Connecting Dots

It’s not news that the market has cooled for some artists, not least many of those emerging names who were unknown pre-pandemic and whose markets mushroomed on the synthetic fertilizer of cheap covid money. Emmanuel Taku’s prices tanked by March, so it’s a wonder why Zachary Small’s NYT article "A Sharp Downturn in the Art Market" (which follows Katya Kazakina’s market-contraction article from that month in using Taku as a key example) flashed on my phone as a timely notification on a Sunday morning. Let’s surmise that the cycle is slow for art-market journalists in August, at a moment between fairs and auctions.

Perhaps more puzzling, however, is Small’s propensity to connect dots. While he rightly cites high interest rates and inflation as factors affecting the markets for emerging artists such as Amani Lewis, Allison Zuckerman, and Taku, he situates that drop in contrast with a market “high point” of Christie’s auction of property from Microsoft co-founder Paul Allen in November 2022.

The Allen sale realized $1.5 billion, a record, by far, for any art auction. Five paintings fetched over $100 million that night, namely Georges Seurat’s Le Posses, Ensemble (Petite version) ($149.2 million); Paul Cezanne’s La Montagne Sainte-Victoire ($137.8 million); Vincent Van Gogh’s Verger aves cyprès ($117.2 million); Paul Gauguin’s Maternité II ($105.7 million); and Gustav Klimt’s Birch Forest ($104.6 million).

Small opines that the Allen sale “seemed to forecast a booming future for an industry that had been getting hotter by the year”, before he narrates the following phase of contraction, defined by speculative collectors unable to secure favorable financing for acquisitions. While he is quite right that much of the market, not just for the the likes of Taku, has been affected by the larger stringency, this macroeconomic condition may not be so decisive in the market for masterpieces.

The Allen sale was not a malfunctioning weather vane. It was a generational sale, with a concentration of rare and important pieces, unlike in overall caliber to anything we should expect to see offered in a single auction perhaps for decades, much less within the span of less than two years.

Multi-billionaire collectors who buy in the masterpiece market may have a purchasing capability that transcends factors such as interest rates and inflation that significantly affect other market segments. As such, one should ask whether the highest prices realized in the Allen sale for Seurat, Cezanne, et. al, in November 2022 would be substantially different if those same paintings were to be offered for sale today — or if in fact the paucity of results at the highest end is primarily a supply-side issue quite unrelated to the other matters at hand in the market today.

In any case, these are two different articles, crudely hammered together.

Selling the Purchaser

This spring I had the honor of being a guest on the “Private Client Risk & Resilience” podcast, hosted by Kurt Thoennessen, CAPI, Area Vice President, Private Client at Gallagher, and President of our New York Chapter committee of the Private Risk Management Association.

Kurt’s show broadly explores wealth protection and risk management strategies for high-net-worth individuals and families. He invites guests from a range of adjacent fields who address these topics in conversation with him. On this episode, I spoke with Kurt largely from the perspective of the art advisory side of my practice.

An excerpt from our conversation:

KT: “It’s almost as if the artist can choose who to sell to, if they’re at a certain level, and you as the art advisor are selling the purchaser. You’re making a sell to the artist — to sell your client.”

DS: “If a show has seven works of art and, and there are 30 interested parties, you have to explain why your client is somebody who should be among the seven and not the 23. Museums often get priority, because galleries are interested in boosting the profile of the artist, expanding their career, expanding visibility. That’s understandable, but the advisor can put forth an explanation as to why a certain collection is the place for the work to be. Being part of the right private collections is something that is beneficial for the artist. There are a lot of factors […] and collector profile is indeed one of them.”

If the collector (frequently with the help of an art advisor) is unable to secure such a purchase opportunity in the coveted primary market, one may have to resort to buying a similar work in the secondary market — at auction or otherwise. Whereas now, in a moment of market contraction, the gap between primary and secondary prices may be narrowing for some artists, that difference of prices, especially in a growth moment can be severalfold. To the extent to which high-value art is understandably recognized as an asset class, the advisor’s role in securing advantageous primary-market pricing can be key.

You can freely listen to the whole episode here.

High end of the non-art market

The highest auction sale this July — and one of the highest all year — was not of a work of art but rather a nearly complete fossil skeleton of a Stegosaurus, named “Apex.” The mounted dinosaur fossil fetched $44.6 million at Sotheby’s, New York on July 17, setting a record, by far, for a fossil sold at auction; the previous record was $31.8 million for the T-Rex skeleton, “Stan” at Christie’s, NY in 2020.

