Do Art Auction Houses Camouflage Results? – artmarketblog.com

Do Art Auction Houses Camouflage Results? – artmarketblog.com

I received an email on December 2nd from one of Australia’s leading art auction houses, Menzies Art Brands, with the subject ‘Defamation Alleged’. The email read:

DEFAMATION ALLEGED

Menzies would like to bring to your attention this story on Page 10 of The Age newspaper today:

LEADING art auctioneer Rod Menzies has described as ”scurrilous” allegations made by Robert Le Tet and Rick Anderson about his business practices, in The Age yesterday.

Mr Menzies, an entrepreneur, cleaning business tycoon and owner of Menzies Art Brands, said he ”always honoured every deal” and was ”well known for carrying out every commitment and for his integrity”.

He said he observed the ”highest ethical standards” and denied suggestions to the contrary. He said in a statement that he had instructed his lawyers to start proceedings for defamation and damages claiming $38 million.

Enquiries
sydney@menziesartbrands.com

Before we continue, this is not the first time that allegations have been made regarding Menzies’ business practices. In 2008 complaints were made by other auction houses in Australia regarding Menzies’ alleged failure to adequately disclose details regarding guarantees provided by Menzies, as well as details regarding works being sold by Menzies that Menzies either owned or had a share in. Menzies denied the charges which were dropped in March of this year by the Australian Competition and Consumer Commission.

This time around, Menzies is being accused of misleading reporting of art sales through his auction house. The accusations were aired in the Melbourne, Australia based newspaper ‘The Age’ where details of a transaction involving a painting by Brett Whiteley, one of Australia’s most famous and valuable artists, were questioned. According to The Age, the painting in question was reported by Menzies Art Brands as having been sold in Sydney on the 25th of March for A$1.44 million. Apparently, however, only two months later Mr. Menzies was offering the painting in question for sale privately through his company for A$1.25 million, which suggests that it wasn’t sold at all. It is then alleged that Mr. Menzies struck a deal with a collector, named as a Mr. Anderson, to swap the Whiteley painting, and another painting, for two paintings owned by the collector. The swap apparently took place in June of this year.

If this allegation wasn’t enough, ‘The Age’ alleges further issues regarding ownership of the Whiteley painting. Apparently a Melbourne financier launched a court case to retrieve the Whiteley painting, which he claims he owns because his company, Questco Pty Ltd. , loaned money to an art dealer to purchase the Whiteley painting – a dealer who is now having financial difficulties. The Melbourne financier apparently then asked Menzies to sell the painting through private treaty for A$1.25 million, but Menzies reneged on the deal a short time later. Menzies is being accused of then returning the painting to the dealer, not the financier, and purchasing it off the dealer for A$850,000. Mr. Menzies then put the painting up for sale in March of this year, which is where this story began. Menzies sought to retrieve the painting from Mr. Anderson whom he sold the painting to by private treaty and apparently even offered several other paintings in exchange which had also been reported as having been sold at auction. Mr. Anderson has so far declined to return the painting.

According to the article in ‘The Age’:

Mr Anderson claimed Mr Menzies has been ”ramping” up the art auction market, and he said it was in the public interest to know how the prominent auctioneer operated: ”He reported the Whiteley painting as sold and then he offered it to me for $200,000 less than what it was supposedly sold for at auction,”.

No charges have been laid against Mr. Menzies or his company and, as you can see from the email I was sent, Mr. Menzies strongly denies the allegations made against him and his company. The question of who is telling the truth will presumably come to light if the defamation case goes ahead.

The reason that I have alerted you to this case is that I have been on a bit of an art auction house crusade of late in an attempt to inform the public about what goes on behind the scenes and hopefully encourage the art auction houses to be more transparent and ethical with their dealings. With transparency being one of the biggest issues, I thought it was important to highlight this case even though none of the allegations have been confirmed as being true.  I will be doing a series on this issue as there are lots of allegations to cover.

