Market Monday: Who Do You Love?
This week, a collection of stories about choosing who or what matters most...
On Monday, we learned of a new twist in Russian billionaire Dmitry Rybolovlev's global legal offensive against Blackbeard of Le Freeports Yves Bouvier: Sotheby's has agreed not to fight a possible court order to release select private sales records to Rybolovlev's attorneys––a concession to transparency that has horrified some gallerists and dealers. As a refresher, Rybolovlev is currently suing Bouvier in Hong Kong, Paris, and Singapore over allegations that Bouvier pocketed millions of dollars by improperly up-charging him on resales for various high-value artworks, including 15 that passed through Sotheby's private sales department. The entire saga ultimately turns on whether Bouvier was acting as Rybolovlev's personal art advisor in these transactions––a role that would have drastically limited his compensation ceiling in certain regions––or as just another dealer, free to set whatever prices and margins the market (i.e. Rybolovlev) would bear. As for Sotheby's, it seems clear to me that the house made the unorthodox decision to open their books based on a simple cost-benefit analysis: Is it better for our bottom line if we side with a billionaire collector... or a private dealer and advisor who we're now competing against, thanks to our recent expansion into those two market sectors? From that perspective, the answer seems like a no-brainer. But it remains to be seen if the Sotheby's crew might suffer a broader backlash in the industry for abandoning the Good Ship Opacity. [New York Post]
Late last year, US Senator Orrin Hatch opened a congressional inquiry into whether American private museums are providing enough public benefits to warrant their robust tax breaks. This week, Hatch forwarded the IRS his findings on 11 of the 43 qualifying institutions, concluding that he "remain[s] concerned that this area of our tax code is ripe for exploitation." In exchange for granting minimal access to the average citizen, the current laws enable private-museum founders to reduce their annual taxable income by as much as 50 percent via associated deductions, including the full fair market value of any artworks they donate to their own institutions. It occurs to me that, for any major American collector prioritizing tax breaks over all else, this particular loophole actually creates a year-after-year incentive to target the highest-priced pieces available on the market––and, in fact, to overpay for them––in order to reach the maximum allowable private-museum deduction as quickly as possible. So the next time a knowledgeable critic slams an institution like, say, the The Broad for exhibiting a tired array of heavily branded, blue-chip artists, keep in mind that its collection may be shaped just as much by the tax code as by personal taste. [The Art Newspaper]
In what looks like this summer's most tone-deaf public relations gaffe, Art Basel will honor veteran Munich gallerist Bernd Klüser with its Faega Lifetime Award... while barring him from exhibiting at the fair itself for the first time in 40 consecutive years. (Cue Will Ferrell.) Even though Basel's selection committee long ago earned its reputation as the fair sector's equivalent to Russia's Olympic judges, it still seems bizarre that the brain trust wouldn't compel them to spare one last booth for Klüser in these circumstances––that is, until you consider the recent realities of the market. Sure, to anyone who values art history, it seems appalling to put an award in a storied gallerist's hands while you're also slamming a dagger between his shoulder blades. But the fact is that few buyers at fairs today really care about what any gallerist did 10 years ago, let alone 40... or, if they do care, it's irrelevant to their decision to participate in Basel anyway. Most feel the fair is now simply too important to the sales and networking landscape to miss for any reason, which leaves its judges and directors free to dispatch any sub-elite applicant at any time. After all, it's just business. [artnet News]
Daniel Grant reported on the somewhat surprising trend of gallerists' elevating key staff members to "partner" status. While the promotion seldom means new partners actually buy into the business or see their names added above the door, they generally receive better benefits (sometimes headlined by a profit-sharing stake) and more say in the gallery's direction. But the surprising element here concerns the "lawyerly agreements" that cement these upward moves, particularly their clauses restricting new partners from defecting to other galleries for a set period of months or years. This kind of contractually enforceable loyalty is exactly what gallerists have been unable or unwilling to establish with their artists, despite the fact that a sudden departure from the roster can be even more catastrophic for business than the exit of a valued lieutenant. Are formal partner agreements a prelude to formal representation agreements, or a symbol that the industry will continue to resist professionalization by treating its staff and its artists by two different standards? Only time will tell. [Observer]
Finally this week, German collector Julia Stoschek unveiled a long-planned Berlin pop-up exhibition featuring 38 works from her holdings––all 38 of which qualify as time-based new media. While it sounds like the host building may not be entirely accommodating to the installation in a few cases, the exhibition's pure existence is already a victory for artists exploring video, sound, and software worldwide. The show doesn't just prove to traditionalist collectors that new media can attract the same level of industry attention as "safe" choices like paintings, drawings, and sculptures. It also hands gallerists, dealers, and curators the most powerful sales tool in the business: a prominent collector who has already said "yes" to cutting-edge works. Given the "follow the leader" mentality's heavy influence on art-market demand, Stoschek's enthusiastic promotion of new media could at least begin to turn the tide on buyers' longstanding hesitance about the genre. And that outcome could work wonders for the advancement of contemporary art in a digital age. [artnet News]
That's all for this edition. Til next time, remember: Even beggars can be choosers if they have the willpower.