Courtesy Palgrave Macmillan

Don Thompson

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What does the current global economic crisis mean for the art market?

That’s the number one question, isn’t it? The best guess is that the top of the market will hold up, because there are about a hundred museums that are actively purchasing art — think of the four in the United Arab Emirates, plus Qatar, and you’re already looking at the purchase of between a hundred and two hundred high-end works a year. Abu Dhabi in particular has put an enormous amount of money into art. So the best assumption is that museum-quality works will hold up, and the middle market will flatten or probably decline a bit.

The middle market is a major concern at the moment, don’t you think?

There’s a whole lot less money and a whole lot more uncertainty out there. The wild card is, how many people in the financial sector are dumping art? The auction houses will be very careful to control what comes to market in the November and December auctions; I suspect most of those consignments are already set. They will be accepting things for May and June. The lesson we learned in 1990, when Japanese banks started dumping, was that the first person got away with it, but the third took a bath. Nobody wants to be third.

That said, some people will want to sell. If you are told by Sotheby’s and Christie’s that they won’t handle your work until May or June, or until a year from now, the next thing you do is contact your three favorite dealers and try to have them sell it. That’s how the word will get out that there’s a lot of art on the market. If that happens, all bets are off.

A week ago Bloomberg ran an article saying that Sotheby’s Hirst sale was the top of the U.K. market. Do you agree?

Absolutely. That was astonishing. I was swapping ideas with four dealers and an auction house specialist before the sale, and our consensus was that half would go unsold and the rest would sell at the low estimates. Shows you how smart we are: In fact, the results were phenomenal. The average price at Sotheby’s was twice the average selling price for Hirst in the previous year. Two thirds of the work in the sale could have been purchased within ten kilometers of Sotheby’s for half the price. It’s mind-boggling. Apparently somewhere between half and two thirds of the pieces were purchased by individuals who had never bought a major work from a dealer. The role of branding is phenomenal.

Let’s talk about the new buyers in the art market. One of Gagosian’s directors recently told a reporter that the dealer is doing over 50 percent of his sales to collectors from Russia and other former Soviet republics.

For the past three years we’ve seen a higher percentage of art going to non-U.S., non–Western European buyers. But Russia is a derivative market. They buy Warhol because Warhol is bought in the West. They buy Hirst because Hirst is bought in the West. If these artists stop being purchased in the West, will the rest of the world move on to something else? I don’t know the answer to that.

But what was your thought when you heard that auctioneer Phillips de Pury & Co. had been bought by a Russian luxury goods concern?

Russian money has been looking for Western trophy companies. The question may be why didn’t they go after a majority share in Sotheby’s, which I think could be assembled for the right amount of money. Sotheby’s share price has dropped. I think someone could make an offer.

What are your one-year, five-year, and ten-year projections for the contemporary art market?

I think the uncertainty and excessive selling is going to keep the market down in the next year. We may be back to some even keel in a year’s time, but it would take a braver person than me to predict that. Nobody is predicting more than a year out.

How would things look after a correction in the art market?