Wednesday, March 1, 2017

Who Caused the Market Slump?

Who Caused the Market Slump? Cheyenne Westphal & Alex Rotter

February 27, 2017 by Marion Maneker

According to the Wall Street Journal, the current market slump, which has seen auction sales fall substantially from 2015 to 2016, was caused by the garden leaves of so many departed auction house specialists last year from both Sotheby’s and Christie’s. Deprived of their big game hunters, the auction houses have had to “make do with smaller, less expensive offerings—and that haven’t generated much excitement among major collectors.”

The Journal neatly offers the evidence, above, showing the 28% decline in the number of lots over $1m even though the total number of lots only fell 2%. make do with smaller, less expensive offerings—and that haven’t generated much excitement among major collectors.

Christie’s lost about 28 business-getting experts over the past year—including the New York heads of its major impressionist, modern and contemporary art departments. Sotheby’s was hit just as hard, losing high-profile deal-makers like Cheyenne Westphal to Phillips and Alex Rotter to Christie’s. These salespeople have spent years nurturing ties to billionaire collectors, and while they sat on the sidelines, fewer $10 million-plus artworks filtered into the auction pipeline.

There’s another way to look at this phenomenon which we discuss in this post for AMMpro subscribers. But let’s follow the Journal’s logic to its conclusion. According to the business paper, the return of these specialists to active duty at their new firms, combined with what might be strong sales in London this week and next should lead us right back to art market nirvana:

If those sales go well, expect the market to start recouping its 2016 sales declines quickly—and begin cycling back to its 2014 peak of $15.1 billion in sales.

A People-Powered Pickup for the Art Market (WSJ)