Auction goes bust: a $79,000 Picasso, anyone?
April 17, 2009
It is a Wednesday in mid-March, a normally busy time during the ski season when spring-break crowds are spending the days tearing down the slopes and the evenings enjoying the restaurants, boutiques and art galleries on Main Street.
Inside the Kimball Art Center, the not-for-profit institution that puts on the annual summer art festival on Main Street and hosts a series of exhibits the rest of the year, a few people are hanging works by some of the seminal figures of 20th century art, the so-called modern masters. Pieces by Pablo Picasso, Marc Chagall, Joan Miró and Henri Matisse, among other giants, will be on display for a night.
A Las Vegas firm the next day will put the pieces — 125 or so, with art from names like Andy Warhol also arriving at the Kimball — up for auction. An auctioneer from the Snyderville Basin has been drafted for the evening. The Las Vegas firm, known as Modern Masters Auctions, has brought a box full of brightly colored auction catalogs to the Kimball, with numbers printed on the back of the catalogs to identify the bidders.
The recession, it seems, is of marginal concern as the auction approaches. The art sellers are confident, knowing that the market in Park City, buffeted by the wealth of vacation-home owners and well-heeled ski visitors, should remain solid amid the recession.
The Modern Masters staffers have brought pieces that normally do well in places like Park City. Retail prices on many of the pieces, which are typically negotiated down when buying fine art, reach past $20,000. The jewel of the auction is a 1946 Picasso lithograph, signed by the Spanish Cubist. It normally retails for $79,000, according to the auction catalog, and the auctioneers are hoping bids will climb to between $40,000 and $50,000.
Thursday, the day of the auction, the exhibition room at the Kimball has been turned into makeshift auction space. The auction pieces are either hanging or on the floor resting against the walls. The colors of other artists with pieces on the auction block, contemporaries like Peter Max and Alexandra Nechita, radiate amid the older works.
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The auction is to start at 7 p.m. There are crowds of people steps away from the Kimball, walking up and down Main Street. Inside, though, there is little action. An hour passes. People from Modern Masters, who are chatting among themselves, are the only people seated in the chairs set up for the auction.
A few interested people browse the works, and 13 people eventually sign the guest list, but there are not enough buyers to hold an auction. It is cancelled. The recession this night has cut deep into an industry that can customarily depend on the biggest names in art commanding prices in the five figures and up.
"We’re totally baffled. Everywhere we go, we have people turn out," says Nim Vaswani, one of the art sellers.
Art isn’t ‘recession-proof’
The cancellation at the Kimball is a striking example of the recession’s effects on the wealthiest people, the target market for art sellers with high-caliber pieces like those in the Park City auction.
There is evidence, though, that the results at the Kimball are reflective of what is happening to the wider fine-art market in the recession. An expert in the field of art selling says the recession has depressed sales of major pieces, those that are generally more exclusive than what was up for auction at the Kimball. Locally, meanwhile, a Main Street gallery that deals in the masters like Picasso and Chagall reports selling was difficult during the winter, the prime season for the art market in Park City.
Michael Moses, the co-founder of the Web site artasanasset.com and a retired business professor at New York University, has studied trends in fine-art sales for nearly 10 years, creating an annual index based on 13,000 repeat sales of original works put up for auction in New York, one of the world’s top art markets.
"It is definitely true that the number of consummated sales have gone down dramatically," Moses says.
The index is falling precipitously in 2009. Moses says the first-quarter results point to a 35 percent drop by the end of the year should the trend continue. The index fell 4.5 percent in 2008, he says, with sales recorded in the index ranging in price from $5,000 to $20 million. The index includes the masters and lesser-known artists.
Historically, Moses says, between 70 and 80 percent of pieces on the block at major auction houses sell. In the last year, though, the figure dropped to closer to 50 percent in some cases, he says. According to Moses, art sales suffered a steep drop during the recession of the early 1990s, declining 65 percent in the first half of that decade.
"Art is not recession-proof," he says, adding, "Art is like any other asset. It has periods of excess and periods of underperformance."
