Market Monday: Even Steven
This week, a collection of stories about settling somewhere in the middle––for better or worse...
On Tuesday, we learned that two big names in the New York art scene had been quietly indicted for tax evasion, with more charges reportedly on the way to the industry as part of a targeted crackdown. Attorney General Eric Schneiderman announced that settlements had been reached with both mega-developer/collector/reseller Aby Rosen––who agreed to pay $7M to dismiss $80M in alleged sales and use tax delinquency––and Gagosian director Victoria Gelfand––who agreed to pay $210,000 related to 30+ works acquired by her private companies. As part of their respective settlement terms, neither defendant admitted wrongdoing. The crux of both cases is a state law that exempts art buyers from sales and use tax if the works are acquired for the declared purpose of resale. Both Rosen and Gelfand seem to have been nailed for allegedly exhibiting such acquisitions in their homes "as if they were... personal possessions." But while some dealers certainly view tax laws as made to be broken, I actually side with Rosen and Gelfand here, at least based on what's been reported. Given that transactions in the art industry can happen anywhere at any time, hanging works at home hardly means they're not actively on the market. Ultimately, the operative question in these cases––and those yet to come––is the same question central to the trial of NYC's infamous Cannibal Cop a few years ago: How do you prove intent before the discussed act has taken place? It seems impossible to me. And that makes New York's art industry relatively easy prey for the tax man. [Bloomberg]
To consummate their renewed vows, this week Gagosian simultaneously mounted two special exhibitions in New York devoted to formaldehyde pharaoh Damien Hirst. The gallery's booth at Frieze consisted entirely of a selection of Hirst's historical works, while its Madison Avenue space presented his new series of paintings based on emergency signals. In my mind, the week-in-Hirst was like a sonogram for art economics: You could actually see the value of his market growing in real time. Katya Kazakina reported that "several [Hirst] pieces sold on the opening day" of Frieze, per Gagosian London director Millicent Wilner, but that Wilner also (naturally) "declined to elaborate" on details. Then private dealer extraordinaire Alberto Mugrabi told Kazakina that he bought four works from the Madison Avenue show and emphasized that the (relatively) reasonable prices proved Hirst was "going to work with" collectors rather than gouge them. Of course, none of these alleged sales are confirmable, but they spur demand even as rumors. Furthermore, as Kazakina notes, Mugrabi doubles as "a major collector of Hirst," meaning that he (like Gagosian himself) is flush with inventory to resell at a healthy profit when the artist's market recuperates. The result: We're not witnessing the miracle of new life. We're witnessing a fait accompli, enabled by the art market's hospitality toward (completely legal) conflicts of interest. Enjoy watching the baby kick. [Bloomberg]
However, Hirst's prodigal return to Gagosian was counterweighted by Julian Schnabel's abrupt departure from the gallery's roster. To absolutely no one's surprise, Schnabel loudly farted on his way out the door, telling Robin Pogrebin that he'd made the decision because he "wanted to have a more human relationship with the person who was representing [his] work." To achieve that, Schnabel will reunite with his apparent BFF Arne Glimcher at Pace, which handled him from 1982 until his 2002 defection to Gagosian––because to Schnabel, "Ultimately, it's about friendship." Pardon my skepticism, but I'm pretty confident that if "friendship" and a "more human relationship" are an artist's priorities for a gallerist, joining Gagosian would not appear anywhere on their decision tree––or that once they made the move, it wouldn't take 14 years to realize it had been a mistake. I suspect one of Glimcher's comments gets much closer to the truth: "Julian is a person who needs a lot of attention." My guess is that the attention Gagosian is now lavishing on Hirst may have been the final crack in the plate for an artist who had been feeling ignored for some time, and who––based on his recent solo exhibition with Blum & Poe in Los Angeles––was already making his irritation known via public flirtation with new suitors. But hey, maybe I'm just misreading this whole situation because of my provincial Midwestern understanding of friendship. [The New York Times]
On Tuesday, influential advisor Lisa Schiff announced that she would be expanding beyond SFA, her longtime art-consulting firm, by co-founding a new venture. Dubbed "there-there," the business will partner Schiff with two alumni of acclaimed Los Angeles nonprofit LA><ART: founder and former director Lauri Firstenberg, and curator Marika Keilland. There-there will apparently combine a philanthropic arm, a project-based production fund, a support-source for women artists, and a corporate branding enterprise. (The firm will reportedly take an agency-like 10 percent commission on its branded content deals, per Georgina Adam at The Financial Times.) We'll learn more in the future, but for now, there-there stands as more proof that the formerly separate sectors of the art industry are all converging into do-it-all entities: auction houses acting more like mega-galleries, mega-galleries looking more like museums, museums working more like private collector co-ops, and now private collectors enlisting art advisors for philanthropy––while corporations enlist the same advisors for branded collaborations. Welcome to the art industry's Singularity. [artnet News]
Finally this week, Stephen Ross, one of the developers shepherding the 28-acre Hudson Yards project on Manhattan's West Side, publicly proclaimed that a $200M sculpture slated for its plaza will "become to New York what the Eiffel Tower is to Paris." While we know the piece will be created by British designer Thomas Heatherwick, Ross stated that additional details will "hopefully" not be unveiled until at least September. Two points worth mentioning here: First, maybe my Los Angeles residency disqualifies me from judging, but I'm pretty sure that the Statue of Liberty is already the Eiffel Tower of New York. Second, considering that Ross originally estimated that the Heatherwick piece would cost only $75M in 2013, I'd love to know how and why it spiked in price by 167 percent in three years. It seems like there are three potential answers: A) Ross is comically inept at controlling costs on his own project, B) he's artificially inflating the sculpture's budget for marketing purposes, or C) he and his co-developers genuinely believe that the piece will generate enough revenue long-term to justify a massively more ambitious iteration. The true answer probably lies somewhere in the middle of those options. But regardless, I hope for Heatherwick's sake that his actual fee went up 167 percent in this process too. [DNA Info]
That's all for this edition. Til next time, remember that it all evens out in the long run.