Alison McDonaldLast year we all faced unprecedented challenges. What effect did the pressures of 2020 have on the art market? Is it fair to say that in 2019 the market was robust and on an upward trajectory? Did that position of relative stability prove meaningful when faced with the economic struggles of 2020?
Laura PaulsonWell, it’s certainly true that the market was robust and on an upward trajectory in 2019, with an expanding group of both American and international collectors that created a stable base for the market when faced with the challenges that resulted from the global pandemic. However, while previous market downturns certainly impacted the financial stability and momentum of the overall art industry, museums and cultural institutions, galleries, auction houses, and art fairs continued to function. This also included the many layers of the art industry that support the presentation of art in these various venues: art transport and packing companies, art handlers and preparators, photographers, graphic designers, registrars, framers, security people, curators, researchers, event planners, and caterers, to name a few. While there were cost-cutting measures in the previous market downturns, the doors remained open and the revenue stream continued. The COVID-19 crisis has been quite different. Not only did the onset of COVID require closing and postponing every aspect of the art industry on an epic scale, it also required an investment in safety protocols and procedures in order for galleries and museums to open to the public. The economic impact on these institutions has been devastating and revealed the fragility of the art-world ecosystem, which depends on so many essential workers to allow the engine of the industry to function.
AMThis crisis is unique in a lot of ways, but during your career you have navigated the art-market downturn of the 1990s and the financial crisis of 2008. How was each of those moments different from our current situation? Did the market bounce back differently on those occasions?
LPWell, in the fall of 1991 it felt like the art world had come to a complete stop. During the late 1980s until approximately 1990, the art market had become very speculative. A generation of artists emerging from the 1980s had become well-known and were actively and competitively collected and “flipped,” for decent profits at the time. In addition, international collectors were witnessing the potential of the overall return on nineteenth- and twentieth-century art and began borrowing money using their art as collateral. That reached a peak in 1990, and then, suddenly, the market stopped, and like musical chairs, those who had expected consistent returns were left with their art and their debt. It created a vacuum and a depression in the market for nearly four years.
During the late 1980s, Charles Saatchi emerged as one of the most formidable and ambitious collectors, often demanding to acquire the majority of an artist’s exhibition because he was planning to build an extraordinary museum in London. In anticipation of this project he published a series of catalogues, Art of Our Time, to showcase the depth and breadth of the art he intended to include in his museum. Saatchi was affected by the market downturn and in 1991 he sold a substantial part of his collection over a few seasons at Sotheby’s. Extraordinary works were offered, and the sales were controversial because the works were initially purchased with the intention of being included in his museum. However, the sales also presented collectors not necessarily affected by the market downturn with opportunities to buy both historical masterpieces and contemporary works that would otherwise have been unavailable. At this time several, primarily American, collectors intelligently acquired works from the Saatchi Collection that ultimately became the core of their personal collections going forward. They were a minority, however; very few people were collecting at this level. It was a long and bleak period between 1991 and 1994; it felt like an eternity and it was a very difficult time for galleries and artists. The late and highly esteemed New York gallerist Pat Hearn coined a mantra for the time: “Stay alive until ’95.”
A sign of recovery revealed itself in 1994 with the sale of Shot Red Marilyn [1964]. It was an interesting story: in May of 1989, the highly acclaimed Los Angeles collector Max Palevsky, an early computer-chip pioneer, sold this iconic work for $4.07 million at Christie’s. It was acquired by a famous Japanese collector named Wanibuchi, also known as the Ginza Tailor. Five years later, in November of 1994, Wanibuchi was in financial distress and sold Shot Red Marilyn at Christie’s. The estimate was $2.5 million to $3 million and it sold for $3.6 million, which was seen as a watershed moment for the market’s recovery. There was great competition for the work, and it was widely heralded in the press as a sign that the art market was on a rebound. The next point of recovery was in 1997, with the sale of the collection of Victor and Sally Ganz, highly focused and knowledgeable collectors who had extraordinary relationships with the artists they collected, including Pablo Picasso, Jasper Johns, Robert Rauschenberg, Eva Hesse, Frank Stella, and Mel Bochner. The collection included Picasso’s Le Rêve [1932], which sold for $48 million and was the highest-priced work in the collection. The sale totaled $206.5 million. It was an exciting moment in the market and one began to feel the arrival of new collectors and of a competitive quest for masterpieces. The following May, the Stroher family, of Wella hair-care fame, sold their Orange Marilyn [1964], which came from the same series as the Shot Red Marilyn that had sold four years prior. Orange Marilyn sold for $17 million from an estimate of $4 million to $6 million. The Orange Marilyn sold for more than four times what the Shot Red Marilyn had sold for in 1994—that shocked the market. It was an interesting indication of the trajectory of masterpiece buying that would come to define the future art market. The shift was driven by wealthy Americans and Europeans who had been on the edge of collecting and began to see the opportunities for acquisitions that they previously could never have acquired.
