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

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