How Powerful Dealers Manipulate Collectors to Buy Artwork and Other Market Secrets
One consultant considers it a velvet-gloved act of coercion.
Say you want a painting by a hot artist like Mark Bradford, who’s the subject of a recent New Yorker profile, or Danh Vo, whose works have become so coveted that collector Bert Kreuk sued to get one, or Amalia Ulman, whose works are so desired that collector and dealer Stefan Simchowitz cut one into pieces so he would have more salable units. What are you going to have to do to get it?
As anyone familiar with today’s superheated market knows, competition to secure coveted artworks can be very stiff. The work of popular artists can spur waiting lists that are sometimes years long, with dozens of respected suitors vying for the prize. This can result in high-stakes negotiations, whether discreet or conspicuous, between buyers and sellers, each aiming to bring to bear whatever leverage they might have.
“When galleries represent artists who are really hot,” one New York collector told artnet News, “they can make demands and get concessions.”
Like what? For one, you may have to buy two artworks to get one, according to the art world professionals we talked to, who, like the New York collector, spoke with arnet News on condition of anonymity.
Delicate Conversations, Ethical Questions
While it’s no secret in the business that you can get to the front of the “wait list” for an artist’s work if you promise the work you’re buying to a museum, you may sometimes be required to buy an additional work if you want one for yourself.
“If the collector happens to be a trustee, it’s a very transparent conversation,” says a New York art advisor who has served on museum boards and committees. “It’s done all the time for big-ticket items.”
And it’s not just the biggest and most powerful galleries that do it, either. “Smaller galleries, like the ones on [New York’s] Lower East Side, do it too,” says the advisor.
Some observers get queasy about deals like this. Securing a place in a museum collection can increase an artist’s market value, and collectors and museum personnel worry about giving the appearance that they’re working together to increase an artist’s prices, especially when a wealthy collector gets a tax break as part of the deal.
Moreover, museums would doubtless prefer that we think that the only factor driving the development of their collections is the judicious decision-making of sober, thoughtful curators and boards, rather than deals made amid a frenzied market that may benefit the artist and the collector as much as the institution.
A curator at a New York state museum even advised artnet News not to report on these practices because, believing they probably weren’t legal, she thought such a report might put a chill on the practice to the detriment of museums.
According to an attorney and art historian we spoke with, however, there’s no such problem.
“Are there ethical questions?” the attorney asked. “I’m not really sure what they would be. It’s not against the law to prefer one buyer over another. It’s a free market.”
And these aren’t informal arrangements. One common criticism of the art world is that it operates on handshake agreements rather than written contracts. But as the lawyer and art historian told artnet News, these transactions are thoroughly vetted: “They get worked out via contracts, not just handshakes. It’s not uncommon for museums to have their legal counsel participate in the negotiations, because they want to be sure the deal is to their benefit.”
The Museum of Modern Art and the Guggenheim Museum both declined to comment for this story.
“We would not be able to discuss any legal conversations regarding acquisitions,” a press representative from New York’s Museum of Modern Art told artnet News. She did confirm, however, that the museum’s counsel “would generally be involved in the arrangements of an acquisition, whether gift or purchase.”
It Can Go Both Ways
Dealers aren’t the only ones with power in these hard-nosed negotiations. Again, it’s no secret that buyers with the right connections can skip to the head of the mythical queue.
“Waiting lists don’t exactly have numbers next to the names,” said a New York dealer. “They’re porous.”
What’s more, collectors can exploit their institutional affiliations to secure favorable prices.
“Collectors who serve on museum boards can say to dealers, ‘I want this artist, and I want a good piece, and if you give it to me for a good price, I’ll buy another at that price and donate to the institution I’m part of,’” said a New York collector. “So it goes both ways.”
“It’s not a stupid way to collect,” added the collector, dryly. The buyer gets a good price on a work whose future value is buttressed by the spot at the museum.
And the buy-two-to-get-one deals may be among the more savory practices that dealers engage in when they’ve got inventory by a hot artist.
Dealers also use their leverage to move other merchandise they perhaps can’t otherwise sell, bundling less desirable works in with trophies in what one advisor considers a velvet-gloved act of coercion.
Dealers, for their part, describe it as rewarding loyalty.
“Most galleries prefer to sell to collectors who support their programs,” said a New York gallerist.
And under the best circumstances, collectors aren’t strong-armed into these conversations, says the gallerist. “Ideally, the collector trusts the dealer’s vision and believes in what she’s doing. The gallery isn’t just a shop. We’re trying to contribute something to the art world, and hopefully to art history.”
What are these conversations like?
The collector puts it this way: “There have been times when I’ve wanted an artwork and been told, ‘You know, there’s a lot of interest in that work.’ Well, is it sold or not, I ask? And they’ve openly explained that others ahead of me on the waiting list have been very supportive of the gallery.”
Let’s say you want a work by Bradford, or Ulman, or Vo. The gallerist might have the work set up for viewing in a back room, says the New York advisor, “and the dealer will have four other works, by other artists, available and ready in the room. So you start a dialogue. It’s all about persuasion. The dealer makes it subtly known that you’re not just leaving with one work, and perhaps takes a percentage off. It may be subliminal.”
Though it’s a gamble taking home works by artists who are not equally sanctioned by the market, it’s not necessarily a losing deal for the collector, a corporate art advisor points out.
“If there’s a box of trinkets at a flea market, you might have to buy the whole box to find the diamond in the rough,” she said. “As a collector, you’re taking a flier that maybe the spoon in the box is actually silver.”
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