I was most intrigued by one finding of Sotheby’s recent report, Peak Performance, compiled by ArtTactic, which recorded sales in the $1m+ tranche over the period 2018-22.
The report, using internal information from Sotheby’s private sales data, said that contemporary art accounted for the largest share of the firm’s private sales—almost 60%!
I would have expected Impressionist and Modern art to represent the biggest chunk, and indeed it accounted for just over half of sales by value in the $1m+ category. However, as David Schrader, the firm’s global head of private sales, explained to me, “The number of transactions is much higher in the contemporary field, and this is a much more active market, which is why it is larger in volume.” For the record, his department turns over between $1bn and $1.5bn each year.
Drilling down, it was interesting to hear that shortening cycles in the art market are driving this trend. Schrader again: “The cycles are compressing, and the market for some artists may change in six months’ time. Vendors may not want to wait for a suitable auction, they may want to sell immediately.”
There could be no clearer indication of how volatile this market can be, particularly for the “wet paint” or “ultra-contemporary” works of art. Owners may want to grab their profit while they can. And in view of the current uncertain economic climate, with banks crashing around our ears, the market is becoming more risk averse. At the price levels contemporary art is now reaching—remember, the report is about $1m+ works—this flight to safety sees vendors thinking about selling contemporary to buy more validated works.
There is an additional advantage to private sales in the contemporary category: vendors may want to avoid the accusation of flipping, something heartily frowned on by galleries and which could lead to black-listing. Away from the glare of public auction, a private sale means that no-one is the wiser when the work changes hands.
In addition, the gallery you bought it from may not want to take the work back. They will have fresh works by the artist to sell—and generally get 50% of the sale price—whereas taking something back for resale would probably only generate a much smaller commission. A private sale may be the only solution.
Curious as to whether his department is “overexposed” for some artists, I asked Schrader: “Do you sometimes reject works?”. Diplomatically, he responded that he may sometimes “steer a work to a gallery”.
And then there is the eternal problem of a massive gap between the vendor’s expectations and the price Sotheby’s thinks the work is likely to achieve. “No one ever likes to hear that a work is worth less than they think,” Schrader said, but he concludes: “Giving honest advice is a good business decision in the long run.”
