Cruise Ship Auctions

Bloomberg reports on cruise ship auctions.

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Among the passengers gathered for the art auction, the guy sitting in front of me seemed the most likely to have attended just for the free booze. The advertisements left in our staterooms had promised Champagne, and amid the smart polo shirts and sundresses, this middle-aged man stood out as exceptionally casual: a white tank top with a faded “Virginia Beach” graphic, black athletic shorts, and a blue baseball cap pulled down close to his eyeglasses. It was 11:15 a.m., and our cruise ship, the Norwegian Epic, was transiting the strait between Sardinia and Corsica, taking almost 6,000 passengers and crew on an eastward course to mainland Italy. As the auction staff ushered in potential bidders, a waiter approached with a silver tray of bubbly. The man in the tank top scooped up a flute. “Breakfast!” he said.

Before bidding could start, the auctioneer instructed us to explore scores of artworks set up on easels around the room—impressionistic seasides, twee cottages by Thomas Kinkade, the Statue of Liberty as rendered by Peter Max, and a surreal composition featuring an anthropomorphic cocktail olive.

My Champagne-sampling neighbor’s name was Chuck Bialon, from Pittsburgh. He said he’d been to dozens of these auctions over the years and whispered a warning: “It’s a shell game.” Gallery staff milled about within earshot, offering potential collectors special prebid prices at what they said were steep discounts. Bialon, his voice lowered, outlined the hidden danger. The spotty onboard Wi-Fi made it next to impossible to Google around for fair-market prices, he said—and also made it unlikely passengers would learn that the company running the auction, Park West Gallery, has long been accused by angry customers of selling overpriced art as investments.

Still, Bialon added, there was that time he’d bought a Rembrandt. Paid almost $12,000 for it on a Carnival cruise of the western Caribbean. Hangs on his dining room wall. I wanted to ask more, but the head auctioneer had seen me taking notes. For the moment, I needed to move along and mingle with others. The whiff of scandal surrounding high-seas art auctions was the reason I was on the Epic.

Park West was founded in 1969, is based outside Detroit, and boasts it’s the world’s biggest art gallery. It sells pictures and sculptures at thousands of live auctions held on more than 100 ships each year. Norwegian, Royal Caribbean, and Carnival all host Park West. And they all get a cut of the revenue. Park West has had annual sales as high as $400 million and counted more than 2 million customers.

With those big numbers come bitter complaints. Starting in 2008, a series of lawsuits have alleged abusive sales practices, including forged Salvador Dalí signatures and promises of investment gains. At least 21 Park West customers filed 11 legal claims across the U.S., according to a 2012 court filing the gallery made in a separate insurance dispute. Six of those class-action customer lawsuits were merged into a single, multidistrict litigation at Seattle’s U.S. District Court, according to a signed 2013 declaration Park West’s founder made in the insurance case. The core claim was that Park West sold art at inflated prices by using high-pressure tricks, appraisals based on no valid methodology, and false claims of authenticity. Price lists in the court record show passengers spent tens of thousands of dollars on works that weren’t one-of-a-kind originals. “The scheme targeted individuals who, while unawares relaxing on their vacations, are wined and dined by Park West and Cruise Line employees and are subjected to Defendants’ art fraud scheme,” a 2010 plaintiffs’ filing in the lawsuit said. Park West called the suit baseless but in 2011 agreed to a settlement that it says included partial refunds and the return of some art. The auction house says it’s changed some of its practices, including offering returns within 40 days and exchanges within 40 months.

Norwegian and the rest of the cruise lines have continued to give Park West access to their captive audience of bored, boozed-up, and broadband-deprived passengers. Fresh lawsuits against the gallery have followed. In one instance, Rane Mazzeo, a brow-and-body waxer from Las Vegas, thought she’d conquered the art market when she stepped off a Norwegian ship on a spring day in 2011. She’d spent $29,809 with Park West while at sea; the auction house had given her appraisals that claimed the works were worth much more. Three years later, Mazzeo got an independent appraisal that put the actual market value at a third of what she’d paid. Mazzeo, 55, sued Park West in September 2015 for fraudulent misrepresentation. The company disputed the claims and was awarded legal fees after winning a motion to compel arbitration. The lawsuit was dismissed, and the parties settled their dispute. (Mazzeo declined to comment.) Norwegian, Royal Caribbean, and Carnival say they’ve required more consumer protections from Park West.

