An Economic Art Surprise

With foreshadowing long before the battles in the Ukraine began and the news getting worse and worse everyone has been concerned about the effects on the economy of every country.

As you know, my interests have always been related to the arts so I was wondering what effect the current situation would have on the art market. No companies were more concerned than the auction houses.

There are a plethora of auction houses in the world but the ones that get the most press are multinational companies and in particular Christie’s and Sotheby’s, with Phillips not that far behind in England. Needless to say, there was plenty of anxiety about the major sales taking place last week during London’s recent auction week.

Phillips had a couple of big strikes against it since it is owned by two Russians through their luxury conglomerate Mercury Group. Their CEO, Stephen Brooks, spent quite a number of days on the phone assuring owners, consigners and representatives that that the owners, Leonid Fridlyand and Leonid Strunin, were not the subjects of sanctions and had no connections with those who did. Finally, Phillips agreed to donate their commissions on the entire March 3rd evening sale to the Ukraine Red Cross which in the end yielded $7.7 million dollars in proceeds. Sometimes what starts out badly ends up for the good.

There were other reasons for concern. Within the EU there are laws in many countries that require businesses to identify the ultimate beneficiaries of limited liability companies, trusts and private foundations to protect against money laundering and, in this case, to check on sanctioned individuals. At the same time some of the oligarchs were ready to dump their art for cash. Suffice it to say there were many hurdles to surmount. Some fabulous works of art came on to the auction block and they did just fine, proving that so far the art market is very robust.

Phillips ended their sale of Contemporary and Modern art with a total of $40 million. In spite of the last-minute withdrawal of 5 lots, 95% of the lots actually sold. There were a few third-party guarantees, meaning that there were individuals who would pay X if the bidding fell below that figure. While established artists brought good prices even better than the estimates, the most active bidding was for the up-and-coming contemporary artists. A 2016 abstract composition based on Géricault’s “Raft of the Medusa” by British Artist Cecily Brown and titled “When Time Ran Out” came in just over its high estimate to sell for a bit over $4 million.

Sotheby’s highlight at their evening sale on March 2 was René Magritte’s “L’Empire des Lumières”. Estimated at over $60 million it brought $79,422,000 including Sotheby’s commission.

Everyone at Christies had to be holding their breath for their March 1st evening sale. It was their first auction with their new Shanghai gallery, live streamed from London and mainland China and incorporating Hong Kong and New York. This was a sale of 20th and 21st century works of art. The bottom line … it worked. However, it did have some showstoppers to whet the appetite. A restituted Frans Marc of 1913 called “The Foxes” brought $57 million which was more than double the artist’s former record price.

I must say I am a sucker for the artist Lucien Freud and Christies had one I loved in the same sale,“Girl with Closed Eyes”, (1986-87) It sold for just under $20 million.

Even in this time of geopolitical crisis art seems to be retaining its value.