by Don Thompson
The response of my partner, Kirsten, to reading about the exercises was, “No one would ever do all that!” But you would do a similar analysis if you were spending millions of dollars on an income property or an initial public offering of stock. Should you not make the same effort for an art investment?
Perhaps Kirsten is right. In that case, throw up your hands and abandon estimating uncertainty and risk. Instead, use a mental heuristic, a shortcut to making a judgment. Avoid answering a hard question and instead pose an easy one. Think, “Have I ever heard of anyone losing money on an art purchase from very low-probability potential art market risks?” If the answer is no, take a deep breath and buy the art. Understand that a lot of managers (and my former MBA students) exhibit the same behaviour, best illustrated by huge over-optimism leading to corporate mergers and acquisitions that fall short of hoped-for synergies of cost and revenue.
People have been guessing about investment art for a long time. Consider the story of Thomas Holloway, inventor of Holloway’s Pills and Ointment. Holloway was a self-made millionaire and a renowned philanthropist in the Victorian era. In 1882, and with the advice of the keeper of Queen Victoria’s art collection, he speculated the then-outrageous sum of £6,615 on Edwin Long’s The Babylonian Marriage Market (1875) (see photo insert), at the time a record price for any British artist. The picture shows young women in Assyria being auctioned off as brides—the tale depicted comes from Book 1 of Herodotus’ Histories. Other great artists of the time that Holloway publicly considered and rejected for purchase were Jules Breton and Ludwig Knaus.
The following year, just before Holloway’s death, an effort was made to resell the Long. The best offer was reported as £2,500. Several selling efforts following Holloway’s death were unsuccessful. Marriage Market is today in the picture gallery of Royal Holloway College in London (which Thomas Holloway founded).
Edwin Long and the work are little known today, although several of Long’s paintings are in the National Gallery in London. Jules Breton and Ludwig Knaus are more obscure.
Postscript
MATERIAL IN THE BOOK COMES FROM MY OWN EXPERIENCES AND ADVENTURES in the contemporary art world, from personal interviews and from secondary sources. Some of the anecdotal material and some estimates are single-source. Often when I tried to confirm a story by a dealer or auction specialist, other sources agreed that it “sounded right.” In the art world, this often means the version others heard originated with the same source as mine. Even material confirmed by multiple sources may be an art-world urban legend. Treat anecdotal material in the book as legend that I hope closely mirrors art-world reality. The text is not footnoted (except for endnotes to provide quote citations) because the book is intended as a journey through the curious world of high-end contemporary art rather than as a reference text.
I offer two disclaimers. One originates with economist Tim Harford and applies wonderfully to this book. “Seeing the world through the eyes of an economist is rather like seeing it through the ears of a bat. We notice a lot that others miss, and we miss a lot that others notice.”111
The second disclaimer comes with the journalistic maxim that a writer, even an economist, should never be part of the story. The artists, collectors, dealers and auctions I write about were chosen to illuminate features of the art market. In a few cases I have been part of the story. Several times I have invited the subject of a story to read a draft and offer corrections or additions.
The insert section includes a number of art images. In a perfect world, the collection would have been different. There were images that were not available, and some I could not use because the artist’s representative asked for conditions that I could not meet.
Some material in the book has previously appeared in different form, in my writing for The Times (London), Harper’s Art (China), Fortune (US), Apollo (UK), Canvas Daily (Dubai) and the National Post (Canada). Several of the headings were appropriated from other sources. “Art, Pay, Love” is a headline from a 2014 Fortune magazine review by Shalene Gupta of my art market book The Supermodel and the Brillo Box. “High School with Money” is from Jerry Saltz, a wonderful art writer whom I have quoted in this and my other books. “The Art of More” is from a 1997 BBC television art documentary, and more recently was used as the title of a 2015–16 art-world television drama on Crackle, a streaming video channel.
As is obvious from the text, I have had extensive input from active and former dealers, auction house specialists, collectors and others in the art world. Some demanded that they not be identified by name or position. One offered to cut off both of my typing fingers if I even accidently identified him as a source. I have refrained from retelling some of the best stories where a source would be too readily apparent.