**Nicholas Forrest is an art market analyst, art critic and journalist based in Sydney, Australia. He is the founder of http://www.artmarketblog.com, writes the art column for the magazine Antiques and Collectibles for Pleasure and Profit and contributes to many other publications

Portraits as Art Market Currency pt. 3 – artmarketblog.com

Portraits as Art Market Currency pt. 3 – artmarketblog.com

The last installment of “Portraits as Art Market Currency” received an interesting comment from a reader who said: “Is that why we have portraits on our banknotes? hehe! Maybe that’s what they thought when they designed them….”. All jokes aside, this comment is actually a good introduction to the concept of the portrait as a historical document – a concept that I want to explore with this post. Although we tend to think of paper money as merely a means of acquiring goods, the coins and notes that we use everyday are in fact historical documents of great value. The fact that there is such a vibrant and growing market in old and obsolete coins and notes confirms the fact that we place a considerable level of value on the historical value of money. I constantly hear of coins and currency notes being sold for astronomical amounts of money, thousands of times beyond their face value, because of their rarity and historical significance. There is no doubt in my mind that bank currency often has an intrinsic historical value and that most forms of bank currency could be considered to be historical documents in themselves. Considering that one of the most recognisable and common features of paper money is a portrait of some sort, it would be reasonable to assume that those portraits which appear on notes and coins also have a significantly high level of historical value. And if you think that people don’t care what the portraits on money look like then think again. When Australia changed over to decimal currency in 1966 a new portrait of Queen Elizabeth appeared on the one dollar bill . The new decimal currency bills were designed by Gordon Andrews who was widely criticised for portraying the Queen with what some people thought was a look of unhappiness, and for giving the Queen what some people saw as a slight scowl. Mr. Andrews defended the portrait by pointing out that “if you have someone grinning at you on a bank note, which you have to look at over and over again, you get to hate the sight of it”. A fair point I think. Another example of the extent to which the portraits on paper money are assigned value is a newspaper article from 1962 about counterfeit currency in which a US Secret Service Chief advised people to look at the portrait. According to Chief James J. Rowley “Counterfeit currency has a lifeless portrait, the fine cross-lines are not clear or distinct”. Sounds more like the musings of an art critic than a secret service agency.

Some may disagree with the concept of historical value as a type of intrinsic value but I think there is more than enough proof to suggest that the historical value that many portraits have can be considered to be intrinsic. The sort of value I am talking about is the value of what a portrait can tell us about various areas of history, not the value we place on a portrait because of the positive opinion we have for the person depicted – an opinion that could change depending on the information we have about that person. The US National Archives conducted an investigation into the Intrinsic Value In Archival Material in 1982 which came up with some useful definitions and information that is relevant to this post. According to the ‘Report of the Committee on Intrinsic Value’ it was determined that “Intrinsic value is the archival term that is applied to permanently valuable records that have qualities and characteristics that make the records in their original physical form the only archivally acceptable form for preservation. Although all records in their original physical form have qualities and characteristics that would not be preserved in copies, records with intrinsic value have them to such a significant degree that the originals must be saved.The qualities or characteristics that determine intrinsic value may be physical or intellectual; that is, they may relate to the physical base of the record and the means by which information is recorded on it or they may relate to the information contained in the record.” It is also worth noting that the committee determined that one of the characteristics of records with intrinsic value is “General and substantial public interest because of direct association with famous or historically significant people, places, things, issues, or events”. The findings of this committee confirm that historical documents can have intrinsic value.

One of the best sources of evidence that supports the idea that a portrait can have value as a historical document is the fact that the National Library of Australia has Guidelines for the acquisition of portraits that are acquired to “provide a documentary record of Australian life and achievement”. According to the guidelines “The National Library collects portraits of Australians of national significance as well as portraits of individuals and groups who are not necessarily known but who are representative of different occupations or of various social, racial or cultural aspects of Australian life. Portraits are acquired to provide a documentary record of Australian life and achievement”. Even more revealing is one of the selection criteria that the library uses to determine whether a portrait is worth acquiring. The following is one of the selection criteria:

2.2.2 The documentary value of the portrait

Portraits acquired must provide an authentic record of the physical appearance of the subject. In addition, some suggestion of the field of achievement of the subject is looked for in background details, dress or any objects shown in the portrait.

