Market Monday: Agree to Disagree
This week, begging to differ with some of the finer points of good industry reportage...
FUND & GAMES: On Tuesday, Colin Gleadell alerted readers to a semi-scandal from the previous week concerning the Artist Pension Trust, the innovative (or at least novel) fund to which groups of approved artists agree to contribute 20 works each over the course of 20 years for eventual resale to their mutual benefit. 18 lots owned by the APT were slated to mount the block at the April 12th Contemporary Curated sale at Sotheby’s London, until the trust withdrew them “at the last hour” in response to pressure by the artists and their gallerists. Gleadell states that the withdrawal demonstrates that treating art as an investment instrument generally doesn't work, largely because both artists and gallerists tend to bristle at the public volatility of auctions––despite the fact that they can sometimes return bigger profits to consignors than the private market.
And yet, while I’ve been highly vocal about my skepticism of the “art as investment” narrative for years, I respectfully disagree with Gleadell on the specifics here. If you want to evaluate the efficacy of art as a financial instrument via this controversy, the problem wasn’t that the APT acted too much like a traditional investment fund. Instead, it was that the APT arguably didn’t act ENOUGH like one. Much of the purpose of pooling your assets with a financial adviser is that said adviser allegedly knows better than you what to do and when to maximize returns––especially when it goes against your wishes and instincts in the moment. If the investors can dictate strategy to the fund managers, the entire arrangement short-circuits. And when the investors have a second set of advisers in direct competition with their fund managers, e.g. the gallerists pushing to maintain total control over their APT-contributing artists' sales strategy, the likelihood of malfunction skyrockets––which is precisely Gleadell's point.
However, none of the above means the arrangement CAN'T work, either in the art market or in the financial markets. It just means that the APT caved when it didn't have to, or alternatively, that it left a self-defeating gap in its bylaws regarding auctions. In either case, the error was in the design and execution rather than in the concept itself. I’m not arguing that now was the right time for the APT to try to diversify into public auctions for its unbranded artists, or even that I like this model in general. I'm just arguing that, based on both the circumstances here and the lack of outrage by involved parties when the APT was strictly selling privately, this isn't necessarily as damning a test case as some are making it out to be. [The Telegraph]
MINUTE MAN: Amid Sotheby's tumultuous fourth quarter of 2015––a period during which it announced a slew of layoffs and learned that it would struggle to break even on its $515M guarantee to the Alfred Taubman estate––the house scored a badly needed PR victory by poaching highly respected Christie's executive Marc Porter to chair its nascent Fine Arts division. Sixteen months later––all but three of which the non-compete in Porter's previous contract forced him to spend on sabbatical (or, to use one of my favorite British-isms, "gardening leave")––the roles have reversed. Porter agreed on Wednesday to swing back onto Christie's vine, which has recently been wilting under the onslaught of a sudden CEO changeover, a 250 staff-member downsizing, and the closure of its South Kensington location. Porter will become Christie's Chairman, Americas, and he will do so immediately, since, mystifyingly, Sotheby's felt it was unnecessary to plant its own non-compete into the agreement that Porter just impaled with a garden trowel. (Nice work in the negotiating department, team!)
Although the reliably sharp Nate Freeman described the move as "a coup" for Christie's, however, I'm a little more hesitant about its value. Why? For starters, because the "coup" designation is exactly what journalists around the industry used to define Sotheby's hiring of Porter back in 2015, as the screen-cap below shows. How'd that work out for Sotheby's?
More to the point, in a business still largely based on trust and personal loyalty, how can any client with a trace of wariness in her bloodstream ever totally trust Porter again after this ridiculous heel turn? It's entirely possible that he really is worth his compost heap in gold. But if the hit to his reputation bleeds into his ability to score consignments and sales, as human nature says it should, it's also possible that this move could be a case of Christie's winning the press conference but losing the war. [ARTnews]
MISTAKEN IDENTITY: Finally this week, in a report headlined by the declaration "Art collector Steven Cohen gave $1M to Trump inauguration," Dan Duray admirably sleuthed a variety of big-ticket arts patrons out of a 510-page White House report on donors to DJT's swearing-in ceremony. Together, the motley crew contributed over $6M toward bringing the party to, in the now-famous words of White House press secretary Sean Spicer, "the largest audience ever to witness an inauguration, period, both in person and around the globe." While Duray himself never says it, many, if not most, reactions that I saw to the piece took these collectors' support as a betrayal of the very culture on which they pour so much of their net worth year in, year out. After all, how can they sleep at night after aligning their bank accounts with a president intent on annihilating the NEA?
At the same time, referring to "art collector Steven Cohen" strikes me as being a little like referring to "amateur zookeeper Michael Jackson." The description is technically true (in a big way), but it also glides past the subject's defining characteristic. The reality is that Cohen and his company on this list are plutocrats first and arts patrons second (at best). In that context, it makes total sense that they would ante up for what may be the most big-business-favorable administration in American history. They understand that a donation to Trump likely means a sizable, tangible return on investment, which in turn will allow them to buy more art (among plenty of other toys). So to the extent that there's anything to be scandalized by here, it isn't the melding of cultural patronage with the inauguration of a corporate presidency. Instead, it's the 0.1 percent's larger takeover of the art world, which Cohen and company have been driving since long before last November 9. [The Art Newspaper]
That’s all for this edition. Til next time, remember: Consensus rarely teaches us much of anything.