And the ballroom dancers went around… and around… and around again. A lesson in reading auction figures.

6 03 2013
Image

John Brack, ‘Backs and Fronts’ (image via http://www.aasd.com.au)

Hello, old friend. Nice to see you again.

It’s good to know some things never change. As regular as clockwork… John Brack’s Backs and Fronts is back on the auction podium for the fourth time in nine years. Wouldn’t be the first, and certainly won’t be the last rapid-fire repeat customer in the Australian art auction world. But I’ve grown particularly fond of this one over the years. Not to mention, those pirouetting figures offer a lovely analogy for the way this painting keeps spinning back and forth through the auction market.

I had a glance back over the painting’s auction record, and it reminded me of an object (or, perhaps ‘abject’) lesson to take on board when looking at reported prices. Thankfully, the Australian Art Sales Digest now publishes hammer prices (the price that the auctioneer calls out at the fall of hammer), not just prices realised (hammer price plus buyer’s premium), which thankfully makes the following exercise much easier.

When many people look at auction prices, (such as the prices for Backs and Fronts over the years laid out in the table below), they simply compare the prices in each column. So, for example, you’d be thinking… “hmm… The painting sold for $1,700,000 in 2007, then $1,800,000 in 2010. Given the whole GFC/collapse of the art market thingy, that’s not too shabby in terms of a return, really, is it? At least they didn’t lose any money.”

Sale date Hammer price Price incl. premium
25/11/1997 (Christie’s) $215,000 $239,000
10/3/2004 (Deutscher-Menzies) $392,290 $470,750
13/6/2007 (Deutscher-Menzies) $1,700,000 $2,040,000
24/6/2010 (Menzies) $1,800,000 $2,160,000
21/3/2013 (Menzies) (yet to be offered) estimate: $1,400,000-1,800,000

Above figures from Australian Art Sales Digest: www.aasd.com.au

But herein lies the problem with that approach. The question you should really be asking is: “what did it cost the buyer to acquire the painting, and what did they recoup when it was sold?” To work that out, you need to first look in the ‘price including premium column’ – that is the total amount the buyer would have had to pay to acquire the artwork. So in 2007, for example, the buyer ponied up $2,040,000 to get their mitts on Backs and Fronts. Then, you need to look at the ‘hammer price’ in 2010 – $1,800,000 – and subtract a good chunk of that amount to account for estimated selling costs (commission, insurance, illustration and cataloguing fees). Let’s make that a round (and fairly modest) 15%.

So when the person who bought the painting in 2007 sold it in 2010 the net amount heading their way would be ($1,800,000 – 15%) = $1,530,000.

Instead of what appears to be a slight rise in value from $1,700,000 to $1,800,000, we now have a fairly dramatic loss – $2,040,000 outlay becomes $1,530,000.

Not so rosy now. And that doesn’t even take into account the effects of adjusting for inflation.

So what does that tell us about the upcoming reappearance of our spinning ladies and gents at auction? Well, the low-end of the 2013 estimate is $1,400,000. That means the reserve price must be equal to, or fall below, $1,400,000. Let’s take the 15% selling costs from that figure… that gives us $1,190,000 ($1,400,000 – 15%). That is the net amount the seller will pocket if the painting sells at its reserve (conservative, because it presumes a reserve at $1,400,000 – it could be lower).

Meaning? The person who spent $2,160,000 for Backs and Fronts in 2010 (the price including premium paid that year) is now happy to sell it for $1,190,000.

(Apologies for the shouty caps that follow…)

That’s right… THEY PAID $2,160,000 AND ARE HAPPY TO SELL IT FOR $1,190,000.

Really?

Try spinning that.

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One Moore questionable artwork withdrawn from auction.

9 02 2011

Oh, those puns just write themselves. In an article published in today’s Age, ‘Auction house fears sculpture may be less than a Moore’ (see what I mean?), Gabriella Coslovich reveals that a sculpture listed in Mossgreen’s latest catalogue as a work by acclaimed British sculptor, Henry Moore, may not be all that it seems. The image here, taken from The Age, shows the more Moore sculpture at left, and the less Moore sculpture on the right. Don’t worry. I’ll stop now.

Mossgreen is dispersing Melbourne-based painter Robert Doble’s collection of art, artefacts and ephemera on February 21. The sculpture formerly known as ‘Mother and Child‘, and now most likely referred to by Mossgreen staff as “that #*!*%!# piece of $#!*” was to have been the highlight of what is a very eclectic collection (have a peek at the online catalogue here). It has now been withdrawn from sale after revelations from an interested buyer that it may be a forgery. Coslovich refers to an article published in 1993 in The Independent that quotes the Henry Moore Foundation, which administers the artist’s estate; Julie Summers, deputy curator of the Foundation, says of the flood of Moore forgeries on the market: “It’s terrifying”.

