WSJ Reviews the 2008 Art Market

Kelly Crowe of the Wall Street Journal has a very good 2008 review article on the art market. It has some very strong positives, as well as some rather bleak news as well. While some of the overall numbers are rather poor, please keep in mind, most of the financial "hits" and weakness came in the final quarter of the year. November is when some of the largest auctions are scheduled for modern and contemporary art, but there were also a few bright spots.

Crowe states Sotheby's said it auctioned about $4.82 billion of fine and decorative art last year, down nearly 11% from 2007. The 2008 total, aided by strong sales in the first half of the year, included $1.4 billion in contemporary art, up 4.5% from 2007; $1.1 billion in Impressionist and modern art, same as the year before; and $219 million in jewelry, down 25%.

Christie's International PLC said it auctioned more than $4 billion, down roughly 20% from 2007. Closely held Christie's said it would release full sales figures this month.

Several artworks nevertheless sold for runaway prices, thanks to their rarity, quality or the fact that they were offered in the spring, when the financial outlook was sunnier. In May, Sotheby's sold the top lot of the year, Francis Bacon's teal-green "Triptych, 1976," for $86.2 million.

Christie's, meanwhile, sold Mark Rothko's sunset-colored abstract, "No. 15," for $50.4 million in May as well as Lucian Freud's earthy nude portrait, "Benefits Supervisor Sleeping," for $33.6 million. That sale made him the priciest living artist.

Crowe conintues Sotheby's cut $7 million from its salary budget last month by laying off an undisclosed number of staff, primarily from its North American offices. It also ended a branded credit-card program with MasterCard, which was part of an effort to extend its brand into a range of financial services. Chief Executive Bill Ruprecht says he expects auction catalogs to be "much thinner" this year and for some contemporary artworks to ratchet back to 2005 prices.

Christie's will unveil a cost-cutting plan this month. Chief Executive Ed Dolman says it includes staff layoffs, lower price estimates and almost no guarantees, a financial mechanism by which the auction house promises to buy a work if it doesn't sell at auction. In November, Christie's and Sotheby's had an estimated $63 million of combined losses from guaranteed artworks that went unsold.

Crowe discuss how collectors now are more cautious, and with reduced demand and higher supply collectors now have more time when purchasing from art fairs and galleries. The intense pressure, similar to real estate of a few years ago with bidding above the asking price, now seems to have subsided. Collectors are also doing more due diligence before they make the final purchase decision.

Times in the fine and decorative art markets have changed, there is more caution in the markets, and more sensitivity and cost consciousness on the parts of both sellers and buyers.

The WSJ article is an excellent read for the appraiser. To read the full article, click HERE.