One is Remarkably Eclectic

Ivan Lindsay on the story behind the Royal Collection — not only the finest private accumulation of artworks, objets and curios in the world, but also a mirror of the diverse tastes and predilections of every British monarch since Charles I

THE ROYAL COLLECTION has been amassed by kings and queens over the last 500 years and is the largest art collection in private hands. It includes textiles, fans, armour, prints and maps, manuscripts, books, jewellery, sculpture, silver, clocks, ceramics, furniture, watercolours and paintings. It contains over 7,000 paintings, 500,000 prints and 30,000 drawings and watercolours (including 600 by Leonardo da Vinci).

Although a few items can be traced back to Henry VIII and earlier monarchs, the first significant royal collector was Charles I, who was described by Rubens as ‘the greatest amateur of paintings among the princes of the world’. Charles was a second son who never expected the throne.

When his older brother, Henry, Prince of Wales, died of typhoid aged eighteen in 1612, Charles was thrust into the role of heir apparent. Archbishop Laud described Charles as ‘a mild and gracious prince who knew not how to be, or how to be made, great’, while Ralph Dutton observed: ‘In spite of his intelligence… his manner was not helped by his stammer and thick Scottish accent, while in public he was seldom able to make a happy impression.’

England had been isolated from Europe since Philip II had unsuccessfully tried to invade with his armada in 1588. When James I re-established diplomatic relations in 1603 and the English started to travel to the Hapsburg courts of Vienna and Madrid, they realised they had missed out on the southern European renaissance, including artists such as Titian, Raphael, Correggio and Botticelli. Charles believed that if he started a major art collection it would make up for some of his deficiencies and enhance his royal stature.

Charles promptly set off to Madrid with George Villiers, Duke of Buckingham, who was described as ‘the handsomest-bodied man in all of England’. Buckingham had been the favourite of Charles’s father and knew how to play the role of courtier. Good-looking and charming, he was also crass, opinionated and a hopeless general who consistently gave Charles misguided advice on foreign policy. He did, however, share Charles’s love of art and the two of them collected masterpieces while enjoying a round of balls, theatre, bullfights, fireworks and hunting expeditions.

Over the next decade Charles laid the foundations of the Royal Collection, buying masterpieces by Raphael, Leonardo, Tintoretto, Titian, Correggio, Mantegna, Raphael and Gianbologna. He also patronised contemporary artists such as Rubens and van Dyck. Charles frequently agreed one price and then, after taking delivery, paid a lower price that often bankrupted the dealers. In 1627 he agreed to pay £28,000 for the outstanding collection of the Gonzagas of Mantua, but only paid £18,000 on delivery. The shortfall of £10,000 was a significant sum when a junior infantry officer earned £15 a year, and it bankrupted the financier, Daniel Nys, and the dealer, Filippo Burlamachi.
AFTER CHARLES WAS beheaded in 1649, the Rump Parliament, under the direction of Oliver Cromwell, decided to sell off his art collection to raise money for his debtors and to re-equip the navy. Cromwell believed that Charles had identified his reign and royal authority so closely with his art collection that allowing normal people to buy the art would weaken the concept of royalty.

The trustees had difficulty with valuations as Charles had concealed all his paperwork, but sales started shortly afterwards in a complicated story of deception, betrayal, double dealing, switching allegiances, fraud and theft. The demise of Charles and his court allowed the other leading buyers in Europe, such as Philip II, Cardinal Mazarin and Archduke Leopold William, to acquire masterpieces that today remain in the museums of Europe.

The dealers, agents and speculators who participated in these sales made fortunes and the modern art market was born. Colonel John Hutchinson, a close ally of Cromwell who had successfully defended Nottingham Castle during the war, paid £600 for Titian’s voluptuous Pardo Venus, which had been acquired by Charles in 1623 at the Spanish Court. Three years later Hutchinson sold the painting for £7,000 to Cardinal Mazarin, and today it hangs in the Louvre.

This was one of the last sales before Cromwell was appointed Lord Protector (having reluctantly turned down the crown). He immediately halted the sale and reserved the remaining items for his two main palaces at Whitehall and Hampton Court. Having railed against the king’s lifestyle and possessions, he apparently saw no contradiction in trying to achieve something similar. After Charles II (1630–85) was invited back as king by the British in 1660 he exhumed Cromwell’s body from Westminster Abbey, decapitated it, and displayed his head on a pole outside Westminster Hall.

Charles forced anyone who possessed any pictures that had belonged to his father return them or face death, and also started cautiously buying again. It is estimated that of Charles I’s 1,400 paintings, around 300 of the greatest masterpieces were lost to European collectors.

Subsequent monarchs kept adding to the collection in line with their own preferences. William III (1650–1702) liked Boulle furniture, and Mary II (1662–94) collected Chinese and Japanese porcelain. Frederick Louis, Prince of Wales (1707–51) acquired a significant collection of French, Flemish and Italian paintings, and George III (1738–1820) acquired the art collection of the British consul in Venice, Joseph Smith, which included 52 Canalettos and a famous library. George III also patronised contemporary artists such as Ramsay, West, Zoffany, Gainsborough and Stubbs.

George IV (1762–1830) added jewellery, porcelain and sculpture. Queen Victoria (1819–1901) acquired over 1,000 paintings of mixed quality, and her Prince Albert (1819–61) bought some outstanding early Renaissance paintings. Edward VII’s (1841–1910) tastes reflected family, the sea, racehorses and shooting, whereas King George V (1865–1936) and Queen Mary (1867–1953) liked gold boxes and Fabergé. Queen Elizabeth the Queen Mother (1900–2002) brought together a strong collection of 20th-century art, and the current Queen (born 1926) has filled specific gaps, encouraged catalogues and improved public access.

Today the collection is primarily displayed in Buckingham Palace, Windsor Castle, Kensington Palace and Hampton Court. The main masterpieces, including the Rembrandts and Rubens, are displayed in the gallery at Buckingham Palace, where they are on view for two months each summer for a fee, and the Queen’s Gallery there has revolving exhibitions.

On ownership, the official position is that ‘the Royal Collection is held in trust by the Queen as sovereign for her successors and the nation, and is not owned by her as an individual’. Nobody seems to know quite what this means; it may be deliberately ambiguous. It appears that this arrangement is connected to the agreement made by George III in 1760 that the Crown lands would be managed on behalf of the government, with surplus revenue going to the Treasury. In return, the monarch receives a fixed annual payment from the government today known as the civil list.

MOST OF THE other collections of the former European royal families are on permanent display in national galleries such as the Louvre, Prado, Mauritshuis, Uffizi and Hermitage. The British Royal Collection is unique in that it remains in the original palaces. Some, such as Brian Sewell, the art critic of the London Evening Standard, argue that the collection would be more easily accessible elsewhere: ‘They should be in the National Gallery; that is where they will have the greatest impact.’ The National Gallery contains around 2,000 paintings, around a third of the size of the Royal Collection, which is small compared to most national collections.

Cromwell’s Rump Parliament rapidly came to the conclusion that the Royal Collection belonged to the people before selling it off. Today the same legal ambiguities exist, but the collection, for the time being, stays in situ and it remains a legacy and testament to the taste of the monarchs of Britain over the last 500 years.

  
Ivan Lindsay is a Spear’s contributing editor

Pictured above, in order, are: Lucian Freud’s self-portrait, presented to the Queen in 1996; Hogarth’s portrait of David Garrick and his wife (1757) and a Fabergé’s Mosaic Egg (1914), bought by George V in 1933.

The Royal Collection © 2012, Her Majesty Queen Elizabeth II. The exhibition ‘Treasures from the Queen’s Palaces’ at the Palace of Holyroodhouse in Edinburgh runs until 4 November.

Munch The Scream lithography (Photo credit: Wikipedia)

(This thoughtful article by Martin Sosnoff on the current enormous prices recently seen at the art auctions came out in Forbes).

I relish evening contemporary art auctions in the Big Apple.  It gives me a feel for the breadth and intensity of bidding on specific pieces of interest.  But, I’m rethinking my position.  Almost all art at auction turned pricey years ago.  Ironically, if I had spent the past 10 years more intensively involved in the art world as an aggressive collector I would have coined money.  Instead here I am battling for investment survival.

Dozens of pieces I bought even five years ago logged median appreciation of 1,000 percent.  I’m not bragging.  The new wave of international buyers carried me along as they bid indiscriminately for iconic contemporary works.  There’s no ending in sight as the past 2 weeks’ auctions proved.  Just a handful of lots I could even afford to bid on.  The going rate on a Mark Rothko now is north of $75 million.

When I heard Munch’s Scream made $120 million I shook my head in disgust.  The 0.1 percent set turned decadent role models in a world enduring 24 percent unemployment among Europe’s weak sisters.  College graduates squirm, unable to make a dent in student loan debit balances while states like California up tuition far beyond a student’s carrying capacity.

