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Dark Side of the Boom



The Excesses of the Art market in C21



Georgina Adam



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Public art scaling up bc public institutions need to attract masses with 'wow' factor art, private museums want high impact works to differentiate themselves, and the increasing size of urban spaces in big new buildings. Artists need assistants and heavy machinery to construct these large works, so they become incorporated companies that need a high income to simply stay afloat.

Historically, artists employed assistants to do backgrounds and clothing, but we know there were not many people involved, simply bc of the spaces the artists used didn't have enough room for more than half a dozen people.

Appropriation is a significant part of creation today, according to NY writer Edward Winkleman. There is so much imagery on social media that it is impossible to draw a line between creation and borrowing.

Any billboard or street art that gives you no choice whether you see it or not, has become free art. You can't turn around and assert ownership of it.

China public push for new museums and galleries. One third are private ones - fear that if give yr art to a public gallery it might sit in storage forever. Also concerns about standards of care or loss of control if donated.

High end homes now being designed with art in mind, ans are often sold complete with a curated art collection as well.

having your own private museum gives you a jump up the queue with dealers selling 'hot' new artists. And having your art exhibited gives it a validation, even if same guy owns both the museum and the art. Prime example Francois Pinault, who owns a lot of Damien Hirst works. During the Venice Biennial he devoted both of his Venetian 'museums' to Treasures of the Wreck of the Unbelievable by Hirst, which featured 189 objects and pics, some of which supposedly salvaged from a C2 wreck.

High end art market benefitting from income inequality. Increasing numbers of billionaires competing for a finite number of trophy pieces. People buying status symbols rather than for investment. Ten percent of yr net worth is accepted as a reasonable guide - but if someone is worth 10 billion dollars, then 1 billion dollars buys a lot of art.

Some owner's art goes on a cicrcular tour each year - following their owners as they move from NY apartment to hol homes in Aspen, the Hamptons and Palm Beach, and returning to specialist art warehouses in between. So similar to the way medieval kings carted their belogings from palace to chateau.

By one estimate 80% of all art in world is in storage at any one time. Collectors often have more art than wall space, or they may have bought purely for investment.

Art is an illiquid asset. If you want to sell, you have to wait for a suitable auction slot. The selling gallery doesn't want it back - they'd rather sell a new painting and take 40% commission, than get 10% on an older one. And most galleries ahve a stock of unsold primary art that they want to get rid of.

And art has extremely high transaction costs. When you buy at auction you need to add 20-25% commissions to the hammer price. Storing it will cost a few more thousand. And it is difficult to be certain of a current value - so many sales are private and unrecorded (or lied about).

Investors buy bulk lot of a young artist's work - say 10 works for $10,000. Then a year later one of the works is sent for auction and a friend buys it back for $100,000. The other nine works are then offered to private buyers at a 'discount' of $60,000.

Russian billionaire Dmitry Rybolovlev spent about $2 billion on an art portfolio over the early years of C21. But when he tried to sell some of the works in 2014, no-one wd pay anything like what he'd paid for them. Turned out his buyer had been front-running - buying the work before recommending it to the Russian, and then selling it to him at an inflated price.

Found out that Steve Cohen had sold a Modigliani for $93.5 million, but it had then been passed on to Rybolovlev for $118 million. The agent had made a cool $24 mill on the deal.

In 2008 Rybolovlev was in peril. He was facing possible seizure of his assets after an ecological disaster at one of his potash factories. And his wife started divorce procedings in a Swiss court. So investedin art as a portable asset.
(In 2004 Donald Trump bought a Florida property for $41.5 million, fighting off a competing bid from Jeffrey Epstein. Four years later Trump sold the property to Rybolovlev for $95 million.)






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