SPECIAL REPORT

MASTERPIECES AND MILLIONS

PRICES FOR ARTWORK GO SKY-HIGH

PAMELA YOUNG April 16 1990
SPECIAL REPORT

MASTERPIECES AND MILLIONS

PRICES FOR ARTWORK GO SKY-HIGH

PAMELA YOUNG April 16 1990

MASTERPIECES AND MILLIONS

PRICES FOR ARTWORK GO SKY-HIGH

The tranquillity of the image contrasts starkly with the controversy that has raged around it. Vincent van Gogh’s Irises depicts a tangle of vibrant blue flowers offset by a single white bloom. Like nearly all of the Dutch painter’s works, it remained unsold in his lifetime. But, in recent years, the stunning 1889 canvas has acquired the sort of notoriety more commonly associated with mammoth real estate transactions. In November, 1987, only weeks after the stock market’s disastrous Oct. 19 plunge, Sotheby’s auction house in New York City sold the painting to Australian entrepreneur Alan Bond for $71 million, which made it the most expensive painting ever sold at auction. The previous record of $52.7 million had been set only six months earlier, by van Gogh’s Sunflowers. Immediately, Irises came to symbolize the past decade’s astonishing rise in art prices. As recently as 1980, the record sum paid for a

picture at auction was just $7.5 million, for J. M. W. Turner’s Juliet and Her Nurse. The Irises controversy intensified two years after the sale when Sotheby’s disclosed that it had loaned Bond half of the record-setting amount as part of the deal. Last year, Bond sent the painting on a tour of Australian museums. But, at the same time, his brewing and publishing empire began to falter, and he was unable to repay the Sotheby’s loan. The transaction has remained at the centre of the art world’s continuing debate over skyrocketing prices, and over the role played by auction houses, which now have branches in many parts of the world. Amy Page, editor-in-chief of the U.S. publication Art & Auction, observed that, when Bond could not repay his loan, “the public learned that the price of Irises was not real, and Sotheby’s was accused of inflating the market.” Instead of putting the painting on the block

again, the auction house began looking for another buyer last year. Late last month, it quietly concluded a deal with the well-funded J. Paul Getty Museum in Malibu, Calif. The institution bought Irises for an undisclosed sum. Most experts say that the Getty museum likely got the canvas for less than Bond had agreed to pay because a painting loses some of its lustre in the marketplace, at least temporarily, when it receives as much exposure as Irises did. But one thing is clear: when such vast sums of money are attached to works, their artistic merit becomes confused with their value as commodities. $ Said prominent Toronto art£ ist Joyce Wieland: “What is g alarming is the way people ¿ are buying things, sticking I them in vaults and treating £ them like gold bricks or el diamonds.”

1 Status: Art has traditional“ ly been a symbol of prestige, but the status attached to ownership has now reached new heights. Collectors in many parts of the world, notably Japan, are spending previously unimaginable sums of money on art. In the past year, three works by Pablo Picasso have sold for more than $47.9 million each at auction. Profits, meanwhile, have soared at the two biggest art auction houses: Sotheby’s, with sales totalling $3.5 billion in 1989, up from $2.2 billion the year before, and London-based Christie’s, with sales of $2.5 billion in 1989, up from $1.7 billion. And as rich collectors drive up the bidding, the most sought-after works have reached prices that are far beyond the means of most museums. Said Brydon Smith, assistant director of the National Gallery of Canada in Ottawa: “It leaves museums very much on the sidelines. The Getty can still compete at auctions, but that’s about it.” Declared Charles Moffett, senior curator of painting at the National Gallery of Art in Washington: “When we were kids, it was a game for millionaires. Now, it’s only for billionaires.” Greedy: There is also growing resentment of the big auction houses among art gallery owners. Phyllis Kind, owner of New York’s Phyllis Kind Gallery, contends that rising auction prices have had a “staggering effect” on the entire art world. In an interview, she accused the auction houses of becoming “very greedy” in a bullish market. “They try to rush through too many lots at once,” said Kind, who specializes in contemporary art. She added that auctioneers are so anxious to get on with the bidding for the top-priced works in a sale that they sometimes bring the hammer down on items costing $58,000 or less before bidding has definitely ceased. The high auction prices are attracting sellers away from art dealers who specialize in older art and who acquire THE MOST SOUGHT-AFTER WORKS ARE BEYOND THE REACH OF MOST MUSEUMS

most of what they sell from private collections. Said Michel Moreault, director of Montreal’s venerable Dominion Gallery, which sells 19thand 20th-century art from both Canada and abroad: “In the United States, and in Canada to a point, it is becoming difficult for galleries to get sales because a lot of people are now offering pieces to auction houses for selling.”

Critics of the auction houses also say that some practices are unethical, including Sotheby’s now-discontinued policy of lending buyers money to purchase a work, with the art itself serving as collateral. Sotheby’s provided six of those loans on purchases of more than $1 million over the past few years, including the one to Bond. But the auction house stopped lending in January. Still, Sotheby’s spokesmen say that their loans did not, as critics charged, drive prices up. “We didn’t believe that then and we don’t believe that now,” said Tim Llewellyn, managing director of Sotheby’s in London. “We take the view that somebody who is bidding for something decides what they think it’s worth and _

what they can afford to pay, regardless of whether they are getting the money to fund that purchase from us or some other source.”

