135 Million Dollars for a Painting?
Obviously, only a handful of people can afford to purchase so many games of Monopoly, and even fewer can afford to spend actual cash. Nonetheless, more and more people have become interested in collecting art, especially at much lower and affordable levels. Because auction houses sell million and multimillion dollar works of art many feel these institutions are private and only serve the extremely wealthy. The truth is auction houses sell works of art at very reasonable prices, often only hundreds of dollars for a quality print, or perhaps a few thousands for a painting; they are also free and open to the public. According to ArtPrice.com “high-profile millionaire lots represent only 0.2% of transactions. The bulk of the market is much more affordable: 83% of lots sold at auction in 2005 were knocked down for less than $ 10,000 and 56% for less than $ 2,000.1”
But how does one begin to collect, even at the lower levels?
Prior to attending auctions, most collectors start by going to galleries. For the uninitiated would-be collector this can be daunting. A typical newer or younger collector might walk into a gallery and see a beautiful abstract painting with a price tag of $10,000. At the next gallery another abstract painting, also quite compelling and intriguing, but the price of this one is $75,000. A third gallery also has an abstract painting, this one priced at $1,500. Not surprisingly many are baffled. How do galleries come up with their prices? Do they just pick numbers out of the air? Or is there method to the madness?
There is.
Art isn’t as mysterious as many purveyors would like outsiders to believe. Galleries and artists want to sell their art, so simply slapping an arbitrary price tag on a work of art won’t do any good if the price isn’t at least somewhat justified-this doesn’t mean some gallerists aren’t more aggressive in their pricing that others.
The art market is comprised of two distinct markets: the primary and the secondary. The primary market is where art is sold for the first time, predominantly through galleries, or private dealers. The secondary market is for art that has been previously sold, and is often the art of non-living artists. This is the work sold at auction, but also through galleries and private dealers. The secondary market is generally higher quality, and often blue chip art-all the familiar names: Picasso, Matisse, Pollock, are blue chip. Occasionally, an auctioned work will come directly from a well-known living artist, or, more likely, from his or her gallery.
In the primary market living artists fall into three somewhat self-explanatory categories: emerging, mid-career and blue-chip. Emerging artists are usually younger, often just out of art school, but they can also be in their thirties, forties or older. Typically there is a short history of exhibits, in school or out, and perhaps some awards. Their prices generally range from $500 – $7,500. Mid-career, as the name implies, are a little older. They have had some financial and critical successes, have had a stronger record of gallery exhibits, and probably have won awards, fellowships or grants. Their prices generally range from $5,000 – $50,000. Blue-chip artists have had both financial and critical successes. Often their works are in museums and important private collections. They command the most attention, and their prices can start at $50,000, and can rise to more than a million dollars for a new work, but they can also be much less for prints, or for smaller or less significant works.
Even in the three categories, there are a wide range of prices. The size of a work of art is one factor: the larger the piece the more expensive it will be. A 96′ x 96′ painting requires more effort, material and time to complete than a 24′ x 24′ painting, and the prices will reflect this. Determining aesthetic value is harder to pin down or teach, but it is more than mere guessing and or hoping. It requires years of not just looking at art, but looking at art in relationship to art history, and art in relationship to other art that has been sold privately, through a gallery or through auctions.
When a gallerist considers representing an emerging artist the gallerist looks not just at one painting or one work of art, but at a body of work. The first step is usually viewing slides, either 35mm or digital. The slides are accompanied by a short biography, and usually an Artist’s Statement or Statement of Purpose: a one-page summary of what the artist is trying to achieve, or say, through his or her work. There are plenty who feel that art shouldn’t need explanations. In an ideal world this might be true. With contemporary art, because there is so many types of art, and so many artists, an artist’s statement helps the gallerist arrive at a better, and quicker, understanding of the art and of the artist’s intent-later, it can also help sell artists’ work.
If a gallerist likes what he or see sees, and reads, he or she may ask to see the work or visit a studio. Besides aesthetics, gallerists have to consider other factors. These factors differ from gallerist to gallerist, but they have some general guidelines: has the artist created something original and unique, something that shows an understanding of art history, without being just a reiteration of another artist’s work? How well is the material handled? Has the artist’s work evolved over time? Does the artist possess enough drive and determination to last the ups and downs of any artistic career? Just as there is no “correct” way to make a work of art, there are no correct aesthetic answers. But a good gallerist, like a good critic or collector, can detect talent and future promise-at least in theory, as every gallerist inevitably makes misjudgments.
