The Back Room: Up, Up, and Away

This week: inflation's effects on the art market, a painting that can't stop flipping, millions spent on Washington lobbyists, and much more.

Florida Senator Rick Scott presenting data on inflation in May 2021. (Photo by Kevin Dietsch/Getty Images). Illustration by Artnet News.

Every Friday, Artnet News Pro members get exclusive access to the Back Room, our lively recap funneling only the week’s must-know intel into a nimble read you’ll actually enjoy.


This week in the Back Room: inflation’s effects on the art market, a painting that can’t stop flipping, millions spent on Washington lobbyists, and much more—all in a 7-minute read (1,895 words).


Top of the Market

Inflation Nation

Andy Warhol’s Front and Back Dollar Bills (1962-63) Photo by Tristan Fewings/Getty Images for Sotheby's

Andy Warhol’s Front and Back Dollar Bills (1962-63). Photo by Tristan Fewings/Getty Images for Sotheby’s

While the industry’s movers and shakers are out finalizing deals at FriezeFelix, and other haunts between Malibu and the Los Angeles River, broader economic conditions continue to drive up prices for nearly everything that touches our odd little niche of commerce.

So what, exactly, does the worst bout of inflation in decades mean for the art market itself? Perception and reality are still warring over the answer, as Katya found in a recent column.

The debate hasn’t felt this urgent in my lifetime. The Consumer Price Index, a key inflation metric, just showed its biggest increase in 40 years (up 7.5 percent YOY in January).

The Federal Reserve has signaled an interest-rate hike in March, with the possibility of more to come later in the year. Meanwhile, supply-chain disruptions and a job market brimming with newly choosy laborers often mean consumers are paying more for second-choice goods and worse services.

It’s a confusing mix of inputs and outputs. Thankfully, Katya’s signature blend of research and reporting allows me to sort the inflation-based takeaways for the art economy into two easy-to-grasp categories…


The Good News

  • Overall, resale prices for art do rise with inflation, according to some data. Research by Yale finance guru William Goetzman backs this premise. Christophe Spaenjers, associate professor at French business school HEC Paris, has also found that artworks act as a better hedge against inflation than cash or bonds.
  • Collectors and advisors generally believe blue-chip artworks are a more stable asset than other options, making them more desirable in an inflationary cycle. As Katya writes, “The thinking goes like this: In the worst case scenario, I won’t lose too much, and in the best case, I may actually see a nice return.” Equities, crypto, and other asset classes tend not to benefit from the same credo.
  • Last fall’s auction and fair cycle gave hard proof that when buyers fear an inflation spike, they retreat to artwork in a big way. That’s what several market insiders saw and heard, including Fine Art Group president of the Americas Anita Heriot. Why shouldn’t the trade expect this type of behavior to continue in future inflationary periods?


The Bad News

  • Although art may hedge against inflation, there is “no evidence” that it does the job “particularly well.” So said Spaenjers based on other facets of his research. Goetzman, too, cautions against the simple narrative of artworks as the ultimate salvation from rising prices, because…
  • Artwork tends to have far higher carrying costs than other commodity-like assets. From transaction fees (like auction-house premiums) and shipping costs upon purchase, to ongoing storage expenses and insurance premiums, artworks are more costly to hold than jewels, stamps, or baseball cards, which tend to be more directly used as inflation hedges.
  • Unlike stocks and bonds, artwork pays out no dividend or interest income. Even other alternative assets provide dependable, tangible upside. It’s expensive to maintain an investment in real estate, but at least a property owner can rent to tenants. Not so for a blue-chip painting. (Rental prices even rise amid inflation, as many galleries and artists are probably all too aware lately.)
  • Supply-chain issues and inflation are escalating the costs of producing and bringing artworks to market. Fritz Dietl of art-logistics giant Dietl International said prices for materials and fuel are way up, and there is “a lot of pressure” to increase wages amid a competitive labor market. That means overall transport costs are rising, too.In fact, the price of air freight has been doubling every couple of months. One cargo of paintings flown to an exhibition in Shanghai cost $83,000 in August… and $600,000 to return in November, Dietl said.


