Anatomy of a Deal

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It took several investors, two dealers and an auction house to make and market the Estella collection. What ever happened to simply buying and selling?

This past April, Sotheby’s Hong Kong held the first of two sales dedicated to the Estella collection, billed as “the most important collection of Chinese contemporary art ever to appear at auction.” The 108 lots fetched $HK139.4 million ($17.9 million), including premium, well above the high estimate, and several artists’ records were set. Even more remarkable than these results, and more revealing about the state of the art market, is how the collection came to auction—as well as how it came to exist.

The complexity of the Estella collection’s brief history and the number of players involved in creating, exhibiting and marketing it make the notion of a buyer and a seller simply exchanging goods seem almost quaint. Shortly before the April sale, it was disclosed that the items had been accumulated not by a single passionate connoisseur but by a small coterie of investors and their adviser, the New York dealer Michael Goedhuis, and then sold to William Acquavella, another New York gallerist. But the trail does not end there: It also turned out that Sotheby’s, which will offer the second part of the collection in New York next month, has a financial stake in it.

The two museums that hosted “Made in China,” a lavish exhibition of the Estella holdings that closed just weeks before the April sale, did not know that the items were headed for the block when they decided, in 2006, to mount the show. And some artists who sold pieces to Goedhuis with the understanding that the collection would remain intact and might one day belong to a Chinese museum consider the auction a betrayal.

Clandestine wheeling and dealing has underlain the marketing and selling of artworks for decades, if not longer, but it seems more prevalent today, no doubt because of rampant inflation in the art market and the increased tendency for collectors to consider their holdings assets rather than sources of enjoyment. In this atmosphere, it is not surprising that savvy dealers, advisers—even artists themselves—might manufacture provenance for contemporary works to pump up their prices. Buyers beware: Before you know it, today’s hot museum exhibition can become tomorrow’s buzzed-about auction preview.

Dubious practices to watch out for include trustees’ pressuring curators to feature artists represented in their personal collections, as well as galleries’ and artists’ estates’ strategically placing in important exhibitions works that they’re intending ultimately to offload. The trend has even crossed over to the commercial realm: Galleries mount museum-caliber nonselling shows to enhance the value of one or two pieces on display. Of course, none of these tactics is particularly new. What is different today is, again, the frequency with which they are wielded.

Wide exhibition exposure certainly contributed to the financial success of the Sonnabend collection, part of which sold earlier this year for a reported $600 million in a series of private sales. Most recently, the trove of postwar art put together by Helga and the late Walter Lauffs made $96 million at Sotheby’s New York after having been on loan for decades at the Kaiser Wilhelm Museum in Krefeld, Germany.

Goedhuis seems to have learned from such examples in expertly packaging and promoting as a collection what was essentially an art-investment fund. The dealer, however, claims loftier motivations for his creation. The Estella project, he says, was born almost five years ago of an interest in contemporary Chinese culture that he shared with one of his investing partners. “We noticed with frustration that there was no reliable, scholarly publication on the subject of contemporary Chinese art,” Goedhuis explains. “So it was decided to build a collection that could form the basis of just such a book. At the same time we decided to assemble the best possible group that would have a claim to international stature.”

As for the moniker, “I was reading Dickens’s Great Expectations, and I felt [Estella] was a name the Chinese could pronounce,” Goedhuis explained to the New York Times before the April sale, adding that although the collection’s namesake isn’t an admirable character—she seduces men just to break their hearts—“it’s a pretty name.”