Many of those I spoke with, for this book and the previous one, did not request anonymity. They are, in alphabetical order and again with my thanks: Her Excellency Sheikha al-Mayassa bint Hamad bin Khalifa al-Thani, museum director, Qatar; Rita Aoun-Abdo, Tourism and Culture Authority, Abu Dhabi; Oliver Barker, Sotheby’s; Charlotte Burns, formerly The Art Newspaper, now Art Agency, Partners at Sotheby’s; Donald Burris, art attorney, Los Angeles; James and Jane Cohan, James Cohan Gallery; Stephane Cosman Connery, formerly Sotheby’s and a partner at Connery Pissarro Seydoux, now a private dealer; Michael Findlay, Acquavella Gallery; Melanie Gerlis, The Art Newspaper and the Financial Times, London; Christiane Fischer, AXA Art Insurance; Ellsworth Kelly, artist (died December 2015); Angela Lee, Northwestern University, Illinois; Richard Lehun, Stropheus Art Law, New York; Alex Logsdail, Lisson Gallery, New York; Nicholas Logsdail, Lisson Gallery, London; Aaron Milrad, collector and art lawyer, Toronto; Pilar Ordovas, Ordovas Gallery, London; Beatrice Panerai, Class Editori, Milan; Judith Prowda, Stropheus Art Law, New York; Patrizia Sandretto Re Rebaudengo, art patron, Turin; David Schick, Consumer Edge Research, luxury goods investment specialist in Washington; and Ossian Ward, art critic and author, London.
There are several writers whose knowledge and insights on the art market I follow and treasure. These include Art Basel director Marc Spiegler, New York gallerists Edward Winkleman and Adam Lindemann, Isaac Kaplan of (online) Artsy and Brussels-based art collector Alain Servais.
My great debt in the preparation of this book is to my partner, Kirsten Ward, for her support in the trials and frustrations of the writing enterprise. Kirsten is not a fan of economic or art-world jargon. If she can’t understand the point I’m trying to make, I rewrite it. If she rolls her eyes at what I have tried to say, it gets discarded. If you make it through the book and feel a little wiser about the art world, much of the credit goes to her.
My London editor, Celia Hayley, unerringly identifies the inconsistencies in the flow of the “finished” manuscripts I send her, and politely tells me how to reconstruct the book. John Pearce, my literary agent at Western Creative Artists of Toronto, provides support and creative ideas and Carolyn Forde of WCA does a great job with international sales. Thank you to Cheryl Cohen for diligent editing, and to Anna Comfort O’Keeffe and Nicola Goshulak of Harbour Publishing/Douglas & McIntyre for their help and patience. And thanks to Megan Ferguson for a great job of fact-checking, and for preparing the reference notes.
I will close with a tribute to one of the architects of today’s auction world. In April 2015, Alfred Taubman died at the age of ninety-one. Known to his friends as “Big Al,” Taubman was a former majority shareholder in Sotheby’s and one of the great characters and innovators in the art world of the 1980s and ’90s. He changed the way people shopped, both at the many shopping malls he built and owned, and at auction houses.
Taubman was one of the first to build large enclosed malls and introduce customer-friendly features such as food courts. He commissioned museum-quality art “to enliven the space.” In 1983 Taubman was invited to be a “white knight” during a takeover bid for Sotheby’s by New York investors Marshall Cogan and Stephen Swid. Henry Ford II, another partner and he purchased the aucti
on house—then headquartered in London—with a bid of $125 million.
He understood the potential if the firm could reach a broader public. Of his own experience he said, “Unless you were a dealer or a duke, stepping over the threshold of a major auction house took real courage and self-confidence … Even though I was a good customer, an avid collector, and financially well-off … [auction house representatives] were rude, unresponsive, and often condescending.”112
Taubman brought the culture of luxury retailing to high-end auctions. He insisted that everyone who entered Sotheby’s be treated with respect. He introduced glamorous celebrity sales, notably of the Duchess of Windsor’s jewels in 1987, and items from the estate of Jacqueline Kennedy Onassis in 1996. In his first seven years of ownership Sotheby’s sales increased by 400 percent, largely because two-thirds of sales were then to individuals rather than the two-thirds to dealers situation prior to his takeover.
Taubman’s influence extended beyond the US and Western Europe. As pop art captured art-world leadership in a postwar world awash in “Made in America,” so the American/UK way of marketing art took hold around the world—including the Taubman way of auctioning it. Much of what major Chinese auction houses have copied from Western houses is directly traceable to Taubman’s innovations.
In later years he was remembered for his 2001 conviction by a US federal jury for colluding with Anthony Tennant, his counterpart at Christie’s London, to raise consignor fees. He always denied involvement. He was fined and, because he was seventy-one and had diabetes, served only nine months as inmate 50444-054 at the Federal Medical Center in Rochester, Minnesota.
Taubman offered generous praise and word-of-mouth promotion of my first art market book, which also made him—in my eyes—a good guy with great taste.
