There are two things that have been bothering me about the art market and are, firstly, the practice of cornering the market which means to own so much of a certain artist’s market that one can control his or her prices and secondly, the secrecy of the auction houses. There are a lot of grey areas that need to be regulated because I think that the problem with the art market and prices is that it has been artificially inflated.
Let’s have the case of the Mugrabis, who own one of the two biggest Andy Warhol collections and who is the person that is interviewed in that infamous Robert Hughes’ interview. It is a generalised practice that the big galleries bid for their artists in order to sustain their prices. Therefore, it does not come as a surprise to find Mugrabi bidding for any Warhol that emerges in any auction around the world. In fact, in the secondary market they work with a series of dealers which would tend do put down other Warhols circulating as ‘not as the level as’, etc. The outcome of this is to sell at a higher price and to buy cheaper. For example, Warhol’s Last Supper had an estimate of $10 million at Christie’s and ended up being bought at $9.5 million but if one of their Warhols is being auctioned they would get someone to counter-bid any interested person. In the financial world, a similar thing is seen as fraud. So that is the way they accumulated so many Warhols and keep controlling their prices. This is also de case for impressionist painting and Fontanas when the Nahmads are involved.
However the case of the Hanging Heart by Jeff Koons raises other issues. Having been sold by Gagosian to Adam Lindenman by $3.5 M who less than a year later decided to put it in auction was bought back by Gagosian $23 million. How was that possible? Althought, everybody was angry with him, he did something that interested them all which is to push the prices higher. It ended up being a win win situation for everybody because they all had an interest in increasing the prices. The story here was that Sotheby’s got a reserve from Peter Brandt at $19 million at the estimate but Gagosian came through with another bid from the Ukrainian oligarque Viktor Pinchuk who offered the needed $23 million plus commissions. What was the role of Sotheby’s in all this? Well, it seems that they manipulated secrecy to maximise their position for, as it is said, Peter Brandt might have not offered the $19 million that Sotheby’s told Gagosian he had.
Tobias Meyer, head of Sotheby’s contemporary is good friends with Adam Lindenman. Isn’t there the possibility that the auctioneer rang the collector and told him that he had a $15 million offer and, at the same time, told Gagosian that he had a buyer at $19 million. Although Sotheby’s did not need to lend money to the buyer, in this particular case, what happens in those cases were Sotheby’s lend money to prospective buyers. He could motivate potential buyers to bid on already inflated art works? In the mean time, the one who pay, as I will explain, are the tax payers and the real artists. Just a thought.