Contemporary art sales are attracting increasing media interest beyond the usual art industry suspects, particularly from financial journals and commentators. There is a significant boom in both the number of sales and of the prices of works by artists born after 1945, a definition which is now becoming an accepted categorisation of contemporary work in the art market. Recent related publications have been produced by The European Fine Art Foundation (TEFAF), Artprice and AMMA (Art Market Monitor of Artron), and print media including the Financial Times, the New York Times, the Washington Post and the Wall Street Journal.
TEFAF organises one of the world’s major art fairs at Maastricht in the Netherlands every March, where over 30,000 artworks – from antiquities to contemporary art – are exhibited and offered for sale by over 200 leading art dealers. Every year coinciding with the fair, TEFAF publishes a report reviewing the previous year’s performance by the global art market. Key players within and beyond the art ecosystem have come to rely on TEFAF’s annual publication of facts and figures and assessments, which harvests global data from public auctions, art fairs and online sales. It is important to bear in mind that such data only tracks sales by art traders, not private sales between non-traders.
TEFAF’s Art Market Report 2015 (Artnotes AM38X) estimates that global sales in 2014 reached the highest recorded level at over €51bn (a 7% increase over 2013), of which 52% was achieved by the dealer sector conducting private (not public auction) sales. Remarkably, in 2014 the largest category of global sales was of postwar and contemporary art, accounting for 48% percent of all fine art sales by value. Overall public auction sales achieved the highest recorded level at €5.9bn (a 19% increase over 2013) and the leading territory for such sales was the US, with an estimated 46% of the market by value. These significant data points have doubtless fuelled wider media interest in exploring which works are selling, who is buying, and why.
Artprice is a leading data bank tracking global public auction sales. AMMA performs a similar function focusing on the Chinese art market. Recent Developments in the Global Market (The Fine Art Market in 2014), published jointly by Artprice and AMMA, focuses only on global public auction sales records and complements TEFAF’s 2014 report. Interesting analyses include comments such as: ‘contemporary art is the segment that attracts the most media attention and is at the same time the most speculative and the most cut-throat segment of the art market … some contemporary artists are even pushing way past the $10m threshold.’ Jeff Koons is cited as ‘the most expensive living artist’ with his works generating $150m at auction in 2014. But the ‘best contemporary art result of the year 2014 was hammered on 13 May at Christie’s New York for a work by Jean-Michel Basquiat’ when his large canvas Untitled, 1981, fetched $31m. Buyers are thought to prioritise their purchases in order of medium: paintings, drawings, sculpture, then prints, with photography having ‘gradually managed to carve a place on the Art Market’, while alternative media like video or large-scale installations are described as representing only a very small fraction of the lots offered at auctions, and such works are usually acquired by museums or similar institutions. The report gives special attention to the art market performance of ‘Western artists born in the 1980s: an ascending generation’.
It is unsurprising that financial commentators in the wider media beyond the art world have taken serious notice of this exponential growth of contemporary art market sales, especially in the West. A recent and perhaps the most significant article, based largely on original research and interviews with a selection of key art-world players, was published by the Wall Street Journal on 12 April, 2015: ‘Fine-Art Sales Often Come With Strings Attached’. The essential thrust is that ‘galleries are increasingly telling buyers who they can and can’t resell to’, including for example a condition of sale not to resell the work at auction or another collector without getting permission first. The article opines that, ‘adding conditions and restrictions to sales agreements is becoming an increasingly common practice in the art world as dealers, worried that an overheated art-auction market is distorting prices, look to maintain control over who buys the works of the artists they represent.’
The inclusion of restrictive reselling conditions in a contract of sale is not a new practice in the western art ecosystem, especially for the first/primary sale directly by the artist or via an agent/dealer: gallerist Andrea Rosen told the Wall Street Journal: ‘I have used these clauses on every invoice since I opened in 1990.’ The estate of Sol LeWitt requires such a restriction. And Hans Haacke deals with the issue of buyers being interested solely in quickly flipping over a bought work to make a profit by requiring ‘collectors’ to agree to pay him 15% of any profit made on a resale (a contractual form of droit de suite or the artists resale right). Haacke also requires that whenever buyers wish to exhibit in ‘a public venue, I want a say in the circumstances’.
Restrictive conditions of sale should ideally be negotiated and agreed with the buyer, then recorded in a contract of sale written in language courts of law would accept and support if necessary. The legal effect of restrictive conditions is likely to impose what is usually called a lien on the work: in effect the seller’s legal ‘right of first refusal’, which restricts the first buyer from reselling before offering to sell the work back to the first seller. Resale buyers are vulnerable to the existence of such liens, when ignored or forgotten by the reseller, which is why sale of goods laws in many art market territories impose a non-excludable legal obligation on resellers to guarantee that they have an ‘unencumbered’ legal right to (re)sell, and to compensate the buyer of any encumbered work if a resale is held to be invalid. Think of sales of real estate, which most countries require to be recorded in a national land registry – together with the existence of any liens or other ‘encumbrances’ such as mortgages – that any buyers must search before concluding their purchase.
But there are no global registers of art sales that prospective buyers can consult – until now. The Claims Journal for the US insurance industry published an intriguing article on 5 March, 2015: ‘New Loss Database Launches Globally as Spending on Art, Antiques Remains Strong’, which reported on the recent founding of The Art Recovery Group and launch of its digital and online ArtClaim Database at www.artclaim.com. Not only does this new service offer registration and recovery of lost art, it also offers ‘new ways of identifying and recording interests attached to works of art’ – and it does so on a global basis. In particular, ArtClaim offers a specialist Collections Management service ‘for the maintenance of detailed and easily accessible off-site records on individual works and large collections including objects subject to financial liens, held in extended storage, on loan or in transit’.
Perhaps now, at long last, there is a way for primary sellers – artists and their agents/dealers – to register restrictive resale requirements in an authoritative art industry-facing global database, which secondary buyers can consult.
© Henry Lydiate 2015