Let’s diss these telephone bidders who pay nine figures for iconic works of art: Giacometti’s Walking Man, Picasso canvases and now Munch’s Scream.  Sooner or later, buyer identity surfaces.  The widow of Safra, who built a personal banking empire and the late Sam Walton’s daughter who owned from go a tranche of Wal-Mart now worth over $20 billion.

There are dozens of Russian oligarchs, Chinese industrial honchos, gaming casino headmen like Steve Wynn – probably 100 or so collectors stand ready to bid for Warhols, Picassos, Bacons, Rothkos and Clyfford Stills work.

Even major museums like the Getty or MoMA dare not compete at auction, fearing push back from their boards and the public.  Actually, buying at auction is a tacit admission that you’ve missed your market, failing to perceive and buy early on controversial or ignored work that later emerges as vibrantly expressing the ethos of its age.

My biggest errors came from selling too soon works by Warhol, Basquiat, Wool, Richter and Botero because I tired of them.  Watching canvases appreciate 10 fold in a 5-year period is forever painful, comparable to banging out Apple 5 years ago at $32 a share (I was a buyer.)

Collecting currently is a frustrating, pricey grind.  Somebody always gets there half an hour ahead, sometimes minutes before you.  At the Frieze exposition on Randall’s Island last week I missed out on two pieces – a Robert Longo American flag in muted greys and an updated rendition of George Washington crossing the Delaware with his troops.

I’m waiting for the contemporary art market to top out and drop 50 percent, but it doesn’t comply.  Catalogs from Sotheby’s and Christie’s wax fat, elaborately packaged, scholarly annotated with notes categorizing the work in question’s derivation and historical context.

You don’t have to thumb through dozens of books on art criticism, biography and illustration.  Sotheby’s and Christie’s researchers do it for you.  Many pieces at auction are bought sight unseen, employing transparencies or images sent over the Internet to smart phones and iPads of prospective bidders.
Today, there’s very little for sale that I can compete for, not part of the $10 million and up buyer class.  My collecting dates back to the mid-fifties when there were maybe 100 serious buyers of contemporary art in New York.  Mark Rothko’s canvases sold at Betty Parson’s gallery for $1,200 and you paid for it a hundred bucks, monthly.  Even Basquiat’s work sold for $2,500 in 1982.

Those days are gone forever.  Work by emerging artists starts around $15,000 while hot mid-career operators like Mark Bradford go for $500,000 and up.  If you walk in cold off the street to a major gallery, the chances are they won’t even consider selling you anything off their walls unless you’ve built a close relationship with them or can prove that you’re a serious collector.

The art world has run contrapuntally to financial markets this past decade.  The S&P 500 Index topped out almost 12 year ago and point to point, with dividends, yielded a skimpy return, little more than 1 percent.  Currently, savers stand disenfranchised by the Federal Reserve Board, earning under 2 percent on 10-year Treasuries and little more than 3 percent on AAA corporates of five years duration.  No wonder art today is considered a repository of value promising appreciation.

Investors still hold too much of their liquid assets in cash which earns nothing.  Our jitter-bugging stock market breeds anxiety.  Risk on, risk off traders trigger stocks like Apple into fluctuations of 3 to 4 percent, daily.  Personal capital won’t come back in until the market takes out its old highs set in 2000 and 2007.  I’m waiting, impatiently.

I yearn for the Yankee frugalist days of my mid-twenties.  We would brown bag it to Wildcat Mountain in New Hampshire.  Everyone self-sharpened their ski edges.  Nobody bought a new car more than once every 7 or 8 years.  You’d be unmercifully chastised at communal spaghetti and meatballs dinners.

The price level for art today is neither leading nor lagging indicator.  This shooting star is a coincident indicator.  Hundreds of newly minted billionaires in Russia, the U.S. and China as well as oil sheiks in the Arab world now yearn to erect museums of contemporary art, but lack inventory to cover the walls as yet.  Their open-to-buy starts with Warhols, Richters and Rothkos and then works down into my inventory category of Joan Mitchell, Anish Kapoor, Georg Baselitz and Anselm Kiefer.

Meanwhile, President Obama has turned silent on ending the capital gains treatment for the carried interest of hedge fund operators, many big collectors.  There is no tuition grant program in exchange for 2 years of public service comparable with the Peace Corps of the Kennedy years.  It’s a toss up whether the payroll tax cut exists past yearend.  Not even the safety net is secure for the jobless.

Our country fails too many of its citizens.  No wonder that the valuation multiplier for the market is stuck at 13 times earnings.  Even 13 seems pricey in a world where the super rich wax self indulgent, flaunting outrageous bids in the art market.

Let’s face the music.  Corporate profit margins remain buoyant because labor these past 20 years got a lesser share of GDP.  Sooner or later, countervailing power builds up and forces concessions.

What will Warhol and Lichtenstein be worth 50 years ahead?  ¿Quién sabe?  The long term history of art prices covering 3 centuries shows a viciously cyclical pattern where one age’s indulgences turn nearly worthless decades later.  Unsaleable.

Meantime, the stock market is dealing with the conundrum of corporate profit margins moderately above trend relative to normalized earnings.  As I expected, commodity prices are coming in.  Oil easily drops another $10 a barrel considering its oversupply.  The stop ‘n’ go economic setting makes me edgy.  Does Greece float out into the Aegean?

Thumbing through Sotheby’s May 9 evening sale catalog, Basquiat canvases showed low estimates of $4 million, ditto for a Christopher Wool word piece.  Gerhard Richter’s 6-foot canvases looked to range over $10 million.  Roy Lichtenstein’s Sleeping Girl, 36 x 36 inches, could make $40 million along with a Francis Bacon and a Warhol Double Elvis executed in 1963.

I remember many of these pieces sold around $100,000 as late as 1990 when shown in New York galleries along with Joan Mitchell’s canvases now reaching over $6 million.

Hundred fold appreciation decade over decade is unheard of in the financial world unless you employ maximum leverage – so dangerous to your stability and staying power.

Financial markets stand more rational and less pricey than modern and contemporary art offerings at auction but nobody cares. When the circus comes to town you’re supposed to sell peanuts.  Sotheby’s and Christie’s surely remain able facilitators.

Martin T. Sosnoff is chairman and founder of Atalanta Sosnoff Capital, LLC, a private investment management company with $8 billion in assets under management. Sosnoff has published two books about his experiences on Wall Street, Humble on Wall Street and Silent Investor, Silent Loser.  He was a columnist for many years at Forbes Magazine and for three years at The New York Post. Sosnoff owns personally and / or Atalanta Sosnoff Capital owns for clients the following investments cited in this commentary: Goldman Sachs and Apple. Write Martin Sosnoff: mts@atalantasosnoff.com.

Blue-Chip Period
What a performer! Ivan Lindsay on the reasons why that randy old goat Pablo Picasso remains so irresistibly attractive to neophyte art collectors (not to mention auctioneers) 

A RECENT BLOOMBERG article led with the line: ‘Pablo Picasso has been dethroned.’ The article was referring to Picasso being knocked off the podium of the annual Artprice report, which grades the leading artists by auction revenue. The report draws results from a group of 450,000 artists, and Picasso slid into fourth place with $311.6 million after Warhol ($324.8 million), Qi Bashi ($445.1 million) and Zhang Daqian, who headed the table with $506.7 million.

That two Chinese artists, little known outside China and specialist circles, now lead the table of the world’s highest-selling artists is an astonishing result and an indication of the changing market. While it definitely shows the increase in the size of the Chinese market, the actual figures are misleading because the Chinese art market is manipulated and appears to have no regulation whatsoever. Western sources glibly repeat dramatic statistics supplied by Chinese auction rooms, whereas the few Westerners who have tried to participate in these auctions report back that the corruption and dodgy practices that exist there are baffling even to those who think they have seen it all in the Western art market. The dazzling run of these Chinese artists, allied with market manipulation, implies that this is a market in which to be very cautious and take profits if speculation is your motive.

But is the strong demand for Picasso’s work, which has existed from his early career to the present day, starting to cool? It appears not, as Picasso is still considered the outstanding artistic genius of the 20th century and the demand for his work shows no sign of abating. Apart from 2007, when Warhol pushed him into second place, Picasso had held the number one position on the Artprice survey every year it had been published.

Why is the Picasso market so dominant? Most art is bought by new money. Old money generally already has its art and later generations are often so controlled by trustees that they cannot do much except live comfortably. The desire for new money to participate in the art market is not a new phenomenon and arises out of basic human instincts. Those who have become successful are curious as to what all the fuss is about in the art market. It appears to be a rich man’s game with its own rules, and it’s a club they can now join. Participation is exciting, a little nerve-wracking and a good way to show off one’s new riches. So where to begin?

Picasso is often the starting point. His oeuvre satisfies today’s collectors on every level: it’s abundant, clearly documented, widely exhibited, extensively covered by literature and well represented in the leading museums. Rarity is not attractive to today’s new collectors, who have little cultural knowledge. They seek familiarity, abundance and track record — hence the bizarre success of Damien Hirst’s Spot paintings, currently filling all Gagosian’s galleries, which were mass-produced by an army of assistants. Apparently Hirst continues to recommend those done by ‘Rachel’. At least Picasso made his own art.

