Market Monday: Depth of Field
This week, a trio of stories that compelled us to look a little further toward the horizon for answers…
BOARD TO DEATH: In a surprise development, Metropolitan Museum of Art director Thomas P. Campbell resigned his post on Tuesday—reportedly, as a result of pressure from the board of trustees. Formerly a curator in the Met’s European Sculpture & Decorative Arts department, Campbell ascended to the top job in January 2009, after the retirement of longtime institutional leader Philippe de Montebello. Daniel Weiss, the Met's president and COO, will step in as interim director, with the potential to claim the position outright if he performs well. Or at least, that’s the word Robin Pogrebin relayed from an anonymous “senior executive in the art world with knowledge of the board’s thinking on the succession plan”—a source who, in honor of both the Watergate-in-red drama now unfolding in Washington and the Met’s recently postponed $600M modern and contemporary expansion, I move to dub "Deep Wing."
In the days since Campbell fell (or was pushed) on his sword, a lively debate has ignited over his eight years at the helm of arguably the world's most recognizable museum. The operative question being, of course: Did he deserve to get ghosted? Although I’ve certainly been tracking the Met’s troubles from afar the past few years, I’m not presumptuous enough to believe that I can parachute into this story off a handful of articles and dead-eye the answer. Talk about the museum’s historically unprecedented attendance figures under Campbell (roughly seven million annual visitors and counting, as of last tally), and you also have to ask how many more tickets it might have punched if he’d foregone 2016's widely panned rebranding campaign. Defend the generally well-received programming at the newly annexed Breuer building, and you also have to bring up the annexation's link to the Met's $40M budget deficit, as well as the brutal array of cutbacks it triggered. Campbell's legacy is a mixed bag for sure, and I’m still not certain how much of what's inside is delicious trail mix rather than straight-up gravel.
What I can say, however, is that it would be reductive to evaluate Campbell as though he had anything close to full autonomy during his reign. From Pogrebin’s initial report to Holland Cotter’s soon-after response to Julia Halperin’s illuminating interview with former Met department head George Goldner, one theme emerges again and again: The Met's recently reshuffled board didn’t just endorse Campbell’s most costly initiatives. In some cases, especially the institution's questionable pivot toward modern and contemporary art, the board outright DEMANDED them. Which could help explain this saga from the very beginning, really. If you want to push an encyclopedic museum toward the present from the boardroom, it might not be a bad idea to replace de Montebello, a commanding presence and staunch skeptic of postwar art, with a bookish European textiles specialist whose lack of operational experience at least raises the question of whether he can manage his way out of a rolled tapestry. So while it’s fair to ask if Campbell could have executed his mandate better, it also seems clear the mandate wasn’t really "his" at all. And if we fail to factor that into our judgments about his tenure, we’re painting a picture that can only be described by the same word that titled the Met Breuer’s debut show: “Unfinished.” [The New York Times]
LOCK, STOCK, AND SMOKING INVOICES: Back to the for-profit side of the industry: From New York’s fair booths to London’s auction rooms, the central theme of Armory Week 2017 was that the good times may be back again for sellers. Sales were supposedly “two-to-three times stronger” on Piers 92 and 94 than at last year's Armory Show, according to first-time fair director Ben Genocchio. Deal reports—which, friendly reminder, are utterly impossible for art-media reporters to fact-check—also bloomed in similarly bright shades of green at trade shows like the ADAA and Independent New York. Even the Impressionist and Modern sector felt the sunshine again, as Sotheby’s and Christie’s London sales combined to eclipse last March’s versions by a combined 107 percent. Put it all together, and many primary and secondary-market merchants on both shores of the pond ended the week as charged up as superfans who just lucked into an "Oprah" car-giveaway.
But like a three year-old energized by her first jolt of intellectual restlessness, we have to ask: Why? More specifically, why NOW? It should come as no surprise that many insiders on both the buy and sell sides largely credited the same two sources they always do during art-market rebounds: themselves, and each other. Just ask Tad Smith, who explained Sotheby’s 15-percent boost in share price this week as the result of “collectors [responding] enthusiastically to the great collections and works we secured for sale” in the fourth quarter of 2016. Or how about collector and TEFAF board member Michael Cox Witmer's attributing the buoyancy at Armory to the presence of "really strong artwork that I think has a place in art history"?
Now, I’m not arguing that these justifications have absolutely no basis in truth. (Although, keep in mind this is also coming from a guy who co-developed one of Artsy’s 20 Best Booths at the Armory Show around the under-recognized artist he spends most of his days managing.) Still, it would be a huge oversight to disregard the powerful influence of financial-market surges—like the one we’ve been experiencing since Trump's electoral victory—on art-market spending. For my favorite evidence of this phenomenon, check this chart by Josh Brown (AKA The Reformed Broker) tracking Sotheby’s share price against the S&P 500 since 1998. Historically, buying and selling $BID has been, in Brown’s words, “like being able to directly trade the wealth effect on steroids.” Translate the idea to the broader art market, and the upshot is that rallies are generally triggered just as much, if not more, by a mass of dividends accumulating in investors’ portfolios as by an upgrade in the quality of the works on offer. So the next time you hear someone portray Wall Street as a secondary factor in determining art's profitability (or lack thereof) in any given moment, don't be afraid to hit them with a well-founded "Well, actually...." [Bloomberg]
THE LONG GAME: Finally this week, a counterintuitive sidebar to the previous story. Amid the robust results in London's Impressionist and Modern auctions, Dmitry Rybolovlev, the mega-collector and Russian fertilizer magnate—in this case, a completely accurate description which nevertheless sounds to me like a great euphemism for “bullshit artist”—took a combined loss of about $120M on three works he acquired from freeport-mogul-turned-fraud-defendant Yves Bouvier. A fourth work from Rybolovlev’s collection, originally purchased from Bouvier for $10.4M, went unsold. A fifth will mount the auction block like a diving board on March 7th. Worse still, all of the above only deepens the $100M loss Rybolovlev already suffered on three previous resales of Bouvier-sourced works, bringing his cumulative write-down on his collection to date to about $220M.
Now, thanks to his reported net worth of $9.8B, Rybolovlev is going to be just fine after drying off from this bath. That said, the big red numbers in the associated headlines fail to answer an equally big question: Given that he would have had to consign this past week's lots to Christie's at least a month ago (if not longer), when the market was still seen as uncertain at best, why wouldn't he hold onto the works until a clear rebound was at hand?
While it’s impossible to say for sure, a case could be made that Annabelle Gauberti, founding partner of the London art-law firm Crefovi, untangled this riddle last week. To paraphrase her perspective: What’s a great way for a plaintiff to support allegations that he was heinously overcharged for a collection of artworks by a nefarious agent? To get subsequent auction-house estimates and resale results that show the market wouldn’t bear anything close to what he originally paid for the same pieces. So, hypothetically speaking, there would be logic to Rybolovlev deliberately throwing a few auction battles to try to win the legal war. Remember, he's suing Bouvier for $1B. Even if Rybolovlev were to effectively incinerate $900M via auction losses, a courtroom win would still leave him up about $100M overall. That's a trade that any investor would make in a split second. But whether it's what a collector, let alone a connoisseur, would do is another matter entirely. [Bloomberg]
That’s all for this edition. Til next time, remember that the nearest explanation isn't always the best one.