Despite the litigation, Park West says art sales have never been better. The gallery’s perseverance was either an amazing corporate rebound or evidence they’d never done wrong. To find out, I booked a windowless cabin on the Epic for a counterclockwise voyage around the Mediterranean, from Italy to France to Spain and back again. Yes, I would be drawing a salary while on a weeklong cruise. But there were certain risks: In 2009, the captain of a Royal Caribbean ship had ordered his security force to put a New York teacher ashore—in Oslo, in the middle of his cruise—after he printed a leaflet warning fellow passengers about the Park West lawsuits. “One minute I was playing table tennis with my son, the next I was being escorted away,” he told the Independent newspaper. Royal Caribbean said at the time it removed the passenger because he continued to be difficult after being warned he was violating the guest conduct policy. To avoid such a fate, I wouldn’t advertise my mission. But neither would I conceal it, if asked.

The Epic, like most modern cruise ships, is a shopping mall embedded in a floating hotel. At the top is Deck 15, with swimming pools, three water slides, and the main buffet restaurant. Decks 5 through 7, linked by escalators and staircases, contain restaurants, casinos, an atrium lobby, a pub with a bowling alley, theaters, boutiques, and a Cavern Club that’s home to an excellent Beatles cover band. Park West had its gallery in the forward section of Deck 5, a wood-paneled space about the size of a tennis court, rigged with spotlights that shone on a set of pictures that changed daily. Positioned next to two banks of elevators, the space drew a constant flow of cruisers. The auctions themselves were conducted in various venues around the ship.

One day at sea, just before I came aboard, Scott Bisset walked into a midday auction in the Epic’s Bliss Ultra Lounge, a disco and cocktail bar with chain-mail curtains for walls and a small karaoke stage at the back. Bisset and his wife, Sharyn Miller, later told me that his outfit—board shorts and a yellow tank top—was part of a savvy strategy. “You don’t want them to think you have money,” Miller said. “Prices can go up.” They are an international couple: Although they live in Dubai, he’s from the U.K., where they own a house, and she spends time tending cattle at her family home in New Zealand. With Park West, Bisset and Miller said they knew what they were doing. They’d bought at an auction on a previous cruise and were happy return customers.

After registering for a bid card that would be their auction paddle, Bisset, 48, and Miller, 51, walked the perimeter of the disco, examining the 300 pictures on display. They spotted four they liked, including a “limited edition” Kinkade lighthouse and a landscape of a bridge in France by the Chinese-born, North Carolina-based Daniel Wall. According to Park West’s website, Wall is the founder of a movement called “intense impressionism.” Before the auction started, Park West offered to combine the four works into a single lot and negotiated with Bisset and Miller a starting bid of $5,100. The figure was a steep discount from the gallery’s suggested retail price.

Everyone took seats so that bidding could begin. At a podium on the disco’s stage, the chief auctioneer, Dillon Cilliers, read highlights from the terms and conditions printed on each bid card, emphasizing Item 1, which said “all sales are final” in bold, capital letters.

The bidding was fast-paced, with Cilliers, a South African in a snappy suit, speaking in auctioneer patter and banging a wooden gavel on the side of his podium. Bisset and Miller’s lot came up. To “win,” they would only need for there to be no competing bids—and there weren’t. Sold, for $5,100! “It isn’t an auction as such, is it?” Miller said afterward. Nevertheless, she added, “I think we saved three grand.” Bisset and Miller also bought another Wall, of New York’s Central Park ($570), and a second Kinkade lighthouse ($1,150).

It was on canvas, but was it a painting? It was difficult to say. Up close, you could see daubs and brushstrokes that gave the picture three-dimensional texture in a few places. “I think they call them a serigraph,” Miller said. “He highlights and paints different parts of it.”

