Scandals and Share Prices Cause Auction Malaise

Usually this is the time of year when the art world gears up with bated breath for the critical round of blue chip sales of Impressionist, Modern and Contemporary art in New York. Gallery activity along the swank spines of Madison Avenue and 57th Street slows as collectors and their advisors plot their strategies for potential acquisitions. Even before the auction catalogues are printed and distributed, dealers compare notes about what treasures the auction houses have nailed down and at what estimates, making sure their own inventories aren’t priced too high or too low.

But this spring, the atmosphere is markedly different. Obviously, the US Justice Department criminal investigation of Christie’s and Sotheby’s over possible price-fixing is a factor. Another is the media-generated fatigue resulting from the rash of articles speculating on the fates of the two auction giants and how many years of hard labour Sotheby’s former chief executive will be sentenced to, assuming there’s an indictment and a trial.

Even art world insiders are surprisingly blase about another development, the auspicious
arrival of Phillips in the New York arena,stuffed to the gills with cash from its new owner, Bernard Arnault’s deep coffers. Practically overnight, Phillips, with it sold British brand now tied to luxury goods giant LVMH,has literally tried to buy the market share from its scandal-stained rivals Christie’s and Sotheby’s. They accomplished this by guaranteeing consignors huge sums for their pictures, reportedly more than Christie’s and Sotheby’s would dare. It’s a terribly risky strategy, one without precedent in the art market, at least at this multimillion dollar level. (Seasoned observers probably recall the short-lived attempt of Swiss auctioneers Habsburg Feldman to establish a New York beachhead in the late 1980s, but they were wiped out by a bear market and intense bullying from Christie’s and Sotheby’s.)

What, then, is the reason for this surprising malaise? One possible answer is that Wall Street has become a heck of a lot more interesting than the seasonal flow of Cezannes and Picassos to the art market. It is more exciting to track Sotheby’s considerable woes on the New York Stock Exchange (it goes by the trading acronym BID) than go online to artnet.com or artprice.com and follow the auction trail of a Toulouse-Lautrec brothel painting. Incredibly, Sotheby’s has lost close to 2/3 of its stock market value since May of last year, assuredly are result of the ongoing government investigation and a wider held stock market perception that BID is simply not living up to high expectations.

The desire then to know what money manager RonaldBaron, founder and CEO of New York’s Baron Capital,the largest outside investor in Sotheby’s stock, will do next to shake up Sotheby’s board room is greater than learning about the provenance of a JuanGris still life, long thought destroyed by Allied bombing of Germany during the Second World War and coming back on the market like a beautiful ghost. Will Baron save his US$500 million
(£.320.4m) stake in Sotheby’s? Will the Gris convince the market that it is real?

Even New York’s outstandingly grimy real estate market has drawn considerable attention away from art market aesthetics.For decades, the handsome Fuller Building at the strategic corner of East 57th Street and MadisonAvenue has been the primo address of blue chip modern and contemporary art dealers, fromPierre Matisse and JamesGoodman to Jan Krugier and Jj.Lally. Its revolving doors have ushered the city’s most prominent collectors and critics to the well-appointed backrooms of the best and the brightest dealers.

The Fuller Building was recently sold and the new owners have bluntly informed long-time gallery tenants that the art honeymoon is over. It is still unclear whether the fourteen-storey building will be gradually converted to luxury condos or forbiddingly expensive back offices for brandname luxury stores like the current tenant Coach that took over the lease of contemporary dealer Robert Miller who relocated to Chelsea on West26th Street.

The Fuller Building story, of course, is not unique. That same scenario already
unfolded inSoHo, the former epicenter of New York’s contemporary art scene and
now a mini-MadisonAvenue,complete with sleek branches of Louis Vuitton and
Prada. The dealers emigrated north to the western fringe of Chelsea, creating a hip but
still ghettoized community of cutting-edge dealers desperate for a decent cappuchino.

Finding great cappuchino is not a problem on Madison Avenue as long as you can elbow your way to the wildly popular espresso bar at Sant Ambroeus at 1000 Madison Avenue. That could be one reason why a small but stellar group of younger dealers have opened or expanded galleries in the immediate area.

The most prominent, at least by square footage, is the Helly Nahmad Gallery on the corner of 76th and Madison on the ground floor of the Carlyle Hotel. Stuffed with Impressionist pictures and a backroom vibrating with work by Brit pack artists such as Damien Hirst, the gallery is a family branch of the 2Cork Street enterprise of the same name run by a first cousin. The New York gallery is apparently so exclusive (or security conscious), it has an unlisted phone number,certainly a first on this island fora street level gallery.

Around the corner is Christophe van de Weghe Fine Art,a’ByAppointment’ salon of prime secondary market material,ranging from an Andy Warhol self-portrait to a fine bronze portrait bust of Annette by Alberto Giacometti. The barely thirty-year old gallerist formerly toiled internationally for power house dealer Larry Gagosian who has sold more million dollar pictures than most dealers could fantasize about. As landmarks come and go on Manhattan’s best blocks, the rite of spring in the salesrooms endeavors to carryon
despite all the noisy distractions.

Judd Tully is Editor-at-large of New York’s Art & Auction magazine. He has written for a wide variety of publications ranging from Beaux Arts to The Washington Post.

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