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Towards a False Art Market Globalisation pt. 1 – artmarketblog.com

admin — Thu, 17 Mar 2011 13:46:33 +0000

Towards a False Art Market Globalisation pt. 1 – artmarketblog.com

One of the things that I find particularly interesting about the current progression of the art market is that although it is often said that the internet has globalised the art market, I often come across circumstances where geographical and cultural boundaries still have a major impact on the way people perceive and interpret the value of an artist’s work. One such artist whose work appears to have been affected by such boundaries is the now deceased German artist Hannah Hoch. The event that alerted me to this issue was the March 9 2011 Impressionist and Modern Art auction held by Christie’s in New York where two works by Hannah Hoch achieved prices that were way above the estimates. The first work, a paper collage titled ‘Konstruction’, fetched a massive $104,500 against an estimate of $10,000-15,000 and was also the highest price of the auction. Another Hoch work in the same auction titled ’5 + 6′ also blitzed its $4,000-6,000 estimate finally selling for $68,500. These phenomenal results really piqued my interest in Hoch’s work, which led to me conducting further research into Hoch’s auction price history. What I found was particularly interesting and led me to make some rather interesting conclusions about the art market that I will reveal later.

If the two Christie’s results had been random anomalies there would not be anything to write about, however, there is a clear trend of estimate busting prices. But this is no ordinary trend. This is a trend that is very much a result of geographic and cultural boundaries. You see, very few works by Hoch appear at auction outside of Germany compared with the number of works that appear at auction within Germany. When works by Hoch do appear outside Germany in one of the major English speaking Western art market centres such as America or England, there is bound to be considerable interest. Christie’s have a record of having sold a total of 19 works by Hoch since 1991. Of those nineteen, five have sold for well over the assigned estimate. The most recent two are those that I mentioned above. Previous to those there was a new auction record set for Hoch by Christie’s in 2007 when ‘Mechanischer Garten’ sold in New York for $824,000 against an estimate of $8,000 – $12,000. Another work sold by Christie’s during 2007 fetched $217,000 against an estimate of $120,000 – $160,000. Going further back, Christie’s sold a work by Hoch for £22,000 in 1992 against an estimate of £10,000 – £15,000. Sotheby’s have sold even fewer works by Hoch than Christie’s with records showing a total of two works passing through their auction rooms. Of those two, one was a collage titled ‘Portrait Gerhard Hauptmann’ which sold for £67,200 against an estimate of £8,000—12,000 in London on the 18th of October 2000.

To be continued………..

image:

Hannah Hoch (1889-1978)
Konstruction
signed with initials and dated ‘H.H. 21′ (lower right)
paper collage on paper
10 1/8 x 13½ in. (25.6 x 34.2 cm.)
Executed in 1921

**Nicholas Forrest is an art market analyst, art critic and journalist based in Sydney, Australia. He is the founder of http://www.artmarketblog.com, writes the art column for the magazine Antiques and Collectibles for Pleasure and Profit and contributes to many other publications

The Art Auction House Sin Files – artmarketblog.com

artforprofits — Tue, 07 Dec 2010 05:47:09 +0000

The Art Auction House Sin Files – artmarketblog.com

Where does it all end? When will people realise that although the questionable practices exhibited by some auction houses are legal, they should not be tolerated? How far will art auction houses be able to go before someone steps in and says ENOUGH IS ENOUGH !! Let’s take a look at the history of sins committed, and those allegedly committed, by the big three art auction houses.

The most famous art auction house scandal took place in 2000 when Christie’s and Sotheby’s were dragged through the mud because of allegations that they had formed a “cartel” and were agreeing in advance to fix commission rates. The price-fixing scheme violated federal antitrust law by eliminating competitive choice and cost customers millions of dollars. Christie’s dobbed on Sotheby’s and were given immunity from prosecution for their information. Sotheby’s ended up taking most of the flak with several senior members getting the boot and two senior managers, A. Alfred Taubman and Dede Brooks, both getting jail sentences. Sotheby’s, Christie’s and their owners also paid a civil lawsuit settlement of $512 million.

