sotheby’s auction, sales at art auctions, sales at christie’s art auction
Alexander Zemlianichenko/AP
Visitors stand at Pablo Picasso's "Femme au Chapeau Bleu Garni d'une Guirlande" at an exhibition in Moscow on Tuesday to promote the upcoming Sotheby's auctions in London and New York. (AP)

Economic Crisis Affects Art Market

November 18, 2008 12:57 PM
by Isabel Cowles
Sluggish sales at Sotheby’s contemporary art auction indicate that the financial crisis has finally hit the art market.

Inflated art market coming down to Earth

Apparently, even art is not above the economic crisis.

At a Nov. 11 contemporary art sale in London, auction powerhouse Sotheby’s lost $10.6 million from guarantees for its contemporary art auction. In a report filed with the U.S. Securities and Exchange Commission, Sotheby’s explained that the losses occurred because works of art either did not sell at all, or went for less than the minimum guaranteed cost, Bloomberg reports.

Last week’s auction results bring Sotheby’s guarantee-related losses to a total of $52.6 million in the last two months: on Nov. 7, the company reported $42 million in losses from guarantees at sales in Hong Kong, London and New York.

As of Oct. 31, Sotheby’s stock was down 83 percent from the same time the previous year; other major houses, such as Phillips de Pury and Christie’s, are not faring much better. At the recent Frieze Art Fair in London, Christie’s fared best, but still sold only 55 percent of its offerings.

But current sales may not be as low as they appear: many of the original estimates were set when the art market was vastly inflated. According to Reuters, many presale estimates were established months ago, following a 250 percent increase of contemporary art costs in the last two years.

“Clearly we’re seeing a settling back,” said senior international art specialist Anthony Grant.

Some art experts believe that the financial setbacks may improve the quality of art and refine its audience. Jerry Saltz, the art critic at New York magazine, argued that the inflated cost of art has resulted in “shallower” art, attracting people “pretending” to be interested.

“Recessions are hard on people, but they are not hard on art,” Saltz wrote after attending the Frieze in London. “The forties, seventies, and the nineties, when money was scarce, were great periods, when the art world retracted but it was also reborn. New generations took the stage; new communities spawned energy; things opened up; deadwood washed away.”

Related Topic: Sotheby’s Accused of Shady Dealings

Last month, CNet Networks, Inc. founder and art aficionado Halsey Minor sued Sotheby’s for deliberately inflating its prices by failing to fully disclose its ownership stake in some of the works sold at auction. According to a report by a Los Angeles Times blog, Minor’s attorney argued that by keeping bidders unaware that the painting he bought (“the Peaceable Kingdom”) was being used as security for another buyer’s debt, “Sotheby's avoided a fire-sale mentality that would have kept down the bidding, resulting in a less lucrative sale.”

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