The economics of the art fair
Kenneth Baker | Sunday, August 17, 2008

Several art dealers have told me in recent years that they foresee a time when art fairs will make the retail gallery financially impractical.

This strikes me as a dire, even if implausible, forecast, considering the largely unacknowledged public service that commercial galleries customarily perform. People sometimes complain of their intimidating atmosphere, but the typical gallery stands open day after day, charging no admission to visitors who want to see artworks firsthand.

Nothing - except a dealer's pride and respect for clientele and artists - guarantees the quality of what the visitor may encounter there. But the disappearance of galleries as we know them would mean an irreplaceable loss.

Museums make plenty of art available to plenty of people, but they tend to foreclose most of the questions that lie open in galleries: questions of value and interpretation, all the questions about an artwork's staying power to which collectors sometimes learn answers the hard way, by putting money on them.

Art fairs have accelerated the art business, especially in contemporary art, sometimes to a frenzied pace, though a deteriorating economy has finally begun to exert a drag, even on the auction market.

Contemporary art fairs tend to jump up the competitiveness behind many affluent collectors' buying habits.

Art fairs have already proliferated to such an extent worldwide in recent years that they have begun to kill one another off.

The Miami/Basel fair in December spawned 20 concurrent satellite contemporary art fairs around Miami, involving more than 1,000 dealers all told.

For a case study of art fair economics from the dealer's point of view, I decided to look not at the contemporary market but at The European Fine Art Fair (known as TEFAF) in Maastricht, Netherlands, almost universally considered the finest event of its kind in the world.

TEFAF, an annual event, has had a growing contingent of modern and contemporary art dealers - including Anthony Meier of San Francisco - but it gives more space to old master paintings, prints and drawings, antiquities, furniture and decorative arts.

San Francisco's Montgomery Gallery, which specializes in Impressionist, Post-Impressionist and Barbizon School painting, has been involved in TEFAF, almost without hiatus, since 1988.

Comparing costs
Peter Fairbanks, Montgomery's founder and proprietor, has taken part in many art fairs. An invitation to participate in one in Palm Beach, Fla., three years ago set him to comparing rental costs for floor space at various fairs.

"The Paris Biennale is probably about $2,500 to $2,700 per square meter," Fairbanks said. "Grosvernor House (in London) is probably about $1,300 per square meter. Palm Beach at the time was asking about $900 per square meter. Maastricht then was asking about $425 per square meter. My argument to the Palm Beach people was, 'Why would I spend $900 to exhibit in Florida when I can show at Maastricht for $425, with 78,000 visitors - qualified visitors? You've got be qualified to find Maastricht," a small city at the southern tip of Holland.

People who attend art fairs as sightseers and potential buyers think mainly of the caliber of work likely to be on offer. But dealers, some anyway, also give thought to the caliber of clientele.

"What I find so satisfying about TEFAF is the level of questions you get there," Fairbanks said. "I could sit here for a year and not get as many informed questions about the work on hand as I get in an hour at the fair. ... Eighty percent of our business is done outside California anyway."

Fairbanks thinks continually about gallery inventory in terms of TEFAF.

"We're always thinking, 'Can we get it conserved in time?,' 'Can we get all the paperwork in place?' There are a lot of paintings we'll bring for the first time" each year.

Lucky exceptions
Montgomery generally takes the type of artwork it is known for, but lucky exceptions occur.

"The first year we went," Fairbanks said, "I had discovered this wonderful Dutch Mannerist painting. It was thought to be a fake Rubens but turned out to be a genuine Hendrick Goltzius. It went from being a fake Rubens at $25,000 to being a right Goltzius at $1.5 million. ... We once had an Anton Raphael Mengs, a view of the great castle at Bayreuth, which is not something we would normally handle. But put out there in that marketplace, it sold immediately to the German government, to go back to Bayreuth."

On the other hand, certain things have surprisingly failed to sell: a landscape by Symbolist artist Maurice Denis (1870-1943), taken to TEFAF for the third time in 2008, and an early landscape by Odilon Redon (1840-1916), unsigned but included in the artist's catalogue raisonne, reasonably priced at $85,000.

As for the cost of taking part in TEFAF, Fairbanks, who was on its board for a number of years, has always argued - successfully, so far - for keeping the fees low and the vetting standards high. That way dealers in prints and drawings can participate, alongside dealers handling multimillion-dollar Impressionist or old master paintings.

The resulting mix strikes even the noncollector. On one aisle at TEFAF, I saw an exquisite drawing of Nuremberg by the Master of the Berlin Sketchbook priced at about $40,000. In the same stand was a notably saccharine $12 million Monet - deaccessioned by New York's Metropolitan Museum - back to back with a superb Pissarro landscape at 2.5 million euros, about $4 million at the time.

This year, Montgomery's stand cost "about $30,000 to rent," Fairbanks said. "The build-out was another $5,000" - a bargain for TEFAF's level of presentation, which makes nearly every other fair look shabby. "Then shipping - we have these show containers that we send over, waterproof, lined and sealed and all that - it will probably cost about $8,000 round-trip for shipping. And insurance - we have built into our insurance policy that we do three or four fairs a year and ... I think it's for between $7 million and $10 million worth of art, which is not much when you look at the price of art these days."

Furnished with antiques
Montgomery furnishes its stand with antiques borrowed from a Dutch dealer, Pieter Hoogendijk, and sends business his way when it can. Fairbanks mentioned repeatedly the amount of business that goes on between dealers at TEFAF.

Montgomery also sends its own preparator from San Francisco to set up the stand, and the gallery absorbs about three weeks' expenses for meals and accommodations in Maastricht.

Montgomery took a year away from TEFAF in 2007 and, despite Fairbanks' long involvement with the fair, the gallery lost its formerly prominent position on the vast exhibition floor.

Fairbanks was stoic.

"At the Paris Biennale," he said, "we had that coveted corner position once or twice, and we would have as many as 900 to 1,200 people an hour passing through the stand. That's too many people. ... You can't concentrate on those who are really interested when you need to ... answer their questions."

On each of three visits to TEFAF, I've noticed that certain artists' works seem to reappear in stand after stand. One year it was Alexander Calder and Joseph Cornell. In 2008, it was Francis Picabia and Jean Dubuffet, Henri-Joseph Harpignies and Charles-François Daubigny.

Asked about this seeming fluctuation in supply, Fairbanks shrugged.
"When the prices jump up," he said, "then the pieces come out."
E-mail Kenneth Baker at kennethbaker@sfchronicle.com.
This article appeared on page N - 14 of the San Francisco Chronicle