In September of 2004, Forbes magazine reported that Christie’s were allegedly withholding information regarding the authenticity of objects from clients. These allegations were made by Canadian newspaper heiress Taylor Lynne Thomson who went on to sue Christie’s. According to Forbes magazine: “Thomson sued and British courts ruled in May that Christie’s had been too lax in its catalog description, leaving out qualifications to its classification of the urns as being “Louis XV.” The judge highlighted the auction specialists’ decision to remove the qualifying words “possibly Italian,” which would’ve raised the possibility of the urns being far less valuable 19th-century copies.”

Christie’s controversial purchase of the highly regarded gallery Haunch of Venison in 2007 caused a flurry of opinions, many of called the sale a conflict of interest and accused Christie’s of blurring the lines between what galleries and auction houses offer. Christie’s wasn’t the first auction house to purchase a gallery though as Sothebys also made a foray into the gallery world by purchasing Noortman Master Paintings in 2006.

In 2008, CNet founder Halsey Minor sued Sotheby’s for allegedly failing to fully declare when they had an ownership stake in works that they were selling. Sotheby’s won the case and were awarded $6.64 million in outstanding debts. Minor can appeal but, as far as I know, has yet to do so.

In February of this year Christie’s allegedly settled with a brother and sister who sued Christie’s for allegedly failing to identify a painting that they consigned to the auction house as being by Titian. The painting was sold for £8,000 by Christie’s in 1993 as a painting ‘from the school of Titian’. It was determined after the painting had been sold by Christie’s that it was in fact a genuine Titian which was worth in the region of 4 million pounds. The siblings claimed that Christie’s failed to competently research and advise on the painting’s value when it was sold in 1993.

In May of this year (2010), Jeanne Marchig, a Swiss animal philanthropist, launched a law suit against Christie’s for failing to identify a painting owned by Marchig, which was sold by Christie’s for $19,500 in 1998, as a painting by Leonardo worth upwards of 100 million pounds. Christie’s sold the painting as a mere ‘19th century German’ work for which Marchig is suing Christie’s for ‘wilful refusal and failure to investigate the plaintiff’s believed attribution, to comply with its fiduciary obligations, negligence, breach of warrant to attribute the drawing correctly, and making false statements in connection with the auction and sale’. Christie’s disagrees with the claims that the painting is a Leonardo. Reaching an outcome with this case is likely to take quite a while.

The most recent art auction scandal involves auction house Phillips de Pury and their ‘Carte Blanche’ sale which took place on November the 8th (2010). So many issues have been raised in relation to this auction that it would take a series of posts to explain them all so I will only mention the most serious allegations. To begin with, the so called “curator” of the auction, Philippe Ségalot, not only was directly responsible for negotiating and organising the consignment of works for the sale, but he also advised some of the buyers – a situation that could be seen as a serious conflict of interest. If this wasn’t enough of a conflict of interest, Segalot is reported to have bid on works himself presumably on behalf of his clients. There have also been several reports that the auctioneer on the night, Simon de Pury, failed to make it clear to the audience when works failed to sell, which auctioneers are legally required to do. By failing to announce the failure of a work to sell the auctioneer could be seen to be attempting to deceive the audience by inducing a false sense of success and excitement.

These are only a few of the more serious scandals that have arisen as a result of some questionable tactics and practices adopted by the world’s top art auction houses. Are these the sort of businesses that you want to business with? Would you trust such a company to treat you fairly and honestly? I have made it my mission to make art collectors and investors more aware of what is happening in the art auction world and hopefully at the same time encourage the art auction houses to be more honest, ethical and transparent. Stay tuned, there is more to come………

Fixing the Contemporary Art Auction Crisis Pt. 1 – artmarketblog.com

artforprofits — Tue, 23 Nov 2010 01:54:17 +0000

Fixing the Contemporary Art Auction Crisis Pt. 1 – artmarketblog.com

So, my last post on the issues surrounding the definition of contemporary art and the classification of works of art by auction houses created quite a storm – and rightly so. If you are still wondering why I have such an issue with the way some auctions houses categorise the works they are selling, then perhaps what I am about to show you will provide some enlightenment. The definition of contemporary art, in the context of the art market, has seemingly become redundant due to years of misuse and abuse. Although I acknowledge that the definition of contemporary art has remained open to interpretation to some extent, some auction houses appear to be taking liberties when it comes to categorising works for auction. Since the art market appears to function according to a corrupted definition of contemporary art, I decided to turn to cultural sector to see what the museum world had to say on the subject.