In 2008, the downturn was actually short-lived. By then we had seen new wealth arrive into the art world from so-called emerging markets, which introduced a new class of international art collectors to the primary and secondary markets. They were competitive buyers and highly focused on blue-chip twentieth-century artists with name and market recognition. There were some very strong sales in 2007, and the market felt effortlessly robust, not unlike the financial markets at that time. There was a feeling, not unlike in the late 1980s, that this market activity would go on forever, with the auctions in particular. But the quality began to slip while the prices remained high, and one could see there was going to be an impasse in the market, which coincided, when it came, with the crash of the financial markets in the fall of 2008. Consequently, the November 2008 sales were very difficult for the auction houses, as I experienced personally.
Three months later, though, in February 2009, I was at Christie’s and we had the extraordinary sale of the collection of Yves Saint Laurent, which was an unparalleled success. There were masterpieces, both works of art and decorative objects, at every price point, and the sale generated extraordinary participation from an international collecting community of people who understood the unique opportunity to acquire rare and important works from an esteemed provenance that would otherwise have been unavailable.
In January 2009, Betty Freeman, an esteemed collector and a supporter of contemporary music, passed away. Her collection was anchored by the iconic Beverly Hills Housewife, a portrait of Betty painted by her dear friend David Hockney in 1966–67. The collection also included works by Dan Flavin, Donald Judd, Roy Lichtenstein, Ken Price, Sam Francis, Alexander Calder, and others. I had the privilege of handling the sale, which was exciting because the market had not been tested since the crash of 2008 for a collection of this diversity and caliber: a rich representation of postwar American art. The sale did brilliantly well, the market breathed a sigh of relief, and it was a further testament to the fact that when great quality comes forward, collectors will compete. It was a remarkable rebound from November 2008.
AMIt’s interesting to me that you mentioned the Saatchi sale and then the Yves Saint Laurent and Betty Freeman sales as events that helped stabilize the art market after those moments of crisis. It seems that when exemplary works became available, it may not have been exactly the right time, but it actually helped secure the future by bringing people out. Is that fair to say?
LPOh, absolutely. In the early 1990s, not that many people were in a position to spend large amounts of money on art. But Charles Saatchi had carefully assembled a phenomenal collection, and the sales, both at auction and privately, were an opportunity for many collectors to acquire definitive works by important international artists. Many of these collectors had had to wait in line behind Saatchi when he was at his buying peak, and these sales provided access to these great works.
Yves Saint Laurent and Betty Freeman were estate sales, and while there had been discussions about timing, estates don’t usually have the ability to wait, due to estate-tax concerns. In the end, these two sales, at a fragile time in the global economy, were both extraordinarily successful, which was a testament to the depth of the market: each sale represented a broad range of tastes in art and decorative art, and, most important, a spectrum of values with impeccable provenance.
AMWhat are the market trends you find significant right now? Is it a moment to offer only works of the highest quality for sale? Is it a moment to buy strategically? What opportunities have been presented and what hazards should collectors avoid?
LPDuring this moment we have continued to manage consignments for clients, considering the most appropriate sale venue, auction or private sale. We had time-sensitive consignments that were slated for the May sales, and when the May sales were canceled, we had to think carefully about what to recommend to our clients. Ultimately we decided to proceed with the scheduled auctions in their new configurations, which were very creative in deference to the new COVID protocols. We presented works at all price points across many different categories, from decorative arts, tribal arts, and Impressionism to modern and contemporary art. Most of these works came from collections that had been in place for a long time and were fresh to the market. We were very pleased with the sale results, especially in a time of such uncertainty.
There are opportunities in this moment, as there is a level of distraction due to COVID and economic and political issues that can result in opportunities to acquire with less competition than in more ordinary times. In addition, the shift to online auctions, viewing rooms, and art fairs has produced an enormous amount of information and art to absorb on these digital platforms, so much that it can actually be overwhelming: it’s a moment to buy strategically and thoughtfully and to continue to focus on quality. Another positive aspect to the digital platforms is that they offer a nonhierarchal experience; everyone has the opportunity to see what a gallery has available without having to travel, or to contend with the feeling of intimidation that big galleries can have for new collectors. I personally believe nothing replaces the experience of seeing art in person, but this moment has opened doors for a lot of people who earlier might not have considered collecting art or having art in their lives.
AMYou mentioned that it’s a good moment to buy something at a level of quality, even if it’s at a low price point. How do new collectors know when they’re buying the “best” example of an artist’s work at that level? Are there general guiding principles that you could share with people who are new to collecting—things they should know about or be thinking about when making an acquisition?
LPCollecting art is a very personal experience. I really enjoy watching collectors develop a passion for an artist, a particular genre of work, or a particular medium with confidence in their pursuit and patience to acquire works of quality regardless of value. Of course, when making an acquisition, it is important to confirm condition and provenance as well as its value in the context of the overall market.
AMWhen you’re advising someone, what type of research do you bring to them?
LPCollectors definitely want to feel confidence in the price of a work, so we always review exhibition catalogues and provide information from both the primary and the secondary market to help them understand value. We also provide context for each artist, so that our clients can understand the place of the work in the artist’s career.
