Big Prices, Big Risks at Fall Art Auctions

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Published: November 2, 2006

Just when it seemed as if art auctions could not get bigger or prices go
higher, along come the catalogs for this fall’s important sales of
Impressionist, Modern and contemporary art. Prime works by masters like
Picasso, Gauguin, Cézanne, Klimt, de Kooning and Warhol fill their pages
with luscious color foldouts and essays. For some of the big sales in the
next two weeks, Christie’s and Sotheby’s have added mini-catalogs made to be
portable, the CliffsNotes of the auction world.
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Also to be auctioned, Gauguin’s "Man With an Ax."
A Pollock Is Sold, Possibly for a Record Price (November 1, 2006)
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Left, Sotheby’s; right, Christie’s

Works to be auctioned in the next few weeks include, a self-portrait, left,
and "Orange Marilyn" by Andy Warhol.

And those with deep pockets are responding in droves. “By the end of
September we had already received more than 350 requests from clients asking
for tickets to our evening sale, which is very unusual,” said Guy Bennett,
head of Impressionist and Modern art at Christie’s in New York. “Normally
people start asking for tickets at the very end of October.” Since
Christie’s main salesroom seats only 750, Mr. Bennett said, a room equipped
with a closed-circuit television will be added to accommodate the overflow.

These evening sales have the highest estimates in auction history; they also
carry the biggest risk. The auction houses have become so competitive for
business that this season they have promised sellers larger and larger
guarantees, undisclosed minimum sums that are paid regardless of a sale’s
outcome. Even the boutique firm Phillips, de Pury & Company has offered a
number of guarantees for its one evening sale on Nov. 16, featuring
contemporary works by some of today’s trendiest artists, with record

Guarantees protect the sellers, but the auction houses could be out hundreds
of millions of dollars and stuck with warehouses full of art that goes
unsold. Yet auction house experts say they feel comfortable giving so many
because the market is so strong.

Two years ago financial analysts predicted that the art market was on the
brink of topping out, but it has defied economic indicators. Many of this
fall’s sellers are veteran collectors — the financiers Henry Kravis and
Mitchell P. Rales, the onetime Hollywood super-agent Michael S. Ovitz and
the newsprint magnate Peter Brant, to name a few — betting that the market
is nearing its top.

Just a few seasons ago $100 million was a magic number for a single work,
the barrier to break, but not anymore. Last month alone the entertainment
mogul David Geffen sold three paintings — a Jasper Johns, a de Kooning and
most recently a Pollock — to a new generation of fund managers for a
whopping total of $283.5 million. Rather than scaring buyers, experts say,
these private mega-deals are giving young billionaires confidence to make
what they may see as last-chance purchases.

Even prominent art dealers are jumping into the auctions. William
Acquavella, the Manhattan dealer, is selling a rare 1895 Cézanne still life
at Sotheby’s — the most important painting in its sale on Tuesday — but not
without a guarantee, which experts say is in excess of $30 million.

“There’s a demand for these kind of masterpieces,” Mr. Acquavella said. “I
bought the picture at the right price and think now is a good time to sell.”
He purchased the Cézanne at Christie’s in London six years ago for $18.1
million; it is now estimated at $28 million to $35 million.

That adage that the “3 Ds” — debt, divorce and death — bring art to the
market should now have an “R” added, for restitution. In Christie’s
Wednesday evening sale of Impressionist and Modern art alone, works by
Klimt, Kirchner, Vuillard and Picasso recently restored to the heirs of
owners from whom art was looted by the Nazis in World War II account for an
estimated $125 million worth of art. Most of these works had hung for
decades in museums, where the public thought they would safely stay.

Now they will be offered to the biggest buying pool ever. It’s not just
American hedge-fund billionaires who are fueling prices or, as in the 1980s,
the Japanese. Financiers from Asia, Russia and India are quickly becoming
collectors. And auction houses, unlike dealers, have offices around the
world staffed with experts who both advise and tempt clients.