The Bottom Line

Although art’s reputation and (mixed) record as a hedge could continue to boost sales until inflation slows, the downsides of the current market conditions may outweigh the upsides for much of the art industry.

The sell side is bound to pass some of its cost increases along to art buyers, particularly at the lower end of the market where margins are thinnest. Nonprofits will also likely struggle to maintain the status quo, especially since government officials tend to cut funding to arts and cultural institutions during inflationary periods. (New York City mayor Eric Adams’s first proposed budget is a case in point; it would slash spending for every municipal department except the NYPD.)

No matter how the costs and benefits math out, however, one thing is certain: inflation will impact the art business more than the art business can ever impact inflation. So whatever moves you make next, make them with your eyes wide open to the bigger picture.



Paint Drippings

X Museum founder and collector Michael Xufu Huang. Image courtesy X Museum.

X Museum founder and collector Michael Xufu Huang. Image courtesy X Museum.

Hold onto your bristles for the latest Wet Paint, folks!

Remember Cecily Brown’s Faeriefeller, the painting at the molten core of the red-hot flipping scandal between X Museum founder Michael Xufu Huang, his Monaco-based friend and client Federico Castro Debernardi, and Paula Cooper gallery?

Well, the painting is going back up for sale at Sotheby’s London on March 2—for a much bigger sum than Huang paid. With an estimate of £2.2 million to £2.8 million ($3 million to $3.8 million), it represents as much as a 442 percent markup (!) from its original $700,000 selling price just over two years ago. The listed provenance is a sight to behold, too.

And if you think that’s spicy, just wait until you read what other art-world personalities had to say about Huang’s Instagram apology for the incident. (Sneak peek: the reactions include expletives and the word “dickmatized.”)

Here’s what else made a mark around the industry since last Friday morning…


Art Fairs

  • Zona Maco welcomed more than 200 galleries and a strong cohort of Mexican collectors to its 18th edition last week, but sales mostly fizzled. Multiple exhibitors blamed the fair’s spotty Wi-Fi for undermining deal-making. (Artnet News)
  • The World Photography Organization, which runs Photofairs Shanghai, has bought a 25 percent stake in Photo London. The latter fair’s organizers said the pact would expand their footprint into Asia and offset challenges posed by Brexit and COVID. (Financial Times)

  • Spark Art Fair will return to Marx Halle in Vienna from March 24 to 27 with a continued focus on solo presentations by a mix of emerging and established artists. Notable exhibitors for the sophomore edition include Galerie LelongKamel Mennour, and König Galerie. (Press release)


Auction Houses

  • Christie’s will offer a prized Man Ray photograph from the estate of New York fashion executives Melvin Jacobs and Rosalind Gersten Jacobs during its New York evening sale in May. If Le Violon d’Ingres (1924) meets its $5 million to $7 million estimate, it will become the most expensive photo ever sold at auction. (Wall Street Journal)



  • More than half a dozen East Coast galleries have announced Los Angeles expansions in recent weeks, ranging from upstart names to blue-chip stalwarts, including Albertz BendaDanzigerSean KellyLissonDavid ZwirnerPacethe Hole, and Sargent’s Daughters. (Artnet News)
  • Mariane Ibrahim gallery now reps L.A.–based figurative painter Ferrari Sheppard, and will hold an inaugural solo show in 2023. (ARTnews)
  • Brussels-based Galerie Jacques De La Beraudiere has withdrawn a $10 million lawsuit against Manhattan’s Edward Tyler Nahem Fine Art over the latter’s alleged withholding of relevant details about the consignment of a 1950 Mark Rothko painting some 20 years ago. The Belgian dealer reduced the legal drama to a “miscommunication.” (Press release)



  • SculptureCenter has named Carnegie Museum of Art curator Sohrab Mohebbi as its new director. Mohebbi will take the reins in March, while continuing to work on the Carnegie International exhibition through October. (Press release)
  • The Portland Museum in Maine launched an $85 million capital campaign to build a vast expansion housing a rooftop sculpture garden, art galleries, classrooms, and a photography center. The institution has already raised $15 million. (Portland Press Herald)