Picasso has an enormous oeuvre with a variety of different periods and styles from which to choose, from the Blue period, the Rose period and Cubism through to the late cartoon style. The size of his production is hard to gauge accurately but is extensive. There are around 13,500 paintings, at least that number of drawings, 2,500 original prints, 1,000 ceramics and 700 sculptures in other mediums. With the prints and ceramics generally in editions of 75, that gives an oeuvre of over 250,000 artworks.

Table courtesy of ARTvest partners
Within this vast body, fashion meanders around the various different periods. Until recently, the early work was sought after and the later cartoonish style considered a joke. It was thought that by his last decade Picasso rather despised his clientele and delighted in dashing off paintings with little effort and charging high prices for them. There is also a sense in the late works that he was increasingly conscious of his own mortality and desperate to seem au courant to his young girlfriends. As the early Blue and Rose periods have become expensive, and Cubism is too intellectual for today’s taste, the later works compare favourably to the childlike scribbles of such later artists as Basquiat and are now increasingly sought after.

The diamond dealer Laurence Graff was featured recently in the magazine Gstaad Life explaining why he has decided (not surprisingly) to open a shop in Gstaad. In the article he is photographed in front of a late Picasso, presumably from his own collection. Of all the paintings he could have sat in front of, that he decided on this late cartoonish Picasso shows the current vogue for these pictures. In it, two figures face each other. The figure on the left, presumably a woman because she has three breasts, with one eye on her nose and another sliding down her face, sits listening to what might be a man with insect-like arms playing a flute.
DESPITE NUMEROUS FAKES on the market, it is actually quite easy to establish if a painting is a real Picasso because most of his works are published in various books, such as The Picasso Project, or have a certificate from one of the family members, such as Marina, Maya or Claude Picasso, who, with their extensive holdings of his work, carefully control the market. The Picasso Project updated both the books of Christian Zervos and the catalogues compiled by the Musée Picasso. Zervos published 22 volumes of illustrated Picasso works between 1938 and his death in 1970, and a further eleven have been added since. If a painting is illustrated in one of these sources then it is highly likely to be real, which soundly underpins the market and gives confidence to buyers.

In addition to the strict authenticity control, there is an extensive and well-documented track record of appreciating value. Inch for inch, Picasso’s work has appreciated more consistently than that of any other artist. A study by ARTvest partners of New York in September 2010 took five notable Picassos and calculated their compound annual growth rate as ranging between 15.88 and 30.23 per cent.

Although reliable figures only exist for these exceptional and valuable paintings, more modest works by Picasso also appreciate strongly. His best works, as with any artist, appreciate the fastest, but as is normal with such a prolific artist who never destroyed anything, the quality ranges considerably. There are numerous Picasso exhibitions held in museums every year and most major museums have plenty of works by the artist in their permanent collection. There are also at least four museums devoted to his work, including those at Barcelona, Paris, Malaga and Antibes.

So it can be seen that when buying Picasso collectors have reassurance, track record, appreciating values, and numerous books, exhibitions and museums to refer to. It is, however, wise to seek help in selecting his best work. Several dealers dominated the Picasso market for years but, with the recent deaths of Jan Krugier in Geneva and Ernst Beyeler in Basel, there is a sense that the market is opening up. In New York, Pace Gallery and Gagosian are active and in London there is James Roundell and the Nahmad family.

Recently, amid the economic doom and gloom, the art market has appeared a beacon of success defying the carnage all around. However, it is traditionally the last market to subside and then the last to recover in the economic cycle. This magazine warned readers to be careful when the Sotheby’s share price turned down some six months ago, a traditional indicator of trouble ahead. The art market will not continue to defy gravity for ever, but for those brave enough to keep buying, and particularly for those who are exploring art acquisitions for the first time, the simplest strategy would appear to be… ‘Buy Picasso.’ 

Ivan Lindsay is a contributing editor at Spear’s.

Much has been made of the price of US$250m taking the art market to a new level but in fact it just validates some of the recent prices paid such as Picasso’s, Gauguin’s and Giacometti’s selling in the US$100m range.  The art market continues to hold up well in this recession as capital increasingly finds it difficult to find a secure home.

The Vanity Fair article…………..

Qatar Purchases Cézanne’s The Card Players for More Than $250 Million, Highest Price Ever for a Work of Art.

With this landmark score, the tiny, oil-rich nation joins a massively exclusive club: only five Card Players exist, and the other four are in world-class collections such as the Musée d’Orsay and the Metropolitan Museum of Art. The purchase is just the latest bid in Qatar’s effort to become an international intellectual hub.

By Alexandra Peers

The tiny, oil-rich nation of Qatar has purchased a Paul Cézanne painting, The Card Players, for more than $250 million. The deal, in a single stroke, sets the highest price ever paid for a work of art and upends the modern art market.

If the price seems insane, it may well be, since it more than doubles the current auction record for a work of art. And this is no epic van Gogh landscape or Vermeer portrait, but an angular, moody representation of two Aix-en-Provence peasants in a card game. But, for its $250 million, Qatar gets more than a post-Impressionist masterpiece; it wins entry into an exclusive club. There are four other Cézanne Card Players in the series; and they are in the collections of the Metropolitan Museum of Art, the Musée d’Orsay, the Courtauld, and the Barnes Foundation. For a nation in the midst of building a museum empire, it’s instant cred.

Is the painting, created at the cusp of the 20th century, worth it? Well, Cézanne inspired Cubism and presaged abstract art, and Picasso called him “the father of us all.” That said, “$250 million is a fortune,” notes Victor Wiener, the fine-art appraiser called in by Lloyd’s of London when Steve Wynn put his elbow through a Picasso, in 2006. “But you take any art-history course, and a Card Players is likely in it. It’s a major, major image.” For months, he said, “its sale has been rumored. Now, everyone will use this price as a point of departure: it changes the whole art-market structure.”

The Cézanne sale actually took place in 2011, and details of the secret deal are now coming out as a slew of V.I.P. collectors, curators, and dealers head to Qatar for the opening next week of a Takashi Murakami blockbuster that was recently on view in the Palace of Versailles. The nation, located on its own small jetty off the Arabian Peninsula, is a new destination on the art-world grand tour: current exhibitions include an 80-foot-high Richard Serra and a Louise Bourgeois retrospective (her bronze spider is crawling across the Doha Convention Center), and in March it hosts a Global Art Forum that attracts artists, curators, and patrons from museum groups worldwide.

Land of the 1 Percent

Qatar (and its capital city, Doha) isn’t just a destination for those with private jets. It’s also a burgeoning intellectual and media hub. It hosts the headquarters of Al Jazeera, the Mideast campuses of Georgetown, Texas A&M, and Northwestern Universities—and of one the most ambitious sets of cultural goals since the robber barons and empire builders of America founded so many grand institutions a century ago.

Qatar does big things in a spectacular way. In 2008 when it opened the Museum of Islamic Art, a grand limestone behemoth by I. M. Pei, a flotilla of vintage ships sailed in V.I.P. guests representing the world’s great museums. Later, Robert De Niro floated up from the sea in a revolving open-air elevator to announce the Tribeca Film Festival was starting a Doha outpost.

In 2010, Qatar opened its Arab Museum of Modern Art, and the Qatar National Museum, currently closed for renovation by superstar architect Jean Nouvel, will reopen in 2014. That’s where the Cézanne could end up, flanked by some famous Rothkos, Warhols, and Hirsts that the Qataris have been snapping up in a buying spree.

The royal family of Qatar, does not comment on its purchases, however. And the tight circle of auction, houses, officials and dealers it is involved with, by and large, sign confidentiality agreements. But multiple sources confirm the record purchase of The Card Players.

The Deal

How did Qatar get the Cézanne? For years, Greek shipping magnate George Embiricos had owned and treasured the painting, rarely lending it. He was “entertained” but unmoved, according to one art dealer, by occasional offers for it that climbed ever higher alongside the art market in past decades. A few years ago, the painting was listed by artnews magazine as one of the world’s top artworks still in private hands.

Shortly before his death in the winter of 2011, Embiricos began discussions about its sale, which was handled by his estate. Two art dealers—William Acquavella and another, rumored to be Larry Gagosian—offered upward of $220 million for the painting, people close to the matter said. But the royal family of Qatar, without quibbling on price, outbid them, at $250 million. (Disputes about the exact price turn on currency exchange rates, exactly when the painting changed hands—and whether the person talking has a pricey Cézanne in inventory. Estimates of what Qatar paid range as high as $300 million.)

Qatar’s appetite was all the stronger because, as the sale was going on, the Metropolitan Museum of Art was opening an entire exhibition devoted to the Card Players series—noticeably absent the elusive Embiricos one. Believed to be the final one the artist painted, circa 1895, it’s “the darkest, the most stripped down and essential,” said Gary Tinterow, curator of that Met show and, as of this week, the director of the Museum of Fine Arts, Houston.

