Though Julian Schnabel will auction Picasso’s “Femme au Chapeau,” right, other collectors have used private transactions to sell artwork like Jeff Koons’s “Hanging Heart Violet,” left. More Artworks Sell in Private in Slowdown
During good times, an auction is the obvious choice for any collector wanting to sell a work of art. But as the recession takes its toll, many collectors have changed strategies and retreated to the more hidden, and potentially less lucrative, world of private sales.
For many sellers, the driving factor is fear. Fear that their friends will discover they need money. Fear that if a Picasso or Warhol, Monet or Modigliani does not sell at auction, it will be considered yesterday’s goods.
If they do not have to, fewer collectors are putting their holdings up for auction at Sotheby’s and Christie’s, where prices and profits have plummeted. But executives at both houses say business in their private-sale departments has more than doubled in recent months.
Even institutions like the Museum of Modern Art are avoiding auctions. This season it has decided to sell two early classic 1960s paintings by Wayne Thiebaud through Haunch of Venison, a gallery owned by Christie’s. In 2005, when the market was nearing its peak, it sold a variety of works at auction at Christie’s for strong prices.
“There’s an element of uncertainty with an auction that in this climate makes it more prudent to sell privately,” said Ann Temkin, chief curator in the department of painting and sculpture at MoMA. (The Thiebauds were donated to the Modern with the express purpose of selling them to raise cash for future acquisitions.)
“The game has definitely shifted,” said Christopher Eykyn, a former head of Impressionist and modern art at Christie’s who is now a dealer in New York. “A lot of clients don’t want to be seen selling, so the private route is suddenly more attractive.”
Just six months ago Sotheby’s Impressionist and modern art sale brought $223.8 million; its May 5 sale is expected to fetch only $81.5 million. Christie’s Impressionist and modern art auction in November totaled $146.7 million; its May 6 sale is estimated at only $94.9 million.
“Clients want it now,” said Marc Porter, president of Christie’s in America. “And that means cash in their pockets.” Why wait months for the regularly scheduled auctions when you can have instant money, even if it means forfeiting the possibility of sparking a bidding war at auction?
Another factor is that collectors, seeing prices fall, are for the most part hanging on to their art, waiting for the auction market to rebound.
So secret are private transactions that confidentiality agreements bind the dealers and auction-house executives. Still, the art world loves to talk, and in recent months among the expensive paintings that have quietly changed hands are a 1970s de Kooning abstract canvas sold for around $30 million; a Cy Twombly “Blackboard” painting for $12 million; one of Gerhard Richter’s “Color Charts” for $18 million; and Jeff Koons’s “Hanging Heart Violet” sculpture for $11 million.
There are exceptions, of course. Estates continue to go to auction because executors have a fiduciary responsibility and prices are rarely challenged after public sales.
For the auction houses, private sales are lucrative and inexpensive. Generally Sotheby’s and Christie’s charge 5 to 10 percent of the purchase price of an artwork, depending on its value and the agreement with the seller. (If a work goes to auction the houses charge sellers 25 percent of the first $50,000, 20 percent of the next $50,000 to $1 million and 12 percent of the rest.) Money earned from private transactions comes cheap, without expenses like advertising, insurance and shipping associated with auctions.
The dismal sales in New York in November, when night after night paintings by Monet and Matisse, Bacon and Warhol went unsold, meant big losses for Sotheby’s and Christie’s, which had a financial interest in most of this expensive art in the form of guarantees, undisclosed sums paid to sellers regardless of a sale’s outcome.
After the fall auctions, both houses immediately began changing the way they conduct business. In addition to announcing hundreds of layoffs, with perhaps more to come, they mostly halted the practice of guarantees and stopped giving consignors a cut in the fees they charge buyers. The days of publishing luscious catalogs have ended as well.
For their part, dealers say that their phones started ringing after Sept. 15, the day Lehman Brothers filed for bankruptcy. “It’s been pretty steady ever since,” said Steven P. Henry, director of the Paula Cooper Gallery in Chelsea. He said he had been getting inquiries about selling art from people who had investments with Bernard L. Madoff, or who had seen the value of their stock or real estate assets collapse.
Matthew Marks, another Chelsea dealer, has noticed that sellers “just aren’t into gambling anymore and auctions are no longer a sure thing.”
Gone are the new rich — the Russian oligarchs and oil-rich Middle Easterners, as well as the American hedge fund magnates — who in flush times were willing to pay any price. Gone too are the Europeans who were active when the weak dollar made their purchases seem cheap.
Today’s buyers tend to be older collectors who bowed out of the market when prices began escalating several years ago. These patrons have far more conservative tastes, preferring works by tried-and-true names like Alexander Calder or Robert Ryman rather than those by younger artists like Takashi Murakami or Damien Hirst who were snapped up by speculators and have now lost some 50 percent of their value.
What is selling, said Brett Gorvy, a co-head of Christie’s postwar and contemporary-art department, is “ the right artist and the right work.”
Tobias Meyer, head of Sotheby’s contemporary-art department worldwide, concurred: “If it’s blue chip, like a Richard Serra sculpture, then we have a list of people who want them.”
For the last six months, pricing has been tricky, a kind of tug of war between greedy sellers and bargain hunters. “Nobody knows where the market is right now,” Mr. Meyer said. “If it’s not something totally unique, the problem is figuring out what it’s worth when something comparable could come up at auction for 50 percent less.”
Indeed the sales next month include works that had been kicking around the private market at prices significantly higher than their estimates from the auction houses. Among them are a late Picasso canvas owned by Julian Schnabel at Christie’s, as well as a Giacometti cat sculpture owned by an undisclosed European collector and a Koons sculpture belonging to the hedge fund manager Daniel S. Loeb, both for sale at Sotheby’s.
Dealers say that despite the increase in private sales, deals do not happen as briskly as they did in the days when collectors were on waiting lists for hot artists. “Everything is a negotiation,” Mr. Marks said.
Still, Mr. Marks is grateful for business. “I’m not asking sellers any questions,” he said. “I’m just happy the phone is ringing.”
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