You paid how much?
A handful of billionaires are driving up New York’s art market to unseen heights, but what does that mean for art?
Full access isn’t far.
We can’t release more of our sound journalism without a subscription, but we can make it easy for you to come aboard.
Get into news that is grounded in facts and Biblical truth for as low as $3.99 per month.LET'S GO
Already a member? Sign in.
NEW YORK—Drivers standing beside black cars on Nov. 12 waited on the sidewalk outside Christie’s, the pre-eminent auction house situated in New York City’s Rockefeller Plaza. Inside, Christie’s was about to start one of its major art auctions of the year. Coiffed staffers directed women in fur coats and silk to the auction room. Some VIP clients sat in the screened skyboxes above the bidding floor, and others bid through the bank of phones. Multimillion-dollar paintings from Marc Chagall, Pablo Picasso, and Paul Cézanne hung on the walls.
The British-accented auctioneer Andreas Rumbler took the podium and managed bidding on Impressionist and Modern paintings and sculptures, peering over his reading glasses to see bidding paddles in the room. Auctions at Christie’s and Sotheby’s sometimes require a ticket, but they are open to the public, and the art (and auctioneers) are something to behold.
A bidding battle began over Pablo Picasso’s Baigneuses au ballon, which had a high estimate of $1.5 million. “Up front, very determined,” Rumbler noticed, nodding at a bidder as the bidding passed $2.5 million. In the end the painting sold for $3.5 million, with fees. Rumbler hammered through about 60 other lots. The sales at the end of the night totaled $145.5 million. The bidders spilled out of the auction house and met their drivers.
That evening of sales may sound big, but it didn’t top the sale of a single painting earlier in the week at Christie’s. Amedeo Modigliani’s Nu Couché (“Reclining Nude”) sold for $170.4 million, the second-highest price ever paid for a work of art at an auction. At the Impressionism auction later, security guards stood around the painting as bidders posed with it for pictures.
These are heady times in the New York art market. Last year the global art market hit an all-time high of $54 billion, according to the prominent TEFAF Art Market Report, and the United States has the largest share of the market by a wide margin. Artsy, a website that covers art industry news, called the U.S. art market “seemingly unstoppable” in reporting on the latest numbers.
The volume of art sales has grown, which seems good for artists, and the number of jobs in the art industry is significantly higher than tech industries with similar overall revenue, according to the TEFAF report. But concerns about a bust persist as a handful of billionaires control the top slice of the market.
Often the biggest price tags in the art world only come from a few bidders, like the six bidders behind the Modigliani sale. Some art dealers see the market growth as mere speculation, not a valuation of art for art’s sake. Others say the wealth rushing into the top tier of the art world has soured the quality of contemporary art.
Some also see a market vulnerable to anonymous money launderers and unsavory characters. A few years ago an embezzling Brazilian banker converted his ill-gotten wealth into a $30 million art collection. In 2008, U.S. investigators discovered an $8 million painting that he tried to smuggle into New York. The U.S. market is largely unregulated but elite auction houses like Christie’s have strict provenance rules for works of art, so they know where the art is coming from. And galleries in the United States must report cash transactions over $10,000, so a mobster can’t show up with a suitcase full of cash to pay for a work of art.
THE $145 MILLION EVENING AT CHRISTIE’S was part of a two-week period in November when Christie’s, Sotheby’s, and Phillips in New York cleared $2.2 billion during major auctions, according to The Wall Street Journal.
The Journal’s Kelly Crow, who has covered the art market at the paper for a decade, calls November in New York her “Super Bowl.” Crow follows the elite posse of art dealers and collectors around the world on the auction circuit. The year’s major auction circuit starts in London in February; goes to Maastricht, Netherlands, and Hong Kong in March; then to New York in May; then Basel, Switzerland, and Venice, Italy, in June; London again in October; New York again in November; and Miami in December.
But New York has become the center of the art market. In World War II, many artists fled Europe for New York and stayed, and the market became established here in the postwar prosperity. Works of art also grew very large, which suited American spaces more than European spaces. European countries also have more taxes and regulations on art, driving sales to the largely unregulated U.S. market.