Members of the royal family of Qatar work through G.P.S., a New York-and-Paris-based triumvirate of dealers known for its discretion. Its principals include Lionel Pissarro, grandson of the painter Camille Pissarro, and dealer Philippe Segalot, who had handled many private transactions for luxury-goods billionaire François Pinault. Guy Bennett, former head of worldwide Impressionist and modern art at Christie’s, also played a hand in the record-setting deal, people close to the matter said. (Christie’s goes way back with the Embiricos family, who are a horsey set, as it hosts the annual Foxhunter Chase in Cheltenham, England.)

The most paid for a painting at auction is the $106 million, paid last year at Christie’s for a lush portrait of Picasso’s curvy mistress Marie-Thérèse. Privately, works by Picasso, Pollock, Klimt, and de Kooning have changed hands in the $125 million-to-$150 million range, traded to and from by Ronald Lauder, Wynn, David Geffen, and the like. But no price has come close to this one. And Qatar is also buying 20th-century art: The Art Newspaper, with has chronicled Qatar’s buying sprees with care and ferocity, earlier this year crowned the nation the biggest single contemporary-art buyer in the world.

The money is there: the United Arab Emirates region (which, loosely defined, includes Dubai, Bahrain, and Abu Dhabi) is home to nearly 10 percent of all the world’s oil reserve, nearly four million people, and, until recently, the planet’s largest-ever construction boom. Qatar’s neighbor (and rival) Abu Dhabi started, stopped, and now has started again ambitious plans to build outposts of the Louvre and the Guggenheim museums on its Saadiyat Island.

The region’s glamorous arts expansion takes place in the shadow of the Arab Spring, of course, but that hasn’t stopped the showmanship game. This is a play for fame, tourism, and immortality—and the buyers are well versed in Hollywood-style hype. The daughter of Qatar’s emir, 28-year-old Sheikha Al Mayassa bint Hamad bin Khalifa Al-Thani, now heads the Qatar Museums Authority. But her first job was working as an intern in New York for the Tribeca Film Festival. (She once bragged, laughing, that her job was picking up breakfast pastries for Jane Rosenthal.) Next week, she’s hosting the opening of the Murakami exhibition.

Qatar became an art-world force roughly a decade ago, when Sheikh Saud Al-Thani, cultural minister and second cousin of the emir of Qatar, began an unprecedented global spending spree. That ended ignobly, with the sheikh’s arrest in 2005 for misuse of public funds (he has since been released). Now his cousin the emir Saud al Saud continues to buy.

Is the buying spree over? Not a chance. Qatar made another major acquisition last year, hiring Christie’s chairman Edward J. Dolman as executive director of the Museums Authority.

Is it really worth £50 million of public money for a masterpiece by one of the greatest artists ever, just so it can stay in Britain and be a source of joy and inspiration to heaven knows how many, asks Ivan Lindsay

IN EARLY OCTOBER, the National Gallery of Scotland (NGS) reconfirmed its intention to raise the £50 million needed to buy the Duke of Sutherland’s second painting by Titian, Diana and Callisto. The painting forms half of a pair, and the NGS, working in tandem with the National Gallery in London, previously secured the first painting, Diana and Actaeon, for a similar sum in February 2009.

Whether such amounts should be spent on art ignites passionate opinions, and the NGS’s announcement that it intends to follow through with its desire to secure the second Titian seems certain to resurrect the left–right divide over issues of art, class, privilege, nationalism and the spending of public money on culture.

Those against are led by the Glasgow MP Ian Davidson, who said on BBC Radio Scotland’s Good Morning Scotland: ‘It is difficult to argue that this is part of Britain’s cultural heritage when it’s a painting by a long-dead Venetian — it’s not as if it’s Jock McTitian… [it’s an] obscene amount of money, particularly when the National Gallery has around twenty Titians.’ He was also quoted by the BBC as saying: ‘Very few people will have heard of Titian; many will have thought he was an Italian football player.’

Sir John Tusa, chairman of the University of the Arts in London, wrote a letter to The Guardian saying: ‘We would, however, [despite broadly supporting the campaign] like to issue a warning and a plea to those who are rallying support for the Titian campaign. Please do not forget today’s young artists… [whose funding] is often forgotten in the rush to celebrate the established and praise the gilded.’

Art-world grandees are united in talking of the painting’s importance, rarity and beauty. Nicholas Penny, director of London’s National Gallery, has said that many who contributed to saving Diana and Actaeon for the nation did so ‘on the understanding’ that Diana and Callisto would also be bought, but the second £50 million ‘is not going to be easily raised. We do believe we can do it, and we have given it a great deal of thought. It’s not just reckless gambling.’ Many of Britain’s artists have lent support to the campaign, such as Tracey Emin, who delivered a petition to Downing Street signed by Lucian Freud, Damien Hirst and David Hockney.
THE TWO TITIANS formed part of the Sutherland Loan to the NGS that was made in 1945 and consists of 33 artworks, including masterpieces by Poussin, Raphael, Rembrandt and Rubens. The loan transformed the NGS into a major European art destination. The current duke, Francis Egerton, 7th Duke of Sutherland, inherited the title and collection in 2000. In 2003, he sold a famous painting from the collection to the NGS, Titian’s Venus Anadyomene, for £11 million, around half its open-market valuation, although he did receive tax benefits, as allowable under British law on a sale to an institution. This was followed by the sale of Diana and Actaeon in 2009.

A spokesman for the duke said: ‘The Bridgewater Collection has grown in value to the point where it is prudent to review the holding in terms of the balance of the family’s overall assets. It does now seem sensible to consider the sale of some part of this collection.’ Since the art collection is now estimated to be worth over £1 billion without the Titians, one can understand how the duke might feel overweight in art. Again, the deal would have tax benefits as it would be a sale to an institution, but it is still a generous offer as the paintings could be worth £150 million each on the open market. If the second Titian is acquired, the duke will also leave the remaining pictures on loan to the gallery for a further 21 years.

The two large canvases depict scenes from Ovid’s Metamorphoses. In one, the hunter Actaeon stumbles into a glade where Diana is bathing naked with her nymphs; in the other, Callisto is being stripped naked on Diana’s instructions to reveal her secret pregnancy by Jupiter. These glorious, dramatic paintings are among Titian’s finest achievements. He referred to them as his ‘poésies’, or his poetry, and painted a set of six of them, which are today split between the Wallace Collection in London, the Museo del Prado in Madrid and the Isabella Stewart Gardner Museum in Boston.

It would be hard to overestimate the importance of these two paintings. Whereas an artist such as Picasso produced around 10,000 paintings in his life, Titian left only a few hundred, and most of these are already in museums. The only other paintings to have been bought by a national institution that could be considered as important would be the National Gallery London’s acquisition of the Wilton Diptych in 1929 and Velázquez’s Rokeby Venus in 1906.
  
PHILLIP II OF Spain originally commissioned the paintings. Despite Charles I trying to buy the paintings 50 years later, they remained in the Spanish royal collection until Philip V gave them to the French ambassador, who sold them to Philippe II, Duke of Orléans. After the French Revolution the duke sold his collection shortly before he was guillotined. The largest share of it was bought in 1798 by the coal magnate Francis Egerton, 3rd Duke of Bridgewater, who paid vast prices for the best paintings.

On Bridgewater’s death, the paintings passed to the dukes of Sutherland and were made available to the public at Bridgewater House in London from 1806. In 1939 they were taken to Edinburgh for safekeeping (a wise decision, as Bridgewater House was bombed) and placed on loan in the NGS in 1945. The duke has said that if the NGS cannot find the money he’ll sell part of the collection on the international market, possibly including the remaining Titian.

The first campaign received funds from the Art Fund, the Scottish Executive, the British parliament, the National Heritage Memorial Fund and the general public. The fundraising for the second painting has received a blow from the Scottish government, which has stated that public funds will not be made available this time. A spokesman made the dour comment that the government has ‘made its contribution’. Jonathan Jones in The Guardian commented: ‘It is a mark of philistinism and small-mindedness for Scotland’s government to declare at this early stage it will not be giving any public money to keep this painting… It was a mark of civilisation that Britain bought the first Titian. It will be a lapse into barbarism to let the second one go.’