The buyer of “Apex” was financier Ken Griffin, who is well known for collecting at the top of the art market, e.g. his 2015 purchase of Willem de Kooning’s Interchange (1955) for a reported $300 million remains the highest known private sale nearly ten years later — and the second-highest known sale of a work of art in any market, after only the sale of the Salvator Mundi for $450 million at Christie’s, NY in 2017.

Griffin, however, has been showing himself to be cross-sector trophy collector, making other notable purchases at the highest echelons of the non-art market. The purchase price of “Apex” was slightly more than his purchase price of $43.2 million for a rare copy of the US Constitution at Sotheby’s, NY in 2021, edging out a crypto-invetor consortium of 17,0000 people, ConstitutionDAO.

Detail of constitution purchased by Ken Griffin at Sotheby’s

But how do such high prices for non-art items stack up with the art market?

The price paid for “Apex” is just under the price of $46.5 million for Basquiat’s Untitled (“ELMAR") at Phillips, NY, which led a season lacking in stratospheric art consignments. This was a mid-range Basquiat, selling for about half the $100M+ price that Griffin reportedly paid in 2020 for Basquiat’s Boy and Dog in a Johnnypump (1982), and less than a quarter of the $200M price that Griffin reportedly paid for Maezawa’s untitled Basquiat head this year, flipped from his $110.5 million purchase at Sotheby’s, NY in 2017.

Jean-Michel Basquiat, Untitled (ELMAR), 1982

As another point of comparison, Rothko’s Untitled (Yellow, Orange, Yellow, Light Orange) (1955) sold for $46.4 million at Christie’s, NY, in November 2023, slightly over half the artist’s record of $86.9 million set back in 2012 and about a quarter of the highest price reportedly paid for a Rothko, namely the private sale of No. 6 (Violet, Green and Red) for $186 million in 2014.

Realizing almost exactly the same price as “Apex” was Kandinsky’s record-setting Murnau with Church II (1910), which sold for $44.7 million at Sotheby’s London in March 2023. Diebenkorn’s auction record was set with the sale of Recollections of a Visit to Leningrad (1965) for $46.4 million at Christie’s, NY in November 2023, and Henri Rousseau’s auction record was set with the sale of Les Filaments (1910) at Christie’s, NY in May 2023.

Mark Rothko, Untitled (Yellow, Orange, Yellow, Light Orange), 1955

Wassily Kandinsky, Murnau with Church I, 1910

Richard Diebenkorn, Recollections of a Visit to Leningrad, 1965

Henri Rousseau, Les Flamants, 1910

Joan Mitchell at Art Basel

Art Basel, in official recap messaging boasted about David Zwirner’s sale of Joan Mitchell’s Sunflowers (1990-91) (illustrated above) for $20 million as “close to the artist’s auction record of USD 29 million.” The sale was used to illustrate their point that “the upper echelons of the market remain firmly intact.”

Needless to say, 20 is not actually close to 29, but it’s also not an apples-to-apples comparison.

Mitchell’s auction record was set less than a year ago, in November 2023, with the sale of a ca. 1959 painting (illustrated below) for just over $29 million at Christie’s, New York against an estimate of $25 - 35 million. By contrast, the Mitchell painting sold by Zwirner at Basel in June 2024 is from 1990-91, over 30 years later.

A much more apt comparison to the Zwirner sale would be to the auction sale of another 1990-91 Mitchell Sunflowers diptych (illustrated below) for $27.9 million, also in November 2023, at Sotheby's New York; it carried an estimate at $20-30 million.

The Sotheby’s painting, which is the same size, is much more complex and therefore unquestionably superior to the Zwirner painting. But just how much better is it than the one that sold at Sotheby’s? Does the price difference of 40% accurately reflect the difference in quality?

$20 million is indeed a sizable sum in absolute terms, and consequently at one level, the sale might be seen as a confirmation of the function of the high end of the retail market. This price is also appreciably higher than any auction price realized for a Mitchell painting prior November 2023.

One is nonetheless left to consider how this painting compares with the Sotheby’s comparable, and whether the respective prices realized appear to be consistent with the relative strengths of the two paintings.

Joan Mitchell, Sunflowers, 1990-91, oil on canvas, 110.25 x 157.5 inches. Sold for $27.9 million at Sotheby’s, New York on Nov. 15, 2023

Joan Mitchell, Untitled, ca. 1959, 97.5 x 86.5 inches. Sold for $29,160,000 at Christie’s, New York on November 9, 2023

Basquiat, "Portrait of the Artist as a Young Derelict" at Sotheby's London

Basquiat’s Portrait of the Artist as a Young Derelict will be offered in Sotheby’s Evening Sale in London on Tuesday, June 25, estimated at £15-20 million (approx. $19 - 25 million), with a third-party guaruntee.

