AMM Weekend

Last week's sales demonstrated there's a very wide gap between the $90m art works and the rest of the market.

Live Auction Art’s Chart of New York Contemporary Sales

The Hidden Masterpiece Market

If this last week’s sales are any indication, the art market has made a decisive shift. Some would like to see this as a shift toward valuing historically under-represented populations. In this view, the market has come to recognize the importance and value of previously marginalized artists opening a space for their future success. And that may be so. 

But there’s equal evidence to suggest the top of the auction market has fundamentally changed. Where there was once a nine-figure masterpiece market and a high eight-figure market for works driven by aggressive bidding, there now seems to be a limit to the top of the masterpiece market at $90m—and an empty gulf down to the $30m level with very few works residing therein. 

The very top of the market, now the exclusive property of Christie’s which has shown it will go to great lengths to own that position, was Barney Ebsworth’s Edward Hopper painting Chop Suey and Joe Lewis’s David Hockney double portrait, Portrait of an Artist (Pool with Two Figures). These are two very different paintings by very different artists with greatly different historical significance that converged at a remarkably similar price point.

Measured by price history for the artists, the Hopper was probably sold as a bit of a bargain when one of the expected no-limit bidders decided to drop out at $75m. The Hockney took a bit more effort—including the threat to sell the work to any bidder with cash in hand—to get two hopeful buyers to drive the painting to the $80m low estimate. By many accounts, the consignor fully believed the painting to be worth quite a bit more than that but the market remained predominantly skeptical.

For our purposes, the only point here is that auction prices, which seemed to be on a trajectory toward the outer limits of the financial imagination just a year ago, proved range bound, at least for now. The immediate question is whether buyers are unwilling to pay those prices for art any longer or whether the venue for such sales has shifted.

On the one hand, the global economic outlook doesn’t favor free spending. Many sober financial advisors and fiduciaries are warning of an approaching recession. The world’s liquidity needs to be mopped up and political miscalculations may finally be adding up for many nation’s economies. The art market is global. There’s no reason to believe it would be immune to expectations of a global slowdown no matter how strong the US economy remains and how central US buyers remain to the market. 

The absence of works selling at auction from $40m to $85m this season may be a sign of the above fears. It might also be the product of a shift toward private sales. One important reason for bringing works to auction is to establish a price in the absence of clear information about prices. Both the Hopper and the Hockney were works without enough pricing information to conduct private sales. Works by other artists who have achieved prices in the eight and nine figures in the last decade—Warhol and Basquiat in particular—are said to have had significant private sales this year.

Let’s pause here to comment on the conspiracy mongering taking place around the Hockney sale. The conspiracy theories around the Hockney sale are really no different than the complaints that the Leonardo wasn’t really a Leonardo. Virtue is not a reason the conspiracy scenario is unlikely. Every version of the supposed mechanism by which the sale would be manipulated winds up with someone owning an unsaleable work of art. That’s hardly an incentive to commit a crime.

Back to the mystery of the missing masterpiece market, it seems more likely that after several years of strong but stable prices for the artists who can command the biggest sums, that market has gone back to private sales either through dealers or the auction houses. If we look at the works of art that met the next level of prices in the $20-30m range, these paintings are by familiar artists like Rothko, Richter and Bacon. Below that we have more familiar names.

Hopes that new names like Joan Mitchell or Kerry James Marshall would continue to rise to fill the gap didn’t quite pan out this season. What the art market needs to thrive is rotation toward new market leadership from an artist or group of artists. Ideally, that artist or group of artists would have a large number of works that could trade successively to build confidence for both buyers and sellers. These new market leaders are still struggling to emerge.

Perhaps they won’t have to. It is possible for a broader market to function without the dominating influence of a single artist. But with the market’s attention having shifted away from the most obvious artists something interesting seems to have begun to happen during the less watched lots.

Late in Sotheby’s Contemporary Evening sale, Alberto Mugrabi jumped into the bidding on a white Warhol shadow painting topping another bid in the room but chopping it unexpectedly to $1.175m, visibly annoying auctioneer Oliver Barker.

The next night it was Larry Gagosian’s turn to be annoyed as he was seen buying to two different Warhol’s in the $5m range. On the second Warhol of the night, Gagosian got visibly annoyed when Christie’s auctioneer eked out another bid just as Gagosian thought the work had been bought. Nonetheless, the dealer topped the bid and bought the work.

None of this would be worth remarking upon here except for the fact that bidding and buying from the Mugrabis and Gagosian has mostly been absent from the Warhol market for the last three years. That, more than the show at the Whitney, might be a small sign that the bottom of the Warhol market has been reached.

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