The extent to which the portrait offers insights into the personality and character of the sitter, and the originality of the portrayal, are also considered important. For some individuals an original portrait as well as a photographic portrait may be acquired if it is considered that they provide differing insights. However, for an original portrait to be preferred to a photographic portrait when both are available, the original work should display this quality to a much greater degree (see 2.2.1).

In the case of original works, a portrait painted from life is preferred to one painted from a photograph, as being more likely to provide the added dimension of character insight. The relationship of the artist to the sitter may also be of relevance here.
From a really young age, we learn to read faces. They have a language and can articulate themselves with nuance in a way that nothing else in the world around us can quite reach. The way an artist paints a face is highly distinctive, and portraiture tells you far more about the artist than it does about the subject. Get to know the vernacular of one artist’s face compared to another, and you can use that knowledge to hunt down other examples.

Non-representational works of subjects are not collected as generally these do not convey documentary information about the subject’s appearance.

Cartoons that offer insights to personality and character will be considered for acquisition.

As far as I can see the value that can be placed on portraits because of their status as historical documents is the sort of future proof intrinsic value that will always remain with the portrait and cannot be disassociated from the portrait.  It is this sort of intrinsic value that makes the portrait a good candidate for use as currency – a concept that I will continue to explore.

To be continued……………….

**Nicholas Forrest is an art market analyst, art critic and journalist based in Sydney, Australia. He is the founder of http://www.artmarketblog.com, writes the art column for the magazine Antiques and Collectibles for Pleasure and Profit and contributes to many other publications

Portraits as Art Market Currency Pt. 2 – artmarketblog.com

Portraits as Art Market Currency Pt. 2 – artmarketblog.com

Welcome to part 2 of my series on the concept of portraits as an art market currency.  Before I continue, I would like to explain exactly what I mean by an art market currency for those that are perhaps slightly perplexed by the concept. Obviously, fine art is never going to replace paper money as the dominant form of currency.   My research focuses less on the actual use of currency as a medium of exchange, and more on the concept of currency as an indicator and a benchmark.  It is important to understand that my concept of an art market currency is merely a theoretical concept – the analysis of which I believe can provide valuable information and knowledge for investors and collectors.

In the currency world, the US dollar is used as a benchmark (world reserve currency) for all other currencies because of the political and military strength of the US, as well as the very strong gold reserves that the US held when the Bretton Woods system was introduced after World War II. Although the art market doesn’t have an official genre, period or style that acts as a benchmark for the rest of the market, the popularity and visibility of the contemporary art market means that it tends to be used as a de-facto barometer for the state of the art market.  Unfortunately, the contemporary sector of the art market would have to be the worst sector to use as an indicator for the health of the entire art market.  As we all know, the contemporary sector of the art market is a highly volatile and unstable market that is constantly at the mercy of cultural and social trends – and is often assigned a value that has very little to do with the actual art object.  So, if the contemporary art market is not a suitable indicator of the status of the art market, is there a category of art that is?  This is just one of the questions that I hope to answer with this series of posts.

