Your art market - what the heck is going on...
This is undoubtedly the question on everyone's mind as we have seen stock portfolios drop and retirement plans for many put off for a decade. There actually is some logic to what is happening and now we have enough data to draw some conclusions. Not all that we are being told is unfortunately true.
President Obama plans to adjust the benefits for charitable giving. This is summed up on the website philanthropy.com as :
"In a document outlining his 2010 budget plans, President Obama proposed limiting the value of the tax break for itemized deductions, including donations to charity, to 28 percent for families making more than $250,000. In other words, taxpayers would save 28 cents on their federal income taxes for each dollar donated.
That would reduce by as much as 20 percent the amount wealthy taxpayers could get in tax breaks. Under the current system, taxpayers who are in the 33 percent or 35 percent tax brackets use that rate to claim deductions."
President Obama has said that he doubts this move would have an adverse impact on charitable giving. I haven't found an institution or a donor yet that agrees with this opinion. So clearly there is a pull back here and a pull back in the general "bricks and mortar" and operation fund giving to institutions. And remember many of these institutions are also funded by stock portfolio endowments which are obviously yielding less income. Our main stream media is not covering this but it is all over the internet. A few examples" Field Museum president John McCarter announced in the face of "30% less funding" the cancellation of Hidden Treasures of Ethiopia featuring the 3.2 million-year-old fossil Lucy. The Indianapolis Museum of Art announced the delay of projects and a budget cut of 1.7 million dollars. The Saint Louis Art was in the midst of a $125 million dollar expansion program that is now on hold. The Los Angeles County Museum, Miami Art Museum, and the Cincinnati Art Museum have postponed renovation projects. The Minnesota Museum of American Art is closing with the county planning on selling its building. The Museum of Contemporary Art in Los Angeles has been bailed out by Eli Broad with a 30 million dollar loan. The Detroit Institute which was in trouble before the economic crisis is seeing a 20% reduction in the 33 million dollar budget which is supported by only 1 million dollars in public funding. And the list could go on but you get the point - non profits need help ..not further cuts in support.
Since last fall the art world has been very unpredictable. If you had to make a general statement, there is some credibility in the statement that great things still find buyers. Clearly whether you are asking yourself whether to buy or to sell, you will be better off if you are a professional buyer or seller. The art market like wall street is in normal times not for the amateurs. Certainly now the climate is even dicier.
The recent Russian sales at Sothebys and Christies showed some spark with some lots; however, overall the auctions were below estimates and disappointing. Sothebys' fall contemporary art sale did not encourage the art market. The sale totaled $125.1 million, well under Sotheby's estimates of $203.3 million to $281.6 million. Of the 63 works for sale, only 43, or 68%, found buyers. This news was actually worse considering Sothebys previous economic reports that stated : "Sothebys reported operating revenues for the third quarter, ended Sept. 30, decreased 11 percent to $76 million. The auction house said the $9.1 million decline is largely due to a higher level of principal losses on auction guarantees, as well as lower private sale commissions and lower auction commission margins.
Approximately $42 million of the guarantee losses relate to property offered in recent fourth quarter auction sales, as well as estimated losses related to guaranteed property to be offered in upcoming Contemporary Art sales in New York, the New York-based company said."
That was well over the euro200 million-euro300 million ($250 million-$380 million) the 733-piece sale had been expected to fetch. Berge told reporters at the closing news conference he was "very, very happy with the result."
"I considered that with the death of Yves Saint Laurent that this collection had reached its end, that it was finished," Berge said. "I am sure that those who bought these works of art are going to welcome them ... with the same passion that Yves and I had during so many years."
The November Sothebys tribal art sale in November featuring works from the Rosenthal collection performed better than many experts expected. In addition Skinners' Boston sale of tribal art of largely medium quality material actually did fairly well. Out of about 400 lots only 10% failed to sell. Granted there were some nice things in the sale but there were certainly a number of medium to lower medium level objects. That result is somewhat surprising in a down economy. Bonhams London took a shot at contemporary African art that was received with a lukewarm response. The few stars seemed to be enough to schedule another sale in December 2009. In tribal art we are waiting for some indication of direction that will come from the May and June sales in New York and Paris. If these sales are successful, a great many doom and gloom forecasters will be covering their backsides by finding the rationale why it happened. There are some great things coming to auction, so I wouldn't bet against the market during this very unpredictable period. Before chasing any objects, if you aren't a pro, then find one.