A Word on Art and the Economy

Arts & Culture: By December 23, 2008, the day I finished this article, the stock market was down 279 points for the month (with a 3277.30 total closing point swing); and just for the record, my personal portfolio was teetering at the 36% loss level for the year! So much for the old idea of INVESTING in the stock market.

Recently I have been comparing the stock market to a floating crap table, but it appears you have better odds of making money at craps; so a more accurate comparison would be slots or roulette. And if you are looking for advice on how to win, here is mine --- don't play! During my lifetime I tried my "casino" luck about a dozen times and once, while playing the quarter slots, I won over $21,000 - so while miracles do happen, I wouldn't count, or even bet, on them!! You should also know that since that win, I have never been back.

Today I like to "play" the stocks: buying another 200 shares of RIMM for 6 ½ points less than I paid last month - you know, dollar averaging; and 300 shares of Citi. I sure hope that those bets are better than the black 8 on the roulette table. Who knows what the stock market will bring tomorrow; and since there is little any of us can do about it, let's turn our attention to the art market.

During these troubling financial times, a fair number of works showing up at auction are not finding buyers and it is my belief that the reason for this is less about their quality, and more about the quantity being offered. I will continue to stress this: there is just so much art any one market can absorb - a statement that was once again confirmed this month when the two main auction rooms, Sotheby's & Christies, offered thousands of works.

The first week started with the Marine and Sporting sales in New York and the results were no surprise to me - 553 works offered and 265 found new homes; a sell through rate of about 45% and a total take of $6.8 million - far, far below the total they were expecting. So far below that they never released the expected numbers. Among the highlights were Alfred Munnings' F.H. Prince and the Pau Foxhounds at $1.06 million and Off to the Start at $362,500; coming in third was Herring, Sr.'s The Earl of Chesterfield's Industry - at $338,500. As always, many of the works had condition and quality issues; however, in my opinion, it was the large number of paintings offered by certain artists that caused the high buy-in (unsold) percentages - 28 works by Herring, Sr. were offered (including 9 important examples), 8 by Dawson, 14 by Jacobsen, and the list goes on.

And just to rub a little sea salt on this wound, one of the auction rooms had a corresponding Maritime sale in London the following week with another 79 works - only 30 of which found buyers; a 38% sell through rate that totaled £983,475 (about $1.45 million).

Also during the first week the American sales, in New York, were in full swing; offering a mix of good and average works. Surprisingly the returns were somewhat acceptable given the current economic climate. Taking top honors was F. Silva's Sunrise at Tappan Zee at $2.66 million; the second slot was filled by G. O'Keeffe's Blue Wave Maine at $1.65 million; and in third was M. Hartley's The Silence of High Noon at $1.54 million. There were also works by Grant Wood, Hassam, Avery, Remington, Farney, Marin, Wyeth, and Garber that did very well. In the end, of the 370 works offered 218 found buyers; a sell through rate of about 59% and a total take of $46.1 million.

If you are keeping count, we have hit 1002 works offered so far and there was still more to come. What? more art!? You have to be kidding? Sorry, but I am not!

The London branches of these same auction rooms offered a series of Old Master sales that week as well. However, here the results were hot; so hot in fact that one might use the word smokin' when comparing them to the other sales!

The evening sales started with a bang and taking top honors was Canaletto's The Grand Canal at £3.85 million (about $5.7 million); second place was nabbed by van Mieris when his A Young Woman in a Red Jacket Feeding a Parrot, estimated at only £500-£700,000, brought a whopping £3.63 million (about $5.4 million); and in third was an even more impressive result when da Carpi's Portrait of Bindo Altoviti (estimate £200-£300,000) made £3.07 million (about $4.57 million). Of the 97 works offered, 67 found buyers (a 70% sell through rate) for a total take of £28 million (or $41.6 million). The day sales saw another 350 works offered and 219 finding new homes (about a 63% sell through rate) for a total of £7.92 million ($11.7 million). When all totaled the Old Masters offered 447 works; of those 286 sold (64% sell through rate) for a grand total of £35.92 million ($53.3 million).