Let me throw a scenario your way that will hopefully help make the reasoning behind the concept of portraits as an art market currency much clearer.  If I were to give someone who knew nothing about art 100 works of art consisting of: 20 cubist paintings, 20 conceptual  works, 20 figurative landscape paintings, 20 religious icons and 20 figurative portrait paintings – and asked that person to look at each category separately and rank the works in each category according to how much they thought each work was worth based purely on the physical characteristics of the art object (without knowing anything about who the artist is, when they were painted, who the portraits are of, the location of the landscapes etc.) – which category do you think they would find the easiest to rank?  I think that conceptual art would be the hardest, because with conceptual art the main component of the work is the concept, not the art object.   Because abstract art is so nonrepresentational, it is extremely difficult to assess unless the purpose or motivation of the artist is known, which rules out the cubist paintings as the easiest to rank.   Religious icons could be compared to portraits – however, the symbolic nature of religious icons means that their value is closely tied to the cultural, religious, social and art historical context in which they were created, which makes valuing such works difficult for experts, and virtually impossible for anyone who does not have a thorough knowledge of the genre.  Figurative landscape paintings would seem like a good candidate for the most easy to rank because of the representational nature of such works, the general familiarity people have with the way nature should be depicted, and also because the skill and talent of the artist are so easy to determine from the way the picture is presented.  What lets the figurative landscape paintings down is the lack of consistency in terms of setting, location, season, angle etc. which means making a comparison between two landscape paintings is likely to be very difficult.  Finally, we come to portraiture.  There are several factors that make the physical characteristics of portraits so easy to compare and rank, including:

– the consistency of the subject (human face)

– the universal nature of the face

– the common goal of figurative portrait painters (to accurately depict the human face)

– the ease with which virtually anyone can determine how skilled or talented the artist is at accurately depicting the human face

In my opinion the physical characteristics of figurative portraiture are the most comparable and easily ranked of all the genres and types of fine art.  I cannot think of another genre or type of fine art that has such consistent characteristics and is so universally decipherable.  The fact that the physical characteristics of figurative portraits are so comparable across the whole genre, and so easy to rank, means that they are also easier to value when compared to other genres.  It is the characteristics of figurative portraiture that I have discussed above which give figurative portraiture an edge over other genres when it comes to the concept of fine art as currency.

Stay tuned for part 3……….

**Nicholas Forrest is an art market analyst, art critic and journalist based in Sydney, Australia. He is the founder of http://www.artmarketblog.com, writes the art column for the magazine Antiques and Collectibles for Pleasure and Profit and contributes to many other publications

2010 Art Market Status Report – 2nd half – artmarketblog.com

2010 Art Market Status Report – 2nd half – artmarketblog.com

The art market has found its self in a rather interesting predicament.  On the one hand, confidence in the art market has increased considerably since the beginning of the year.  On the other hand, the ever increasing likelihood of a major financial crisis has seen more cautious and selective buying.  Adding to the drama is the increasingly obvious lack of top quality paintings by the Old Masters, which the market is currently showing a very healthy appetite for.

On the 13th of July an impression of Edvard Munch’s controversial work Madonna sold for an amazing £1,252,000 at Bonhams – twice its lower estimate of £500,000. This makes it the most expensive print ever sold in the UK and the second most expensive print in the world. At Bonham’s 19th Century Paintings sale held on the 22nd Apr 2010, ‘Female figure study’ , a drawing on paper by John Constable with a hidden history, sold for four times it pre-sale estimate to make £24,000. Also achieving success was an interesting  ‘Portrait of a Gentleman’ by George Dawe (British 1781-1829) which was the subject of fiercely competitive bidding and finally sold for £43,200 against a pre-sale estimate of £4,000-6,000.

At Christie’s Victorian & British Impressionist Pictures Including Drawings & Watercolours sale on the 16th of June,  Sir George Clausen’s ‘Head of a young girl (Rose Grimsdale)’ made £505,250 against an estimate of 250,000 – 350,000 setting a new world auction record for a work on paper by the artist. The same sale also saw a new record for Archibald Thorburn with yet another work on paper titled ‘Grouse in flight’ which made £217,250 against an estimate of 60,000 – 80,000

At Christie’s 23 June 2010 auction of Impressionist and Modern Art the top price was achieved by ‘Portrait of Angel Fernández de Soto’, 1903, a Blue Period masterpiece by Pablo Picasso (1881-1973), which sold for £34,761,250 against an estimate of 30,000,000 – 40,000,000.  Another portrait titled ‘Frauenbildnis (Portrait of Ria Munk III)’, one of the last great female portraits painted by Gustav Klimt (1862-1918), sold for £18,801,250 against an estimate of £14 million to £18 million.

