Bargain Warhols, Secrecy Bring Collectors to Private Art Sales By Katya Kazakina
July 27 (Bloomberg) -- Chelsea art dealer Leo Koenig used to negotiate private sales by bringing buyers and sellers together. Now, he has to buy the artwork to make a sale happen.
“The super-deals are there for a second,” said Koenig, who owns a gallery on West 23rd Street in Manhattan. “You need to have a check ready to take advantage of them.”
He recently pounced on a Gerhard Richter painting being sold by a collector at a 30 percent discount to last year’s prices and two early Warhols going for half of the market’s high.
Then he offered them to potential buyers for what he paid, showing his invoices, plus a 5 percent fee. While Koenig isn’t getting rich -- the Warhol and Richter prices were all in six figures -- the eight deals he closed in this fashion since March helped keep his gallery afloat.
Such sales are on the rise since the economic crisis chased speculators and other buyers out of the public art market and scared sellers with the risk of costly artworks flopping at auction.
Publicly traded Sotheby’s has lost about half its market value in the past year. Worldwide sales for Christie’s International declined 35 percent in the first half of 2009, the company said.
With prices in flux, many collectors prefer the discretion and flexibility of a private sale over the auction room’s risk and visibility.
‘Ouch’ Factor
“If it doesn’t sell, it’s not a public event,” said Michael Findlay, director at Acquavella Galleries Inc. in New York. “However, if your painting is on the cover of an auction catalog and it’s been marketed globally and then doesn’t sell -- ouch!”
In June, a $310 million private sale of paintings by Mark Rothko and other artworks owned by financier Ezra Merkin suggested that there’s still appetite and cash for great art. (Merkin steered $2.4 billion of client funds to New York-based Bernard L. Madoff Investment Securities LLC in exchange for $470 million in fees, according to an April complaint filed in New York state court by Attorney General Andrew Cuomo. Merkin is trying to get the complaint dismissed.)
Christie’s brokered “several $30 million” private transactions during the first half of 2009, said Chief Executive Officer Edward Dolman. Works by Warhol, Willem de Kooning, Donald Judd, Sigmar Polke, Picasso, Matisse, Richard Serra, Dan Flavin, Bruce Nauman, Jeff Wall, Gilbert and George, Alighiero Boetti and Vija Celmins have changed hands in recent months, according to dealers, art consultants and collectors.
Appealing Deals
Private sales compose the most opaque segment of the largely unregulated art market. The secrecy that makes these deals appealing to clients also precludes most participants from revealing any specifics about the transactions.
Such deals also allow collectors to have control over prices “at the time when price points are very difficult to determine,” Dolman said. “People are happy to negotiate and walk away from a transaction” if the agreement isn’t reached, he added.
Serious and seasoned collectors, who understand the advantages of buying in a depressed market, have filled the gap left by fleeing speculators.
“They want deals,” said Dorsey Waxter, director at Greenberg Van Doren gallery, which recently sold eight prints by Jasper Johns, with prices ranging from $12,000 to $350,000. “They typically have in mind a number they want to pay and are very committed to that number.”
“There are many sales taking place up to $1 million,” said Nicholas Maclean, a private art dealer in London and New York. “A $10 million deal is a very big trade today, and very few of those are taking place.”
Significant Works
Prices haven’t declined much where significant works of art are in play, and these are more likely to appear in a private sale now than at auction, said Donald B. Marron, who collects modern and contemporary art and is the chief executive officer of buyout firm Lightyear Capital LLC.
“Some great things are offered privately, but prices are quite high,” said contemporary-art collector Adam Lindemann. Sellers “are not willing to accept today’s prices, so fewer deals are getting done.”
Prices often are so disconnected from reality, “you are getting a feeling that people are on a fishing expedition,” said Todd Levin, director of New York-based advisers, Levin Art Group.
‘Late Picasso’
A realistic range for a sculpture by Japan’s Takashi Murakami is between $1 million and $5 million, down from the record $15.1 million his “My Lonesome Cowboy” fetched at Sotheby’s in New York in May 2008, Levin said. The range for a “nurse” painting by Richard Prince is between $2 million and $3.5 million, down from the record $8.5 million that one of them sold for at Sotheby’s in London in July 2008, he said.
Mid-quality works linger on the market unless they are discounted at least 30 percent and often more from the peak prices of last year. On the other hand, “a late Picasso is going to sell with very little change on the price,” Acquavella’s Findlay said.
Even in this economy, when a masterpiece appears, collectors have to step up and pay -- or risk losing it, dealers said.
“It doesn’t mean you are going to buy a great blue-period Picasso at a 50 percent discount,” said Findlay.
(Katya Kazakina writes for Bloomberg News. The opinions expressed are her own.)
To contact the reporter of this story: Katya Kazakina in New York at kkazakina@bloomberg.net.
Last Updated: July 27, 2009 00:01 EDT
