Hurty Art Market Fact #4: Contrary to popular belief, art does not always go up in value.

29 10 2010

Prompted by a comment left by Megan (another Megan – not ‘Meaghan’ me – too many Meaghans spoil the broth) on an earlier post, I decided to undertake a little exercise to test whether her very generous assessment of my prophetic skills was on the money, so to speak. Because, as much as I’m delighted to accept random and baseless compliments, I do like to test whether said flattery is justified.

One of the many things I looked at in my PhD was repeat sales of artworks at auction, to determine price movements for particular artists. It was fun. What can I say? I have a strange attraction to Excel spreadsheets and formulae – something my year 12 mathematics teacher would likely find surprising. Nowadays, I still keep a close eye on the things that pass through auction in Australia, and my ongoing research interest is in tracking and documenting the crazy alchemy that turns art into money. One of my conclusions is that there is absolutely no guarantee that a work of art bought at auction will rise in value, and sudden and rather dramatic drops in price are not at all uncommon. In the case of an artwork acquired from a commercial gallery, the likelihood of it increasing in value is minute.

But back to Megan’s assessment. I decided it was high time I revisited some of my old friends – artists whose prices skyrocketed during the art market boom that ran from 1998/9 to 2007. Below is a chart that shows a few repeat sales of the same artworks by some of the boom’s biggest hitters. To explain the figures – I started with the hammer price plus premium, which is presumably the total price paid by a buyer to the auction house for that painting. Then, I adjusted that amount, compounding annually, to account for inflation, working out the adjusted value of the original purchase price for the year in which the painting next appeared at auction. Next, I estimated the net amount that went to the seller at the second auction appearance. This amount is the hammer price, less an estimated 15% seller’s commission. I then worked out the difference between the adjusted purchase price and the net amount that went to the seller. Using the first example from the chart to explain this further, somebody paid a total of $2,040,000 for Brack’s Backs and Fronts in 2007. When that person sold it in 2010, they netted $1,530,000. Once you take into account the effect of inflation on the 2007 purchase price, this amounts to an adjusted, real loss of $774,968. Ouch. In the case of the John Olsen painting, The Afternoon Walk, it was resold three times between 2003 and 2009, registering a significant loss each time. Ouch, ouch, ouch. Oh, all these sales took place at one or more of the Menzies branches.

Yes, we are in the midst of a global financial maelstrom. Yes, under those conditions we would expect to see the value of many investments fall, particularly those that were acquired at the height of the boom. Still… Ouch!


All art buyers are equal, but at auction, are some buyers more equal than others?

10 05 2010

Auction_hammerThe laws that govern buying and selling in a competition-based forum are based on the premise that all buyers are competing on a level playing-field. According to competition laws, the only factor that should restrict your capacity to bid at an auction is personal access to material resources (the size of your wallet/cheque book/credit limit), and, of course, the total amount you’re willing to pay for the thing being sold.

The Australian Competition and Consumer Commission (ACCC) regulates the auction trade (be that the real estate, used car, or art market) to ensure that no factors endemic to that trade contribute to the creation of an uneven playing field. By law, when you’re bidding for an artwork at auction, the person against whom you’re bidding should have no financial advantage over you that has been put in place by another participant in the auction process. Interesting to consider, then, the buyer’s premium. During the brouhaha over art auction practices that played out in the public arena a year or two ago, the one issue that wasn’t raised is the question of whether or not auction houses offer loyal/preferred clients a discount or rebate on the buyer’s premium. And I think it’s an important question to ask. The following is all hypothetical, but I’d be really keen to see what prevailing auction house policy is on these matters.

Why? Well, in Australia, the major art auction houses charge 20% on top of the hammer price of an artwork. So, if you are the successful bidder for painting and the auctioneer brings down the hammer at a price of $1,000, you will also be liable for a charge of $200 plus 10% GST on that amount, so the total premium added to the hammer price will be $220. Your total bill for the painting will be $1220. But, what if the person you’re bidding against has been promised a rebate on the buyer’s premium by the auction house? Let’s say, for argument’s sake, that something has been put in place prior to the auction that would mean he or she will only be 10% out-of-pocket in buyer’s charges. That rebate might be offered in many and varied ways – one that springs to mind could be that, if the buyer was also a volume seller, they could be offered a commensurate discount on their seller’s fees. However the rebate or discount might be offered, it would give your competitor a considerable advantage over you. Back to the $1,000 painting, if you calculate that you don’t want to pay more than a total of $1,200 or so, you will stop bidding at $1,000. But, let’s say your competitor also wanted to limit his or her total bill to $1,200 or so – with the rebate, they could bid up to $1,100 and still only be liable for a total amount of $1,221. So, you would stop bidding at $1,000, and they could bid up to $1,100. The same bid on a hammer price of $1,100 would cost you $1,341.