Unfortunately for Robert Doble, mother-and-child compositions are the most often faked. The telltale signs of a forgery that’s been cast from an original work? The base on a forgery will be cast with the sculpture, whereas with the original, the sculpture will be attached separately to the base. Also, as the casting process causes the bronze to shrink during cooling, the forgery will be slightly smaller.

The biggest concern with this for the art world in general? These works continue to circulate. Robert Doble has indicated that he intends to give it to a friend as a 50th birthday gift. Although it’s unlikely to find its way back onto the market anytime soon, what about in ten or fifteen years or so, when all the fuss has died down? When I was at Leonard Joel, I once saw the wonderful Treena Joel (granddaughter of Leonard) write ‘FAKE’ across the back of a canvas that had been submitted for sale at Joel’s, and categorically proven to be a fake or forgery. Although I’m fairly sure that defacing someone else’s property like that could get you in trouble, I appreciate the sentiment.

In France, authorities are permitted to remove signatures from fake works of art. Here? Most of the time, they end up back in private hands only to resurface on the market in the future. That’s why I toasted the incineration of the notorious Blackman and Dickerson forgeries last year. Burn them. Burn them all!

(Image: ‘The Age’ online)





Arty-Party!

23 06 2010

Look! Sad-eyed puppy!

Mea culpa. Apologies for being so slack with the posts of late. But I have good reason. Things have been very busy in the offline world. But the outcome of all this hard work is that if you’re in Melbourne, or have reason to be here on 15-16 July, I’m co-convening a symposium at the University of Melbourne with speakers drawn from across the art world talking about all things current in the Australian art industry – from fakes and forgeries, to the sustainability of the Aboriginal art market, and the potential effects of the resale royalty legislation and the proposed changes in the Cooper Review on the market. Artists, dealers, auction house representatives, legislators, academics, all going head-to-head. It’s going to be juicy. Keynote addresses are to be given by the Minister for the Arts, Peter Garrett, AM, MP, and Sam Leach, the winner of the 2010 Archibald and Wynne Prizes, and there’s an associated Melbourne Conversations event at Fed Square on the evening of Thursday 15 July. More details can be found hereincluding how to register. More updates to follow.





Art investment made easy, or, parking your loot in Picasso

6 05 2010

Picasso’s 1932 painting “Nu au Plateau de Sculpteur (Nude, Green Leaves and Bust).Picasso made some pretty extraordinary works of art. Nu au Plateau de Sculpteur, 1932, pictured at left, is not one of them. But, proving the old maxim that money and taste aren’t always found hand in hand, the aforementioned painting set a new record price for an artwork sold at auction when the hammer fell at Christie’s in New York on Tuesday night. The going price? US$106.5 million. The sale just narrowly pipped the previous record holder, Giacometti’s Walking Man I, which sold for US$104.3 million at Sotheby’s in London earlier this year (both these prices include buyers’ fees). While I’m at it – as wonderful as Giacometti’s work is, I’d really love to know why his work in particular has been going through the roof of late. Who has the greatest vested interest in seeing his prices go up? That’s not a rhetorical question. I’m genuinely interested in finding out. My inherent suspicion is always peaked when an artist’s market rallies in such a dramatic fashion, particularly when compared with the prices being paid at auction for equally well-regarded peers’ works of art.

But, back to Picasso. A price precedent has been set for large Picasso canvases for quite some time. Way back in the economic golden days of 2004, someone paid US$104.1 million for Boy with a Pipe, 1905 – in my opinion a far more powerful work than the latest record-breaker. For those fortunate people who managed to hold onto the odd pile of cash in the wake of the GFC, this means that a high-profile Picasso painting is a good place to park said cash while the stock market continues to buck and turn. With the economic and political situation in Europe looking ominous, it’s no surprise at all to find that secure material assets are finding favour amongst investors. Word is that much of this investment is coming from China.

The idea of art as material asset really took off in the post-war decades – in 1955, Fortune magazine declared art to be one of the most desirable international currencies. The art market as we know it today, particularly the auction trade, came into its own after then. Whereas previously auctions tended to be the purview of sombre and serious dealers and dedicated collectors, in the 1960s and beyond, they became social affairs as high society and the monied classes tussled over artworks that would bring them cachet and, if they were lucky, a secure way to invest a portion of their fortunes. No matter how unimpressed you are by Picasso’s market-topping painting, for whomever divested themselves of the equivalent of Greece’s national debt (ok – yes, an exaggeration) to acquire it can be pretty certain that their money is safe, as long as the art market status quo remains steady. And there are too many wealthy individuals and organisations heavily invested in said market for it to be undermined anytime soon.

And, as an aside, for anyone who questions why Christie’s closed its Australian branch and how Tim Goodman managed to secure what amounts to a Sotheby’s franchise Downunder, consider this – the price for the Picasso painting in Australian kangaroubles amounts to about $118 million. During the boom years 1999-2008, only once did the total… TOTAL … amount of art sold at auction in Australia exceed that amount. The approximate average for that ten year period was about A$90 million. In short? To say the Australian market is small change for the international auction leviathans is something of an understatement.

(image via nytimes.com)