Duchamp, Koons, and Cattelan

Yesterday, Scott Lynn of Masterworks posted an article to LinkedIn titled “Why We Think Maurizio Cattelan’s $6.2M Banana Might Not Be a Smart Investment. Although I agree that one cannot necessarily expect "Comedian" to continue to appreciate (and certainly not at the same exponential rate that it has the past few years), I think that some of his logic and substantiation is worthy of critique (especially No. 3).

1. Lynn says that “market trends don’t favor Cattelan’s work.” He cites an 80% decrease in total auction sales prices of Cattelan since 2010, “signaling that his broader market trajectory is declining.”

However, one must be cautions not to assess an artist’s overall market simply by tracing relative annual sales results, which depend in no small part on the content of the consignments. For example, nothing like "Him," Cattelan’s sculpture of Hitler, which fetched $17,189,000 at Christie’s, New York in 2016, has been offered publicly for sale. If it were, one should expect a strong price, perhaps particularly in the wave of the current spectacle surrounding the artist.

2. Lynn states that “conceptual art has limited market appeal.” While I don’t necessarily disagree that conceptual art presents certain marketing challenges relative to traditional physical art, Lynn’s generalized statement may not apply to a particular and truly iconic work, which indeed, “Comedian” became, practically the minute it was first exhibited at Perrotin’s booth at Art Basel Miami Beach in 2018. Exceptional works do not necessarily conform to generalized rules.

In an attempt to substantiate the claim that "conceptual art has limited market appeal," Lynn cites a 1999 sale of Duchamp's "Fountain" (i.e., readymade urinal) for $1.6 million. However, Lynn (of all people) should know that the markets for modern and contemporary art have transformed fundamentally in the past quarter century. If "Fountain" were to be offered today and marketed as deftly as “Comedian” was by Sotheby’s, I have no doubt that it would be estimated at, and sell for a much stronger price than it did in 1999.

3. Lynn says that “editions could dilute value.” Here, in reference to “Comedian”, which is an edition of 3 + artist’s proofs, I emphatically disagree. Of course, a print from an edition of 50 will almost certainly be significantly less valuable than a unique work by the artist. This, however, is not the case for many small editions, such as those of certain sculptures.

The best example to demonstrate this point my be Jeff Koons's "Rabbit", which sold for $91.1 million at Christie's, New York in May 2019. This remains the highest auction price realized for a living artist. It is from an edition of 3 +1 artist's proof.

One might even surmise that in certain circumstances such as that of "Rabbit", the distinguished collections of the other editions can propel the price that prospective collectors are willing to pay for the rare available edition. Similarly, if another edition of "Comedian" were to be offered for sale, the spectacle of the edition sold at Sotheby’s last month may add to interest.

Banksy and the Banana

When appraising art, the most relevant comparable sales are usually those by the same artist. If there are no appropriate comps, one may, by necessity, look to other artists. Find yourself appraising a Mantegna painting with no useful auction sales in 20+ years, you might look at the recent Botticelli sales to gain an understanding of present demand for significant Italian Renaissance paintings.

Doing such is relatively uncommon when appraising contemporary art, particularly by well-known artists whose works sell regularly at auction and privately. Yet, if I were appraising Maurizio Cattelan’s Comedian, the duct-taped banana that sold this week at Sotheby’s, New York for $6.2 million against an estimate of $1-1.5M, I would do just that.

Comedian is hardly alone within Cattelan’s oeuvre to trade in shock value, not even among works that have sold publicly. Known for his 18-karat gold toilet, America, created for the Guggenheim in 2016, Cattelan’s auction record was set the same year when, that May, one of three editions of Him (2001), a slightly under-life-size sculpture of Hitler sold for $17,189,000 for at Christie’s, NY. And yet, chilling as it may have been, this sculpture (an edition of which sold to Holocaust survivor Stefan Edlis) caused no great media spectacle, nor, perhaps more fundamentally, did it cogently pose any essential questions about the status of art itself.

It was not another Cattelan, but rather a Banksy that had me convinced that Comedian would perform far beyond its estimate, and enormously above its primary-market realized price of $120,000 at Perrotin’s booth at Art Basel Miami Beach in 2018. The appreciation rate of 50x seems about right given the sentiment that it tapped, as well as the attendant press, now coupled with deft marketing.