Yet more portraits achieved high prices at Christie’s Old Masters & 19th Century Art sale held on the 9th of July at their South Kensington saleroom. Margaret Sarah Carpenter’s ‘Portrait of a young girl’, who is thought to be Henrietta Carpenter, reached £32,450 against an estimate of 7,000-10,000 and achieved a new world record price for the artist at auction. A work from the Studio of Sir Peter Lely titled ‘Portrait of King Charles II’ also fetched £32,450 against an estimate of 6,000-8,000.

Over at Sotheby’s the ‘An Exceptional Eye: A Private British Collection’ sale held on the 14th of July saw a watercolour over pencil by John Robert Cozens titled ‘The Lake of Albano and Castel Gandolfo’ reach £2,393,250 against an estimate of 500,000 ‐ 700,000 –  the top price of the sale and a new record for the artist at auction.  The portrait miniatures performed particularly well with the Sotheby’s press release stating that “a very high price achieved for an early work by John Smart (lot 17, £56,450), and a record for a work by Bernard Lens (lot 10, Portrait of King Charles I, sold for £58,850)”

At Sotheby’s Impressionist & Modern Art Evening Sale held on the 22nd of June, the top price paid was again for a portrait.  Edouard Manet’s ‘Portrait de Manet par lui-même, en buste (Manet à la palette)’ fetched £22,441,250 against an estimate of £20,000,000-30,000,000 –  a record for the artist at auction. The top-selling lot of the June Russian Paintings Day Sale was Boris Grigoriev’s oil on canvas Portrait of the artist’s son, Kirill, which sold for the sum of £253,250, above its high estimate of £200,000.  Another portrait, Alexander Evgenievich Yakovlev’s ‘Titi and Naranghe, Daughters of Chief Eki Bondo’, took top spot at the 7 June Important Russian Art Sale selling for £2,505,250 – more than triple the £700,000 – 900,000 estimate .  Sotheby’s sale of the long-lost art trove of Ambroise Vollard saw more records set for works on paper held in Paris on the 29th of June. According to the Sotheby’s press release from the sale: “Key works among the highlights of the group were an extremely fine impression of Picasso’s celebrated 1904 etching ‘Le Repas frugal’ (another portrait), which more than doubled its high estimate of €300,000 to bring €720,750 (£584,078), the highest price of the sale. A monotype by Edgar Degas, ‘La Fête de la patronne’, circa 1878-79 soared past pre-sale estimates (€200,000-300,000) to bring €516,750. Paul Gauguin’s ‘Trois Têtes Tahitiennes ‘sold for €312,750 (£253,445) well above the estimate of €100,000 to €150,000 and a record was set for a print by Pierre-Auguste Renoir when ‘Le Chapeau Epinglé, Deuxième Planche’ more than tripled its high estimate of €80,000 to bring €252,750 (£204,822). Man Ray’s ‘Autoportrait solarié’ fetched €168,750 ($206,138)”

On the 2nd of June at Sotheby’s in London, in the sale of 19th Century European Paintings, one of the finest figure paintings by Jean-Baptiste-Camille Corot ever to have appeared on the market was purchased by the Musée d’Art et d’Histoire in Geneva for £1,609,250, exceeding its pre-sale high estimate of £1.2 million.  According to Sotheby’s “‘Jeune femme à la fontaine’ enjoyed an exceptional early provenance before it was requisitioned during the Nazi period, and was recently restituted to the heirs of its erstwhile owners.”

