Thursday, 11 December 2014

The old master market

Picture: Christie's
The best old master sold this season was a sculpture, Adriaen de Vries A Bacchic Figure Supporting a Globe, a large bronze by an immensely important and rare seventeenth century sculptor. I saw it on view in London a few years ago, when it was withdrawn due to questions over the legality of its export. These have been resolved, and it sold last night for $27,884,000. I was impressed when I saw it; it's a really outstanding sculpture. And I'm delighted that it's been bought by the Rijksmuseum. It's a great acquisition for them; they currently have a major Vries on loan from Stockholm while the Nationalmuseum is renovated, but this is the first of their own. It's so pleasing when a great work of art finds the right home.

Art market reports tend to focus on the handful of most expensive lots that always make up the bulk of total sales by value. That creates a misleading impression, because small samples are inherently volatile. Sotheby's £30m top lot, Turner's Modern Rome, was more than half the total for their old master evening and day sales combined. Sotheby's has been well ahead in old master painting sales volume;Christie's total for evening and day sales was just under £20m. But that lead is precarious; if Christie's had got the Turner tables would have been decisively turned. I was amused to see Artnet report that Christie's' sale was deliberately small to avoid unsold lots, as if they'd turn away good consignments because they'd prefer a smaller sale. Can you imagine an estate agent turning down your house because their window display is full?
A four-wheeled wagon
Picture: Christie's
The highlight of the Christie's sales for me was the I. Q. van Regteren Altena Dutch and Flemish drawings, which predictably saw some very high prices. But they weren't for the predictable lots. Who'd have thought a study of a cart would sell for €76k? It was quite lovely and beautifully preserved, but I thought the estimate of €10k - €15k rather high. At the top of the market there are collectors willing to pay well above the odds for things they really want, but prices for early drawings were generally on the low side, and there were some real bargains among the low-priced lots that were offered without reserve.

Most of the Dutch pictures sold well, as expected, and the bizarrely fashionable Brueghels continue to sell for prices well beyond their merits. A rather indifferent Bosch follower picture that should have been in the day sale but for its subject matter sold predictably above estimate for an undeserved £170k. A disappointment but not a surprise. The large and well preserved van de Herp tavern scene that I liked didn't sell. You could have had it for about the price of that tiny Ostade sketch of a cart! I was also surprised that the Antwerp School landscape at Christie's made just £422k. It's a rare and beautiful museum-quality picture. I'm disappointed a museum didn't step in to buy it at that bargain price.

The art market has always been dominated by the highest price works, and it's a staple of market reporting to lament the weakness of the middle market. But today's middle market isn't only weak relative to the highest priced lots. Mid-rank old masters are exceptionally cheap compared to disposable income, or to house prices, or to school fees, or contemporary art. There are more rich people than ever before - legions of lawyers and bankers and consultants, IT professionals and entrepreneurs. And the internet means the market is now global. But despite a static pool of old master pictures available for sale, prices stagnate. One reason is taste, which has been widely noted and I'll address in a future blog post. Another reason is the structure of the market, and particularly the changing role of dealers.
Picture: Sotehby's
The changing nature of the market can be seen in the result for this picture, attributed by Sotheby's to an eighteenth century follower of Van Dyck and estimated at £8k - £12k. It is actually thought to be seventeenth century, and it sold for £332,500. That's a really odd price - too little for a Van Dyck, too much for an artist in his circle. I blame the internet. It's now easy to look up auction prices, which means dealers struggle to justify big mark-ups. Buyers will counter with an offer based on the auction price, which squeezes the dealers. Dealers need to be seen to be 'adding value', to be able to justify a mark-up above a commission-like percentage above the auction price. Discovering a 'sleeper' is one way of doing that, so misattributed pictures can actually sell for more than if they were correctly attributed. Obviously there's potential for some very cynical manipulation here, but it's tempered by the need for the auction houses to demonstrate their expertise and not be seen to get it wrong too often. The dealer's perspective on this was nicely explained by Bendor Grosvenor in his write up of the summer old master sales.

A major role of dealers in the market was always to provide liquidity. If there is no private buyer on the day of an auction, a dealer will step in and hold onto a picture until it can be sold. Obviously individual dealers gain competitive advantage and profit from knowing which pictures to buy, and at what price. But the unglamorous business of stockholding has always been the cornerstone of the economic function of the art trade. That is tougher and less profitable when buyers know what you paid. But private buyers aren't necessarily confident enough to compete head to head in the auction room. Dealers can give potential buyers time to think about a purchase, and information about what they're buying. Of course some dealers are hucksters and of course some dealers charge outrageous prices. But they still play an important and valuable role.
Picture: Sotheby's
Despite the extensive marketing and much-vaunted 'relationship management' of private collectors, dealers still underpin the market and there are still seriously undervalued pictures at auctions. I was amazed that this Jan van der Heyden sold under estimate for just £230,500. It's a really attractive picture, and I thought it under-estimated. But for whatever reason the buyers stayed away on the day. It really is worth much more than that; the buyer got a bargain. If it was bought by a dealer I'll be interested to see how it's priced, and whether they can justify a market price as opposed to a marked up price. 


  1. Michael,what exactly is the difference between market price and marked-up price? The more I read about those auctions the less I understand.....

    1. That was just a phrase I made up. I'm getting at the fact that potential buyers will look at how much they paid at auction, and be reluctant to pay much more. They'll expect to pay a mark up, but not a massively higher price. But in this case I think it went very cheaply, and it's actually worth much more - a multiple rather than just a percentage mark up. I liked the phrase - but sorry if the meaning was unclear!

    2. Not at all.I appreciate the patient explanation.I never take part in auctions and look with bewildered eye at the intricacies of pricing in it.What I am familiar with is the 50/50 split of profits between artist and gallery,now even at "non profit" establishments. Immoral rip-off....