NFTs and More

  • Four Italian museums, including the Uffizi Galleries and Milan’s Pinacoteca di Brera, are selling NFTs of masterpieces from Raphael, Leonardo, and others to raise money for the physical works’ conservation. The digital replicas are on view at Unit Gallery in London and offered in editions of nine, priced from $114,000 to $284,000. (Artnet News)
  • An Italian court ruled that a major art collection owned by a failed bank must be sold in order to repay its clients. The hitch? National heritage laws prevent the works, including a Caravaggio said to be worth millions, from leaving their current location. (Artnet News)
  • U.K. tax authorities seized three NFTs as part of a suspected $1.9 million case of VAT fraud, marking the country’s first enforcement action involving crypto assets. (Bloomberg)



Data Dip

Cashing Checks on Capitol Hill

© 2022 Artnet Worldwide Corporation.

© 2022 Artnet Worldwide Corporation.

From 2018 through 2021, art businesses cumulatively funneled nearly $2.5 million into lobbying Washington lawmakers, according to my review of public disclosure documents.

  • The top spender was Sotheby’s, which paid $960,000 in fees across all four years.
  • Only three of the lobbying industry’s 10 largest art-business clients were for-profit companies: Sotheby’s, rival Christie’s ($225,000), and Pace Gallery ($90,000).
  • The nonprofit Art Dealers Association of America and Association of Art Museum Directors took second and third place (respectively) in the spending ranks, paying a combined $770,000 toward lobbying efforts.

For more details, click through for this week’s Gray Market.


[Read More]


“Before the auction, he didn’t know anything about Giacometti… I tried to educate him and let him know how important the lot was and why we should have it.”


—Art advisor Sydney Xiong on how a three-hour crash course just ahead of the Macklowe evening sale convinced her crypto-billionaire client Justin Sun to shell out $78.4 million for a prized cast of Alberto Giacometti’s Le Nez (1947/1965). (The New York Times)


Artwork of the Week

Francis Bacon’s Triptych

Francis Bacon, Triptych 1986-7. Courtesy Christie's.

Francis Bacon, Triptych 1986-7. Courtesy Christie’s.


Date:                    1986–87
Seller:                  Norman Foster

Estimate:             £35 million to £55 million ($47.3 million to $74.3 million)
Selling at:            Christie’s London
Sale date:            March 1


A week after Christie’s announced that this eerie Bacon triptych would headline its upcoming 20th/21st century sales cycle in London and Shanghai, Katya unmasked the work’s consignor: starchitect Norman Foster.

It’s “unclear” why Foster is bringing the work to auction now, she writes. But it has apparently been offered privately since the start of the pandemic, according to people familiar with those discussions, at an asking price ranging from $70 million to $100 million.

The triptych is loaded with cryptic political and personal references. The left panel is modeled on a 1919 photo of U.S. President Woodrow Wilson at the talks that produced the Treaty of Versailles, the pact that ended World War I; the right panel alludes to the assassination of Russian revolutionary Leon Trotsky. The central panel, however, hosts an image of Bacon’s then-partner John Edwards, as only Bacon could envision a loved one.

The artist’s triptychs have done big numbers under the hammer in recent years. The last one offered to bidders was Triptych Inspired by the Oresteia of Aeschylus, which became the top-selling work of 2020 by wringing $84.6 million out of none other than Sotheby’s owner Patrick Drahi. Seven years earlier, Christie’s New York sold Three Studies of Lucian Freud for $142.3 million, still the artist’s auction record today.

The final price for this latest triptych is anyone’s guess. But Christie’s has already secured a third-party guarantee for the lot, ensuring that Foster won’t come away empty-handed again.

(Representatives for Foster didn’t respond to emails and calls seeking comment. Christie’s declined to comment.)


With contributions by Naomi Rea. 


Thanks for joining us in the Back Room. See you next Friday.

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