AMIn 2019 you launched a new business, Gagosian Art Advisory. It must have been a complicated moment to start a new project. How has this moment shifted the course of your own business development?
LPWell, like everyone else, we’re working remotely now, which is challenging. For me, nothing replaces sitting with colleagues and sharing ideas. Much of our work—appraisals, pricing artworks, proposals—is project oriented, and we rely heavily on our library for research. We usually have the firsthand experience of seeing art in clients’ homes or in storage; we can manage that over Zoom, but it doesn’t replace the experience of seeing the art in person. We have been fortunate to be able to maintain a steady stream of business, especially appraisals and advisory, despite the pandemic. Appraisals are always in demand, particularly as collectors use this moment to reevaluate their art collections, whether for insurance, financial and estate planning, or possible sale. As I mentioned, we have utilized technology to facilitate this work with great results.
AMYou recently had your team certified as appraisers by the Appraisers Association of America. Why is that official training an important step to take?
LPThe Uniform Standards of Professional Appraisal Practice [USPAP] is generally recognized as the performance standards for appraisals, and it’s been cited by Congress as such—and is required by the IRS panel committee, insurance companies, and banks. We have deep knowledge and experience in providing appraisals, so the USPAP certification confirms our professional expertise that is recognized universally in the art market.
AMIn regards to the IRS component, does your certification offer some benefit or insight? Is any tax knowledge gained?
LPThere’s an IRS art panel that reviews all estate-tax appraisals, charitable-donation appraisals, and gift-tax appraisals, and they bring a level of expertise to judge your justifications of value. They review and decide whether your arguments are valid or if you’ve valued a work too low or too high. Therefore, being USPAP compliant is critical. We cannot submit our appraisal without the certification.
AMIn terms of entire collections, not just individual buying but building or selling a collection at this moment, how is that different from before the pandemic?
LPWell, it really depends on the situation. With estates, selling a collection is often a tax-driven decision. Estates tend to be sold publicly for reasons of transparency and timing and to allow for global exposure to the widest possible audience, providing heirs and decision makers with the assurance that every possible opportunity has been utilized to generate the highest prices.
When we handle collections, we consider the best process for the sale as it pertains to the needs of our clients. This includes the state of the market, the artists in the collection, and the needs of the family, collector, or estate. Sometimes there’s a preference for discretion and we recommend private sale. Gagosian Art Advisory represents estates and private collections and requests competitive proposals on behalf of our clients for optimum marketing, promotion, and financial terms and selects the proposal that best meets our clients’ needs.
AMWhat role do art fairs play in the current market landscape?
LPArt fairs can be a great venue for new discoveries and can give collectors the chance to be introduced to a global network of art galleries and to establish enduring relationships. In general the art fairs focus on the primary artist market, but recently, with the addition of Frieze Masters and TEFAF, there is also an opportunity to experience a range of collecting opportunities, from antiquities to contemporary art.
AMWhat online sales campaigns or auction setups most surprised you last year? Do you feel that any of these initiatives will qualitatively affect the reach of the art market or the way we do business in the next five years? Are there new expectations from clients that we’ll need to build on going forward, or will this pressure recede as we return to some sense of normalcy with our physical events in the future?
LPOverall, the online sales campaigns and auction setups have been really well done, as an attempt to maintain a level of normalcy. The shifting of the auction calendar and the frequency of auctions, however, have been challenging for many collectors, leading to feelings of saturation and dislocation. Great and innovative ideas have also been presented to continue creating revenue through online exhibitions, viewing rooms, and art fairs. Despite the innovation, collectors are looking forward to returning to a traditional calendar of gallery and museum exhibitions, biennials, art fairs, and auctions, which always generate excitement in anticipation of the cultural seasons in the fall, winter, spring, and early summer. I think this sentiment applies across everything we’re feeling in our lives at this time. Our cultural experiences have become very isolated, if not nonexistent. All cultural institutions have made Herculean gestures to continuing their programming online and in person if possible, which has been inspirational.
AMDo you think the election of Joe Biden as US president will have a positive impact on the art market?
LPYes, I think Joe Biden and Kamala Harris will have a positive impact on nearly every aspect of our lives because they are leaders who will create stability. Their commitment to conquering the pandemic with leadership, a strategy, and a plan will help our economy recover and hopefully allow the delicate art ecosystem of museums, galleries, and cultural institutions to open their doors again soon. The inaugural events were inspirational and revealed a new administration committed to the arts and diverse voices from the past and present. First Lady Jill Biden chose the luminous and symbolic Landscape with Rainbow from 1859 by Robert S. Duncanson, an internationally renowned Black landscape artist from the Civil War era, as the inaugural painting. The First Lady also chose Amanda Gorman as the National Youth Poet Laureate to read her powerful and poignant work “The Hill We Climb” for the Inauguration. These are hopeful examples of cultural leadership and a sign this new administration recognizes the importance of the arts in our lives as an opportunity for personal discovery and enlightenment for everyone.