For the doubters, it’s worth recalling that tourism is a major earner for the country. And it’s not just foreigners who enjoy its 4,500 open houses and museums — a visit to any gallery on a Saturday afternoon reveals that they are full of British people from all walks of life. To let this painting escape national patrimony would be nothing less than a tragedy. The deadline for the fundraising is the end of 2012, and no doubt this issue will continue to raise temperatures over the forthcoming year. Perhaps the last word should go to the 19th-century critic William Hazlitt, who, on seeing the paintings for the first time, wrote: ‘A new sense came upon me, a new heaven and a new earth stood before me.’
To donate to the fund, call 0131 624 6459 or visit nationalgalleries.org/aboutus/project/1:167/campaign-
for-the-titians
Ivan Lindsay is a contributing editor at Spear’s

Even if reports of the death of the blockbuster exhibition are somewhat exaggerated, it’s true that galleries are having to change the way they stage big shows, says Ivan Lindsay

OVER THE SUMMER, the National Gallery and Royal Academy in London announced their autumn exhibitions, Leonardo da Vinci: Painter at the Court of Milan (9 November–5 February) and Degas Dancers: Eye and Camera (17 September–11 December). The news, along with the announcement that, to capitalise on the huge influx of foreign visitors expected in London for the 2012 Olympics, the Tate Gallery will stage extensive exhibitions of works by Pablo Picasso, Edvard Munch and even Damien Hirst, reopened the debate as to the importance and effectiveness of such exhibitions and whether they remain a viable way to show art to the general public.

While attendances at exhibitions indicate a steady popularity with the public and provide a crucial source of income for museums in the way of admissions, sponsorship, catalogues and sales from the shop, people are tiring of the scrum at such shows. Curators themselves have been complaining of museum fatigue and academics have been suggesting that blockbusters are damaging art. Colin Tweedy, the chief executive of the Prince of Wales’s Arts and Business charity and a trustee of the Serpentine Gallery, claimed in an interview earlier this year that ‘the blockbuster model is killing art… it’s not the right way to see the great artists. In the next five years museums will stop doing these exhibitions because they are too much trouble. It’s an old model. The curators of culture have to think in a different way.’

Tweedy pointed to the recent Gauguin exhibition at the Tate Gallery, which broke records for advance ticket sales but left many visitors disappointed because of the sheer number of people there. ‘Nobody liked it because nobody could see it,’ he said. It is true that if there were fewer than a dozen people in front of a painting on a weekday you were lucky.

In response to this, the National Gallery, trying to avoid what it terms ‘gallery rage’, has reduced the number of admissions at the Leonardo show from the 230 per half-hour it’s allowed by health and safety regulations to 180. Other than making a good soundbite, it is hard to see where the expression ‘gallery rage’ has materialised from, as what is apparent is more a weary exhaustion as art lovers bump into one another, politely apologising as they shuffle around.

The demise of the blockbuster exhibition has been predicted ever since Roy Strong announced in the Eighties that the Victoria and Albert Museum would no longer put on such exhibitions in order to concentrate on developing its own collections. Visitor numbers collapsed along with income, and major exhibitions had to be rapidly reintroduced.

The genre has been around for a long time: the Great Exhibition of 1851 in London’s Crystal Palace attracted more than six million visitors with 13,000 exhibits, and the Manchester Art Treasures exhibition of 1857 saw more than a million visitors for 16,000 exhibits. In 1863 the display of the Prince and Princess of Wales’s wedding presents at the South Kensington Museum (now the V&A) proved popular, as did the major display of Italian art at the Royal Academy in 1930.

While improved air travel from the mid-20th century has made it easier to move large paintings around, there is a general fatigue among museum directors over the issue of large exhibitions and an increasing resistance from both museums and private collectors to lend. The major risks to an artwork are in transit. The Leonardo exhibition has put together seven of the fifteen authenticated paintings by the artist, which is a credit to the curator Luke Syson, who has recently been poached from the National Gallery by the Metropolitan Museum in New York, where he starts in January.

The current writer has no love of the scrums at such exhibitions but will have to go in order to see the Portrait of Cecilia Gallerani (more often referred to as Lady with an Ermine, above right), the mistress of Milan’s ruler Ludovico Maria Sforza, who was known as ‘il Moro’ or ‘the Moor’. This beautiful painting of a woman turning to her left and holding an ermine, which normally requires a trip to Krakow to the Czartoryski Museum, has always been coveted and, after being stolen by the Nazis, spent some time in the collection of Hans Frank, the Governor General of Poland in the Forties.

The Portrait of a Man by Raphael, which was also commandeered by Frank from the Czartoryskis at this time, was never seen again, but the Leonardo was thankfully recovered by Allied troops, who found it hidden in Frank’s country home in Bavaria after the end of the Second World War.

Among all the discussions about the future of such exhibitions, what is certain is that they are becoming increasingly hard to organise. Ann Dumas, one of the organisers of the Degas exhibition, has said that an earlier exhibition at the Royal Academy, The Real Van Gogh: the Artist and His Letters, which proved a great success, took more than five years to organise. Curators have to overcome political issues, restitution problems, museum and private collector reluctance to lend, rising costs of insurance where government indemnity cannot be granted, and transport, staffing, sponsorship, security and logistical issues.

They also have to find a new message to try to convince museum directors, owners, sponsors and the public that they have something fresh and new to put across. In describing the current Degas exhibition Dumas says: ‘We hope people will revise the notion that Degas was just a painter of pretty dancers. He was in a way conceptual and an extremely radical, highly innovative artist, in tune with the technological developments of his time.’ 

DESPITE MUSEUM FATIGUE and rage, the complaints of the public and the forecasts of the demise of the blockbuster, an examination of the figures attending exhibitions published annually by The Art Newspaper indicates that the public are still flocking to the exhibitions that attract their attention, making the careers of successful curators, improving the prestige of the museums involved and drawing tourists to the leading exhibiting cities, such as London, New York, Tokyo and Paris.

The Louvre in Paris is the world’s most visited museum, with 8.5 million visitors per annum. Successful exhibitions regularly attract more than 500,000 visitors, such as Pablo Picasso in the Metropolitan Museum of Art (April–August 2010), with 703,256, and Post Impressionism: 115 Masterpieces from the Musée d’Orsay at the National Art Centre Tokyo (May–August 2010), with 777,551. With ticket prices often in excess of £10 (the full-price ticket for the Leonardo exhibition is £16), even allowing for concessions, these exhibitions can provide an income of more than £5 million, clear motivation for cash-strapped galleries.

Critics complained in the late 19th century of the astonishing range of exhibitions crowding London at any one time, from major artists at the leading galleries to smaller peep-shows of oddities and circuses. Critics are making similar complaints today. Even if exhibitions such as Monet’s Water Lilies are losing their momentum, it seems the blockbuster is here to stay, and what might be changing is its content. Photographic exhibitions such as London’s National Portrait Gallery’s current show Glamour of the Gods: Hollywood Portraits are gaining in popularity and museums are trying to concentrate on drawing exhibitions from their own holdings to cut costs. The Metropolitan’s successful 2010 Picasso exhibition was drawn entirely from its own holdings.

There is no doubt that a pressurised, crowded museum is not the best way to see art, but it does give the chance to see work that is normally difficult to access. A better way to view art is to pick a quiet London gallery such as the Wallace Collection in Manchester Square or the Dulwich Picture Gallery, seek out a couple of paintings by an artist who interests you and slowly absorb them. Try to extract the essential qualities of an artist and articulate what makes a painting special. Major exhibitions, in one form or another, despite their detractors, will remain a feature of life in the cultural capitals, but the best way to study art is still quietly and privately. Degas himself said: ‘Art is not what you see, but what you make others see.’ That presumes you can see the painting in the first place. 
Leonardo image courtesy of National Gallery. Degas image on loan from the Honorable Earle 1 Mack Collection

Ivan Lindsay is an art dealer and contributing editor at Spear’s

When Spear’s hosted a debate on what makes a masterpiece, none of the participants could agree. Ivan Lindsay was there — but now he has the floor to himself

AT THE MASTERPIECE Fair in London, Spear’s organised a breakfast panel to discuss ‘What is a Masterpiece?’ The discussion, at Le Caprice in the Masterpiece tent in the grounds of Wren’s own masterpiece, the Royal Hospital, was lively because no one could agree on the answer. This is perhaps not surprising, as it is as difficult a question to resolve as ‘What is art?’ Some of the panel were of the opinion that a masterpiece has to be an actual artwork by an important artist and precious, rare, beautiful and moving, whereas others felt it should have a broader application that could be applied to cars, furniture and contemporary design.

Most artists produce poor quality art that never approaches a masterpiece, work that is banal, mediocre and forgotten within a generation. A few good artists produce good art that, having found a formula that sells, they stick to without ever producing anything great. Very few artists produce great work. For painters, these select few can be divided into those who consistently produced masterpieces, who tended to have a small production and limited patronage, such as Manet and Bacon, and Duccio, Mantegna and Giotto from earlier times, and artists who were only sometimes great, such as Picasso, Matisse, Monet and Constable. The latter were always experimenting and, as such, sometimes they succeeded and sometimes not.

Webster’s offers a current definition of ‘masterpiece’ as ‘a supreme intellectual or artistic achievement’, whereas the original meaning of the word was somewhat different, originating in the Middle Ages as a benchmark to judge the work of craftsmen in the guild system. Most trades, including confectionary, goldsmithing, knife-making and painting, allowed a tradesman to submit a work when his peers believed him ready to produce work of sufficient quality for him to sign it and to be judged a master.