Those Kinkades Miller bid on? She won’t be getting the exact ones
Mostly, Park West doesn’t sell works that are unique in the sense that most casual collectors might understand. With a few high-end exceptions, it sells what are, essentially, reproductions with individual embellishments, such as a signature. The official terms include giclée, a type of inkjet print; serigraph, or silk-screen; and “mixed media,” which, in most of the Peter Max works, are paper lithographs with dabs of paint added. It took days of me hanging around the gallery and attending auctions to understand this—and I’ve covered art sales for years as a journalist, with the benefit of a Ph.D. in archaeology. Seeing actual brushstrokes threw me off. I finally saw in the Park West catalog, a copy of which is placed in every Epic stateroom, that the “intense impressionist” pictures were actually “hand embellished giclée on canvas.”

In fact, according to the company, most of Park West’s art is mass-produced to some degree. Those Kinkades Miller bid on? She won’t be getting the exact ones. Instead, she’ll get others from the same series, sent from Park West’s Florida framing and shipping facility. That way, the shipboard floor samples can stay where they are. It’s spelled out in the terms and conditions, Item 16: If you buy an embellished or mixed media work, “you likely will instead receive a unique work that is a variation of the example displayed.” Bisset, who works as the finance director of a company in Dubai, had read the fine print. “I know these pictures are not originals,” he said. “I know they are limited-edition copies. I’ve either got to want them or not.”

In all, Bisset and Miller spent $7,079 that afternoon. By evening, the rush had worn off. Reality hit as the couple sat on their stateroom’s balcony taking in the sea air, Miller sipping a Jack Daniel’s and lemonade while her husband drank Grolsch. “We suddenly thought, How much have we spent?” Miller said. “We need to start buying originals if we’re going to be spending that kind of money. Something where there’s not another copy of it.”

We were anchored off Cannes when the good stuff went up on the walls of Deck 5. There was a signed, numbered Joan Miró lithograph of colored squiggles, a Henri Matisse print, and a few black-and-white Marc Chagall etchings. The biggest display was a set of six Salvador Dalí prints I immediately recognized—and couldn’t believe were being sold. In the 1940s, Dalí had collaborated with Walt Disney on a short film, Destino, for which the surrealist master drew some storyboards. The project wasn’t completed during either of their lifetimes but was later revived by Disney’s nephew Roy, whose animators turned out a seven-minute film in 2003. For the release, Disney created a set of numbered prints based on frames of the film. By 2008, Park West was offering a set of six Destino prints for $11,000, discounted from what it said was an appraisal value of $22,000.

Years later, those valuations didn’t hold up. A quick Google check (we were in port, and I had phone reception) showed recent auction estimates of $200 to $300 per Destino print. On Craigslist, someone with a set that had passed through Park West was trying to offload five for $4,000, including the company’s frames and certificates of authenticity. The Destinos also showed up in the class-action litigation against Park West; the plaintiffs cited a Dalí expert who valued the prints at $100 each.

On the Epic, I was eager to learn how much Park West was asking and returned that evening for a VIP reception. Park West galleristas and their guests were decked out in cocktail dresses, jackets, and ties. A table was laid out with crackers, cubed cheese, and more Champagne. Several times I heard a staff member say “I love your dress” to a potential collector.

Bisset and Miller were there, invited because they’d been big spenders. As Miller checked out the newly hung pictures, her husband was at Cilliers’s desk in the back, watching a video on a laptop. It was a promo for artist Chris DeRubeis, with narration that described him as the pioneer of “abstract sensualism.” A little later, Bisset examined some serigraphs by Anatole Krasnyansky, pointing out the recurring Venetian carnival motif in each. Cilliers complimented his customer’s eye. “That’s what makes him him,” the auctioneer said.

I asked a staffer for prices on the Miró, which I really liked, and the Dalí Destino set. She checked a price list in a binder. The Miró was $14,000, and the Dalí Destino set could be mine for $14,900.

The irony of spending day after day examining hand-embellished giclées in the Mediterranean was that at every port, we could easily find some of the finest art humanity has ever produced. Before boarding the Epic in Rome, I’d caught the train to the port at St. Peter’s Basilica, steps from Michelangelo’s Sistine Chapel. The next day we hit Tuscany, where shore excursions included trips to Florence’s Uffizi Gallery, with Botticelli’s Birth of Venus. In Cannes, I took the train to Nice to see the Chagalls. And in Barcelona, I went to the hilltop Joan Miró Foundation’s museum, hoping to learn more about the lithograph of his I’d seen aboard. The museum gift shop had some similar pieces for about $400, but they weren’t signed.