Some of the buyers now are newly wealthy from countries like China. The man who bought the $170.4 million Modigliani was Chinese cab driver-turned-billionaire Liu Yiqian. “The message to the West is clear: We have bought their buildings, we have bought their companies, and now we are going to buy their art,” Yiqian told The New York Times after the Modigliani purchase.
This kind of attitude can make art dealers grimace. Joel Mesler co-owns the Mesler/Feuer gallery on the Lower East Side, which is a midtier gallery that has been the launch point for soon-to-be-successful artists. Prominent galleries have been moving from Chelsea to the Lower East Side and Brooklyn as the result of another hot market in New York: luxury real estate, where investors have been buying up properties that sit unoccupied. Mesler said the bidders like those on the Modigliani were “speculators”—who view art as merely an investment vehicle—not “collectors.”
‘It’s the perfect statement of what the art market had become: This dead, moneymaking machine that was no longer about striving for the highest in human nature.’ —Bruce Herman
“There’s always been speculation,” he said. “It’s just more pronounced now.”
The sale of the Modigliani doesn’t affect Mesler’s slice of the market. But Mesler’s gallery business has expanded as the market has expanded overall. That growth has been good and bad, from his perspective: It has put more eyes on art at all levels of the market. But he has noticed a decline in the quality of art coming into the heated market. He thinks the demands of the market have pushed artists in directions they might not otherwise have gone.
The Wall Street Journal’s Crow thinks the speculators are a small slice of the buyers, but a couple of new billionaires investing in art can have a massive effect on prices. The same night of the big Modigliani sale at Christie’s, Roy Lichtenstein’s Nurse sold for $95.4 million. The previous record price for a Lichtenstein was $56.1 million, set in May 2013.
How did Lichtenstein’s work climb in value so quickly? That’s a question that collectors “suspicious of the process” are asking, Crow said, and she thinks the market is headed to a plateau.
“You can just decide, ‘I think my Picasso is worth $10 million’ and then the next year, no, it’s now worth 11. And you’re just like, based on what?” said Crow. The art market, she said, doesn’t operate with the same checks and balances that other markets have: “I think that’s in some way why these hedge fund guys love it, because they’re so heavily regulated in their day jobs, and then they come to art and it’s like a big chessboard.”
One of the most successful contemporary artists, Damien Hirst, did a conceptual piece mocking the art market’s excesses in 2007. He hired craftsmen to cover a human skull in 8,601 diamonds and titled the piece For the Love of God. He then set up a conglomerate of investors, including himself, to “purchase” the piece for $100 million. It remains a mystery whether the piece actually sold to Hirst’s conglomerate. Hirst won the coveted art world headlines though: “Hirst’s diamond skull sells for $100 million.” Another article proclaimed, “The world’s most expensive piece of contemporary art.”
Bruce Herman, the chair of the art department at Gordon College, called Hirst’s piece “brilliant.” “It’s the perfect statement of what the art market had become: This dead, moneymaking machine that was no longer about striving for the highest in human nature,” he said. “It was about one-upmanship and status. The real work of art was not the object, it was an event … a caper.”
But as the market is perhaps overvaluing some high-end art, Herman has countered for years the undervaluing of art in evangelical circles. Herman was the founding chair of the art department at Gordon three decades ago. He thinks now there is a movement among Protestants to value modern visual art more.
“[People] look at modern art and they’re bewildered,” he said. “Part of my job over the last three decades has been … to invite people to the party.”
Most of the counsel Herman gives is for Gordon graduates who are not near the nine-figure world of Damien Hirst, who are working two jobs to make art. He talks to them simply about being “faithful disciples of Christ” in their work, whether in small or famous circles. And Crow said artists should ignore the market and do good work.
“Rembrandt survived that reckoning of the marketplace and now he’s an icon,” she said. “Ultimately what the marketplace decides, it ends up becoming irrelevant. It’s a little Ecclesiastes, you know. Eventually it all becomes vanity, and if the art is good it survives.”
If you enjoyed this article and would like to support WORLD's brand of Biblically sound journalism, click here.