Park City’s gallery scene is regarded as the most exclusive art marketplace in Utah, and artists like Picasso and Chagall are not widely carried in the state. DeVon Stanfield’s Main Street gallery, Stanfield Fine Art, though, dedicates roughly 20 percent of its space to art by the masters, accounting for between 40 percent and 45 percent of the value of the gallery’s inventory. At $59,500, a Chagall piece, signed by the master and part of his "Four Tales from the Arabian Nights" series, is the most expensive painting on display.
Stanfield says sales of art made by the masters are down in 2009, and their pieces have tied up some of the gallery’s money since he must purchase them outright in order to carry them, a different scenario than with pieces by newer artists that do not require the same investment by the gallery.
But he talks of several high-dollar sales of masterworks this winter as well, capped by a $30,000 Picasso purchased late in the ski season. Two pieces by Rembrandt van Rijn, both in the $25,000 range, also sold this winter, he says.
"We’ve had to negotiate. They’re tough as nails. We’re not making a lot of profit," Stanfield says. "Right now might be the best time to collect something."
A late-hour sale
Vaswani, the art seller with Modern Masters, has had successes in Park City before.
He recalls blockbuster shows he staged locally for Nechita, long ago pegged as the Petite Picasso, and Max, brought to Park City early in 2001. Spectators filed into the galleries for glimpses of the famous artists in what became talked-about events around Park City. Vaswani says sales were brisk during the Nechita and Max appearances.
"I had no reason to think this would be as surprising as it turned out to be," he says about the auction at the Kimball, one of the 10 to 12 his firm puts on each year, primarily in Florida and Texas.
Recently, even during the recession, he says he has held successful art sales. Earlier in the winter, sales pushed to between $200,000 and $300,000 during shows in Florida. Crowds in Jacksonville, St. Petersburg and Naples, an exclusive beach destination on the Gulf of Mexico, were buying. A piece by Max typically sold for $5,000, Vaswani says, recalling "astronomical numbers" during a two-day Max event in Jacksonville.
The margin on sales of the artists Modern Masters deals can reach between 40 and 50 percent. The firm nets a profit of between 10 and 15 percent. Vaswani touts what he labels brand-name art, done by artists who have a following among collectors. Those pieces, over time, have outperformed stock markets, he says, claiming that the value of some pieces has jumped by 75 percent in the last year, even in the troubled economy.
"They’re looking for something that’s tangible, they can enjoy," Vaswani says about buyers nowadays, adding, "People have to find salvation somewhere, and somewhere with a record."
The Kimball event, though, is unfolding in an unplanned manner. The auctioneer’s services are not needed. The easel that is to hold the works of art in front of the bidders is not especially important at this point, either, the auction having been called off earlier in the evening.
The art sellers — two who flew to Utah from Las Vegas for the auction and another who flew from Austin, Texas — do not want to leave Park City without making a sale, though. Renting the Kimball and traveling with the art cost the firm $10,000, money Vaswani and the others hope to recoup.
As the event’s planned 9 p.m. end approaches, there remains potential for Modern Masters. A middle-aged couple, the man wearing jeans and a short-sleeved, collared shirt, has been browsing the pieces for more than an hour. The art sellers give the man their attention, realizing that he might make the trip to Park City worthwhile.
The man is a buyer, it turns out. He purchases 10 pieces, including works by Miró, Chagall and Nechita. He spends a few minutes with the art sellers before leaving the Kimball with family. Vaswani does not talk about the buyer afterward, and he does not discuss how much the deal is worth. One of the pieces, a Chagall lithograph signed by the artist and entitled "Reverie," carried an estimated auction price of between $10,000 and $12,000. If it had been sold at auction, the bidding would have started at $10,000.
"Park City comes through for me again," Vaswani says, recalling the successful local shows of Nechita and Max.
Vaswani and the other art sellers start to dismantle their display at the Kimball. The unsold pieces are packed up. The auction catalogs are put away. The Kimball is left to prepare for the opening of a celebrated exhibit of Chicano art, selected from the collection of Cheech Marin of Cheech & Chong fame, scheduled in two days.
Vaswani’s next stop, meanwhile, is an art gallery in Austin. He leaves for the Texas capital still describing Park City as a desirable market for art sellers. He says he would return with another show, undeterred by the results of the Kimball event.
"I could have run and said ‘I don’t want to take a chance,’" he says. "You have to take a chance."