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The Hirst is yet to come
Despite the hype and high-profile exceptions, the contemporary art market isunsustainable and unlikely to offer long-term rewards, says Ivan Lindsay
Although the contemporary art market appears to continue its breathtaking ascent, with ever more outrageous prices paid for art on which the paint has only just dried, a close analysis of the recent sales and reports coming in from Art Basel indicates that all is not as it should be. Auction rooms, dealers and consultants are all trying to keep this extraordinary market afloat but the truth is that it is starting to show signs of fatigue.
On the surface the market looks healthy (as did Bear Stearns, Citigroup and Lehman’s until recently). The September issue of The Art Newspaper reported: ‘There was general agreement that Christie’s and Sotheby’s had posted highly satisfactory results for their important [contemporary] evening auctions.’ Sotheby’s led the way, with their art evening selling £94.7 million (94.7 per cent by lot), followed by Christie’s selling £86.2 million (83 per cent by lot).
Leading the charge was Jeff Koons’s Balloon Flower, a curious magenta metal sculpture not unlike a child’s balloon tied in a knot with a stick pushed into its middle. Unsure quite what it was, I turned to the Christie’s magazine, in which William Paton helpfully advised: ‘This monumental sculpture has everything: in formal terms, it is magnificent, its pristine surface introducing a touch of the sublime to its glistening, flowing, sensual, curves and crannies… a sense of refinement, purity, of the sheer love of form.’ Apparently today’s collector finds this kind of flannel illuminating. The piece was certainly important to Howard Rachofsky, who bought it from the artist for $1.1 million in 2000 and pocketed a $24 million profit in eight years.
The Koons sold for $25.7 million but had been guaranteed at $25 million, allowing Christie’s a profit of only $700,000. Take away all the marketing costs, and the price of sending the sculpture to Germany to give it a polish before the sale, and it probably made a loss on it. Christie’s and Sotheby’s are increasingly reliant on the contemporary market just as the cracks are starting to appear. In 2007, for example, Sotheby’s took $1.34 billion from the sales of contemporary art, which made up a quarter of its worldwide turnover.
The truth about what is really happening is hidden behind a deafening wall of positive PR. There is endless talk of how the market has diversified and the slack is being taken up by the Qataris, Russians, Chinese and Indians. But these nationalities are only dabbling in the Western market and so far have only shown real interest in their own art.
At Art Basel, much was made of Roman Abramovich and Sheikh Saud Al-Thani and other deep-pocketed potential buyers showing up — and, yes, they bought a few pieces. However, dealers are saying privately that interest in the young artists wasn’t there and even the major names were ‘sticky’. Many cutting-edge dealers are rapidly abandoning their young artists who until recently had ‘heat’, and are having to try to trade the secondary market just to stay afloat.
Contemporary collectors tend to have one of two approaches: you can buy plenty of cheap young artists in a shotgun approach (as Charles Saatchi or Anita Zabludowicz do), which tends to attract the speculators; or you can pay a lot more for artists who are already established. Since the speculative money has already left the market, that just leaves the major collectors going after the major pieces, and even those collectors are becoming uneasy. Eli Broad, the Los Angelesbased billionaire collector, has said several times that he does not believe the prices are sustainable.
As the economy declines, the cheerleaders continue to pump out the humbug. Take Simon de Pury, for example, a consummate salesman who heads up Phillips de Pury. ‘It is a question of availability,’ he said recently. ‘If you have unlimited money, you can no longer buy the best old masters collection in the world. [Drivel: there is a Rembrandt on the market for £45 million and a Goya for £30 million.] But you can buy the best collection of living artists. For that reason contemporary art will be the most significant market over the next twenty years.’ However, a look at Phillips’ contemporary sales on 29 June reveals a less certain picture, with a sale total of £24.5 million and a huge 34 per cent of lots failing to find a buyer.
In fact, the more one examines the nuts and bolts of this market the less sustainable it seems. Apart from the odd masterpiece that makes the headlines when it is bought by a couple of billionaires slugging it out, the art market overall is slowing. A recent nationwide survey conducted by the Royal Institute of Chartered Surveyors reported a decline in lots, buyers and prices; the £224 million taken by the London summer contemporary sales is up only 16 per cent on 2007, compared to the 300 per cent increase seen by the summer sales of 2007.
Damien Hirst is a barometer of the rise and fall of the market. Although his work is sold through a network of galleries such as White Cube in London and Gagosian in New York, word is they cannot keep up with his enormous factory production. Therefore, he has bypassed all his dealers, forgetting that they created him, with his huge sale at Sotheby’s in September consisting of works created during the past two years netting him £111 million.
Despite this success, The Art Newspaper recently reported that White Cube is sitting on more than 200 Hirst works worth more than £100 million that it cannot sell, including 34 butterfly paintings, 35 spin paintings, seven spot paintings and six medicine cabinets. Hirst certainly has talent… for publicity and making money. With all this unsold inventory at his dealers, he knew they could not afford to let the sale fail and The Times duly reported postsale that Hirst’s three leading dealers (White Cube, Gagosian and Haunch of Venison) either bought or underbid on over £40 million of the £111 million total. Then there’s the diamondencrusted skull entitled For the Love of God, which, when it wasn’t sold after huge publicity, had to be bought to save face by a group of investors that included Hirst and Jay Jopling. It’s worth noting that Saatchi has sold his Hirsts and he observed cryptically in a recent interview that only two or three of his artists would stand the test of time. Which two or three, he didn’t say.
Today there are thousands of artists being proclaimed as important. What people tend to forget is that all through history the work of only about ten artists from each generation keeps appreciating. The rest becomes worthless. As George Soros says: ‘Recognise the trend whose premise is false, ride that trend, and step off before it is discredited.’
Imagine the scene in twenty years’ time: Hirst’s shark sits in its tank in Steve Cohen’s barn, long since banished from his drawing room because of the smell. Pieces of flesh float around the tank and the shark can just be made out through the murky, water. The question is not so much what it’s worth, but how much it will cost to have it removed.
The Rothschilds had a maxim: one third in securities, one third in property and one third in art. They didn’t specify what art because they thought it was obvious. They avoided fashion and the craze for contemporary Victorian art, much of which is now worthless, and sought out great pieces by the most famous artists of the past, whose value had withstood the judgement of time, a strategy that was as sound then as it is today.
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