The best comparable is, in my view, the Banksy, formerly known as Girl with Balloon, which sold, considerably above estimate, for $1,364,669, at Sotheby’s London; upon hammering, the painting dropped and partially shredded. The owner kept the work, and the stunt became an instant media sensation. The shredded Banksy was offered again just three years later, again at Sotheby’s London, this time with a lofty estimate of £4,000,000 - £6,000,000 ($ 5,473,340 - $ 8,210,010), and it made multiples, fetching, with buyer’s premium £18,582,000 ($ 25,426,401), a new record for the artist.

Notoriety sells, without question. But why does a work become notorious? The commonalities extend beyond mere shock. Cattelan’s conceptual modified-readymade and Banksy’s shredded painting share tropes of self-destruction and decomposition, each updating concepts explored by artists for generations. Further, both fundamentally question the meaning and limits of what constitutes a work of art. For these reasons, I consider Love is in the Bin to be a pertinent comp for Comedian, arguably the most pertinent — and its repeat(-ish) sale in 2021 for 18 times higher than the 2018 sale is what caused me to believe that Comedian would soar as it did.

The High End of the Auction Market: November 2024

With Rene Magritte’s L'empire des lumières (1954) guaranteed to sell this week at Christie’s in the region of $95 million, it was a foregone conclusion that the high end of the November Evening Sales would be markedly different from May, when the the three big houses were led by the sale of Basquiat’s Untitled (ELMAR) at Phillips for a comparatively low $46.5 million.

The Magritte flew last night, fetching, with buyer’s premium $121.1 million, over $40 million above the artist’s previous auction record, set at Sotheby’s in 2022 for a painting of a similar subject. The price, among the highest realized at auction for a postwar painting, is still not remarkable in absolute terms; in the past decade we’ve become accustomed to nine-figure results for major works.

However, at a moment of correction in many market sectors, the strength of the Magritte sale suggests that the market for masterpieces may operate by its own logic and largely apart from trends seen elsewhere in the market.

If one were to wonder how the five $100+ million lots in the November 2022 Paul Allen auction would fare in today’s market, the Magritte sale may point to an answer. The Magritte’s realized price of $121.1 million is squarely within the range of the highest prices in Allen; more specifically, it would have been the third-highest sale in that auction, after Cezanne’s La Montagne Sainte-Victoire ($137.8 million) and slightly above Van Gogh’s Verger aves cyprès ($117.2 million). One might even extrapolate from the strength of demand for the Magritte that the paucity of highest-end consignments in recent auctions appears largely to be a supply-side matter.

Also selling this week for more than the above-mentioned $46.5 million Basquiat were Ed Ruscha’s Standard Station, Ten-Cent Western Being Torn in Half (1964) for a record-setting $68,250,000, offered by Christie’s sans guarantee with an estimate in the region of $50 million, and Claude Monet’s Nymphéas (1914-17) for $65.5 million at Sotheby’s.

Comments in ARTNews

My comments on the sale of the Derek Fordjour are included in Angelica Villa’s article for ARTnews on Phillips’s Evening Sale last night:

The night’s brighter spots were on paintings by mid-career artists Elizabeth Peyton and Derek Fordjour. Peyton’s Kurt (Sunglasses) went for $2.4 million, nearly three times its high estimate, while Fordjour’s ranch-inspired painting Twelve Tribes went for $1.1 million, more than double its high expectations.

The result for the Fordjour, according to one adviser, shows some signs about what contemporary art collectors are facing in their negotiations with galleries.

“Primary market access is difficult for Fordjour,” said David Shapiro, a New York-based appraiser, told ARTnews following the sale. “I’m not surprised. It’s very competitive for those pieces.”

Notation of auction prices

Some may rightfully be confused by the variation in notation of auction prices. Auction houses, on their websites, publish prices that include the buyer’s premium, though their pre-sale estimates do not account for the buyer’s premium. The art press usually refers to premium prices, and appropriately specifies them as such.

Artnet, one of the major databases for recording auction prices, only publishes the price including buyer’s premium, unless (typically for smaller auction houses and/or older sales) they publish only the hammer price — in either case specified accordingly. Another major auction price database, Artprice, typically publishes both the hammer price and the price including buyer’s premium, respectively specified as such. This may be most instructive to many, myself included.