Endnotes
Chapter 1 High School with Money
1 Jeffrey Deitch, quoted in Calvin Tomkins, “A Fool For Art: Jeffrey Deitch and the Exuberance of the Art Market.,” The New Yorker, November 12, 2007, http://www.newyorker.com/magazine/2007/11/12/a-fool-for-art.
2 Anny Shaw, “Adrian Ghenie painting sells for record £6.2m at Christie’s,” The Art Newspaper, October 7, 2016, http://theartnewspaper.com/news/back-to-business-as-usual-at-christie-s-in-london/.
3 Rolando Jimenez, quoted in Edward Helmore, “Buy! Sell! Liquidate! How ArtRank Is Shaking Up the Art Market,” The Guardian, June 23, 2014, https://www.theguardian.com/artanddesign/2014/jun/23/artrank-buy-sell-liquidate-art-market-website-artists-commodities.
Chapter 2 The Orange Balloon Dog
4 Peter Schjeldahl, “Selling Points: A Jeff Koons Retrospective.,” The New Yorker, July 7, 2014, http://www.newyorker.com/magazine/2014/07/07/selling-points.
5 Miriam Elia and Ezra Elia, We Go to the Gallery, Dung Beetle Learning Guide 1a (London: Dung Beetle Ltd., 2015).
6 Brett Gorvy, quoted in Christie’s, “Jeff Koons Balloon Dog (Orange) Press Release,” September 9, 2013, http://www.christies.com/presscenter/pdf/2013/release_2791_koons_pwc.pdf.
7 Henry Alford, “Oops. I Left My Millions at Home,” The New York Times, November 15, 2013, http://www.nytimes.com/2013/11/17/fashion/A-view-of-the-Christies-and-Sothebys-art-auctions-from-the-outside.html?_r=0.
8 Gallerist, “‘Rendered speechless’: Brett Gorvy Has a Lot to Say about This Week’s Auctions,” Observer, November 11, 2013, http://observer.com/2013/11/rendered-speechless-brett-gorvy-has-a-lot-to-say-about-this-weeks-auctions/.
9 Graham Bowley, “The (Auction) House Doesn’t Always Win: Christie’s and Sotheby’s Woo Big Sellers with a Cut,” The New York Times, January 15, 2014, http://www.nytimes.com/2014/01/16/arts/design/christies-and-sothebys-woo-big-sellers-with-a-cut.html.
10 Brett Gorvy, quoted in Stacy Perman, “Pop Goes the Art Market,” Fortune, March 28, 2015, http://fortune.com/2015/03/28/art-art-auctions/.
Chapter 3 Three Studies of Lucian Freud
11 Mark Rothko, quoted in Dorothy Seiberling, “The Varied Art of Four Pioneers,” LIFE, November 16, 1959, 82.
12 Jussi Pylkkänen, quoted in Dan Duray, “Christie’s Contemporary Sale Nets $691.6 M., Auction Record, with Bacon, Koons in Front,” Observer, November 13, 2013, http://observer.com/2013/11/christies-nets-691-6-m-at-contemporary-sale-auction-record-with-bacon-koons-in-front-2/#slide9.
13 Pilar Ordovas, quoted in Eric Spitznagel, “FAQ: Why Does Francis Bacon’s Art Auction Record Matter?” Bloomberg, November 15, 2013, http://www.bloomberg.com/news/articles/2013-11-15/faq-why-does-francis-bacons-art-auction-record-matter.
Chapter 4 $26 Million for Nine Words
14 Roberta Smith, “Painting’s Endgame, Rendered Graphically: A Christopher Wool Show at the Guggenheim,” The New York Times, October 24, 2013, http://www.nytimes.com/2013/10/25/arts/design/a-christopher-wool-show-at-the-guggenheim.html?_r=0.
15 Christophe Van de Weghe, quoted in Vernon Silver and James Tarmy, “The 350, 000 Percent Rise of Christopher Wool’s Masterpiece Painting,” Bloomberg, October 9, 2014, http://www.bloomberg.com/news/articles/2014-10-09/price-of-christopher-wools-apocalypse-now-soars-with-art-market.
16 Brett Gorvy, quoted in Christie’s, “Release: Christopher Wool’s Apocalypse Now, 1988 The Seminal Painting of Contemporary Art—An Emblem of a Generation,” November 12, 2013, http://www.christies.com/about/press-center/releases/pressrelease.aspx?pressreleaseid=6772.
