| BUSINESSWEEK ONLINE : DECEMBER 27, 1999 ISSUE | ||||||||
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| WHERE TO INVEST -- THE INVESTMENT SPECTRUM
Still Life with Surreal Price Tag With stock-rich nouveaus buying, bargains are few Donald G. Fisher, chairman of Gap Inc. (GPS), was seen dropping out of the bidding for a painting by the New York artist Chuck Close once it topped the million-dollar mark. Scott Black, a respected collector of Impressionist-era art, didn't make any major purchases at auction this fall. Neither did Eli Broad, CEO of SunAmerica Inc. (AIG) in Century City, Calif., and another renowned collector. ''We bid on several things,'' Broad says, ''but the price went way beyond what we were willing to pay.'' It's an experience that savvy, long-term art collectors are having often these days. The art market is at its strongest since the late-1980s boom, which was followed by a crash in 1990. The combined take at the flagship New York auctions of Sotheby's Holdings Inc. (BID) and Christie's International PLC this fall topped $560 million, up 46% in two years. Black, a value investor in his day job as CEO of Boston's Delphi Management, worries that prices are out of control. ''The market's very overheated,'' Black contends. ''B-level paintings are going for A to A+ prices.'' Some collectors may want to do what Black is doing: wait, in the hope that prices will eventually drop. But like every market, this one has its inefficiencies. Relatively new collectors, such as the ones driving prices today, tend to gravitate toward familiar, easy-to-understand works by name artists--Impressionist portraits and still lifes, for instance, or pop art. Cubist and surrealist works, meanwhile, are out of favor and far cheaper. So are many photographs and difficult-to-understand, cutting-edge contemporary works. Plus, the raft of new Internet auction sites means that even small collectors can now bid on art worldwide. Sothebys.com and Christies.com are being upgraded to offer more information to buyers online. In the meantime, top Web sites include Artnet.com., the new joint venture Sotheby's.Amazon. com, and the Great Collections section of eBay.com (EBAY). CASH CUSTOMERS. Almost everyone agrees that this boom is far different from the one in the frenzied late 1980s. Dealers say there is none of the buying on margin that helped propel late 1980s art prices into the stratosphere. The buying is being driven mainly by Americans paying hard cash they've earned in the soaring stock market. ''The new collectors in the market are very intelligent, and they have good advisers,'' contends Sotheby's Chief Executive Diana D. Brooks. ''Yes, they may pay enormous prices for some works. But compared with the wealth they've accumulated, it may not be an enormous price for them.'' Indeed, much of the froth in the market comes from one continuing trend: The super-rich are willing to pay ever more astronomical prices for key works by great artists. For instance, Picasso's Nude on a Black Armchair, a 1932 portrait of Marie-Therese Walter, one of his mistresses, went for $45.5 million. The rumored buyer: Leslie H. Wexner, chairman of The Limited Inc. and a longtime collector. Another Picasso portrait, Woman Sitting in a Garden, went for $49.5 million. What has some collectors worried is that many secondary works by recognized artists are also going for two or three times their pre-auction estimates. Consider Pink Panther, a porcelain sculpture by the contemporary artist Jeff Koons depicting the Pink Panther cartoon character in the arms of a half-nude woman. That one was hammered down at $1.8 million. That's more than double Christie's high estimate. Less wealthy collectors should consider shopping for known but out-of-favor 20th century artists. New York dealer Josh Baer suggests Joseph Beuys. The price of the late German artist's prints and small objects he made have fallen as low as $1,000, compared with $1 million or more for a major piece. Another key to purchasing works by contemporary artists is to monitor the prices at the bellwether museum shows. New York money manager Arthur Goldberg and Chicago real estate developer Lewis Manilow are both big fans of William Kentridge, a South African-born video artist who won the main prize at the Carnegie International show in Pittsburgh. Kentridge's drawings go for up to $15,000; his videos fetch up to $50,000. It's also important to start buying lesser-known artists before other collectors hear about them. Manilow recently bought works by two African artists, Yinka Shonibare, a Nigerian working in London, and Bodys Isek Kingelez, a Congolese artist who was also featured at the Carnegie show. Goldberg and Manilow both have been buying super-realistic graphite drawings by little-known artist Peggy Preheim, whose work can be found at New York's Bonakdar Jancou Gallery for around $4,000. BUY WHAT YOU LOVE. For some small collectors, the Internet is proving a boon. Ken Raboy, a senior manager at Andersen Consulting in Dallas, haunts online auction sites. He has recently made a half-dozen purchases on Artnet.com, many of them at bargain prices. In October, he nabbed a Francesco Clemente print for $3,800, right before a major retrospective at New York's Guggenheim Museum started boosting the artist's prices. The Internet also is handy for shopping for photographs, where surface texture is less important than it is with paintings. Rare prints by classic photographers, such as Weegee, are skyrocketing in price. One Gustave Le Gray just went for $840,000 at auction, a record for a photo. Last year, San Francisco real estate investor Paul Sack nabbed a night view of Notre Dame in Paris by Maurice Tabard on Artnet.com for $4,025. ''For me to go to New York every four weeks to monitor the shows is crazy,'' he says. ''This is more practical.'' Price, of course, isn't everything when you're buying art. ''Do not buy art as an investment,'' cautions Christopher Burge, head of Christie's Inc. ''The strong market hasn't changed that. If anything, it means you should get more advice [before buying].'' Experienced collectors say buy only works you love, no matter what the price. Eli Broad says he asked one wealthy collector: ''How can you pay $15 million for a painting?'' The simple response, Broad recalls: ''He said, 'I'd rather have the painting than the money.''' That's an excellent rule of thumb for any art collector. By THANE PETERSON _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP |
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RELATED ITEMS Still Life with Surreal Price Tag PHOTO: Meatworkers' Congress, Circa 1940, by Weegee ONLINE ORIGINAL: Sotheby's and Christie's: Houses Divided about the Net INTERACT E-Mail to Business Week Online | |||