Once an artist signs on with a gallery the usual business rules of supply and demand apply: if an artist’s work is critically praised, prices will generally rise. If an exhibit sells out-with or without critical praise-that, too, will increase the prices for the next exhibit. If a gallery has ten paintings priced at $10,000 and they all sell, you can be certain that for the next exhibit the prices will be higher, say $15,000 to $20,000. If these also sell out, again the prices may rise, say to $25,000 to $35,000. If none of them sell, the price will be brought down.
In theory, art is straightforward economics; in practice, it is not. Very few shows sellout completely, receive rave reviews or go completely unnoticed or unsold. Most fall somewhere in between. This makes it up to the gallerists to decide if prices should be increased, and, if so, by how much. Also, like many businesses, salesmanship and the personality of the gallerist can be play an important role. Sometimes this is just hype: the proverbial salesman who can sell snow to an Eskimo. Better gallerists express the passion they feel for an artist in such a way that it becomes contagious; they are able to speak of the art without hype, pretense or obfuscation. Like a good Shakespearean actor, they can render what might seem an archaic language into everyday speech that all can understand easily.
A generation or two ago, Leo Castelli gained tremendous influence by bringing Pop and Minimalist artists to the world’s attention. In the 1990s Charles Saatchi was incredible powerful, making art stars out of young, and often brash, London-based artists. Today, Larry Gagosian is the most prominent and powerful dealer, with galleries in New York, London and Beverly Hills, and a rooster that includes many of the most important living blue-chip artists.
Like artists, gallerists also establish their own history of achievement. If a gallerist consistently picks unknown artists whose work becomes well-known and valuable, more and more artists will vie to show at their gallery, and more and more collectors will want to buy work from the gallery. When a top gallery takes on an emerging artist, they may be able to charge $10,000 or $15,000 for a work of art. An unsung gallery taking on the same artist, might only be able to charge $1,000 to $2,000, because the gallerist record precedes the artists. For their efforts, gallerists usually receive 50% of the sales price. This might sound like a lot, and it is, but being a successful gallerist is not easy. Besides all the usual costs of any business: overhead, rent, and staff, etc., gallerists must win the confidence of artists, and they must nurture and maintain relationships with collectors. Such relationships can be incredible demanding and time-consuming. And whereas signing an emerging artist might be relatively easy, representing mid-career and blue chip artists is quite difference. It can be ruthless, with a good deal or resentment when one gallery steals or poaches an artist from his or her current gallery owner. And also, if a gallerist doesn’t sell an artist’s art, that artist will move on to another gallery.
When a gallery or auction house sells a work of art a record is kept. (Rarely are there records kept for private sales, as many collectors wish to remain anonymous, and do not want others to know how much they have paid, or even that they have purchased a work of art.) As an artist’s work becomes more valuable, the records are entered in an art databank, such as Artprice.com or Artnet.com. This way, a buyer, or seller, can go to the database and find out if the sales history of a particular painting, and a particular artist. Records go back over many years, so one can see how other works by a particular artist have done. You can track how many Picassos were sold last year, or this year, or fifteen years ago, and you can find out the exact selling price. Just like the stock market, art databases have charts, graphs and indices indicating highs, low and in betweens. This can be very helpful to auction houses.
Financial figures, however, are only one aspect that auction experts consider in pricing their estimates. Other considerations, beyond the obvious aesthetic, are: provenance, rarity, quality, freshness, condition and fashion.