Chapter 5 Jeff Koons and Popeye
17 Scott Rothkopf, quoted in Carol Vogel, “Think Big. Build Big. Sell Big. Whitney Retrospective for Jeff Koons’s Monumental Ambitions,” The New York Times, June 11, 2014, http://www.nytimes.com/2014/06/15/arts/design/whitney-restrospective-for-jeff-koonss-monumental-ambitions.html.
Chapter 6 Ludwig’s Play-Doh
18 Jeff Koons, quoted in Ingrid Sischy, “Jeff Koons Is Back!,” Vanity Fair, July 2014, http://www.vanityfair.com/culture/2014/07/jeff-koons-whitney-retropective.
19 Adam Lindemann, quoted in Andrew M. Goldstein, “Dealer Adam Lindemann on Picking Winners in a Superheated Art Market,” Artspace, June 11, 2014, http://www.artspace.com/magazine/interviews_features/how_i_collect/how-i-collect-adam-lindemann-52372.
20 Jeff Koons, quoted in Vogel, “Think Big. Build Big. Sell Big.”
21 Koons, quoted in Sischy, “Jeff Koons Is Back!”
Chapter 7 Sotheby’s and third Point
22 “Exhibit 99.3: Letter to William F. Ruprecht,” US Securities and Exchange Commission, October 2, 2013, https://www.sec.gov/Archives/edgar/data/823094/000119312513388165/d605390dex993.htm.
23 Daniel Loeb, quoted in Deepak Gopinath, “Hedge Fund Rabble-Rouser,” Bloomberg Markets, October 2005, 60.
24 Amy Cappellazo, quoted in Nate Freeman, “House Arrest: How One Topsy-Turvy Season at Sotheby’s Could Change the Auction World Forever,” ArtNews, August 10, 2016, http://www.artnews.com/2016/08/10/house-arrest-how-one-topsy-turvy-season-at-sothebys-could-change-the-auction-world-forever/.
25 Miuccia Prada, quoted in Ella Alexander, “Prada Defends High Price Points,” British Vogue, April 15, 2013, http://www.vogue.co.uk/article/miuccia-prada-defends-prada-prices-explains-ecommerce-plans.
Chapter 8 Foraging for Collectors and Consignors
26 Brett Gorvy, quoted in Colin Gleadell, “Art Sales: The $2 Billion Art Bonanza,” The Telegraph, May 20, 2014, http://www.telegraph.co.uk/luxury/art/34082/art-sales-the-2-billion-art-bonanza.html.
27 Lewis Carroll, Through the Looking-Glass, Millennium Fulcrum Edition 1.7 ed. (Champaign, IL: Project Gutenberg, 1991), http://www.gutenberg.org/files/12/12-h/12-h.htm.
28 Judith H. Dobrzynski, “How Auction Houses Orchestrate Sales for Maximum Drama,” The New York Times, October 28, 2015, http://www.nytimes.com/2015/11/01/arts/design/how-auction-houses-orchestrate-sales-for-maximum-drama.html.
29 Xin Li, quoted in Derek Blasberg, “How Xin Li Went from the Runway to the Center of Nine-Figure Art Auctions,” Vanity Fair, November 2015, http://www.vanityfair.com/style/2015/11/xin-li-model-art-auctions.
30 Eileen Kins
ella, “Meet Xin Li, Christie’s Secret Weapon for China Sales,” artnet News, November 8, 2014, https://news.artnet.com/market/meet-xin-li-christies-secret-weapon-for-china-sales-160712.
31 Rebecca Mead, “The Daredevil of the Auction World,” The New Yorker, July 4, 2016, http://www.newyorker.com/magazine/2016/07/04/loic-gouzer-the-daredevil-at-christies.
32 Wang Wei, quoted in Amy Qin, “With Modigliani Purchase, Chinese Billionaire Dreams of Bigger Canvas,” The New York Times, November 17, 2015, http://www.nytimes.com/2015/11/18/arts/international/with-modigliani-purchase-chinese-billionaire-liu-yiqian-dreams-of-bigger-canvas.html.
Chapter 9 Lisson goes to new york
33 Melanie Gerlis, “‘Amateur management’ blamed as book claims third of galleries run at a loss,” The Art Newspaper, August 29, 2015, http://theartnewspaper.com/market/art-market-news/amateur-management-blamed-as-book-claims-third-of-galleries-run-at-a-loss/.
34 Marc Spiegler, quoted in Blake Gopnik, “Great Art Needs an Audience,” The Art Newspaper, February 12, 2014, http://old.theartnewspaper.com/articles/Great-art-needs-an-audience/31726.