Whereas in its original usage masterpiece status was conferred by fellow craftsmen, judgement is now made by art critics, connoisseurs, museum curators and dealers. Whether these people are as well qualified to judge quality as a craftsman’s colleagues is another topic for debate. Some argue that the expression is used so often, and in such a wide context, that it has been debased to include just about anything, usually with the aim of conferring a superior status on an object for the purpose of making a sale. Others maintain that applying it just to major artworks by great artists is a misapplication of the more recent usage of the word and argue that it should include works from all the different fields of manufacture and craftsmanship, more in line with its original meaning.

I lean towards using the word less as opposed to more, and employing it in its more contemporary usage to describe major artworks by the most famous artists whose reputation has increased through the only true measure of an artwork’s merit, the passage of time. A master interprets his own vision, whether an idea or something he saw, in a way that is usually skilled, profound, interesting, perceptive, passionate and harmonious.

A masterpiece is timeless in the way it resonates with generation after generation and appeals to people irrespective of their language, religion or background. It often serves as a window on the past. A master absorbs the spirit of his time and transforms his experience into a universal one. Often people are aware they are in front of a masterpiece and yet they cannot articulate how they know this, as the energy that emits from such a work is metaphysical and therefore indescribable.
PERHAPS THE BEST way to consider a masterpiece is to examine a couple of examples. Rembrandt’s portraits of Jacob Trip (left) and his wife Margaretha de Geer (below left) hang side by side in London’s National Gallery with a wall to themselves in the Rembrandt room. They are painted in Rembrandt’s rough later style that he developed after his bankruptcy of 1656.

The portraits were probably executed after Jacob’s death in 1661 as a memento organised by Margaretha for their children. As such, Rembrandt had to base his likeness of Jacob on other earlier portraits by fellow artists such as Nicolaes Maes, while Margaretha was painted from life. Jacob Trip sits in a chair wearing a cap, white scarf and coloured shift while holding a stick. One of the richest men in Europe, having made a fortune in mining, iron manufacture, arms manufacture and arms dealing, he gazes coldly back at the viewer with the steely expression of a man used to getting his own way.

The smaller, vibrant study Rembrandt made of Margaretha is also a masterpiece, although, amazingly, the attribution to Rembrandt was doubted for many years by the so-called Rembrandt Research Project (RRP). The RRP was set up by the Dutch government to clear up once and for all the disputed attributions to Rembrandt. An amazingly incompetent and arrogant committee, it took no one else’s views into consideration and just went through Rembrandt’s oeuvre making frequently flawed attributions to Rembrandt or otherwise.

Margaretha is depicted head on, looking at the viewer. She is wearing a white ruff, a black cape and an odd hat and is holding a white handkerchief. Her hands are strangely masculine and heavy. Rembrandt was perfectly capable of painting a good hand if he wanted to, but in his portraits he often reduces everything except the face to peripheral detail to focus the viewer’s attention on the face. Her skin is parchment soft and her watery eyes gaze unseeing back at the viewer. Her clothes are 30 years out of fashion — she must have kept them from the time when she had been interested in such matters and pulled them out especially for the portrait.

Life as the wife of Jacob Trip must also have been an interesting journey, and she resonates with an energy that is both resigned towards the end drawing near and yet facing it with a calmness and peace that many people know from their own grandparents in their final years. These two paintings remain fascinating and moving on many different levels.

Just around the corner in the National Gallery hangs Rubens’s portrait of Susanna Fourment (below), painted some 40 years earlier, in around 1622, on the occasion of her second marriage. This painting is known as Le Chapeau de Paille (The Straw Hat), which is curious as she is wearing a felt hat with feathers on it of a design that was popular for both men and women in Flanders in the 1620s.

Susanna stands wearing a formal evening dress with cape and precious diamond-drop earrings, which were probably a gift from her father, the rich silk merchant David Fourment. The painting demonstrates the accomplishment and bravado that Rubens was capable of infusing into paintings of close family members. There is a hint of sadness in her expression, perhaps over the recent demise of her first husband. Susanna’s younger, prettier sister would later marry Rubens, who was good-looking, a linguist, a diplomat who negotiated peace treaties for his king, a lover of life, a successful artist with a studio that at times housed over 50 assistants, and he lived in a palace on one of Antwerp’s finest streets.

These three great paintings have been considered masterpieces since the day they were painted. Today they remain much loved and enjoyed by thousands of people every day. While many argue that if you believe something is a masterpiece then it is one, this argument sounds as ridiculous as saying you are a brain surgeon because you believe you are one. (Scalpel anyone?) Perhaps the time has come to stop debasing this expression by making it all-inclusive and to raise the bar once again and use it only for artworks of major importance by leading artists who belong to the rarefied canon that includes the best artworks ever created.

–
Ivan Lindsay
Lindsay Fine Art Ltd
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London England
SW10 0BB
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www.oldmasters.net

The Canary in the Mineshaft

Where the art market leads, the stock market often follows. If what’s been going on at Sotheby’s lately is any kind of indicator, there are hard times to come, says Ivan Lindsay
FOLLOWING THE RECENT two-week marathon of art sales at the leading auction rooms and a difficult three nights for Sotheby’s, the Sotheby’s share price has turned down, halting a breathtaking ascent that took it from its 2009 low of 7 to its recent high of 54 on the New York Stock Exchange. The fall took the share price down to 40, a loss of more than 20 per cent in a month and a half. In the past, such drops in the Sotheby’s share price have been an early warning of trouble ahead in the art market and also for the broader stock market.

Since Sotheby’s was listed in 1988 it has been sold off early in the Nikkei, dot.com and recent mortgage bubbles, proving itself a lead indicator. Most recently, for example, Sotheby’s stock started to fall in November 2007, rapidly dropping by more than 40 per cent, while the broader stock markets did not start to sell off until some months later and only achieved major declines by late 2008.

Sotheby’s share price is a reflection of the health of the company, the trend of the art market and the general direction of the stock market. Since the last of these appears still to be up, investors must be concerned about the art market and the health of the company. The recent news that appears to have spooked investors is probably partly the less-than-stellar recent sales results and partly Sotheby’s announcement of its first-quarter sales results on 9 May.

The quarterly results followed on from record figures for 2010, the best for Sotheby’s in its 267-year history apart from 2007. The 2010 consolidated sales were $4.8 billion, the operating income was $274 million and the balance sheet showed cash at the year-end of $483.7 million. Bill Ruprecht, the president and CEO, seemed pleased with ‘a much lower risk profile than in the previous peak years of 2006 and 2007’ and called the results ‘a remarkable achievement’.

The first quarter has traditionally been a loss period for the company, but Sotheby’s reported a net income of $2.4 million for the 2011 first quarter and Ruprecht said: ‘This is one of our best first quarters on record… Sales are up year to date by 31 per cent.’ Less impressive were the operating costs, which, having been reduced in the downturn, rose by 16 per cent. Sotheby’s and Christie’s both tend to over-expand in the giddy bull markets of the art world and then have to slash costs in downturns.

In addition to the increase in operating costs, it may be that some of the less than transparent business practices that have emerged in this boom are starting to concern investors. It seems that when the art market is on fire, and with fierce competition from other auction rooms for business, it is tempting to start pushing business practices to the edge. This famously led to the price-fixing scandal of the Nineties, when the chairman of Sotheby’s was prosecuted and jailed.

More recently, it is the ‘irrevocable bid’ that is attracting adverse attention. This is the practice in which the auction room extracts a third-party guarantee that a person will bid at a certain level at the sale. In return, the guarantor is promised either a fee or part of the upside if bidding continues above their bid. If no higher bid is made, they buy the painting at that price.

Needless to say, this has a skewing effect on the auction and, while probably technically legal (although untested in the courts), the sale cannot be said to be a public auction. Allan Schwartzman, the leading New York art adviser, was recently quoted in The Economist, saying: ‘These sales are no longer auctions. To attract material at the top end, auction houses pre-sell the material to “irrevocable bidders”. They are deliberate, orchestrated events.’

Such sales create misleading benchmarks that override the normal rules of supply and demand. The odd sheikh from Qatar or tycoon from Ukraine might believe he is actually participating in a real auction but others, closer to the action, are increasingly concerned about the real value of some of the more widely traded artists.

Take Warhol, for example. On the surface, all looks dandy for Andy and works by the artist accounted for a staggering 25 per cent of the week’s takings in the recent contemporary sales at Sotheby’s, Christie’s and Phillips de Pury, totalling $181 million. That $181 million was made up of 54 works by Warhol. Nothing was left to chance and a small group of auction-room staff, dealers such as Jose Mugrabi and Larry Gagosian (sometimes in partnership), and collectors such as Peter Brant, Eli Broad and Steve Cohen are buying and selling and supporting prices by underbidding.

Mugrabi bought his first Warhol shortly after the artist died in 1987 and is believed to have 800 of his works. Gagosian entered the Warhol market in the mid-Eighties and was also closely involved in the markets of most of the other contemporary artists being sold.