The results that I have highlighted above give a good indication of the current market sentiment and the market trends that are likely to define the market for the near future.  To start with, the popularity of portraits is a major indication that buyers are seeking the safety of the academic and the scholarly.  With portraits in particular, the level of skill and talent of the artist is pretty much immediately obvious to even the most untrained eye. When it comes to fine art, and portraits in particular, I do not think that people use the term craftsmanship to describe the work carried out by some artists.  To accurately portray the physical attributes and the personality of the sitter is, in my opinion, a craft that requires skill, training and a healthy dose of talent.  When one adds the historical value and importance of portraiture, the appeal of a famous (or not so famous) face from history to an investor becomes even more apparent.

I have spoken about the concept of fine art as a form of currency in previous posts.  If ever there was a type of art that was more suited to being used as a form of currency, it would have to be portraiture.   The number of common features that most portraits share, combined with the ease with which one can judge and value a portrait based on intrinsic and extrinsic characteristics, makes the portrait a prime candidate for an art world currency.  As I have said before, scholarship is the key to successful art investment, and successful wealth preservation using art for that matter.  Portraits are usually afforded the honour of in depth scrutiny and attention by scholars and academics because of the information that portraits can provide about various branches of history.  For this reason, among others, portraits are given the sort of long term continued attention that constantly adds value.

The second trend that I have alluded to is a greater interest in works on paper – in particular original drawings and watercolours.  I personally of the opinion that the increased popularity of watercolour paintings, particularly those by British artists, is due to the greater interest in the art of the Victorian era which was the golden age of British watercolour painting. Although original works on paper, such as drawings and watercolours, are often looked upon as the less valuable mediums in the scheme of things, the tide can change very quickly as it has recently.  As well as the revival of interest in Victorian art, a shortage of major works by the Old Masters and the Impressionists has driven buyers to seek the qualities that they are looking for in other mediums and periods. An article titled ‘Young masters in an old game’ from The Guardian newspaper written by John Windsor in November 2009 sums up the situation surrounding works on paper perfectly with the following statement: “Taste is shifting from new, ill-conceived conceptual art of the Brit-pack variety – costing thousands but faltering at auction, towards old, traditional skill-based art……. but you do need to develop an eye for quality – the easy, confident line of a master draughtsman, the luminosity of a watercolourist’s washes.” It is a shame that the watercolour painting is considered the poorer cousin of the oil painting because there are so many amazing watercolours by some of the world’s greatest artists that do not receive the exposure that they deserve.

**Nicholas Forrest is an art market analyst, art critic and journalist based in Sydney, Australia. He is the founder of http://www.artmarketblog.com, writes the art column for the magazine Antiques and Collectibles for Pleasure and Profit and contributes to many other publications

Art Investment: The Cold Hard Truth pt. 1 – artmarketblog.com

Art Investment: The Cold Hard Truth pt. 1 – artmarketblog.com

I have read and heard so much incorrect information regarding art investment of late that I think it is about time that the cold hard truth about art investment is made available.  So, here it goes.

Should I invest in art?

The answer to this question depends on how much money you have to invest. Only a very small percentage of the works of art in existence will experience an increase in value that is rapid enough and sufficient enough to provide the investor with a worthwhile return on their investment. Those works of art that can provide a good return are inevitably going to cost significant sums of money due to the fact that the characteristics that make a work of art a good investment are really only found in highly valued works of art. There is really no inexpensive way of successfully investing in art. Another option is to invest in a fine art fund, which essentially allows investors to purchase a share in a managed portfolio of carefully selected works of art. Once again, however, the minimum investment for such funds is quite high at around the US$250,000 mark, which is more than the average person is likely to be able to afford. The other problem with fine art funds is that the investors do not get to experience any of the pleasures of owning the works of art which, quite frankly, is one of the very few benefits of art investment. It is fair to say that people who want to buy art generally want to see it and enjoy it. That is, unless one has enough money to be able to invest in a fine art fund and purchase art for their own pleasure. Investors in fine art funds should expect to get a 10-15% a year return on their investment according to Philip Hoffman, manager of an art fund called The Fine Art Fund. Proper art investment, ie. using fine art to generate a worthwhile return on your investment, is really only a pursuit for the wealthy as success really is relative to the amount of money one can invest. For those that do have the money, however, the returns can be quite high and the risk quite minimal.