Christie’s is once again dominating the next two weeks; both its
Impressionist-and-Modern auction on Wednesday evening and its
postwar-and-contemporary sale a week later are larger and more impressive
than those of its archrival, Sotheby’s. Solid teams of experts, long-term
connections and aggressive financing are the reasons, not to mention a bit
of luck.

Although Sotheby’s and Christie’s like to promote each work as a
masterpiece, blockbusters really make up only a small percentage of this
season’s offerings. Heading the group is Gauguin’s “Man With an Ax” (1891),
a richly colored canvas painted in Tahiti. Christie’s estimates it will sell
for $34 million to $45 million. Although the seller identification reads
only “property of a lady of title,” experts say it is from a member the
family of the Sultan of Brunei.

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Christie’s is also auctioning Picasso’s soulful 1903 portrait of his friend
Angel Fernández de Soto seated at a Barcelona cafe table shrouded in tobacco
smoke. Eleven years ago the composer Andrew Lloyd Webber bought it at
Sotheby’s in New York for $29.1 million. At the time he said he was buying
it for his foundation, which supports theaters and young actors. It is now
expected to sell for $40 million to $60 million, with the money going back
into the foundation.
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"Adele Bloch-Bauer II," one of the Klimt works drawing interest.
A Pollock Is Sold, Possibly for a Record Price (November 1, 2006)
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As important as the Picasso and the Gauguin are, all eyes will be on four
Klimts that were recently on view at the Neue Galerie in Manhattan. The
paintings, along with “Adele Bloch-Bauer I,” for which Ronald S. Lauder paid
a record $135 million in June, were relinquished by Austria this year, after
a long legal battle, to a niece of Mrs. Bloch-Bauer, Maria Altmann of Los
Angeles, and other family members, who are selling them next week. The four
works, together valued at nearly $100 million, consist of three landscapes
and another portrait of Mrs. Bloch-Bauer, from 1912.

As soon as Christie’s announced it was selling the Klimts, Mr. Lauder said
he would love to buy them all for the Neue Galerie, if the price was right,
especially the later portrait of Mrs. Bloch-Bauer. But whether a shopping
spree is in his future is a matter of speculation. To help pay for “Adele
Bloch-Bauer I” he has put three works by Schiele that had hung at the Neue
Galerie — two watercolors and a painting together estimated at $45 million —
up for sale at Christie’s on Wednesday.

By comparison Sotheby’s Impressionist and Modern art sale, despite its 85
lots, is a tepid affair. Many of the works have been on the market in the
last decade. In addition to Mr. Acquavella’s Cézanne, there is “The Card
Game,” a 1893 Toulouse-Lautrec of two women in a Paris brothel. The seller
is Mr. Kravis, a former Sotheby’s board member, who bought the painting
privately six years ago for an undisclosed sum. It is now estimated at $5
million to $7 million.

This season’s catalogs of postwar and contemporary art are stuffed with
blue-chip names. Two artists in particular stand out: Warhol and de Kooning.
The cover images of Sotheby’s and Christie’s catalogs are being called “the
dueling Warhols.” Christie’s shows a 1962 “Orange Marilyn” being sold by the
San Francisco collector Roger Evans, estimated at $10 million to $15
million; Sotheby’s has a 1964 self-portrait estimated at $3.5 million to
$4.5 million. The seller is Jean-Christophe Castelli, son of the legendary
dealer Leo Castelli, who died in 1999. Both Warhols were once in Leo
Castelli’s private collection.

“What has become clear is the sheer rarity of classic Warhol images of the
1960s and early 1970s,” said Brett Gorvy, a co-head of postwar and
contemporary art at Christie’s. “There are traditional Impressionist and
Modern art collectors who now see that buying a Marilyn is as powerful as
buying a great Picasso. He’s also one artist who speaks to collectors all
over the world.”

Tobias Meyer, head of contemporary art for Sotheby’s worldwide, says today’s
crop of new rich also wants de Kooning. “De Kooning is the new Rothko of
this market,” Mr. Meyer said. “But unlike great Rothkos, there is still
enough supply.”