8 April 2004

Ruckus over resale royalty

With pressure mounting for the introduction of a resale royalty on works of art every time they change hands, auction houses are becoming anxious, writes Michael Hutak.

Fine art worth more than $91m changed hands in Australia's booming auction market last year, yet the artists responsible for those works (or their heirs) saw not a red cent of it. One auction house, Sotheby's, shifted $7.9m of Aboriginal art at one sale last June. Yet living conditions on many of the remote desert communities where the finest indigenous artworks originate remain a national disgrace.

Media attention on anomalies such as the late Johnny Warangkula Tjupurrula – one of the originators of the dot-painting phenomenon who spent his final years in abject penury while works he had sold for $30 went for hundreds of thousands in the saleroom – has accelerated calls for a resale royalty to be introduced in Australia.

Such a royalty, also known as a droite de suite after the French scheme that has been in place since the 1920s, is a fee – typically fixed at about 5% of the hammer price – that goes to the artist every time an artwork changes hands in the secondary market. Support for such a scheme gained momentum in 2002 when Rupert Myer made a resale royalty a key recommendation in his federal government inquiry into visual arts and crafts funding.

However, the prospect of a new tax on collectors has the secondary art market in a lather as it collectively points towards a fast-falling chunk of sky.

"It's been highly unsuccessful in France," says Paul Sumner, chief executive of Sydney auction house Lawson-Menzies. "And it hasn't actually reduced the gap between rich and poor artists – it just rewards artists who are already successful."

Sumner, who has just an-nounced that his firm will take on market leader Sotheby's for a slice of the lucrative Aboriginal market, says Lawson-Menzies will pay 2% of its normal commission on sales of indigenous works into a new foundation that will donate funds to improve health and living conditions in Aboriginal communities.

The foundation hopes to raise $200,000 in the first year. However, Sumner acknowledges the impetus for setting it up is to derail the resale royalty juggernaut. "We're trying to head it off," he said. "We think it will be a nightmare to administer and ultimately will only hurt the artists."

But citing a 2003 Australia Council study, which found that 50% of Australia's artists earn less that $7500 a year from their art, Labor arts spokeswoman Senator Kate Lundy argues that artists couldn't be hurting much more than they are now.

The creation of a decent ongoing income stream for artists "is way overdue and it's Labor Party policy to introduce a resale royalty", she says. Lundy, who introduced a private member's bill on the issue in the Senate on March 11, concedes it has no chance of passing without government support. However, she says she's "calling the government's bluff on this. There's simply no excuse for them to delay their response to Myer any longer."

Last September, a year after Myer reported, then-Arts Minister Richard Alston promised a response on resale royalties before the end of the year. Six months later, his replacement, Daryl Williams, who also retires at the next election, is backing away from the idea.

"The government will only commit taxpayers' money to developing an implementation strategy if it is satisfied that we should implement a resale royalty scheme," a spokesman says. In other words, it's not satisfied.

Labor's draft bill is modelled on European Union legislation, where a droite de suite will extend to member countries from 2006. Lundy was advised by the National Association for the Visual Arts, the Australian Copyright Council and Arts Law, which have urged the government to act on Myer's recommendation and implement the scheme.

"We need a decision," NAVA executive director Tamara Winikoff says. "This issue has been kicking around for 20 years and it should be a bipartisan issue. We're very pleased that Labor has committed itself to a bill, and we urge the government to support it."

Not everyone in the trade is contrary. Sotheby's Tim Klingender has gone on record several times in favour of a droite de suite. "I think it would be great if it could be made workable," he says. And leading Melbourne Aboriginal art dealer Gabrielle Pizzi believes a resale royalty is "an inevitability".

But she warns: "Some people will have to be dragged kicking and screaming to it."

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First published in The Bulletin

3 April 2004

Collectables: Dake Frank

Auction prices fetched by some Australian contemporary artists are rocketing. And those about to take off display obvious signs.

The hullabaloo over painter Tim Maguire hit the heights last November when Untitled 1997, a massive split-screen canvas, brought $329,000 at Christie’s Melbourne – the third time in 2003 that a new peak was set for Maguire's florid photo-realist visions. Just one year earlier Deutscher~Mennzies had offered a comparable work with an estimate of just $10k-$15,000 (it sold for $35,250).

The latest benchmark sent market watchers into overdrive: Maguire was the new John Kelly, who was the new Garry Shead, who was the new Bill Robinson, etc. Such headline-grabbing sales are more salacious evidence of art’s potential for a quick return-on-investment, and the cue for another tranche of cashed-up, dumbed-down, saleroom ingenues to turn up, grab a paddle and start splurging.

But those hoping to get a piece of “the next Tim Maguire” should also note that the savvy buy and sell on the way up, not at the top of the market. The time to pick saleroom sensations is before they become headline fodder. Maguire, however, did fit a model that made him ripe for reaping so here’s a quick checklist for pinpointing who’s next.