Pink Panther (1998) by Jeff Koons, image courtesy of Sotheby’s. 

ONE OF THE major Warhols in the sales was Sixteen Jackies, a posthumous collection of small 1964 portraits of Jackie Kennedy, fifteen of which were bought from Warhol’s estate. The arrangement of the sixteen ‘Jackies’ had nothing to do with Warhol and was actually put together by the owner and seller, Brant, who was advised by Jeff Koons. The piece was supported by bidding from Mugrabi, who, with his sons, also underbid two other Warhol paintings at Sotheby’s and bought two more at Christie’s. The piece sold for just $18 million on the reserve against an estimate of $20–30 million.

Elsewhere, Sotheby’s had clearly overestimated several of the major lots that failed to sell, such as Lichtenstein’s Half Face with a Collar (unsold at $11 million) and Freud’s Naked Portrait Standing (unsold at $6.75 million). Koons’s Pink Panther, apparently one of his more important works, shows a porcelain bust of a blonde woman clutching one of her breasts in one hand and a model of the cartoon feline in the other.

Sotheby’s gravely informed potential purchasers that it was from an edition of three, the other two being in the hallowed halls of the Museum of Modern Art in New York and the Museum of Contemporary Art in Chicago, and that this example came from a prestigious private American collection. It sold on an irrevocable bid for $15 million, having been expected to go for $20–$30 million. This did, however, represent a huge increase on the $1.8 million it fetched at auction in 1999.

In conclusion, it appears that the art market is currently overhyped and being manipulated, and investors in Sotheby’s are taking their profits. They may also sense problems coming in the economy and feel that this will be felt early in the art market and have an impact on Sotheby’s figures. As Goldman Sachs said recently, ‘Equity prices are a lead indicator of GDP growth and react strongly to expectations about the future.’ Only time will tell whether the Sotheby’s stock price correction is just a pause as the market catches its breath after its dizzying increase since 2009 or is the start of a serious correction. If its past performance can be any indication, then it might be time to exercise some caution.

After the recent contemporary sale at Sotheby’s, the auctioneer, Tobias Meyer, expressed his gratitude to the ‘collector community’ who had ‘supported the sale’. It remains to be seen whether that was life support.

The recent round of London art auctions confirmed the strengthening art market and were notable for the reappearance of the Russians who have been absent for the last two years. Sotheby’s and Christie’s brought in a combined US$495m for their evening and day sales of Impressionist, Modern and Contemporary art with Sotheby’s adding an extra US$150.6m from the George Kostalitz collection and Christie’s US$37.5m from a stand – alone sale of Surrealist art.

During the credit crunch the Russians, who had borrowed heavily against their shares in the bull market, suffered from margin calls after the collapse of the Russian stock market. Allied with falling commodity prices they retreated from the London art and property markets. Now they have returned stronger than before and Kroll are busy doing credit checks on a new generation who have arrived in London with deep chequebooks. Asad Meerza, the leading private property broker who specializes in Mayfair and Belgravia and currently has 4 houses in Belgrave square and several of the better known Mayfair hotels on his books says, “In the last couple of years the top families from the middle east like the Royal families from Qatar and Saudi Arabia have dominated this market but in the last 6 months the Russians have re-entered the bidding and won several landmark buildings.” A Russian is amongst the bidders for the 1.3 acre £150m Piccadilly Estate which overlooks Green Park and includes the old home of Lord Palmerstone at 100 Piccadilly which was for many years the Naval and Military club(known as the ‘In’ and ‘Out’)and is being sold by receivers from the distressed portfolio of Simon Halabi.

At the art sales the Russians won of many of the top lots including Bonnard’s 1923 Terrasse a Vernon at £7.2m, Van Dongen’s portrait of the actress Lili Damita of c. 1926 at £3m and Magritte’s thoughtful 1941 nude L’Aimant at £4.7m. They were also in the bidding for the 1912 Les Arbres en Fleurs by Natalia Goncharova and were definitely bidding and believed to have been successful on the top lot at Sotheby’s, Picasso’s 1932 Portrait of his mistress Marie – Therese Walter which went for £25.2m.

Survival in post soviet Russia requires a keen instinct for detecting artifice and the Russians were conspicuously absent from the contemporary sales preferring artists with substantial track records of value. The contemporary market has made only a partial recovery from its 70% drop in value and to the Russians, Jean – Michel Basquiat’s childlike scribbling reminds them of childlike scribbling, Jeff Koon’s vacuum cleaners look like something they could buy from a hardware store and his inflatable dolls look like, well, inflatable dolls. They are not the only ones cautious of this market and Souren Melikian, writing in the International Herald Tribune, observed after the recent sales that although, “For the moment, contemporary art is on a roll…….The day one of the pundits discovers that the king has no clothes on, all the glib talk of marketing teams telling investors how savvy they are will not prevent tens of millions from melting like butter in the sun.”

The Russians also carried off several Bacon’s including the 1964 Triptych Three Studies for a Portrait of Lucian Freud at £23m. Bacon has been sizzling in general recently although the artist himself had long periods in his career when he struggled, writing to his dealer in the 1950’s, “Is it possible to make me a small advance? I am quite broke and canvas and paints are terribly expensive…….If I can’t sell anything….I will get a job as a valet or cook.”

Baconski has become popular with the Russians since Roman Abramovich bought his 1976 Tripych in May 2008. Abramovich, often a trend setter in oligarch circles, had never been known to show any interest in art before the arrival of his current girlfriend, the svelte and glossy Dasha Zhukova, daughter of Alexander Radkin Zhukov, the oil magnate and arms dealer. Dasha explained to Abramovich that she wasn’t that impressed with Chelski, football was boring and that buying some art would be a sound investment and good for his reputation. Abramovich, showing an intuition that has taken him from selling plastic ducks out a grim Moscow apartment to one of Russia’s leading businessmen, rang up Sotheby’s and asked them what were their most expensive paintings coming up? The result was that in their next sale he bought the Bacon Triptych for US$86.3m and Lucien Freud’s Benefits Supervisor sleeping for US$33.6m.

Abramovich has close ties to Prime Minister Putin who also makes sporadic but spectacular forays into the art market. Putin has nearly completed construction of his vast French Renaissance palace on the Black Sea which the Moscow Times alleges has already cost over US$1bn. In Russia many think Putin is Russia’s richest man and the recently released Wikileaks cables show that US diplomats believe he is a beneficiary of the Amsterdam based crude oil trading company Gunvor. Gunvor, meaning “careful in fighting” in Old Norse, is the 4^th largest crude oil trader in the world, turned over US$70bn in 2007 and handles 30 – 40% of the Rosneft’s oil production(the Russian oil producer which is majority owned by the Russian government). In a cable intercepted by Wikileaks, John Beyrle, the United States Ambassador to the Russian Federation said that Gunvor’s “secretive ownership is rumoured to include Prime Minister Putin”, an allegation firmly denied by Gunvor itself.

Putin doesn’t often buy art himself but “encourages” others to buy it from time to time. For example, in 2007, 450 art objects including paintings by artists such as Nikolay Roerich, Ilya Repin and Boris Grigoriev owned by the late cellist Mstislav Rostropovich was to be sold by his wife at Sotheby’s. Reputedly a copy of the catalogue arrived on Putin’s desk a week before the sale and he put in a call to Alisher Usmanov, the Uzbek businessman reckoned by Forbes to be worth US$19bn, is a shareholder in Arsenal football club and owner of John Paul Getty’s old mansion Sutton Place near Guildford. Usmanov, known as the hard man of Russian business, presumably a title not bestowed lightly, survived 7 years in an Uzbek labour camp after a conviction for “bribes and extortion,” charges he has always denied.

Uzmanov pre-empted the sale, which was then cancelled, with a bid of US$72m and said, “I want to return it to the country where it belongs, so I have donated it to the state.” The collection now resides in the Konstantin Palace in St Petersburg where Putin likes to entertain. Who actually owns it now is unknown. Mikhail Shvydkoi, Head of Russia’s Federal Cultural Agency, said at the time that the Russian state had wanted to bestow some official honours on Usmanov but that Usmanov had modestly declined.

The recent unrest in the middle east has only intensified the flow of Russian money arriving in London and President Dmitry Medvedev said last week that, “the latest revolts in the Arab World were instigated by outside forces that were also scheming to topple the authorities in Russia.” Russia is no stranger to revolution and Putin and Medvedev control the world’s largest country with an iron grip. Whilst it is easy to criticise Russia’s many faults, people in the West forget that Russia stretches from Europe to China and incorporates a plethora of peoples, cultures and religions. Even Mikhail Gorbachev, the former Soviet leader has been critical recently saying, “We have democratic institutions, but they aren’t effective, they’re used to cover arbitrary rule, abuse. Society has been broken, it’s accepted the falsehoods.” However, others point out that Putin believes, probably rightly, as did those before him such as the Tsars, Lenin, Stalin and Krushchev that to relax control would result in violent confrontations and a slide into civil war.