This would not be not the same as preferential treatment offered to buyers in the retail industry – for example, discounts offered to people who have signed up to a retail chain’s loyalty program. In retail sales, buyers pay an asking price. Their choice on whether or not to buy is based on the price on the tag. They are free to negotiate the price with the seller or, if they deem it too expensive, to walk out of the shop. Competition in this environment is based on price-point – a retailer that asks too much for its product will be ‘punished’ by buyers who will go elsewhere to find the same or similar product at a lower price. Price adapts to demand. It is the retailer’s prerogative to offer loyal shoppers discounts to reward their patronage – although it may mean that those in the loyalty program take advantage of their discount and rush in to buy up all the available black trenchcoats, for example, leaving none for the other buyers. But because the members of the program and the less privileged buyers are not competing to set a price for said trenchcoats, this scenario does not contravene anti-competition laws.

Aussie Sotheby’s iSnack 2.0

4 10 2009

Tim Goodman

Auctioneer Tim Goodman (picture: Anthony Geernaert via

Well, if anything was going to waken me from my interweb slumber, this would be it.

Down here downunder, we pride ourselves on our audacious and irreverent approach to most things. And so… now we have locally-born Monsignor Tim Goodman – formerly of Goodman’s Auctions, more recently of Bonhams and Goodman, giving Robert Brooks, chairman of British powerhouse Bonhams, the ol’ heave ho. It seems that Tim got a better offer. Bonhams who?

He may just be scraping up the slops, but Tim Goodman (pictured) has successfully wooed the floundering British auction house Sotheby’s and orchestrated a deal by which he will use the Sotheby’s name here in Australia. This in itself is rather surprising. Many in the industry suspected that  Sotheby’s might follow its arch-rival Christie’s, which closed its Australian branch in 2006, and withdraw from the local market. But Sotheby’s has been disinclined to dilute the brand thus far, and has chosen to close under-performing branches rather than pass franchises onto enthusiastic locals. Seems that Tim was very convincing.

My immediate concern? Upwards of 50% of Sotheby’s Aboriginal art sales by value went to international collectors. Whereto from here in the absence of Sotheby’s self-appointed  Aboriginal maestro Tim Klingender? There’s a glittering but fragile network of collectors throughout the world who have looked to Sotheby’s for an indication of what is the best/only Aboriginal art to buy.

Will Goodmans/Sotheby’s be able to stoke the same fires?

Don’t miss Peter Walsh fundraising auction this weekend: Go because he was a great bloke, go because it’s a great cause, or go because there’ll be some great art to buy

15 05 2009

Melbourne artist Peter Walsh really was one of the good guys. One of the best, truth be told. His premature and tragic death from that most evil of diseases, cancer, in January this year left the local art scene bereft. A brilliant raconteur, with a devilish sense of humour that would leave you doubled up with laughter, Pete was also a damn fine painter. One of his works, Momentary Landscape, is pictured at left (image via Mossgreen). 

In the interest of disclosure, I love Pete’s work, and bought a few pieces from him over the years.  I knew him moderately well – and treasured the acquaintance. As did most of us hardcore St. Kilda night owls who trawled the cooler-than-fuck pubs and wine bars during the ’90s. But we’ve all grown up a fair bit since then. For his part, Pete moved onto much better things. Namely, the wonderful Lisa Walker – a great chick and a brilliant photographer. And I’ve seldom seen a man so smitten by his children. I’d often bump into him outside Brew-ha-ha in Blessington Street after I’d bought my morning latte – I’d be clutching my coffee, he’d be carrying Hazel, his eldest daughter, his brown eyes sparkling. Lisa and Pete had another beautiful daughter, Alice, a few years later. By then they had extricated themselves from the seedy but delicious streets of St. Kilda, and taken up residence in the leafy, conservative climes of Malvern. To hear Pete wax lyrical about the change of scenery from inner city to affluent suburbia was hilarious. I still can’t believe he’s gone. Nor can the throngs of people who packed a Toorak cathedral to farewell him, I’ll wager. It was a send-off worthy of a man who could justifiably call thousands of people, ‘friend’.