First, go for beauty over brains. Ugly doesn’t wash in the saleroom, no matter how much the critics might wax lyrical. Second, stick to contemporary artists, the market’s current growth area. Third, seek out artists in their late 30s and 40s with a good body of work behind them; those who have shown they can conduct a sustained professional practice. Fourth, opt for artists who have been on the critics’ radar for more than a decade but are still new or unknown to the saleroom, ie. those with less than 50 works offered at auction. And lastly, if you plan to hang the work awhile before moving it on, it helps to like it.

Still sound like too much work? Forced to tip, 45 year old Queensland-based painter, Dale Frank, fits the Maguire model to a tee. Ever-present on the contemporary scene for over 20 years, the prolific Frank shows with the country’s leading galleries and has impeccable critical credentials, with reams of favourable reviews, several monographs published, and a retrospective at the Museum of Contemporary Art, Sydney in 2001 to boot.

Represented in every major state gallery collection, Franks’ luscious abstract works already bring vast slabs of colour to white-walled foyers and living-rooms from Kirribilli to Kew. Yet Australian Art Sales Digest records reveals just 47 works have ever been offered at auction.

However, again last November, Christie’s set a new artist record of $21,150 for a handsome 2 metre square painting. That was the jump on previous sales that canny collectors look for and it is a very attractive floor price for works that could easily climb to $100,000-plus without raising an eyebrow.

[For the record, I don’t own any of them.]


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Abridged version published in The Bulletin

2 April 2004

Art Market Notebook: Autumn 2004

The Rise of the Others

The new year began with the fine art auction market flush with cash but fraught with competition, reports Michael Hutak

In 2003 the great Australian art boom continued to gather pace with another $91 million worth of fine art changing hands in the saleroom - a 15.91 per cent increase on 2002 ($79.2) and an aggregate neatly split four ways between Christie’s, Sotheby’s and Deutscher Menzies and “others”, according to statistics compiled by the Australian Art Sales Digest. Tellingly, the biggest increase came not from the big three but in the crowded “other” category, centred mainly around players in Sydney. Swelled by a resurgent Lawson~Menzies (which actually recorded a better sale aggregate than Christies in the last round for 2003 in late spring), last year’s new comers, Cromwells, and the new old-money/new money partnership, Bonhams & Goodman, sales for the “other” category almost doubled in 2003 to $22.3 million, an aggregate representing more business than the entire auction market in 1993. That year it stood at a paltry $19.3m, in the days when “Christoby’s” pretty much split the blue chips among themselves leaving the potato chips for Leonard Joel’s (which celebrated 85 years in the business in March).

The year before, Sydney was big story. 2002 was the year Deutscher Menzies established their March sale in Sydney as a season-opening fixture on the calendar. It was when Sotheby’s cleared an incredible $7.9 million worth of Aboriginal art in June at their first foray into Sydney with indigenous art. And Cromwells, L~M, and Bonhams & Goodman embarked on a harbour city turf war which has made competition for quality stock fiercer than ever. In 2003 contemporary names like Tim Maguire and John Kelly were on everyone’s wish list, but it would prove to be the year of Russell Drysdale, who had four of the top ten highest prices achieved at auction, including the only picture to break the million barrier last year, The Outstation, sold by Sotheby’s in Melbourne in May.

Sotheby's, which topped the sales aggregates for the third year running with $27.3m, has made corporate dispersals the bedrock of its success, having managed sale of the Fairfax, BP, AXA and Kerry Stokes collections in the past two years alone. 2004 continues the trend with the planned March dispersal of the Western Mining Corporation Contemporary Art Collection, with an aggregate estimate of $806k to $1.2m. As to why so many corporations have shed themselves of art in recent years, Sotheby’s MD Mark Fraser told AAC the reasons are myriad: “Such things as share holder accountability; focusing on core activities when art is peripheral area; big increases in the value of artworks; secondary reasons can be a change of premises or a merger or de-merger of companies.” Naming Wesfarmers, Macquarie Bank, Westpac and ANZ as having the finest corporate collections still extant in Australia today, Fraser did say he knew of no major corporations that have started collections in the last two years. In fact several more firms have also sold off their collections confidentially with Sotheby’s through the saleroom.