Although a third of Russians in a recent poll said they could see the possibility of violent protest ahead some also admitted wryly that Russians tend only to work when there is someone around with a stick whilst others pointed to the Russian expression which loosely translates as, “Russians tend to only make the Sign of the Cross after they get struck by lightning.”

Certainly on the streets of Moscow last week there didn’t seem much sign of political unrest and it is hard to see anyone worrying about anything much other than surviving in the current temperatures which recently hit -30 as a front swept in from Siberia. A headline on the front page of the last week’s Moscow Times said, “Russians in Britain Enjoy Stability and Sea Air” and went on to describe that there are now 5 Russian language newspapers published in London and an estimated 500,000 Russians living in England with the majority of the poorer immigrants working in hospitality and construction. The attraction of England and London in particular seems only to be increasing for Russians of all income groups and the auction rooms and property dealers would be well advised to keep taking on Russian speakers for the foreseeable future.

Although the world economy is stubbornly deflating, with the US Bureau of Labor Statistics having just calculated September’s inflation figure at 1.14% and 2009’s average at -0.34%, many believe that the vast creation of dollars through quantitative easing has to bring inflation in the not-so-distant future. So investors are once again trying to establish whether art is a good investment in times of inflation. This is a difficult question to answer because, although it is easy to see that a painting sells for more than it cost, it is hard to establish the holding expenses such as insurance, restoration, security, transport and transaction costs, and any gain has to be indexed against inflation.

Throughout history, however, many collectors have instinctively felt that art is a good investment, without being able to demonstrate exactly how. Most investments have an income such as the coupon on a bond, the dividend on a share or the yield on a property. Such an income allows banks to lend money against an asset, confident on how the loan will be repaid. Art is like gold in that the potential gain relies solely on appreciation.

Some collectors find it distasteful to discuss art in terms of investment and like to maintain that they buy what they like and then don’t worry about it. This is all very well for minor acquisitions, but even if investment is not their primary motivation, most collectors like to feel that they are making responsible acquisitions which will prove a solid investment should they or their descendents ever have to sell. Many collectors have made their fortunes by carefully assessing the potential gain offered by each investment opportunity and would like to apply that discipline to art. The lack of clarity in the potential returns from art put many off from becoming collectors, and those that do invest have to do so with limited information.

Gerald Reitlinger wrote the first book on assessing art as an investment, The Economics of Taste, in 1961, which analysed prices of three hundred artists from 1760 to 1960. He followed it up with a second book in 1970 which surveyed the art market of the 1960s. He tried to break down time into distinct periods from 1760 onwards, making calculations as to how inflation had eroded the pound (i.e. from 1760 to 1795 he maintains the pound inflated by a factor of 12) but he acknowledged that, “travelling beyond 1900 one runs into difficulties”. Although Reitlinger established the cost of some of the most famous acquisitions of earlier times, such as when Augustus the Strong, King of Saxony (the richest buyer of his day, whose superb collection can still be seen in Dresden) bought Raphael’s Sistine Madonna in 1754 for £8,500, it is hard to say accurately what this would be worth today and how it would have compared to whatever else Augustus could have acquired at that date for a similar sum. Reitlinger tried to make comparisons from contemporary expressions such as that a man was “passing rich on £40 a year” and you could get “dead drunk on tuppence”.

The next book to examine historical art prices was Christopher Wood’s The Great Art Boom 1970–1997 (Art Sales Index, Weybridge, 1997), which examined that period and gave prices for individual artists as well as an overview. Wood concurred with Reitlinger as to the difficulty of assessing art as an investment and observed that the rampant inflation of the 1970s further distorted the figures. He pointed out that art cannot be examined as a whole and has to be broken down into sectors, each of which swings in and out of fashion and moves up or down at different speeds. He also discussed the tremendous changes he had seen in the art world. When he joined Christie’s in 1963 turnover was just over £3m and the company had no overseas offices.

Regarding fashion, Wood observed that in 1970 Old Masters were still at the top of the art buyer’s wish list, with the 1965 sale of Rembrandt’s Portrait of Titus setting a world-record price of £798,000 (bought by Norton Simon) until the record was broken with the 1970 sale of Velasquez’s Juan de Pareja (bought by the Metropolitan Museum), which achieved £2.3m. From 1970 to 1997 the market was dominated by the Impressionist and Post Impressionists, which supplanted the Old Masters, with artists such as Van Gogh, Cézanne and Gauguin all setting records. Van Gogh in particular dominated the records in the 1980s with his Irises (bought by Alan Bond but never paid for and later resold) at £28m beating his previous 1987 record held by Sunflowers at £22.5m (bought by Yasuda Fire and Marine). With the supply of Old Masters, Impressionists and Post Impressionists drying up, the Moderns took over after the 1991 recession. Moderns incorporate the period 1900–1950 and include sub-sectors such as Futurists, School of Paris, Expressionists, Surrealists, Dadaists, Abstractionists, Cubists, Fauvists, etc. Although Moderns maintain the No. 1 position, the most recent market, although at lesser values, has been the boom of the 2000s in contemporary art, which was strong until it collapsed in 2009.

What has emerged is that rarity puts buyers off. Although a great masterpiece will always attract competition, what the market seeks is a ready supply to create a pricing structure buyers feel comfortable with and to provide enough material to make a market. Hence the success of contemporary art and prolific artists such as Picasso, whose work is regarded as a currency and has consistently dominated the art market in terms of value sold (Position No. 1, most-traded artist at auction 2009, US$121m).

The Art Newspaper recently conducted an exercise with some specific pictures to establish how they had fared against inflation and gold. Pieter Brueghel the Younger is widely sought after by collectors of Flemish Old Masters. A technically accomplished artist, he made a living out of repeating the compositions of his more talented father, Pieter Breughel the Elder. These come up often enough to be familiar to art buyers, are non-religious in this secular age, decorative and attract buyers. The Kermesse of St George, 1628, sold at Sotheby’s, London in April 1981 for £275,000. It next appeared in July 2005 when it sold for £2.2m. With inflation, the £275,000 would have been worth £785,847 and investing the £275,000 in gold in 1981 would have been worth £297,000 in 2005.

Another well-publicised and documented art investment was the New York dealer Richard Feigen’s 1982 acquisition of Turner’s The Temple of Jupiter Panellenius, Restored, 1814–16 ,at Christie’s, London for £648,000. Feigen sold it at Sotheby’s New York in January 2009 for £8.3m. The original £648,000 would have been worth £1.7m allowing for inflation over the period and if invested in gold would have been worth £2m.

Artprice calculates that post-war American artists have fared equally well with every £100 invested in 1998 in Jean-Michael Basquiat, for example, being worth £655 by June 2010. Warrior, 1982, sold at Sotheby’s New York in November 2005 for £1m, appeared again at Sotheby’s two years later in June 2007 and fetched £2.8m. The original £1m would have been worth £1.06m after inflation and £1.3m in gold.

Although modern art funds come out with a bewildering array of figures, the only pension fund which has made a serious foray into the art market and published figures was the British Rail Pension Fund, which invested around £40m in art, or around 3% of their holdings, from 1974 via Sotheby’s, who gave free advice as long as the acquisitions and sales went through them. The fund acquired a collection of 2,400 pieces, including Chinese porcelains, African tribal art, Old Master and Impressionist paintings, Limoges enamels, and gold and silver objects. When it sold these objects between 1987 and 1999 the portfolio wound up with an annual compound return of 11.3%, but the gains came primarily from 25 Impressionist paintings, showing the importance of a diversified art collection from an investment viewpoint.

The pension fund’s investment was made against the backdrop of 17% 1970’s inflation and had three distinct advantages over modern ‘art funds’ in that it had unlimited funds so could afford the best items, it had access to the entire market (albeit through Sotheby’s) and unlimited time to hold the objects. The conclusion many drew from this exercise was that art proves successful as an investment only if held for the long term. Maintenance and transaction costs are simply too high for it to be a short-term investment.

So, in answer to the original question, is art a genuine hedge against inflation, the answer would appear to be a qualified yes, in some cases, and only when buying with the knowledge of someone on the inside. In some decades it outstrips stocks and bonds and generally exceeds inflation. It normally outshines gold, although probably not in the last decade when gold has moved from US$200 an ounce in 2000 to over US$1,300 in 2010.

The conclusion is that anyone who really wants art to perform primarily as an investment would be better off sticking to more normal, quantifiable and easily tradable investments such as stocks and bonds. However, art makes sense as a small part of an investment portfolio that generally keeps up with inflation, provides a diversification that holds its value in times of recession or war, and provides more enjoyment hanging on your wall than the stock certificates in your safe or interest on your bank balance. The most expensive painting sold to date was Picasso’s Nude, Green Leaves and Bust, Christie’s New York, May 2010, at US$106,482,500. This had been bought by its late owners, Francis and Sidney Brody of Los Angeles for US$17,000 in 1950. Perhaps Spears readers might try doing the maths to see how good an investment that was after inflation?