When it comes to making decisions regarding the classification and categorisation of works of art it is the cultural sector that generally has the final word, so I was hoping the cultural sector would provide something insightful. What I found was insightful indeed. To begin my search I went to the website of the Museum of Contemporary Art, which is located in my home town of Sydney, Australia, and is a favourite haunt of mine. The Sydney MCA website says: “Contemporary art can be defined in several ways: art which is of this time; art which is recent, new or existing now; or art which follows modern ideas or fashions in style and design. It can also refer to museum collections from 1970s onwards”. So, the Sydney MCA defines Contemporary art as both recent and as an era that began in the 1970’s. The next museum definition I found was provided by the Madison Museum of Contemporary Art whose website said: “Contemporary art had its beginnings in the early 1970s, resulting in part from a general challenge to the authority of state and cultural institutions dominated by men and exclusivist policies. Contemporary art, also identified with the term postmodernist art, has been in many ways a continuation of the ideals of modern art—its themes, styles, and, most importantly, the concept of the work of art as private expression”. Again, the MMOCA defines contemporary art as a sort of era that began in the 1970’s.

Now, before I continue on I want to make it clear that I am not agreeing with the above definitions of Contemporary art provided by the museums. I do, however, acknowledge that a museum devoted to contemporary art requires a relatively broad definition of contemporary art due to the fact that a museum’s collection needs to have a relatively long shelf life. If a contemporary art museum were to focus purely on current art, they would have to constantly update the collection, which would be an extremely expensive and time consuming task. At the present time I can understand the reasoning behind the decision by Contemporary art museums to begin what could be termed the “Contemporary era” in the 1970’s, as both Conceptual art and Digital art – both of which continue to have a strong influence on current artistic practice – came to prominence in the early 1970’s.

To be continued………….

image: ’4 the Love of Go(l)d’ sculpture by Eugenio Merino

Evaluating Art Auction Results Pt. 5 – artmarketblog.com

artforprofits — Mon, 16 Mar 2009 18:24:17 +0000

Evaluating Art Auction Results Pt. 5 – artmarketblog.com

2. Percentage of lots sold by value continued

In part four of this series I looked at the second of two methods that auction houses use to calculate the percentage of lots sold by value. As I mentioned in part 4, the method of calculating the percentage of lost sold by value using the knockdown figure as the denominator in the equation is the most popular method but it too has it’s fair share of problems. The figure resulting from the knockdown method doesn’t really tell us that much about the success of the auction and what it does tell us is really of no use to anyone. By using the knockdown figure as an indication of the value of the works of art being auctioned as opposed to the estimate, the auction house is effectively reducing the chances of ending up with a low % sold by value figure even if every work is sold. Let me explain. If you use the estimate as an indication of the value of an artwork (estimate method) then the difference between the hammer price and the estimate could be quite significant which would result in a low % sold by value figure. Let’s say that you sold every single work in the auction but all the works sold for half their estimate. The % sold by value figure would be 50%. However, if you use the knockdown figure as an indication of the value of the works of art in the auction then because every work sold the % sold by value figure for the same auction would be 100%. Can you see the problem.

As I explained in part 4 of this series the knockdown figure is calculated by adding:

1. the hammer price of works that are sold
2. the highest bid for works that receive bids but are passed in
3. the lowest figure reached by the auctioneer before passing in a work that did not receive any bids

Because the hammer price is used as an indication of value for every work sold at the auction a 100% sold by lot rate will automatically result in a 100% sold by value rate regardless of how much the works sold for. Also, because each work of art in the auction is assigned a value regardless of whether it is sold or not the % sold by value figure is going to be considerably higher using the knockdown method for what one would consider to be a poor auction result than if calculated using the estimate method. eg:

hammer price/estimate

5000/8000
6000/9000
8000/13000
3000/5000
9000/15000
0 (unsold)/3000 (passed in)
0 (unsold)/7000 (passed in)
0 (unsold)/6000 (passed in)
0 (unsold)/8000 (passed in)
0 (unsold)/2000 (passed in)

total 31,000/estimate 76,000

Let’s say an auction has ten lots (as above), five of which are sold for a total of $31,000 against a total auction estimate of $76,000. The % sold by value figure would be 41% using the estimate method which would seem fair considering that only half the lots sold and those that did sell were sold for much less than the estimate. Now, calculating the % sold by value figure for the same auction would require that the estimate figures used in the estimate method be replaced with either the hammer price, the highest bid if the work was passed in or the lowest figure reached by the auctioneer for works that receive no bids at all. When these numbers are added in the results look like:

5000/5000
6000/6000
8000/8000
3000/3000
9000/9000
0/2000 (passed in)
0/5000 (passed in)
0/4000 (passed in)
0/6000 (passed in)
0/1000 (passed in)

total 31,000/knockdown 49,000

As you can see, by giving the unsold lots a value the percentage of lots sold by value would increase to 63% using the knockdown method which is considerably better than the 41% resulting from the estimate method. The benefits for the auction house of using the knockdown method as opposed to the estimate method are considerable but the knockdown method doesn’t really tell us as much about the auction as the estimate method does. The % sold by value figure calculated using the estimate method tells us whether the auction house was able to meet it’s own expectations and the expectations of the market whereas the % sold by value figure calculated using the knockdown method doesn’t really tell us much at all. Seriously !!. For an auction where all lots sell the knockdown method compares the sale price with the sale price. With an auction where not all lots sell the knockdown method compares the price people paid for the works that did sell with the price people paid for the works that did sell plus the supposed value (according to the auction house) of those that didn’t sell.

The one downside to using the knockdown method as opposed to the estimate method is that the % sold by lot figure can experience a significant increase from an exceptionally high price realised for a particular lot. If, say, a painting sold by $5 million dollars against an estimate of $1 -$2 million then the sold by value percentage for that particular lot would be 333% if calculated using the estimate method whereas it would only be 100% if calculated using the knockdown method.

In conclusion, I believe that using the:

as representative of the value of a work of art is misleading, deceiving and just plain silly. I don’t believe that the highest bid received for works that are passed in is indicative of an artwork’s value. I also have a problem with the use of the lowest figure reached by the auctioneer before passing in a work that did not receive any bids as an indicator of value because no-one knows how low the auctioneer would have had to go before a bid was made. The auctioneer is not going to go too low because the auction house doesn’t want to sell the work for too low a price. The lowest figure reached by the auctioneer before passing in a work that did not receive any bids is therefore not indicative of value if one is using the same philosophy as applied to the lots that did sell and the lots that received bids. In a nutshell the figure doesn’t really tell us the percentage of lots sold by value and it doesn’t really tell us anything about the success of the auction either.

See previous posts in this series here:

Evaluating Art Auction Results Pt. 4 – artmarketblog.com
http://artmarketblog.com/2009/03/04/evaluating-art-auction-results-pt-4-artmarketblogcom/

Evaluating Art Auction Results Pt. 3 – artmarketblog.com
http://artmarketblog.com/2009/02/27/evaluating-art-auction-results-pt-3-artmarketblogcom/

Evaluating Art Auction Results Pt. 2 – artmarketblog.com
http://artmarketblog.com/2009/02/19/evaluating-art-auction-results-pt-2-artmarketblogcom/

Evaluating Art Auction Results Pt. 1 – artmarketblog.com
http://artmarketblog.com/2009/02/12/evaluating-art-auction-results-pt-1-artmarketblogcom/

Dissecting Christie’s Feb 09 Art Auction Pt. 2 – artmarketblog.com

artforprofits — Sun, 08 Mar 2009 13:37:23 +0000

Dissecting Christie’s Feb 09 Art Auction Pt. 2 – artmarketblog.com

A few weeks ago I posted the first half of the results from the Christie’s February 2009 Impressionist and Modern Art auction along with information relating to whether each lot had been sold at auction previously and if it had, when it was sold and how much it sold for. My purpose for doing this is to show that there is always far more to art auction results than the statistics provided by the auction houses will tell you. Just because an auction results in a high hammer total, high percentage of lots sold by value and a high percentage of lost sold by number doesn’t mean that the auction was a complete success. The statistics that the auction houses provides could be masking the fact that a majority of the works sold in the auction had been sold at auction before for a higher amount meaning that the people selling these works were selling at a loss. Although the purpose of the auction house is to sell works of art and not to ensure people make a profit on the works they are selling; the factors that may be beyond the control of the auction house, such as whether a person makes a profit or not, should still be used as a measure of the success of an auction. In the next post in this series I will look at the data I have provided in this and the previous post and provide an analysis of the data.