Can I successfully invest in contemporary art?

Since contemporary art appears to be relatively cheap compared to the work of, say, the old masters, it is often presumed that buying contemporary art is an easy and Large profits can be made from investing in contemporary art, but investing in contemporary art is a very risky business. Successful investment in contemporary art usually requires a “flipping” approach that involves buying and selling works in relatively quick succession to take advantage of short term trends. This approach is very, very risky and requires that the investor have large sums of money to invest that he/she is willing and able to lose. Not only does one need lots of money and bravery to be a successful “flipper”, one also needs to have the right knowledge and contacts at hand, which very few people do. With the right advisor it is possible to profit from investing in contemporary art over the long term but the risks are still high. What it comes down to is that there are plenty of way better investment vehicles for those investors who are wanting high risk with the potential for high returns. In other words, contemporary art is not a good investment.

To be continued………..

**Nicholas Forrest is an art market analyst, art critic and journalist based in Sydney, Australia. He is the founder of http://www.artmarketblog.com, writes the art column for the magazine Antiques and Collectibles for Pleasure and Profit and contributes to many other publications

Going Crazy for Works on Paper – artmarketblog.com

Going Crazy for Works on Paper – artmarketblog.com

Pablo Picasso (1881-1973) Tête de femme signed and dated '30 Mars 43 Picasso' (lower right) gouache and wash on paper 25 7/8 x 19 7/8 in. (65.7 x 50.4 cm.) Executed on 30 March 1943

Pablo Picasso (1881-1973) Tête de femme signed and dated '30 Mars 43 Picasso' (lower right) gouache and wash on paper 25 7/8 x 19 7/8 in. (65.7 x 50.4 cm.) Executed on 30 March 1943

During the major art auctions that have taken place over the last few months in London and New York there has been a particularly noticeable demand for original works on paper. In particular, original works on paper by the most popular modern artists such as Picasso, Calder, Chagall etc. have been particularly popular with prices at auction routinely exceeding the top estimate thanks to highly competitive bidding. Because works on paper are usually the domain of the connoisseurs who have a stronger appreciation for the non-visual aspects, it is unusual for works on paper to be so strongly fought over. However, as the supply of works available for sale by the most famous modern artists continues to dry up, the demand for works by the big names has created a situation where even the works that are usually considered to be far less desirable are being snapped up with unprecedented urgency.

The most fought over pieces have been those with imagery similar to that which is typical of major works from the artists oeuvre, and that have the appearance of finished original works of art as opposed to studies or cartoons (even if they are). It is the larger scale coloured works that give the strongest impression of being original and finished works of art and, as such, are the most sought after. The price of works on paper, by the some of the most desirable big names such as Alexander Calder, have been creeping up in price for some time now as supply of works by such artists becomes inevitably smaller as time progresses. Even though owners of valuable works of art are sitting on their artistic assets while the art market finds its feet thus reducing the supply of works on the market, the level of demand for what is available is way above what most people expected. With demand out-stripping supply to the extent that we are currently seeing one can only conclude that there the market for art is still strong and there is plenty of money available to be spent.

To give you some idea of the sort of demand we are seeing for works on paper here are some recent auction results:

Sale Information:

Sale 2168
post-war and contemporary art morning sale
14 May 2009
New York, Rockefeller Plaza

Lot Description:

Alexander Calder (1898-1976)
Spirally Lady
signed and dated ‘Calder ’44’ (lower right)
ink and gouache on paper
30¾ x 22½ in. (78.1 x 57.1 cm.)
Painted in 1944.