Over at Christie’s, new paintings director, Jon Dwyer, would be happy with his first year at the helm, one which restored respectability to the French-owned firm’s local operations to post $21m in sales, a 64 per cent turnaround on 2002 revenue. The company had been haemorrhaging market share, living on the glory days of the $16m Mertz sale in 2000 – until Dwyer opened his account with a record $7.1m aggregate at last year’s May mixed vendor auction. 2004 couldn’t have begun better with Christie’s winning the plum business to disperse the contents of ‘Rona’, John Schaeffer’s landmark Bellevue Hill mansion. Shaeffer has compiled arguably the world’s finest private collection of Victorian and pre-Raphaelite art and is now in the process of selling off great chunks of it in order to shore up his exposure to the declining fortunes of his listed cleaning company, Tempo Services, (mooted in early March as a takeover target). Christie’s had plucked the Shaeffer sale out from under arch rival Sotheby’s, which had “limited success” last September in shifting the remains of Shaeffer’s once prized collection of 19th century and colonial-era Australian paintings for well below the low estimates. As Christie's sex it up to break the record as the biggest single vendor sale in this country, the proof will come, come April.

The appreciating Australian dollar however will have varied effects this year on the international market for Aboriginal art, where it will dampen foreign demand but entice foreign consignment of works held overseas. The latter effect is also expected to be felt in the wider market for Australian modernist and contemporary art. And Sotheby’s will have their first serious competition in indigenous art since 2000 when it met, matched and repelled Deutscher~Menzies’ fast and furious foray into the market. Both Christies and Lawson~Menzies have appointed Aboriginal art specialists, and the latter intends to conduct two sales a year of Aboriginal art. Shaun Dennison, a management consultant turned art expert, has been appointed to oversee Christie’s expansion in Aboriginal Art. While the party line has always been that the firm has “traditionally” not separated streams of modern and contemporary Australian art “ethnographically” and has instead incorporated Aboriginal works within the context of its normal seasonal offerings, Dwyer would “not rule out stand-alone auctions of Aboriginal art in the future”.

And at Lawson~Menzies, Cooee Gallery proprietor Adrian Newstead has come on board as Aboriginal specialist for a planned two-sales-per-year operation. CEO Paul Sumner has identified a new niche for his firm, after his art department was recently submerged into brother house Deutscher~Menzies in a bury-the-hatchet manoevre late last year that put an end to the dog-eat-dog competition between Rod Menzies two auction houses. Sumner hopes to head off finger-pointers with his announcement that L~M will pay two per cent of its normal commission on sales of indigenous works into a new foundation charged with donating funds to improve health and living conditions in Aboriginal communities. This move also offers Sumner the opportunity to denounce noises from Canberra that a resale royalty, as recommended by the 2002 Myer Report will be introduced into the Australian secondary art market. While it’s been generally acknowledged that a droite de suite in Australia will do much to support indigenous artists, the prospect of a what amounts to a new tax on collectors has many secondary market operators like Sumner in a lather. "We're trying to head it off," he said. "We think it will be a nightmare to administer and ultimately will only hurt the artists."

For his part Sotheby’s Aboriginal art guru, Tim Klingender says he supports a resale royalty and remains unfazed by his new competitors. Sumner, however, is in a unique position to know his rival, having been Klingender’s MD during the period when Sotheby’s was fending away Deutsher~Menzies challenge in 2000. And since taking over at L~M last year he has had the advantage of swapping notes with D~M’s Chris Deutscher about what went wrong. “I’ve seen both sides of the fence and I know what the processes are at Sotheby’s and I know what to expect.”

Klingender countered that he never comments on the activities of other firms… “especially that one!”.


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First published in Australian Art Collector

Art Market Notebook: Autumn 2004 -- The Rise of the Others


The new year began with the fine art auction market flush with cash but fraught with competition, reports Michael Hutak


 First published in Australian Art CollectorIn 2003 the great Australian art boom continued to gather pace with another $91 million worth of fine art changing hands in the saleroom - a 15.91 per cent increase on 2002 ($79.2) and an aggregate neatly split four ways between Christie's, Sotheby's and Deutscher Menzies and "others" according to statistics compiled by the Australian Art Sales Digest. Tellingly, the biggest increase came not from the big three but in the crowded "other" category, centred mainly around players in Sydney. Swelled by a resurgent Lawson~Menzies (which actually recorded a better sale aggregate than Christies in the last round for 2003 in late spring), last year's new comers, Cromwells, and the new old-money/new money partnership, Bonhams & Goodman, sales for the 'other' category almost doubled in 2003 to $22.3 million, an aggregate representing more business than the entire auction market in 1993. That year it stood at a paltry $19.3m, in the days when "Christobys" pretty much split the blue chips among themselves leaving the potato chips for Leonard Joel's (which celebrated 85 years in the business in March).

The year before, Sydney was the big story. 2002 was the year Deutscher Menzies established their March sale in Sydney as a season-opening fixture on the calendar. It was when Sotheby's cleared an incredible $7.9 million worth of Aboriginal art in June at their first foray into Sydney with indigenous art. And Cromwells, L~M, and Bonhams & Goodman embarked on a harbour city turf war which has made competition for quality stock fiercer than ever. In 2003 contemporary names like Tim Maguire and John Kelly were on everyone's wish list, but it would prove to be the year of Russell Drysdale, who had four of the top ten highest prices achieved at auction, including the only picture to break the million barrier last year, The Outstation, sold by Sotheby's in Melbourne in May.

