Auction Season Heating Up

The last week of January culminated with the Old Masters sales at Sotheby's and Christie's in New York.  There was noticeable buzz in the auction rooms, and while few expected the Old Masters bubble to burst like that of the Contemporary market, the sales were hardly sensational.  At Sotheby's, the top ten lots fetched sums over $1,000,000, but there were many disappointments. Sotheby's morning session of Important Old Master Paintings realized $57,647,000 for the 92 lots offered, with buy-in rates of 39.5 percent by lot and 37 percent by value. The pre-sale estimate was $74,380,000-103,020,000.
 
There were a number of museum-quality works including a JMW Turner that fetched $11.5 million hammer price, despite its $12 million low estimate.  Many suspected that the Old Masters market would weather the financial crisis better than other art markets because the artists are established and more likely to hold their value.  Furthermore, Old Masters collectors tend to be 'old money,' unlike hedge fund and investment bankers, who are more likely to go for big ticket contemporary items. 

Museums in Trouble

Another week, another museum closes.  First we learn that LA MoCA is on the brink of collapse and now we find out that two other reputable art museums will be closing down: the Rose Art Museum of Brandeis University and the Gulf Coast Museum of Art in Florida, which has been in business for over 73 years. 
 
The Rose Art Museum of Brandeis University may auction off its collection, which is currently valued over $350 million.  The museum displays works by many important pop artists and has presented a forum where many of today's top contemporary stars had exhibited early in their careers. As a cultural space, the Rose Art Museum will be sorely missed.
 
In the past, museums have only sold artwork outside the scope of their specialty.  But this year will see museums selling off works to cover their basic operating expenses. What is a museum to do?  Does it follow the path of LACMA and deaccession artworks to keep alive?  LACMA recently consigned two important Old Masters to Sotheby's.  Museums are extremely important to a city's attractiveness, to mapping the cultural history of Western Society and as a place for the free exchange of ideas.  Let us hope that museums are able to survive this economic turmoil.

  Private Sales

It seems that from magazines to newspapers to bloggers everyone thinks that the art market is a bubble and is going to crash hard.  They argue that the huge profits investors were reaping in the art market were bound to bring in new collectors and drive up prices until there was no new money left.  In the first half of 2003, 130 items at auction sold for over $1 million, but in the first half of 2006 that number more than tripled to 454 works.  While individuals and corporations are seeing their assets shrink, there is still business to be done in the art world.  Mr. Oliver Barker, the Sotheby's Contemporary Art Director said that traditional buyers are ready to get back into buying art, "These guys are licking their lips to get involved again."
 
It appears that cash strapped collectors are willing to unload some art, but clearly not at bargain basement prices yet.  As David Benrimon Fine Art LLC has said in interviews and past newsletters, there will be at least a 20 to 30 percent drop in prices from their peaks.  But this has not been enough to entice some buyers.  There is plenty of cash on the sidelines, and galleries and auction houses are getting deals done-albeit quietly.  No one wants to gloat when the international economy is suffering.
 
Many have pointed the bubble blame on the auction houses themselves.  In a recent article, one London based dealer said the auction houses were, "experts in looking after widows and hustling rather than art."  He continued to say that the auction houses were the problem because they were, "flooding the market, trying to compete with each other." A number of prominent art consultants have also commented that auction houses will fall and galleries will rise.   The auction houses put themselves in the uncomfortable position of offering guarantees to individual collectors on the sale of their artwork, with the expectation that the bubble would continue to grow.