There are, however, a few visible exceptions, who persistently cite only hammer prices, sometimes without specification. One is ArtTactic, an art market research firm. The other is BaerFaxt, an art market newsletter. Both, for example, posted to social media last night to announce the sale of Claude Monet’s Nymphéas (1914-17), using only the hammer price of $59 million; ArtTactic did not even specify it to be a hammer price.

The price that matters most for reportage is that which includes the buyer’s premium, in this case $65,500,000, which most closely approximates its Fair Market Value (FMV), a value type defined by the IRS as “the price that property would sell for on the open market. It is the price that would be agreed on between a willing buyer and a willing seller, with neither being required to act, and both having reasonable knowledge of the relevant facts.” (IRS Publication 561).

Fair Market Value is in fact the only type of value that can be used for an appraisal for any IRS tax purposes, and it is important to recognize, as the IRS has done for over 30 years, that Fair Market Value corresponds to the price including buyer’s premium. In 1992, the Internal Revenue Service specified in Technical Advice Memorandum 9235005 that for estate-tax purposes, FMV includes buyer’s premium. This is universally understood to be applicable to the calculation of FMV for any purpose, not limited to estate-tax purposes. In other words, hammer is only a portion of the total price, the remainder being the buyer’s premium.

The hammer more closely approximates another type of value, namely Marketable Cash Value (MCV), defined by the Appraisers Association of America as “the net value a willing seller realizes after disposing of property in a competitive and open market to a willing buyer. Both the buyer and seller must be reasonably knowledgeable of all relevant facts, and neither being under constraint to buy or sell.” However, the hammer is not necessarily the net price to seller; some (but not all) sales are subject to vendor’s commission (VC), and at some auction houses vendor’s commission may be negotiable.

Ed Ruscha at Christie's

Ed Ruscha’s Standard Station, Ten-Cent Western Being Torn in Half (1964) will be offered this November at Christie’s, New York with an estimate on request in excess of $50 million.

The benchmark is his record-setting sale of Hurting the Word Radio #2 (also 1964) for $52.5 million at the same house in 2019.

This is the second $50M+ lot announced for the November auctions, the other being the Magritte, guaranteed to sell for at least $95 million.

This past May, the highest realized price was $46 million — very low by comparison with the records in most recent auction seasons.

With these two offerings, we can already expect the highest end of the fall auction season to look considerably different from the spring 2024 season.

It’s a buyer’s market for many artists, but the fluctuations at the highest end of the art market also depend highly on circumstance.

Hear more about trends in the art market on the recent episode of the Private Client Risk & Resilience Podcast, on which I was a guest this week.

It is honor to be back on the Private Risk and Resilience Podcast today as the guest of Episode 34, speaking with Kurt Thoennessen, CAPI about trends in the art market and about the upcoming Private Risk Management Association (PRMA) summit in Arlington, Texas. Tune in here.

AI in Art Appraisal (part 2)

The recent episode (# 162) of The Appraisal Foundation’s “Appraiser Talk” deals with the topic of AI in appraisal. It is worth a listen, though I disagree with most of what the guest, technophilic real-estate appraiser Jim Amorin, asserts, above all, his comment that AI is “like having a crystal ball for the market.”

AI is only as good as as what it scrapes, and we don’t have market data from the future. Appraisers do analyze trends. And yes, technology can help organize data that shows past trends, which at times may provide insight into forecasting future outcomes — though such forecasting may often be tangential to an appraisal assignment with the given task of assessing a past or present value.

While such propensity for pattern recognition is presumably what emboldens Mr. Amorin to feel like he has a crystal ball, one must worry that the machine is not always right, either by virtue of having been trained on an insufficient quantity or type of data, or, critically, because artificial intelligence, certainly in its present form, lacks the nuance for judgement of real human intelligence.

Mr. Amorin’s assertion that “these AI algorithms excel at detecting patterns that might not be immediately obvious to the human eye" has proven, and will, I believe, continue to prove untrue. Perhaps the most notorious recent example was the AI / facial-recognition-driven attempt at attributing a would-be Raphael based on the machine’s detection of a “97 percent similarity” between the figure of this painting and the de Brécy Tondo — the attribution was subsequently questioned by another AI-based team.

Indeed, facial-recognition software might rightly perceive a 97% percent visual similarity between none other than the Mona Lisa and a well-painted copy (of which there are many), but the the 3% difference would presumably cause a 99%+ difference in value.