So – a clarion call to any of you within coo-ee of Melbourne over the next few days… a veritable ‘Who’s Who’ of the Australian art world have donated artworks to an auction that’s to be held at Deutscher-Hackett this Sunday. Given Pete’s legendary sense of humour, the auction has the appropriately irreverent title: ‘For Pete’s Sake’. Proceeds from the auction are going into a trust account for the financial support of Pete’s daughters, who are now just three and seven.”Which artists?” you ask – think of the name, and they’ll be on the list. Mike Parr, Gareth Sansom,  Callum Morton, David Larwill, Rosslyn Piggott, Guan Wei, Lewis Miller, Imants Tiller… the list goes on. And on. It’s a shining testament to just how well-regarded Pete was in the art world.

Get on your bikes and get down to Prahran for the viewing and auction. Quickly! If not because it’s a good cause, which it is, then go along because it represents an opportunity to buy some seriously good art by most of Australia’s best living artists. Oh, and Deutscher-Hackett is waiving buyer’s premium for the auction, not to mention providing the venue, staff and running the auction. Nice work. 

What: ‘For Pete’s Sake’ auction

Where: Deutscher and Hackett, 105 Commercial Road, South Yarra 3121

When: Preview dates – Thursday 14 May to Sunday 17 May, 11.00am-6.00pm.

Auction: Sunday 17 May, 6pm, Deutscher and Hackett, 105 Commercial Road, South Yarra 3121

No wonder he’s hiding: Sydney bikies on the hunt for runaway art dealer Ron Coles and their missing millions

14 05 2009

In a jaw-dropping story published in the Sydney Morning Herald, it is revealed that the Australian art world’s man on the run, Ron Coles, is being pursued by what is described as an ‘outlaw bikie gang’. Although they didn’t specify exactly which outlaw bikie gang it is, I doubt it’s of the relatively blancmange ‘Brando in The Wild One‘ variety whose most threatening move would have been to throw a double choc-malt milkshake in your face. Anyway, it seems Coles may have absconded with millions of dollars belonging to this group of bikies. The article implies that he was laundering their money through his ‘Investment Gallery’, buying art with slightly tarnished cash and handing back wads of crisp, clean, brand-spanking new legitimate moola.

I don’t know quite what to say to this. Other than… ARE YOU INSANE?

Oh. And Run, Ron, Run.

“Please look after this bear. Thank you.”: Oops! Glastonbury council destroys Banksy’s Paddington Bear.

1 05 2009

Uh oh. Seems some overly zealous council workers have painted over one of Banksy’s Paddington Bear stencils in Glastonbury during an anti-graffiti blitz.

This wouldn’t be the first time one of Banksy’s works met such a fate. In Melbourne, we had a little Banksy of our own, ‘Little Diver’. The owners of the building whose wall the artist tackled with his spray-can covered said stencil with a sheet of perspex to protect and preserve it. But, in a perverse twist of fate, another, rather more prosaic, practitioner of wall defacement poured silver paint behind the sheet of perspex and scribbled ‘Banksy Woz Ere’ across the face of it.Image from Web. Showing a Banksy artwork. 131208.

Could this be the inevitable fate of much stencil art? I mean, it’s a curator’s worst nightmare… an artwork, exposed in a public space, indistinguishable for all intents and purposes from the colourful tags that surround it. Besides which, given that street art began as what amounts to a guerrilla movement, disseminated under cover of dark and anonymity, should it be left to its fate? Purists would probably argue yes. But that’s unlikely once the market gets its hands on it. Once an example of street art has a tangible financial value placed upon it, there’s no way it will be left to deteriorate and succumb to destructive environmental elements. This is exactly what happened here in Melbourne, where a massive mural painted by Keith Haring on an exterior wall of the Collingwood Technical School in 1984 has been listed with Heritage Victoria to ensure its preservation, despite much debate about the artist’s intention. Painting it in such an exposed location, Haring would have known that it would deteriorate over the years. Was that as important a facet of the artwork as its actual execution? Or would he have wished to see it restored and preserved? Impossible to say – Haring died in 1990.

