placenta on it). You see, it’s accepted by every art professional who ever lived, that time is the filter by which art finds not only its historical worth, but also its cultural worth – and hence it’s financial value. There’s no skipping the process – no matter how glossy the catalogue. Don’t get me wrong, there are some great people in both auction rooms. But what if, like Sepp Blatter (and his cronies) at FIFA, the actions of the powerful few give to the entire the whiff of Lucifer.
Through the branding genius of both Christies & Sothebys a work less than a year off the easel (in normal lines of supply/demand & non-hyper branding, worth perhaps just €5,000 or €10,000) can sell at their Contemporary Art auctions to a hungry brand-led buyer for over a million euros. Extraordinary really. The art market at the upper echelons was always a hungry class conscious beast that needed feeding, but this – and I know, I’ve stated it before in this piece – this is a totally new thing.
Both auction rooms, with the explicit, and complicit, support of each other – and those that follow their financial lead – have pumped this new sector for profits. And it’s one that’ll seemingly never dry up. New works created daily by those espoused artists to feed it. The artists, are they complicit? Not really. I’ve yet to meet any artist worth his salt who didn’t think he was Michelangelo reincarnated. And most with an ego to match. Especially so when the cheques (less the sales commission) start rolling in. But sadly, over the past fifteen years it’s been a crap shoot of untested quality. Those commissioned glossy auction catalogue essays accompanying these literally still wet paintings seem to count for more than the actual pieces themselves. Surely if it’s got four pages of fold-out text accompanying the image then it’s got to be important. Right. You’d think so. And they’re hoping you do.
But perhaps there’s something else at play here. Something that I – as an unhip, slovenly provincial auctioneer sort – might not be aware of. That these current, and future, losses are possibly an accepted price the newly minted are prepared to pay, so that they might be seen as part of a fashionably branded club. A price that will help them be seen as ‘important’ collectors of the new? Perhaps that’s it. For them, their own branding of themselves becoming more important than the product they’ve bought.
Is it fair though, that the ‘others’, the truly innocent, are caught out of pocket? Then again, look at all the millions who play the Lottery. Knowing they have little or no chance, still they play. However, their losses are only single digit euro losses. A time-untested painting in one of these now ‘curated’ auctions (the great new buzz word in the sector) can cost from hundreds of thousands upwards to over a million. It’s a different animal of a ‘gamble’. In fact, no gamble at all, as there’s no financial upside – ever. Then again, perhaps anyone foolish enough, or rich enough, to get caught up in this tulip buying ‘as an investment’ are perhaps deserving of their loss. Generally that’s been the art outsider’s view – and I can understand it, generally I’d be of the same thinking. But this is different, way different, from what’s gone before. The saying, ‘if you hear a bandwagon it’s too late’ comes to mind when considering ‘normal’ gold rushes. Ordinarily my thoughts on such things would be; I’m a capitalist, same as the next man, and if little old ladies aren’t being run over then let it be – all is fair in art and war. But what if, what if, there was never any gold to start with, only fool’s gold, laid as a trap?
The excuse ‘changing tastes’ is often given as to why the piece bought by a vendor’s grandfather is worth less than what was paid for it. Yes, this happens all through art history, this up and down in artist’s prices. One only has to consider the work of Ernest Meissonier, a Victorian French military painter. Prized by Lords and Gentlemen, in his time fetching, in present day terms, over €500,000 a painting. Today, €30,000 will buy a good one. But today’s corporate auctioneer’s branding power is a different animal. A whole sector has been inflated – like some sort of grotesque unproven financial balloon – lending present day art historical importance to contemporary works not worth the merit. It’s devious. And especially so given that there are going to be so many financial fallers. And all so professionally driven to fall. It might be useful to note that in every generation, in every sector of the arts, there are only born a few real geniuses. There can not be hundreds of Giacomettis, Picassos, Modiglianis, Caravaggios or even Bacons. Ever was it thus, and ever will it be so. Nothing has changed. All that’s changed is lifestyle choice. In present day times we have many more ‘artists’ living the lifestyle, that is all. The same genius ratio applies as before.
Rolex and Cartier have their branding, and goods of quality to match, built to a T. They may ask a lot but they stand by their product. For the price you pay, one buys; the brand, the physical thing, and an after sales service. As well as the assurance that there will always be a secondary market for what you’ve bought. Albeit, if you went to sell what you bought from them immediately after you bought it, the payment received would be halved (someone has to pay for the full colour ads in the glossies, the sponsorship of those polo matches, etc – and that person is you, the purchaser, tempted because of that lifestyle association). Over time however, the value of what you’ve bought – the ‘investment’ – would be clawed back. Due to the high quality, rarity, and the continual support by each firm of the product they created, and brought to market.
