Salesroom Sanity

Pablo Picasso Jean Dubuffet Henri de Toulouse-Lautrec Wassily Kandinsky Edgar Degas Edouard Manet Juan Gris Kasimir Malevich

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For those who truly love art, the market is becoming more exciting than it has been in a long time. The splendid news is that auctions are at last reverting to a natural balance that seemed lost forever as a result of speculation that spiraled ever faster out of control. 

The market correction became clear this fall when Sotheby’s and Christie’s held their sales of Impressionist and modern art. While the main sessions, which began at Sotheby’s on November 3 and ended on November 6 with the second Christie’s evening sale, left outsiders under the impression that the market was taking a beating, these auctions were actually surprisingly successful. Indeed, they pointed to the fundamental vigor of an art market allowed to function free of manipulation, because in contrast to the housing or banking sectors, it is fueled by desire — a powerful motivation that continues to drive buyers.

A welcome novelty is that in the fast-deteriorating economic environment, auction-house specialists were able to make a stand against the excessive demands of speculation-minded vendors for the first time since the 1990 market crash. In a historic turnabout, Sotheby’s and Christie’s experts went back to consignors to persuade them to bring down inflated estimates and reserves. Year after year, estimates had been pushed up by consignors who were convinced that higher figures led to higher profits in a market where innumerable newcomers, incapable of assessing for themselves the artistic merit of a lot, took at face value whatever statements and numbers were printed in the catalogues. The growing scarcity of goods in the midst of rising demand made it impossible for the best experts to resist the pressure. They were as eager to fill their catalogues as they were scared by the thought of losing out to the competition. Paradoxically, the financial tempest that blew hard during that fateful November week turned out to be the experts’ saving grace. Most consignors heeded the experts’ recommendations, which allowed both auction houses to post sale totals that were astounding given the economic context.

By the end of the November 3 evening session, Sotheby’s had sold 45 lots for $223.8 million. The sales pattern established that day deserves to be carefully considered by all those who buy or sell art. All three works of supreme importance went through the roof, showing that the last-chance syndrome is as effective as ever.

Kasimir Malevich’s Suprematist Composition, 1916, which brought $60 million, set a world record not just for the avant-garde artist, but for any Russian painter. An irresistible and powerful psychological incentive played a role in the making of the extraordinary price. In 1927 Malevich took Suprematist Composition out of Russia and had it displayed in commercial exhibitions in Warsaw and Berlin and was later prevented by the Communist regime from returning to Germany. Malevich had entrusted his picture to an architect who reportedly sold it to the Stedelijk Museum, in Amsterdam. There it spent the next 50 years before being returned to the artist’s family in early 2008, following a protracted legal battle.

To admirers of 20th-century art, the release of the Malevich for sale felt like a miracle. This was a chance in a lifetime — hence the staggering price. The triumph, however, came with a warning. There is a limit to the price of every work, however rare and desirable. Now is not the time to try to squeeze an extra pound of flesh out of art buyers. Only one contender appears to have been in the running for the painting. Tobias Meyer, who was conducting the auction, opened the bidding at $49 million, slowly took it to $51.5 million, called out two more bids and brought down his hammer at $53 million. Those attending the sale got the distinct impression that a single commission bid on the auctioneer’s book, which was designated in the catalogue entry as an irrevocable bid, had allowed the Malevich to sell. With the sale charge, this raised the price to $60 million. The estimate quoted just moments before the sale was $55 million, well below the figure "in the region of $60 million" later printed in the press release. Presumably, the estimate and the reserve that came with it(generally set at around 10 percent below the lower end), had been reduced before the sale. Nevertheless, the final price was sensational, proving that major rarities continue to sell at top dollar even in a threatening economic environment.