The next day, during the crossing to Naples, was the day I met Bialon, owner of the Rembrandt. He wasn’t there for the free booze after all. He was interested in a Kinkade on canvas for his house and had arranged a prebid for about $1,200, he said. That’s when my note taking finally became too obvious. Cilliers, the chief auctioneer, said he’d noticed I was writing a lot. I fessed up and waited for nautical security to swarm.

Instead, Cilliers’s first reaction was to seem embarrassed that I hadn’t seen enough big sales. Americans are Park West’s target market, he said, and they made up only about 10 percent of the Epic’s manifest. If I wanted to see how well they normally do, Cilliers said, I should check out a cruise from New York. Otherwise, for any comment I’d need to contact headquarters. And that was it. I wasn’t sent to Oslo.

About 40 people showed up to that day’s sale, in a lounge called Le Bistro. Wearing a dark suit and lime-green tie, Cilliers told newcomers that if they wanted the free Champagne or raffle tickets, they needed to sign up for a bid card. Once they were seated, he made clear he wanted buyers, not oglers. “If you’re here to watch the show,” he said, “you’re in the wrong place.” A waiter passed flutes of mimosas and Champagne. “This isn’t television,” Cilliers said, pointing to his eyes and then back at the audience. “I can see you.”

Cilliers started with a Peter Max of a man holding an umbrella—a “one-of-a-kind” on canvas. Estimated retail was $23,800, he said, but he’d start bidding at $20,000. After a flurry of unintelligible auctionese, Cilliers banged his gavel on the side of the podium and asked for a round of applause for the Max. It hadn’t sold, but that didn’t seem to be the point. He’d conditioned the crowd into thinking anything under five figures might be a bargain.

Soon, Cilliers racked up sales. A bronze statue of a cat, retail $6,400, went to a sole bidder for $4,900. Then a trio of pictures came to the block, valued at $19,150. An American couple had arranged a first bid of $9,790 and was hoping nobody pushed it higher. Cilliers searched the room for competitors, found none, and banged his wooden hammer. The room erupted with applause. The husband, the back of his buzz-cut neck flushed red, beamed with relief.

Cilliers also sold a vellum manuscript page, with red and black Latin script on it that he described as “a piece of history,” to another lone bidder for $4,100, as well as a giclée of leopards by Andrew Bone to a man wearing a Yankees T-shirt for $1,025. (When I spoke to the Yankees fan later, he referred to the purchase as a “painting on canvas,” and I didn’t have the heart to tell him otherwise.)

The American couple’s $9,790 purchase had earned them the close attention of Park West staff. One perched herself over their shoulders, whispering. Minutes later, Cilliers offered a Romero Britto picture, saying it was worth up to $4,200 but could be had for a bid of $1,390. The couple, now the toasts of Le Bistro, nodded. Cilliers banged the gavel as his assistant offered the couple more Champagne.

Amid the auction lots came games. Park West is known for sprinkling in diversions like raffles and mystery items. (At one auction I won a gift box with a watch, pen, and case for business cards. I gave it to the Filipino man who cleaned my stateroom.) Another tactic is bidding by elimination. I watched as an assistant brought out a print valued at $300, and Cilliers asked anyone willing to pay $5 to raise his bid card. “If you don’t have $5,” he said, “I’ll give you $5.” Almost every card in the room went up. Cilliers started to increase the price, and a few cards went down each time. At $70, I counted eight bid cards still up, when he abruptly concluded the bidding, taking in a quick $560. It would’ve been confusing for anyone who didn’t understand that that exact picture wasn’t for sale—that Park West had hundreds, possibly thousands, of identical copies from the print run in its warehouse. (Some sore winners of such rounds later told me they’d thought the game would continue until there was a single remaining bidder, leaving them time to drop out.)

To finish off with a bang, Cilliers filled the stage with five Peter Max pictures worth, he said, $31,460—but available for $9,999. No takers. He added a sixth image to the bargain. It was of the Statue of Liberty surrounded by votive candles, flowers, and an American flag.