Sotheby's, which topped the sales aggregates for the third year running with $27.3m, has made corporate dispersals the bedrock of its success, having managed sale of the Fairfax, BP, AXA and Kerry Stokes collections in the past two years alone. 2004 continues the trend with the planned March dispersal of the Western Mining Corporation Contemporary Art Collection, with an aggregate estimate of $806k to $1.2m. As to why so many corporations have shed themselves of art in recent years, Sotheby's MD Mark Fraser told AAC the reasons are myriad: "Such things as share holder accountability; focusing on core activities when art is peripheral area; big increases in the value of artworks; secondary reasons can be a change of premises or a merger or de-merger of companies." Naming Wesfarmers, Macquarie Bank, Westpac and ANZ as having the finest corporate collections still extant in Australia today, Fraser did say he knew of no major corporations that have started collections in the last two years. In fact several more firms have also sold off their collections confidentially with Sotheby's through the saleroom.

Over at Christie's, new paintings director, Jon Dwyer, would be happy with his first year at the helm, one which restored respectability to the French-owned firm's local operations to post $21m in sales, a 64 per cent turnaround on 2002 revenue. The company had been haemorrhaging market share, living on the glory days of the $16m Mertz sale in 2000 until Dwyer opened his account with a record $7.1m aggregate at last year's May mixed vendor auction. 2004 couldn't have begun better with Christies winning the plum business to disperse the contents of 'Rona', John Schaeffer's landmark Bellevue Hill mansion. Shaeffer has compiled arguably the world's finest private collection of Victorian and pre-Raphaelite art and is now in the process of selling off great chunks of it in order to shore up his exposure to the declining fortunes of his listed cleaning company, Tempo Services, (mooted in early March as a takeover target). Christie's had plucked the Shaeffer sale out from under arch rival Sotheby's, which had "limited success" last September in shifting the remains of Shaeffer's once prized collection of 19th century and colonial-era Australian paintings for well below the low estimates. As Christie's sex it up to break the record as the biggest single vendor sale in this country, the proof will come, come April.

The appreciating Australian dollar however will have varied effects this year on the international market for Aboriginal art, where it will dampen foreign demand but entice foreign consignment of works held overseas. The latter effect is also expected to be felt in the wider market for Australian modernist and contemporary art. And Sotheby's will have their first serious competition in indigenous art since 2000 when it met, matched and repelled Deutscher~Menzies' fast and furious foray into the market. Both Christies and Lawson~Menzies have appointed Aboriginal art specialists, and the latter intends to conduct two sales a year of Aboriginal art. Shaun Dennison, a management consultant turned art expert, has been appointed to oversee Christie's expansion in Aboriginal Art. While the party line has always been that the firm has "traditionally" not separated streams of modern and contemporary Australian art "ethnographically" and has instead incorporated Aboriginal works within the context of its normal seasonal offerings, Dwyer would "not rule out stand-alone auctions of Aboriginal art in the future".

And at Lawson~Menzies, Cooee Gallery proprietor Adrian Newstead has come on board as Aboriginal specialist for a planned two-sales-per-year operation. CEO Paul Sumner has identified a new niche for his firm, after his art department was recently submerged into brother house Deutscher~Menzies in a bury-the-hatchet manoevre late last year that put an end to the dog-eat-dog competition between Rod Menzies two auction houses. Sumner hopes to head off finger-pointers with his announcement that L~M will pay two per cent of its normal commission on sales of indigenous works into a new foundation charged with donating funds to improve health and living conditions in Aboriginal communities. This move also offers Sumner the opportunity to denounce noises from Canberra that a resale royalty, as recommended by the 2002 Myer Report will be introduced into the Australian secondary art market. While it's been generally acknowledged that a droite de suite in Australia will do much to support indigenous artists, the prospect of a what amounts to a new tax on collectors has many secondary market operators like Sumner in a lather. "We're trying to head it off," he said. "We think it will be a nightmare to administer and ultimately will only hurt the artists."

For his part Sotheby's Aboriginal art guru, Tim Klingender says he supports a resale royalty and remains unfazed by his new competitors. Sumner, however, is in a unique position to know his rival, having been Klingender's MD during the period when Sotheby's was fending away Deutsher~Menzies challenge in 2000. And since taking over at L~M last year he has had the advantage of swapping notes with D~M's Chris Deutscher about what went wrong. "I've seen both sides of the fence and I know what the processes are at Sotheby's and I know what to expect."

First Published in Australian Art Collector