If, on the other hand, we look at Sothebys & Christies, we see the very beginning of the relationship is the same. But then it deviates, viciously. The branding. The same thing, except the only thing they’re promoting is their name – not the product. Now continue along as a consumer. You see the full page glossy ad, and tempted by the glamour of it all, decide to roll up at a Christies or Sothebys auction – both trading with two hundred and fifty years of reputation behind them. It is worth noting however, that while this may be so, they are both now newly owned by financially hard-nosed owners. You trust the name over the door and decide to bid. The amount? Based on the text contained within the glossy inch thick catalogue, the estimates given, and by the bank of telephones to left & right of the auctioneer’s rostrum, you tend towards the higher estimate.
In this example let’s say the auction estimate is €400,0000 – €700,000. The ‘investment’ you decide on is to be a bid of €600,000. Perhaps, just for assurance, you search online to see that comparable works have sold in previous auctions for comparable sums. Online you also see that commercial galleries are selling similar works for similar prices. You, the bidder, are comforted. All is good in the garden. Let the games commence.
[As an aside, both auctioneers have, over the past fifteen years, diversified into private art sales and made strategic investments in private art galleries. Sothebys have also, just recently, acquired Art Agency, Partners a powerful private art brokerage firm for $85,000,000 - a big step in trying to exert covert influence over who buys what, and when.]
When the London auctioneers top-end buyers fees & expenses are added, your bid of €600,000 actually ends up costing €784,500. You hang the painting – a ‘hot’ artist – on your wall. Say you ‘get a feeling’ and decide to sell it (and Sotheby/Christies actually takes it back for se-sale). And you get lucky, first man out. It sells for what you paid €600,000. Less those high-end selling fees & expenses the settlement cheque you receive will be for €452,400. That’s a loss of €332,100 on your ‘investment’. And you’re one of the lucky ones. The dreadful sting in the tail is, had you held on to it long enough it would have actually ended up being worthless – when Christies & Sothebys decide (and they will) to discontinue selling that particular artist, thus closing their positions.
One assumes those buying art at auction, over a certain level, are treating it an investment, not just status. But in America, especially, certain people do crave the words ‘Contemporary Art Collector’ as the pre-fix to their name. These people, might they possibly deserve the financial punishment? But those who genuinely trust in an auctioneers honest estimate of open market value, do they?
The art world – if it is to operate ‘successfully’ – needs it’s innocents from which to feed. Those who pay steep for their errors feed the lions of the business. It’s the same on Wall Street. Churning funds paying for the silk suits and bonuses of the brokers. But this is a different kind of financial massacre. While investing on Wall Street for the uninitiated is bad enough, the Christies & Sothebys position is even worse; both can close out any part of the sector, at any time, with no regulation approval required. In the capitalist system, free markets tend to regulate themselves. But what if it’s not ‘free’ and what if it’s not a real ‘market’. To note. The oft tugged line, ‘only buy a painting if you love it’ is but the selling mantra of the dealer, or auctioneer, who wants a get-out-of jail card. Don’t trust it. And it doesn’t apply here, this is a whole new level.
Amusingly, a high net worth Chinese business couple (who play the art game at the top end) recently let slip publicly that they only bought art which appears on the cover of catalogues. For two years previous to this becoming publicly known, and then discontinued by them, several auction houses – and the trade – noticed their naive purchasing credential. Several lesser works, at massive estimates, were positioned on catalogue covers to accommodate their buying criteria. Numerous vendors paid to the auctioneers higher than normal commission rates for the privilege. This is not strictly illegal, it’s just part of the art game. But the fixing of the game itself?
I honestly can’t say where all this will land. But in my book, if you’re the true instigator and creator of a ‘market’ for an artist’s work with no long-term obligation to it, or that sector of the market itself, then it’s a problem. And especially so, if after constantly cashing in on your position, you then decide to close it off (for financially devious reasons) by discontinuing to sell the work. Is it fraud? To my eyes, as things stand, it kind of has to be. Interestingly, one of the FBI’s top men has recently begun to look at this market for irregularities, but he’ll probably not get the whole way along. If two big boys have been in business for over two hundred and fifty years straight, they’ve pretty much learned how to cover their tracks along the way.
Apologies if I’ve bored you with this blog. God, but I only sat down this morning to write a few words and this is where it ended.