Intense: Christie’s became embroiled in a controversy of its own when it reversed its stand on another contentious issue: guarantees of a minimum price. With a guarantee, if the bidding does not go as high as the promised sum, the auction house itself buys the item at an agreed amount— or supplements a selling price to meet the guarantee. It is a practice that Sotheby’s has followed for 20 years.

Said John Marion, chairman of Sotheby’s North American operations: “It is a way of attracting into public competition some very interesting properties.” But Christie’s executives traditionally opposed the practice, saying that it potentially created a conflict of interest for an auctioneer. Then, they reversed their position and offered the firm’s first guarantee to acquire auction rights for five highly desirable paintings from the estate of U.S. financier Robert Lehman, including a van Gogh self-portrait. Said chairman

Charles Allsopp: “We were driven to give it because we didn’t want to lose business.” Now, the art world is keenly awaiting next month’s major art auctions—the houses have their big sales every May and November—to see whether the market will sustain its upward momentum. In New York this spring, both of

the leading auction houses have a contender to overtake the Irises record. On May 15, Christie’s will offer van Gogh’s Portrait of Dr. Gachet (1890), an intense, melancholy depiction of the doctor who treated the painter in Auvers, France, after his release from a mental institution. Then, on May 17, the highlight at Sotheby’s auction will be the Impressionist masterwork Au Moulin de la Galette (1876), Pierre Auguste Renoir’s sundappled painting of young Parisians at an outdoor dance hall. In both cases, the presale estimate is $46.4 million to $58 million, but bidding frequently continues well above the estimate.

Triumph: Increasingly, the individuals who still have enough money to triumph in the auction bidding wars are from Japan. Last November, Tokyo real estate developer Tomonori Tsurumaki became the world’s secondhighest bidder at an art auch tion when he purchased a ï 1905 Sotheby’s Picasso, 1/1 Pierrette’s Wedding, for $59.5 million. And, until Bond bought Irises, Tokyo’s Yasuda Fire and Marine Insurance Co., which paid $52.7 million in March, 1987, for van Gogh’s Sunflowers at Christie’s in London, was the world’s highest bidder at auction.

Until recently, Japanese interest has been concentrated on the Impressionist movement of the 1870s and 1880s and the subsequent

_ early-modern period that stretches

from the 1880s to 1920: it is in those areas that prices have escalated most rapidly. Ivan Karp, director of New York’s OK Harris Gallery, a SoHo establishment that sells contemporary art, said that Japanese collectors are not, on the whole, “completely clear on the relative worth of Western art objects.” But he added that many Westerners pay questionable prices, as well. Declared Karp: “It is a very speculative market and a very uninformed market.”

Criticism: Clearly, the main casualties of the feverish buying are the museums—and, by extension, the public. Apart from the current Irises owner, California’s Getty Museum, which has a generous endowment, most institutions have annual acquisitions budgets of a few million dollars or less. Canada’s own National Gallery faced fierce criticism after it announced last month that it had spent $1.76 million for Voice of Fire, an abstract work by U.S. artist Barnett Newman. Manitoba Conservative MP Felix Holtmann complained that the institution had spent an inordinate amount of money for the painting. But the gallery pointed out that a comparable work by the same artist had recently sold for nearly $3 million.

Insurance costs are escalating in line with prices. Last month, when thieves stole 13 art objects from the Isabella Stewart Gardner Museum in Boston, the institution revealed that it was not insured against theft because the premiums—more than $3.5 million— would have exceeded its entire budget (page 48). And because of higher insurance costs, blockbuster shows that bring together major works of art from international collections are becoming far more costly to mount—and may soon end completely. The cost of insuring the van Gogh retrospective in Holland marking the centenary of the painter’s death is estimated at a record-breaking $3.6 billion.

American museums are suffering from other problems as well. As a result of 1986 changes to the U.S. Tax Act, collectors who donate works to a museum can now claim tax deductions only for the amount that they originally paid for an item, which often is a fraction of its current market value. Because of that, owners who might have donated works have become more likely to sell them at auction for a substantial profit.

Snobbery: According to a survey by the New York-based Association of Art Museum Directors, donations to U.S. art institutions declined by 60 per cent between 1986 and 1988. Such establishments as the Metropolitan Museum of Art in New York and The Art Institute of Chicago have sold off works from their collections in order to finance new purchases on the market. Peter Boswell, assistant curator at the Walker Art Center in Minneapolis, which specializes in 20th-century art, said that his gällery was able to set up an endowment fund of “several million” for the acquisition of new works by selling off some of its 19thcentury holdings. But the practice can get “a little dicey,” Boswell added. “It’s like baseball or hockey, where you sometimes wind up trading several players and getting only one in return.”

The pressure on the museums will likely intensify. Now, even works by some living artists are selling for millions of dollars at auction: a painting by U.S. artist Jasper Johns sold in 1988 for $21.6 million, and a work by Dutch-born American painter Willem De Kooning went for $27.3 million in 1989.

Spokesmen for the auction houses predict that 1990 will be another very good year. “Humans have always wanted to create and own art, right back to cave paintings,” said Christie’s Allsopp. But, the chairman continued, “throughout history the motives for owning art have not changed and not all of them are wholly admirable: art is bought for taste, snobbery and greed, and always has been.’’And as long as enough players in the marketplace have money to spend, the auction houses will continue to have healthy balance sheets.

PAMELA YOUNG

JEREMY HART

DIANE TURBIDE

LISA ROCHON