Interesting conundrum, though. 

Image: Banksy ‘Little Diver’, before and after: ‘The Age’

A licence to print money: How to turn a fabric off-cut into $6000

28 04 2009

Clint Arthur and his two $6,000 Vuitton prints.

Firstly, you need to be an artist with the celebrity status of Japan’s Takashi Murakami. Secondly, you need to join forces with French luxury goods manufacturer, Louis Vuitton, whose hilariously expensive handbags and clutches adorn the pretzel-thin arms of the world’s most watched fashionistas and celebutards. Thirdly, you need to get yourself exposure – and preferably a retail outlet – in one of America’s biggest contemporary art galleries. OK. That’s the hard part. Now comes the easy bit. Whip up a design for Vuitton to print onto some fabric, out of which the company will craft some of aforementioned exclusive fripperies. Said process will leave quite a few remainders and off-cuts. Take those off-cuts, grab a few timber stretchers, attach off-cuts to stretchers, sign and number them on the reverse, then sell in shop set up in large contemporary art gallery. Easy. But where does this leave the people who snap up your ‘limited edition prints’, if they bought them thinking they were acquiring ‘original’ works of art?

According to LA-based art collector and gourmet butter retailer (!), Clint Arthur, this is what happened to him (that’s a visibly cranky Arthur pictured with his prints above). And he’s more than a little miffed. And, if as reported in the LA Times, up to $US 4 million worth of Murakami ‘prints’ were sold at a Louis Vuitton boutique that had been set up inside a retrospective at the Los Angeles Museum of Contemporary Art, there were many other collectors who were also happy to pony up the cash to buy these ‘artworks’. Now, Murakami, along with peers such as Jeff Koons and Damien Hirst, uses his practice to challenge the traditional boundaries between art and commerce. He has established a multimedia collaborative relationship with Vuitton, extending to the construction of a manga candyland cartoon clip featuring Vuiton’s ‘Superflat Monogram’ (really worth a look) in which Murakami acknowledges the ‘brilliant guidance’ of Vuitton’s artistic designer, Marc Jacobs.

In this, Murakami et al are Andy Warhol’s cultural heirs. All of which is fine. But, art theory aside, the aggrieved Arthur is suing Louis Vuitton for fraud, alleging that the luxury goods manufacturer did not disclose that the ‘prints’ were contrived from bits left over from the manufacture of the Murakami-designed handbags and other natty be-tassled goodies also for sale in the boutique.

The prints were described in the boutique as “canvasses revisited by Takashi Murakami”. “Revisited”? Now that there is some of the best and most creative use of art sales lingo I’ve yet to see. Louis Vuitton argues that, as an experienced art collector, Arthur should have known what he was getting. Moot point. But the devil is in the detail. And where things may get sticky for the French company is with California’s ‘Fine Prints Act’

The purpose of the act is to ensure that buyers are given all the information they need about the nature of a print at the point of purchase. To avoid, I’d imagine, the sort of debacle that saw collectors fleeced out of millions of dollars by the ‘printmaking’ process set up around the elderly Salvador Dali. At their best, original prints are exquisite – I’m a nut for them. But for anyone other than an expert, the processes used to make prints can be pretty obscure. And the difference between an original, fine print and a mass-produced, ‘limited edition’ print… well, think a cubic zirconia and a diamond. Mr. Arthur believes he’s been landed with a couple of cubic zirconias. And where it might get difficult for Louis Vuitton is that the Fine Prints Act (1744(4)) makes it very clear that an art seller must tell a buyer when the “multiple or the image on or in the master” is “of an image produced in a different medium, for a purpose other than the creation of the multiple being described”. In short – if the fabric was made for the bags, and the prints were an afterthought, then there could be a problem. Then again, Vuitton might just say that the fabric was made with the express intention of producing prints, and the bags were the afterthought. Chickens and eggs.

Point being – fine art prints? One very large, squirming can of very slippery worms.

Images: Clint Arthur: Los Angeles Times; Takashi Murakami, DNA images: BBC