TIME: Almanac 1995

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<text id=90TT1395> <link 90TT0825> <link 89TT3098> <title> May 28, 1990: Bumps In The Auction Boom </title> <history> TIME--The Weekly Newsmagazine--1990 May 28, 1990 Emergency! </history> <article> <source>Time Magazine</source> <hdr> ART, Page 69 Bumps in the Auction Boom </hdr> <body> Two great paintings go through the roof, but the floor is shaky By Robert Hughes--With reporting by Barbara Cornell/New York No boom lasts forever, and this spring may be remembered as the moment when the art-auction frenzy of the late 1980s began its decline. In the big sales in New York City over the past two weeks, despite freakish prices for two great paintings, the auction market was showing ominous signs of instability. For Van Gogh and Renoir, in Japan, there was no ceiling. For other artists, including some highly promoted contemporary ones, the floor was shaky. On Tuesday night at Christie's, Van Gogh's melancholy portrait of his physician, Dr. Gachet, sold to the Japanese dealer Hideto Kobayashi for $82.5 million, the highest price ever paid at auction for a work of art. Kobayashi bought the painting on behalf of noted Japanese collector Ryoei Saito, a paper-manufacturing executive. Two nights later, at Sotheby's, Kobayashi again acted for Saito in bidding $78.1 million for one of the best Renoirs in America, Au Moulin de la Galette. Thus one man spent $160.6 million for a brace of paintings, sending the top end of the market from obscenity into farce; and the drain of America's cultural patrimony continued, watched by hamstrung museums that were now selling, not buying. New York's Guggenheim Museum sold a 1914 Kandinsky for $20.9 million and a fine early Chagall for $14.85 million. Long may the museum's public rejoice in the American minimal and conceptual art--bricks on the floor, words on paper and the like--that it plans to buy with the proceeds. But one tsubame (swallow) did not make this spring. Twelve of the 70 works in the Sotheby's sale failed to reach their reserves and went unsold. On the night of the Van Gogh sale at Christie's, a Manet, The Bench, made only $16.5 million--not chickenfeed, but still a disappointment considering Christie's presale estimate of $20 million to $25 million. In addition, an exceptional 1925 Mondrian made $8.8 million; Christie's estimate had been $12 million to $16 million. The high end of the market, driven by Japanese fixations on Renoir and Van Gogh, had ceased to pull the rest. A week earlier, Sotheby's contemporary auction was a flop, with overall sales totaling little more than $55 million against estimates of about $86 million to more than $112 million. The prices of "name" artists, from Willem de Kooning to Eric Fischl and Jean-Michel Basquiat, were humiliatingly trounced, although a few--Cy Twombly, Richard Diebenkorn--saw new levels set for their work. The contraction did not affect just contemporary art. In London last month a massively hyped auction at Sotheby's of a group of early Russian avant-garde paintings owned by the late George Costakis was a disaster, with major figures like Alexander Rodchenko and Liubov Popova falling to levels 25% to 50% under the low estimates. The worst debacle was experienced last week by the Manhattan auction house of Habsburg, Feldman Inc., whose offering of Impressionist and modern works (estimate: $35 million to $47 million) sold only eleven of 78 items for a total of $1.8 million. What went wrong? Confidence. The sales revealed a buyers' backlash against controversial practices by the auctioneers, notably that of giving guarantees to owners in order to acquire works to sell. This technique--which Sotheby's invented and Christie's denounced with high sanctimony in 1989, before quietly adopting it themselves in 1990--has produced a string of "pre-auction auctions" among the houses competing for merchandise. It means that the winning house, in order to fulfill its guarantee, has to pump its estimate higher and higher to hype expectation. Were sales in which top bids were running 20% to 30% under the low estimates to be called failures? Not really, sniffs Sotheby's U.S. chairman John Marion. As for charges that hype by the auction houses has undermined not only prices but the houses' own credibility as well, Marion says, "Anyone can say anything they like." But art dealers, who have lost much of their business to auctions in recent years, are not immune to schadenfreude. Lawrence Rubin, for instance, head of New York's M. Knoedler & Co. gallery, sees "a slump self-induced by the auction houses. Over the past three years, they have simply doubled their price estimates regardless of what the thing might really be worth. You can't go on jerking up prices relentlessly like that without real clients ready to pay them, and clearly they're not. You run out of rope." The slide in the contemporary market--the junk bonds, as distinct from the Impressionist blue chips--is not helped by the fact that some of the biggest buyers of former years, like advertising mogul Charles Saatchi, are now strapped for cash and have turned into sellers. But the larger problem will not go away. As the auction analyst Souren Melikian recently wrote in the International Herald Tribune, "Market manipulation has now reached such proportions...that even the greenest newcomers are becoming aware that they are being taken for a ride." Since the main form of this manipulation has been the systematic inflation of estimates, it leaves the auctioneers with a problem not even Dr. Gachet could cure. </body> </article> </text>