See part 1 of Dissecting Christie’s Feb 09 Art Auction here:

http://artmarketblog.com/2009/02/17/dissecting-christies-feb-09-art-auction-pt-1-artmarketblogcom/

Continuation of data relating to lots sold at the Christie’s February 09 Impressionist and Modern Art auction:

-Otto Mueller (1874-1930) Sitzender Akt in Landschaft, c.1927: Sold for £769,250 ($1,106,182) against an estimate of £650,000 – £850,000 ($926,250 – $1,211,250). No previous auction sale history

-Gustav Klimt (1862-1918) Dame en face mit plisiertem Kleid (Damenbildnis en face) , c. 1898: Sold for £1,385,250 ($1,991,990) against an estimate of £600,000 – £800,000 ($855,000 – $1,140,000). Previously sold by Christie’s on the 9th of November 2004 for USD$1,000,000 (GBP 524,700) against an estimate of USD$750,000 – 950,000 which represents an increase in price of $991,990

-Marino Marini (1901-1980) Gentiluomo a cavallo, c. 1937: Sold for £769,250 ($1,106,182) against an estimate of £700,000 – £1,000,000 ($997,500 – $1,425,000). No previous auction sale history

-Ossip Zadkine (1890-1967) Torse de femme, c. 1925: Sold for £421,250 ($605,758) against an estimate of £300,000 – £500,000 ($427,500 – $712,500). No previous auction sale history

-Marc Chagall (1887-1985) Les mariés aux deux bouquets, c. 1980: Sold for £541,250 ($778,318) against an estimate of £400,000 – £600,000 ($570,000 – $855,000). No previous auction sale history

-Pablo Picasso (1881-1973) Buste d’homme, 1971: Sold for £1,497,250 ($2,153,046) against an estimate of £1,200,000 – £1,800,000 ($1,710,000 – $2,565,000). No previous auction sale history

-Max Ernst (1891-1976) Temptation of St. Anthony, 1945: Sold for £97,250 ($139,846) against an estimate of £100,000 – £150,000 ($142,500 – $213,750). No previous auction sale history

-Julio González (1876-1942) Le rêve (Le baiser) 4/6, c. 1934: Sold for £577,250 ($830,086) against an estimate of £400,000 – £600,000 ($570,000 – $855,000). Number 5 of the edition of 6 was sold by Christie’s in 2002 for GBP 220,000 against an estimate of GBP 250,000 – 350,000 which represents a theoretical increase in value of GBP 377,000.

-André Masson (1896-1987) Le météore, 1939: Sold for £169,250 ($243,382) against an estimate of £120,000 – £180,000 ($171,000 – $256,500). No previous auction sale history.

-Joan Miró (1893-1983) Femme entendant chanter le coq aux éclats violets, 1972: Sold for £892,450 ($1,283,343) against an estimate of £500,000 – £700,000 ($712,500 – $997,500). No previous auction sale history.

-Paul Delvaux (1897-1994) Faubourg, 1956: Sold for £277,250 ($398,686) against an estimate of £200,000 – £300,000 ($285,000 – $427,500). Previously sold by Sotheby’s in 1975 – price unknown

-Francis Picabia (1879-1953) Geminis, 1936: Sold for £385,250 ($553,990) against an estimate of £120,000 – £180,000 ($171,000 – $256,500). Previously offered for sale at Christie’s Paris in May 2008 but failed to on an estimate of EUR 250,000 – 350,000. Previously sold by Sotheby’s in 1975 – price unknown.

-Joan Miró (1893-1983) Personnage, 1976: Sold for £481,250 ($692,038) against an estimate of £280,000 – £380,000 ($399,000 – $541,500). Previously sold by Sotheby’s in February 2004 for GBP 172,000 against an estimate of GBP 150,000 – 200,000 which represents an increase in price of GBP 309,000.

To be continued…..

Art Market Blog - artmarketblog.com » auction results

Towards a False Art Market Globalisation pt. 1 – artmarketblog.com

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The Art Auction House Sin Files – artmarketblog.com

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Fixing the Contemporary Art Auction Crisis Pt. 1 – artmarketblog.com

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Evaluating Art Auction Results Pt. 5 – artmarketblog.com

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Dissecting Christie’s Feb 09 Art Auction Pt. 2 – artmarketblog.com

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