Viva Las Christie's
Thanks to some recent conversations I’ve had and some reading I’ve been catching up on lately, auction houses have been on my mind the past couple of days. While I’ve definitely alluded to what a bad look I think they are for collectors before, I feel compelled to be VVS diamond-clear about the topic this morning.
When it comes to art collecting, think of the major auction houses as four-star Vegas casinos. They’re big. They’re lavish. They’re loud. They’re packed with gamblers. And they’re engineered to herd their clientele into making the worst possible financial decisions at all times for their own benefit. The house always wins.
For all these reasons, casinos and auction houses alike thrive on dumb money. Gamblers get comped in high-roller suites where the partying would make de Sade blush not because they’re skilled card-players, but because of how much cash they lose. Similarly, show me a client considered a VIP for building her collection on “big auction wins,” and I’ll show you a sucker dramatically overpaying for assets in a Cirque du Soleil atmosphere.
This reality is important because of the optics. Too often, writers, analysts, and other alleged industry insiders act as if the auction market is the same thing as the art market. It’s not. The same is true of casinos and the gambling market. Sports books, horse racing, all the high-stakes unregulated forms of poker that Matt Damon and Ben Affleck are contractually obligated to make a movie about at least once every 15 years - there’s so much more activity in the industry than what’s put on blast by the Las Vegas tourism board. In the case of both auction houses and casinos, all we’re talking about is the most obvious, most publicly accessible segment of a much larger whole.
How much larger? Of course, we have very little quantifiable idea. When it comes to art, we’re dealing with a closed, unregulated market full of privately held businesses that constantly use secrecy to their advantage. This fact makes the visibility of auction results that much more of a distortion. The data gets overvalued because it’s the only real data available.
It reminds me of the old anecdote about happening across some drunk late at night, desperately scouring the pavement under a street lamp on his hands and knees:
“What are you doing?”
“Looking for my keys."
"You sure you dropped them here?”
“No, but this is where the light is.”
Now imagine this episode unfolding on the Strip, a few steps outside the Wynn or Aria, and it offers a pretty complete summary of what we’re dealing with on this issue.
None of this is to say that auction houses are inconsequential to the art market. They certainly matter. But they are not a 1:1 reflection of the bigger picture, least of all what prices are appropriate to pay for work or which artists qualify as legitimately wise long-term investments. Nor do I mean to suggest that everyone inside the building is naive without exception. Even in casinos, there are always a few savvy players. But why are they there? Usually, to take advantage of all the dumb money surrounding them.
The overall point remains. The auction houses are only the most obvious variable in the art market, and they’re most useful for telling a story about a very specific subset of that market’s players. We should all be careful not to overweight either one’s importance because of its visibility. Vegas may suggest a few broader things about our species and our culture, but it tells us the most about Vegas itself. And like the debaucherous frenzy of the art auction, it’s wise not to use what happens there as a guidebook for the rest of our lives.