Mixed results in New York

[26 May 2009]


At the end of the first quarter of 2009, the global art market price index showed a 10% contraction. But in New York City, host to some of the world’s most prestigious art sales, the crisis is being felt particularly hard: the same index shows a 35% local contraction since January 2008. The May sales in Manhattan were therefore awaited with a great deal of apprehension. Over roughly ten days, the top end of the market was seriously tested with the Impressionist and Modern Sales (5 May at Sotheby’s, 6 May at Christie’s) and then the Post-war and Contemporary Art sales (between 12 and 16 May).

In one week of New York sales, the three main auction houses sold 734 works of Contemporary Art generating a total sales revenue of $180m… i.e. $660m less than at the same May sales of 2008! At the time, the market was surfing on a mood of speculative euphoria. Today, in 2009, the deterioration of market conditions has inevitably produced some major counter-performances. For example, the number of sales above the $1m line in the Contemporary Art segment (40) was less than a third its previous year total of 132.

The end of a speculative era… exhausted demand leading to a restricted offer… substantially reduced estimates … the figures posted by the big three auctioneers (Sotheby’s, Christie’s and Phillips de Pury & Company) were but a pale shadow of their former glory. The contraction was particularly hard at Sotheby’s. The auctioneer had announced a 58% fall in its first quarter revenue compared with the year-earlier period, and was hoping to make up for lost ground with the New York sales. But the $81.5 expected from the Impressionist & Modern sale of 5 May shrank to a final figure of $52.9m, i.e. $155m less than the previous year. A week later, the total revenue from its Part I Contemporary Art sale was down 87.4% on the year-earlier figure.

Remember that in May 2008 Sotheby’s generated its best ever performance for a Contemporary Art sale with a record figure of $320.6m, substantially higher than the most optimistic forecasts. This year, Sotheby’s will have to be content with a meagre $40m… Of course, the comparison with last year is particularly brutal after the Russian billionaire, Roman Abramovic, bought a Francis BACONTriptych for $77m. That figure was very close to the total revenue generated this year by Christie’s Contemporary Art sale ($80.8m from 49 lots).
Sotheby’s managed to sell 39 of the 40 lots it presented on 12 May 2009, compared with 73 lots sold in 2008. The results were mixed for the key pieces in the sale: the large-scale canvas by Martin KIPPENBERGER sold within its estimate range at $3.6m; Jeff KOONS’ baroque Easter egg fetched $1.2m (but was estimated $4.7m) and Andy WARHOL’s monumental Camouflage fetched $1.45m vs. an estimate of $1.8m. Among the other million-dollar sales at Sotheby’s, a dark and dramatic Mark ROTHKO painting, Black, Red-Brown on Violet fetched $1.4m vs. an estimate of $1.5m-$2m. The next day, Christie’s bought in a more colourful work by the same artist that was over-estimated at $3m- $4m. The Americain Richard PRINCE and the British artist Cecily BROWN received better support: Can You Imagine by Richard Prince sold for $1.15m vs. and estimate of $600,000 – $800,000, and Girls Eating Birds by Charles Saatchi’s protégée Cecily Brown fetched $1m vs. a high estimate of $900,000 (Sotheby’s).
At the end of the day, Sotheby’s had generated 14 sales above the $1m line in the Contemporary Art field compared with Christie’s score of 26. The best results at Christie’s were $5.3m for Roy LICHTENSTEIN’s Frolic, $5.15m for Jean-Michel BASQUIAT’s Mater, $7m for David HOCKNEY’s Beverly Hills Housewife, $4.1m for Peter DOIG’s Night Fishing, and $5,8m for Richard DIEBENKORN’s Ocean Park No 117. Jeff Koons generated a surprisingly good result with his Jim Beam – J.B. Turner Engine which sold for twice its estimate at $2m.

At Phillips de Pury & Company the results were frankly disappointing: in May 2008, it sold 83 works of Contemporary art in its Part I sales with 13 above the $1m line. In 2009, the meagre total revenue figure of $6.4m represented only half the estimated total. None of the bids reached past the $1m line. Its best sale was $895,000 for Philip GUSTON’s Anxiety. The star lot of the sale, an untitled work by Robert GOBER, estimated at $2.5 – $3.5m, was bought in. None of the amateur collectors swallowed the estimate which was presumably based on the record of $3.5m that the same auctioneer generated in May 2008 for Gober’s hyper-realist sculpture – a human leg sticking out of a wall – (estimated $1.2 – $1.8m).

The results were also very mixed in the area of Contemporary Chinese art, few examples of which were present at the sales. The major names WANG Guangyi, FENG Zhengjie and ZHANG Xiaogang appear to have survived the price meltdown relatively well: on 14 May, Phillips sold a Wang Guangyi for $230,000 and a Feng Zhengjie for $105,000. Christie’s sold two paintings by Zhang Xiaogang (Untitled for $400,000 and The Sisters (The Grand Family no.7) for $600,000).
On the other hand, YUE Minjun did less well: more of his works were bought in between the autumn of 2008 and the May sales of 2009 (13 in total) than in 10 years of sales. Phillips added to this list of unsold works with Backyard Garden, a monumental canvas painted in 2005 that was expected to fetch between $500,000 and $600,000.

The auction houses are restructuring, reining in their costs and reducing their risk exposure, notably by considerably diminishing the number of works offered. The low bought-in rates recorded at this year’s New-York sales (20% on average) prove that the adopted strategies nevertheless provide a degree of resistance for the top end of the market. In just several months, New York art prices have fallen back to their 2005 levels. These price reductions constitute acquisition opportunities and are welcomed with optimism by market players (the AMCI index was above 30 at the beginning of May).