Provenance refers to where the work of art came from, or who previously owned it. The fact that Betsey and John Hay Whitney, wealthy and well-known philanthropists, owned Boy with a Pipe adds to its value. Additionally, having only one previous owner before they bought it for $30,000 in 1950 adds to its rarity, as does the time period: it was painted during Picasso’s youthful and short-lived “Rose Period”. The quality-aesthetically speaking-was first rate, as was the condition. Over time a work of art, like anything else, if not properly cared for, is likely to suffer damage. That’s why art needs to be inspected to see if there are rips or tears in the painting; to see if the work has been repaired, or exposed to too much sunlight or heat, or any number of additional factors. Freshness reflects how often it has been seen, or put on the market. A work of art that has been in private hands for generations is going to be much more valuable than one that has been sold and resold on numerous occasions. Fashion in art doesn’t change every season, like clothing, but types of art can be fashionable, and can go out of fashion as well. Old Master paintings, for example, though still highly valued in certain circles, do not create the same kind of “buzz” that contemporary, or Impressionist, art does. Today’s new money collectors do not have the same desire (or even the same opportunities, due to scarcity), to hang Rembrandts, Caravaggios or Canelettos in their galleries or living spaces as their elders, and these artists do not carry the same cachet or social hipness, as say a Ed Rusha or a Jean Michael Basquiat.
Artists, art critics, gallerists, curators, and others involved in the art world, often vehemently disagree of what is “art”, or what is “quality art”, or which artists are good or valuable, or likely to rise in value. On the rare occasion the professionals agree an artist becomes “hot” and the prices can rise swiftly and dramatically. One of the excitements of auctions is seeing an artist’s work sell for many times the estimate. In February 2005, in London, Marlene Dumas painting The Teacher (sub a) estimated at $680,000 – $860,000 sold for $3,342,600 (221 Monopoly board games). At Christie’s in New York, a Dirk Skreber painting, estimated at $120,000 sold for $396,000 (27 Monopoly board games). A rising emerging artist, Barnaby Furnas (b. 1973) had one of his paintings estimated at $10,000 to 15,000 sell for $45,000 (3 board games). The day after the auction, these artists were suddenly very hot and interest in their work grew tremendously.
If you are interested in collecting art, here are a few questions you might consider: what type of art are you interested in collecting? Paintings? Sculptures? Drawings? Prints? Video? Do you want art that fills up empty spaces on your walls? And who doesn’t? Or do you want something more? Do you want to build a collection to leave to your children? If you have $50,000 to spend, do you want to spend it on one purchase? Or would you prefer to spread your purchases out over a certain time period, say a year, and makes smaller purchases along the way? If you have only $5,000 to spend you can ask the same question: one work of art, or a few pieces? Do you want to impress friends and clients with a “name” artist, or are you comfortable purchasing an emerging or unproven artist on the rise?
Steps would-be collectors can take to get a better understanding of art.
1.When you go to a gallery or a museum bring along pen and paper. When a particular artist, or work of art, moves you, write his or her name down. Later, do some research or reading on what his or her art is about. You’ll find that learning about one artist will help you learn about others. It will also increase your desire to learn more.
2.If you’re in New York, attend lectures at MoMA or the Whitney or Guggenheim or any of the other museums.
3.Go to the auctions houses, Christie’s, Sotheby’s, Phillips during their Post-war/Contemporary exhibitions and sales, usually November and May. After viewing the art, buy a catalogue to flip through later to reacquaint yourself with the art and artists. Certain artists will grab your attention; familiarize yourself with their names and there work. Look at the prices. Do they same high? Low? Just about right? If you have the chance, attend the auctions. If you can’t attend the auction, auction results are available the following day at the auction houses’ websites, or at artnet.com. Compare the final sale prices with the catalogue estimates.
4.Research and read: get a subscription to Art News or Art in America or Art Forum. Every Friday’s The NY Times publishes its gallery reviews. Read the reviews, and then go to the galleries and see if you agree with the reviewer is saying or not. Find a critic who doesn’t sound too “arty” and read his or her reviews. Eleanor Heartney, a writer for Art in America, writes very clear prose, without the art school jargon many lesser critics employ to sound impressive. Jerry Saltz, at the Village Voice, is another well known and well respected critic worth reading.
5.Go the “Open Studios” and talk to the artists-they don’t bite, well most of them don’t.
6.Relax and have fun. There are no “right answers” to art. Part of education is learning to trust your own taste.
7.Never buy something because others tell you it is “good” or “important.” After all, you are the one who will own it and live with it.
8.Overall, one needs to continually look at art. Professionals look at art almost every day. The more you see the more you’ll start to get a feel of what you like and do not like.