And for our running total, that makes 1449 works offered so far - just from the two main auction rooms and for only the sales that I have covered. There were also 53 Early British & Irish Paintings, 105 British Drawings and Watercolours, 178 Modern & Contemporary; and 333 Twentieth Century works of art offered - bringing our total to 2118.

Well, there was no stopping them. The second week of December witnessed another onslaught of paintings, drawings and sculpture. The first to appear were the Victorian and Edwardian. Interestingly enough, both of these sales had very few lots -- one offered 72 and the other 84 ---and both had a tough time. Okay, so your next question is: if these sales had very few lots why didn't they do well? The answer is easy, 2 weeks prior (in November) one of these auction rooms had a 242 lot single owner estate sale of British art that spanned the same periods - and that one did extremely well (88% of those lots sold with a total take of £3.82 million - about $5.7 million). So, another 156 works in the British & Edwardian periods was just too much!

Anyway, here are the results. Top honors went to Grimshaw when his Glasgow, Saturday Night brought £481,250 (about $713,000); runner up was Dicksee's Paola & Francesca at £409,250 (about $607,000); and in third was Waterhouse's Flora at £268,250 (about $394,000). Other works by Grimshaw, Godward, and Frith also did rather well. Of the 156 works offered, 82 found new homes (a 52.5% sell through rate) for a total take of £3.59 million (about $5.28 million).

In addition, to the results above, during the second week there were 95 lots of British Art on Paper; 262 lots of 20th Century British Art; 353 Contemporary works; and 233 Impressionist works. This brings our total to 3217.

On top of that, the third week featured another 639 works offered in a variety of painting sales; bringing our total for just the two main salerooms to over 3850. Additionally, there were a number of "general" sales that included paintings - so the real December total was probably well over 4000 - with a high percentage of works not selling! And if you were to add in all the works offered by the hundreds of other salerooms across the globe, the numbers would be mind numbing.

There is an easy fix to these high buy-in rates - stop flooding the market. Years ago the typical 19th Century European Painting sale included all the 19th century works (Marine, Sporting, Russian, etc.); today, there are individual sales for almost every category. And where there is a themed sale, there is a need to fill it - and fill them they do, with whatever they can get! In addition, specialized departments were created causing competition within their own business (one department trying to get a work before the other does). The auction rooms need to roll back the clock and merge some of these departments - enabling them to produce stronger, more controlled, sales that will help put some order back in the market.

Most major sales should contain 150-250 lots and a good deal of selectivity needs go into their make-up. We all know that not every painting is an important work, but those paintings that fall into the minor classification or have condition / quality issues should be sold in separate sales. Years ago the auction rooms had both Important Sales (for the better works) and Fine Sales (for the not-so-important works) - and those can take place at different times of the year to help spread out the number of works offered at any one time.

It is also time for the auction rooms to stop wearing so many hats --- auctioneers, dealers, brokers, bankers, advisers, etc. They do have an important role in the art world: to sell works in a public forum. They are not art dealers, in the true sense of the term, and they are definitely not bankers - so they should stop trying to be a jack-of-all-trades and do what you do best. And as for the financial guarantees they give to certain sellers, these are great for the seller; but don't you think that once an auction room has a vested interest in a work there is going to be a conflict of interest? Which works will they highlight in the exhibition? Which works will they push their buyers to acquire? I think the answers are pretty obvious.

The auction rooms are now feeling the pinch and their first round of layoffs are starting. When the world's economy stabilizes and even more people begin to look at art as a viable alternative investment, I hope that the auction rooms will be more responsible.

Howard L. Rehs
Rehs Galleries, Inc., New York City
Francis A Silva Sunrise at Tappan Zee
Munnings FH Prince and the Pau Foxhounds
Sir Frank Dicksee Paola and Francesca
Frans van Mieris A Young Woman in a Red Jacket Feeding a Parrot

Howard L. Rehs

After graduating from New York University in 1981, with a degree in Art History, I moved to London for a year to study and buy 19th century British Victorian art for our gallery. Since then my interests have included all schools of art from the 19th and 20th centuries. Today, I am considered one of the leading art dealers in 19th century French Academic and Realist painting and the world's exp...(Read More)

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