“What was yesterday?” Cilliers asked the crowd.

“Monday!” they shouted.

Cilliers, with a beleaguered look, reminded them that it had been the anniversary of Sept. 11. He continued sweetening the deal with more pictures, until there were 10 Maxes in all, still for $9,999. No one bid, and the crowd filed out toward the casino.

When the Epic returned me to Rome, the first thing I did at my desk was research whether the Miró lithograph I’d admired was a good deal at $14,000. It turned out to be part of a set of 39 sold by Christie’s in London in March 2015 for the equivalent of about $96,000 at the time. Just 13 were signed. The most generous valuation I could come up with—assigning a value of zero to the unsigned ones—put the price of a single signed picture at $7,400. Later I found a precise figure: In 2011, Swann Auction Galleries in New York had sold one of the Mirós for $3,360, including fees. Sure, prices shift from year to year. But had I paid what could be seen as Park West’s 317 percent markup, I’d have joined their roster of unhappy customers.

Being safely off the ship, I got in touch with Park West’s founder and chief executive officer, Albert Scaglione. “We’re not out there cheating people,” he said over the phone. Scaglione said that since the lawsuits he’s beefed up his compliance department, which reviews videos of every auction. He disputed that Park West’s prices are inflated, arguing they’re the market prices for his way of selling art. “We’re not Sotheby’s or Christie’s,” he said.

Scaglione, 77, did say he was sympathetic about the confusion during auctions regarding whether works were original paintings. “It’s often garbled, it goes too fast,” he said, suggesting he might introduce better signs explaining things. The seemingly high prices for prints that went for less on land? “You might find one in an obscure auction in Austria that sold for a third,” he said. “These things aren’t always available.” The Dalí Destino prints? Park West had set its prices as the exclusive marketer of the prints, he said, and any other prices are, at best, from “people who bought from us, who are selling,” he said. He also said, “how do you know it’s not a forged Destino?”

I told Scaglione that I’d noticed one reform on the Epic: Not once did I hear the auctioneers make promises of investment return. In fact, the two times I asked about price appreciation, separate staffers gave the same response: “We can’t predict the future.” Scaglione told me, “The place we’re at now is so nice. Did we ever have an auctioneer selling art as an investment? We did. We fired them.”

One thing Scaglione didn’t want to discuss was Park West’s 2011 settlement. I had found, buried in the docket for a separate case, the amount the company had paid to resolve the matter, including legal fees and damages: $1,154,435.47. During a good year, that would be a single day of revenue. It explained a lot about the company’s durability.

Rembrandt was the last Park West mystery to solve. Bialon had said he’d tell me the whole story when he got back to his house in Pennsylvania, where the retired computer systems analyst spends his time breeding tropical fish in 40 aquariums he keeps in his basement. By phone, he said he picked up the Old Master on a Park West cruise seven years ago. It was a self-portrait etching of the artist wearing a flat cap. It had been printed in the 1800s from copper plates that Rembrandt van Rijn made during his lifetime in the 1600s, according to the Park West appraisal that came with the picture. The document valued the etching at $11,800, the same Bialon had paid for it.

But nowhere did the appraisal say where the etching had come from—its provenance. Now Bialon wanted to know. “The thing has been sitting around for a couple hundred years,” he said. “Somebody had it.” In late September, Bialon called Park West, gave them the registration number off the appraisal, and asked if they could send him the picture’s history. At first Bialon was told he’d get the information in the mail in a week. When nothing arrived, he called and got bounced around, only to be told he’d get a certificate of authenticity and nothing more.

When I spoke to Scaglione, he was aware of Bialon’s case and was firm about refusing him the provenance. “We get things from families, we get them from clients,” he said. “We do not and will not provide the sources.”

The day before this article went to press, Scaglione sent me an e-mail. It was another chance to observe how Park West operates. During our earlier phone call he had requested that I not use an audio recorder. Now he revealed that he’d been using a recorder on his end and suggested I submit for his verification “anything whatsoever that I said.” Scaglione also wrote, “[W]e have video tapes of all the auctions you attended” on the Epic. “We have a video of each work of art that came up and when you took notes and when you did not.” In at least this one respect, Park West has learned to value the art of authentication.

Source: Bloomberg