Although I usually appreciate ARTnews for its comparatively straightforward coverage of the art market (relative to other major publications), Daniel Cassady premised his article about this offering, “Basquiat Triptych to Sell at Sotheby’s London for Half Its Price from Two Years Ago”, on an inaccuracy.

Cassady notes that the painting was offered at Christie’s in 2022 with a $30 million estimate. However, he cites the present estimate as 15-20 million USD (NOT GBP, as it should be). Today’s GBP-to-USD currency conversion is 1.27, so his numbers were off by a lot. Sotheby’s low estimate is nearly two thirds, not half the previous estimate, and it certainly may sell above this guaranteed price.

Most works that are withdrawn or bought-in and then offered for public sale again just two years later would be unlikely to carry low estimates that are much higher than 2/3 of the previous unmet estimate. Not even Basquiat is immune from the strong drive among collectors to buy what's fresh to market — and to expect to pay much less for what is not.

Furthermore, a repeat sale which is guaranteed to fetch nearly two thirds of an overconfident estimate from just two years prior does not necessarily reflect what Cassady refers to as a “dip in prices.”

To express this point, Cassady cites the sale of Basquiat’s Untitled (ELMAR) at Phillips, New York last month for $46.5 million against an estimate (on request) of $60 million — but is this a dip? One must keep in mind that this price was far higher than any other auction price realized for a Basquiat containing Xerox collage.

Also this season, The Italian Version of Popeye has no Pork in his Diet (1982) sold for $32 million at Christie’s NY, slightly above its EOR of $30 million, and Sotheby's eclipsed the record for a Basquiat/ Warhol collaboration with the sale of an untitled 1984 painting for $19.3 million. And Kenny Schachter reported that Ken Griffin bought the Basquiat from Maezawa for $200 million this year, turning a profit of nearly $90M in just seven years.

Jean-Michel Basquiat, Portrait of the Artist as a Young Derelict, 1982, oil, oil stick, and acrylic on wood and metal, 80 x 82 inches

Matthew Wong, Shangri-La

Auction buy-ins (lots that fail to sell) are often used as convenient yardsticks for measuring market health (or lack thereof). While this metric has certain utility, buy-ins must be understood in their specific context.

For example, Matthew Wong’s “Shangri-La” failed to sell at Christie’s, Hong Kong in the May 2024 Evening Sale, when offered with an estimate of of HKD 42,000,000 - 62,000,000 ($5,376,798 - $7,937,178). This low estimate was higher than all but one hammer prices ever realized for Wong.

Perhaps even more notable was the fact that the low estimate was nearly $1 million (US) higher than the realized price (with buyer’s premium) of $4,470,000 for this painting at Christie’s, New York, just three and a half years earlier; that price was over six times its high estimate of $700,000.

Repeat sales in short succession typically carry more cautious estimates than this — even in robust markets. The wisdom of such a practice may be all the more apparent when a successive offering follows meteoric growth, as was the case for Wong.

“Shangri-La” is a visually distinctive, yet stylistically highly characteristic, and undoubtedly attractive painting. It was simply not fresh to the eyes of prospective collectors. Perhaps a more timid estimate would have been irresistible to some, and this might have ultimately proved to yield a sale.

My takeaway is that one might not extrapolate too much about larger trends from certain examples without analyzing the specificities of the sale.

Matthew Wong, Shangri-La, 2017, oil on canvas, 96 x 72 inches

Quote in Karen Ho's ARTnews article about Christie's website

My comments are also included in Karen Ho's ARTnews article on Christie's hacked website:

https://www.artnews.com/art-news/market/christies-website-ongoing-outage-evening-auctions-online-bidding-1234706687/

Quote in Alex Greenberger's ARTnews article on Phillips's Evening Sale

I am pleased to be quoted in Alex Greenberger’s ARTnews article, “$46.5 M. Basquiat Leads Phillips’s Tepid $86.3 M. New York Auction”

Following the hour-long auction’s conclusion, some said it was tough to speak in grand pronouncements about the results. “We’re seeing a mixed, artist-specific market at Phillips tonight,” art adviser David Shapiro told ARTnews. But he said there were some positives: the sell-through rate was 92 percent, which he noted was solid, “notwithstanding some tepid results.”