Estimate: $30,000 – $40,000
Price Realised: $188,500 (including premium)

Sale Information:

Sale 7736
impressionist/modern works on paper
24 June 2009
London, King Street

Lot Description:

Pablo Picasso (1881-1973)
Tête de femme
signed and dated ’30 Mars 43 Picasso’ (lower right)
gouache and wash on paper
25 7/8 x 19 7/8 in. (65.7 x 50.4 cm.)
Executed on 30 March 1943

Estimate: £110,000 – £150,000
Price Realised: £313,250 (Including Premium)

Lot Description:

Ernst Ludwig Kirchner (1880-1938)
Mädchenakt am Ofen
signed ‘E L Kirchner 12’ (lower right); with the Nachlass stamp numbered ‘A Be/Bg 1’ (on the reverse)
watercolour and black chalk on paper
14 7/8 x 17¾ in. (37.8 x 45.2 cm.)
Executed in 1914

Price Realized: £181,250 (Including Premium)
Estimate: £40,000 – £60,000

**Nicholas Forrest is an art market analyst, art critic and journalist based in Sydney, Australia. He is the founder of http://www.artmarketblog.com, writes the art column for the magazine Antiques and Collectibles for Pleasure and Profit and contributes to many other publications.

Evaluating Art Auction Results Pt. 4 – artmarketblog.com

Evaluating Art Auction Results Pt. 4 – artmarketblog.com

auction12. Percentage of lots sold by value continued

In part three of this series I looked at the first of two different methods of calculating the percentage of lots sold by value. The first method that I looked at which is calculated by using the following formula:

(total sale value at hammer price)

divided by

(total sale estimate)

x100

is the less frequently used of the two methods and is not the method used by the top auction houses. The main problem with the above formula is that the sale estimate is being used as a representation of the value of the works of art being auctioned which we all know is problematic to say the least. Auction houses use estimates as a marketing tool with a low estimate often used to encourage bidding which would make the percentage of works sold by value calculated using the estimates highly inaccurate.

Other than the estimate for each work as calculated by the auction house there is really only one other indicator of the value of a work of art and that is the highest price someone is willing to pay for the work. When you think about it, using the highest price someone is willing to pay for a work of art as an indicator of value does make sense because, in reality, the true value of a work of art is really only what someone is willing to pay for it at the time it is sold. For this reason, all the major art auction houses use the highest price that someone is willing to pay for a work of art as being representative of the value of that work of art. But what about lots that don’t sell?. Well, the value that the auction house uses for unsold lots is the highest bid for those that do attract bids and the final (lowest) figure reached by the auctioneer for lots that are passed in without receiving any bids. The value that the auction houses use in place of the denominator (total sale estimate) in the formula referenced above is called the knockdown figure and includes:

1. the hammer price of works that are sold
2. the highest bid for works that receive bids but are passed in
3. the lowest figure reached by the auctioneer before passing in a work that did not receive any bids

The formula used by the major auction houses to calculate the percentage of works sold by value is:

(total sale value at hammer price)

divided by

(knockdown figure)

x100

As an example of the way the sold by value percentage is calculated I will use an auction of five works with the following results:

1. Sold for $100,000
2. Sold for $150,000
3. Passed in $100,000 with three bids
4. Passed in at $50,000 with no bids
5. Sold for $200,000

The total sale value at hammer price of the three works that sold is (numerator). The knockdown is the hammer price of the three works that sold plus the highest bid of lot 3 and the price that lot 4 was passed in which comes to a total of $600,000 (denominator). When you use these two figures in the formula you get $450,000 divided by $600,000 x100 which equals 75 – the percentage of lots sold by value. If every single lot in a sale were to sell then the percentage of lots sold by value would be 100%.

Although the auction houses choose to use this particular method of calculating the percentage of works sold by value there are just as many problems with this method as the first method I looked at.  More on this in my next post.

To be continued………..

**Nicholas Forrest is an art market analyst, art critic and journalist based in Sydney, Australia. He is the founder of http://www.artmarketblog.com, writes the art column for the magazine Antiques and Collectibles for Pleasure and Profit and contributes to many other publications.