Some of the more intriguing findings are mined from the data on Artfacts.net, which has tracked openings and closings among 5,000 top galleries since 2007 (the criteria for inclusion is participation in a major art fair in the last 11 years). There’s been much ink spilled over the fact that galleries are closing, and McAndrew observes that more than 20 notable galleries shut their doors in 2017—but the issue is larger than simply the number of galleries that close each year. In 2007, five galleries opened to every gallery closing, and Artfacts.net counted a total of 275 galleries worldwide that opened that year; in 2017, less than 50 new galleries opened their doors. The reasons as to why galleries are dying in droves has been documented—high rent prices, exorbitant fees levied by art fairs, art-going habits shifting toward event-driven Instagram spectacles—but McAndrew singles out the way in which mega-galleries poach young talent before they can make money for the small gallery that has supported them.
“Although this development is nothing new, its prevalence is becoming increasingly problematic to a wider range of dealers, with the very top dealers encroaching on both classic mid-level dealers and also those who would otherwise be thought of as near the top end,” McAndrew writes. “This has further cemented the superior market position of a very small number of dealers at the very highest level.”
The vast majority of collectors interviewed say “I’ve never sold a work”
No one wants to admit to being a flipper. Of the 791 active art buyers who were interviewed in the Art Economics/UBS survey, a whopping 86% claim to have never once sold a work from their collection.
A separate UBS survey of HNWIs, referred to in the report, found that “almost 40% could not estimate the value of their own collection and the majority had not discussed their collections with a financial advisor,” and that “the vast majority (81%) [was] planning to leave their collections to their heirs when they passed away.”
What fair fatigue?
Despite a long-simmering backlash toward art fair proliferation—Jose Freire’s Team Gallery is the latest to quit the whole expo business, and Gavin Brown’s Enterprise isn’t doing any New York fairs this year—dealers made more money on fairs in 2017 than the year prior. Dealer sales at art fairs were $15.5 billion, up 17% from 2016, and dealers said they made 46% of all their sales at fairs, a figure that was up by 5%. And while fairs will continue to grow like weeds on every corner of every continent—there were about 55 art fairs around the globe in 2000, and now there are 260, according to the report—galleries, on average, participated in five fairs in 2017, the same as the year before. However, dealers also reported that their spending on fair participation rose by 15% in 2017.
Speaking of art fairs, people really like bringing Alex Katz works to them
Alex Katz is not in the top 20 list of sales by living artists, nor is he in the top 20 list of artists with the most solo exhibitions. But in the list of most-exhibited artists at fairs, Katz is number two, appearing with at least one work at 35 of the top 68 fairs around the world. (The late Warhol is number one, with 43 fair appearances.) Undoubtedly, a big Katz painting of a beach on a sunny day brightens up an art fair booth.
The twilight years of grand old galleries
There’s one reason for galleries closing that isn’t often talked about: people retire, or die. The titans of SoHo’s 1980s rise, such as Paula Cooper, Barbara Gladstone, and Mary Boone, are getting up in their years, and in the next decade, retirements are inevitable, leaving the future of their businesses in flux. “Unlike the auction sector where large brands dominate, most dealer businesses, even at the high end, are identified strongly with key individuals,” McAndrew writes. “When a dealer moves on or retires, the business itself also often comes to an end, versus the brands and corporate identities in the auction sector.”
Larry Gagosian addressed this issue during a recent talk at the 92nd Street Y, and didn’t have a concrete answer as to what will happen to his eponymous gallery. “I don’t have children, and that’s usually how these legacies are established,” he said. One anonymous dealer quoted in the report was a little more blunt: “When I retire or leave, there will be no company to sell,” they said. “The business is based on me, my network of contacts and a little bit of inventory. It’s the same in bigger galleries, if one person leaves that can mean the end. While there are some businesses that are successfully handed down through generations,” continued the dealer, “they’re not common.”
The total sales in the art industry are still dwarfed by big tech…for now
At one point, McAndrew reminds us that Google alone generated $110 billion in revenue in 2017, making the $63.7 billion generated by approximately 310,685 different businesses in the art world seem a bit paltry. But look for that number to increase as wealthy people get wealthier. “By 2025, forecasts are that [the combined wealth of all HNWIs] may reach as high as $106 trillion,” McAndrew writes. “If as low a portion as 0.1% of that increase in investable wealth were to be invested in works of art over the eight-year period, this alone could add a further $40 billion to art sales, bringing the market well in excess of $100 billion.”
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