One must question whether AI, in its present form is at all “very good at analyzing patterns and irregularities,” as Mr. Amorin contends. On the subject of Leonardo, the example in the illustration above came up in the Photos app of my computer — and yes, this is, in fact, a kind of artificial intelligence. The machine’s error of mistaking the Salvator Mundi with a Frida Kahlo self-portrait is certainly funny, but the absurdity of this mistake —ostensibly resulting from insufficient data and training in the model — is also a keen reminder of how flawed, at base, these systems are. (Should we read some deeper meaning into the fact that Photos cropped out the Salvator Mundi’s crystal ball? )

[NB: Similarly problematic statements riddle Mr. Amorin’s self-published book The Generative Shift: Preparing Appraisers for Artificial Intelligence Models Like ChatGPT. While one might be tempted to dismiss a book that has not undergone due editorial process or peer review, it is alarming to see that Amorin’s voice was regarded as relevant enough for his inclusion in the Appraisal Foundation’s recent convocation, “Artificial Intelligence & USPAP Shaping Future Standards and Ethics Forum.” I also recognize that some aspects of real-estate appraisal may differ from those of personal-property appraisal, but we follow the same set of professional standards, and my concerns remain.]

Magritte at Christie's

The first major consignment of the fall 2024 auction season was just announced: Rene Magritte’s L’empire des lumières (1954) will be sold at Christie’s, New York this November in a single-source sale of property from the estate of Mica Ertegun. Christie’s estimate for the Magritte is “in excess of $95 million.”

A sale at such a price would far surprass Magritte’s previous auction record of $79.3 million (US) for a closely-related 1961 painting of the same title sold at Sotheby’s London in March 2022. A price of $95 million+ would also set a new record for any work of Surrealist art, a sub-sector that has had considerable market traction in recent years.

Of significant note is the fact that this pre-sale estimate is nearly double the highest realized auction price in the relatively quiet auction season of spring 2024, namely $46.5 million for Basquiat’s Untitled (ELMAR) (1982) at Phillips, New York, followed closely by the sale of another Magritte, L’ami Intime for $43 million at Christie’s, London.

Despite reported private sales at the highest echelons of the market, and notwithstanding the partially circumstantial nature of certain major estate consignments, the lack of auction consignments of works in the nine figures (or approaching it) spelled total declines in year-to-year sales results — and consequent skepticism among some. Sales figures were woven together with true stories of decline in other market segments, such as markets for emerging art, many of which contracted following a speculative bubble.

The Magritte consignment approaches the value level of the five highest paintings in the Paul Allen sale, and it has the potential to be the first work of art to sell at auction for over $100 million since the sale of Picasso’s Femme à la montre fetched $139.3 million at Sotheby’s, New York in November 2023.

In Artnet’s recently published mid-year market report, Phillip Hoffman, CEO the Fine Art Group stated: “If a big estate came up, and it was of the quality of Yves Saint Laurent’s or Paul Allen’s, it would do incredibly well, even now.” While the Ertegun estate, in totality, is not the same as the Allen estate, this Magritte, which had no equivalent in the spring auctions, will indeed be a test of demand at the high end of the market.

Koons at Christie's

Christie’s just announced that they will be offering Jeff Koons’s Balloon Monkey (Blue) (2006-13) in their 20th/21st Century London Evening Sale on October 9, 2024 — from the collection of Damien Hirst, no less.

The published estimate is £6,500,000 - £10,000,000, which is approximately $8,400,000 - $13,000,000, using the currency conversion provided by Eileen Kinsella in an Artnet News article on the consignment, titled “Damien Hirst Is Selling a $8.4 Million Jeff Koons at Christie’s During Frieze London.”

It has become something of a journalistic tic to refer to works of art by a value (e.g., $8.4 Million Jeff Koons) before any sale has taken place, and with no appraisal to cite. Such headlines tagging a work with a number often take their cues from an auction estimate, as was the case with this Koons. However, one must keep in mind that the pre-sale estimates given by auction houses are not appraisals; they are strategic figures assigned for specific sale purposes.

Kinsella reports that the Koons is guaranteed by Christie’s to sell. What she does not specify, however, is that the pre-sale estimates given by auction houses do not include buyer’s premium. It is possible that the sculpture is guaranteed for less than the low estimate, but if in fact it is guaranteed at the low estimate, even a sale to the guarantor would realize a higher price than $8,400,000; such a price would be the hammer price plus the buyer’s premium minus a pre-negotiated fee to the guarantor.