Every week, Artnet News brings you The Gray Market. The column decodes important stories from the previous week—and offers unparalleled insight into the inner workings of the art industry in the process.

This week, assessing the damage… 

‘PIECE OUT

On the first Friday of the new year, MCH Group announced the cancellation of Masterpiece London, the 13-year-old cross-category fair of art and fine objects that was slated to open its next edition in June. In a press statement, the company cited “escalating costs and a decline in the number of international exhibitors” as two factors that made the event “not commercially viable this year.” While it’s possible that Masterpiece London will return in the future, the more important question is how much this cancellation might foreshadow what’s expected to be a rocky year ahead for the art business. 

Personally, I’m pessimistic about this particular fair’s chances for resurrection in 2024—or any other year, for that matter. Masterpiece London 2022 went ahead with healthy-enough sales and plenty of enthusiasm (even if much of it was for dinosaur bones and large, pretty minerals), based on my colleague Vivienne Chow’s reporting. But the fair’s 2020 and 2021 editions were both casualties of COVID-related shutdowns; this year, it seems to have been sunk by the same broader economic headwinds howling through the rest of the U.K. art industry. Masterpiece CEO Lucie Kitchener told the Art Newspaper that part of the blame falls on the chaotic aftermath of Brexit, which has magnified operational headaches and expenses for British businesses across sectors.

Put it all together, and Masterpiece London has not been held in consecutive years since 2018 and 2019. In general, when an annual event in a volatile economic sector fails to materialize three out of five years, I would not bet on it roaring back in year six. Kitchener’s comments to TAN about Masterpiece London’s future only deepen the gloom creeping in from the margins. She said that “no future editions of Masterpiece in its current format are planned. MCH group is working with the Masterpiece team to consider future brand developments.” That, as my dad would say, is a yikes.

The exterior of Masterpiece London. Photo: Andy Barnham, courtesy of Masterpiece London.

If this year’s cancellation does indeed mean the casket has closed for good on Masterpiece, it  represents a bigger blow to MCH Group than the loss of one annual trade fair. Remember, Masterpiece was the only property that MCH held onto when it announced in November 2018 that it would reverse course on the aggressive expansion into regional art fairs that it embarked on in 2016. The company included in its larger statement that it had “decided not to proceed” with its pledged investment in Singapore’s then-still-developing Art SG fair. Soon after, MCH Group sold off its 50 percent stake in the India Art Fair and its 25 percent stake in Art Dusseldorf.

(The company also discontinued plans to expand its classic cars expo, Grand Basel, to Miami as part of the unwinding. Ironically, it eventually purchased a 15 percent stake in Art Events Singapore, the parent company of Art SG, more than four years after pulling out of the original deal.)

In contrast, MCH Group didn’t just hold onto Masterpiece London through the fire; it eventually doubled down, upping the 67.5 percent stake it acquired in 2017 to full control of the brand in August 2022. 

That decision came after MCH Group began leveraging Masterpiece as a second foothold in East Asia to complement Art Basel Hong Kong. Masterpiece London’s 2019 edition included a pavilion operated by Hong Kong’s Fine Art Asia fair. After originally planning to stage a 24-exhibitor pavilion of their own within Fine Art Asia that fall, Masterpiece dialed back to an “object-led showcase” of 15 exhibitors due to logistical challenges stemming from the pro-democracy protests sweeping Hong Kong at the time. Kitchener also spoke publicly about Masterpiece’s general intent to expand in Hong Kong in the years to come. 

COVID thrust that playbook into the incinerator, but it was reasonable to think that an eastward push could be back on the table after Masterpiece’s main event returned to London in 2022. The prospect looked even more plausible in light of what Chow termed “the strong presence of Asian visitors, primarily Mandarin- and Cantonese-speaking art lovers” there. Last year’s fair also counted multiple first-time Asian exhibitors based everywhere from New Delhi to Hong Kong, all hoping to augment their presence in the British art capital.  

Instead of expanding deeper into Asia, however, Masterpiece contracted at home. The disappearing act has already prompted nervous chatter that other regional fairs could be forced to postpone or cancel their 2023 plans amid an increasingly recession-spooked art market. If MCH-backed Masterpiece couldn’t make the numbers work, what other event in the middle tier of expos can? 

Lynn Chadwick, Walking Woman (1984). Sold for just under $2.4 million by Osborne Samuel at Masterpiece London 2022. Photo: Vivienne Chow.

Personally, I tend to believe these fears are overblown. For starters, it’s not as if MCH Group has proven to be some heretofore infallible wizard of fair management. If the U-turn that the company pulled on its regional expo strategy in 2018 wasn’t proof enough, the yearslong erosion of its Baselworld watch fair drives the point home. Having enough capital to buy or launch something means nothing about one’s ability to maintain or grow it. 

Zooming out even further, too many people in the art world assume that any time MCH Group gets involved in an art event, it also means that Art Basel is involved. But this assumption is a product of something between faulty reasoning and wishful thinking. Sandy Angus, who managed the India Art Fair before, during, and after its brief ownership by MCH Group, put it this way to The Art Newspaper in 2019: “MCH is an investment group and it doesn’t speak to Art Basel at all—one of the real problems was that there was absolutely no input of any sort from Art Basel, with whom we have a good relationship.” In fact, as of March 2021, Zachary Small reported that Art Basel was “the only profitable entity” within MCH Group’s portfolio of subsidiaries over the preceding three years. 

All the more reason not to assume that just because Masterpiece London collapsed into dust, more regional fairs are likely to follow. Some of what afflicted Masterpiece London is specific to its particular circumstances, even if you set aside ownership and management. 

High inflation and high interest rates are hitting the art economy at large, but the U.K. is taking it harder than most. In tandem with the aforementioned post-Brexit difficulties, Russia’s invasion of Ukraine has sent energy costs skyrocketing in Europe and the U.K., whose usual diet of Russian oil has been embargoed even as carriers have to opt for less efficient routes to avoid the conflict. Meanwhile, gas prices in the U.S. are lower than they’ve been in a long time, keeping the costs of travel and domestic art shipping manageable. Those factors alone create separation between different regional fairs’ odds of weathering the storm. 

That said, I do think that Masterpiece London’s fate is a harbinger of difficulties, just not necessarily doom. It’s already clear that art businesses of all types are getting ready to slash expenses in 2023, regardless of which (if any) of the art market’s major regions technically tips into recession. Fair participation will be among dealers’ first targets. 

Phyllida Barlow’s pom-pom installation at Masterpiece London 2019. Courtesy of Hauser & Wirth.

There is at least some evidence that the process has already started. Melanie Gerlis relayed in the FT that Masterpiece London’s total number of European exhibitors plunged nearly 60 percent over the last three editions, from 38 such galleries in 2018 to just 16 last year. Multiple dealers that I spoke to ahead of the December fairs in Miami were already regretting their booth commitments based on how the economy had slid in the time since they were accepted. Though many, if not most, seemed to sell enough to get by in South Florida, few sold enough to dramatically expand their margin for error in the first half of 2023. 

Ultimately, then, this year is shaping up to be an experiment in how art businesses have metabolized the lessons of the pandemic shutdowns. They were starved of fairs then and mostly did fine, partly by pivoting to e-commerce, road shows, and collaborative enterprises. Logic would suggest that those experiences would make them more willing to be judicious about their fair participation and other expenses now that the economy is tightening for mundane reasons. 

But will that actually turn out to be the case? Or did the post-pandemic bullrush back into physical fairs and brick-and-mortar expansions prove that most of the COVID-era conversation about finding new efficiencies, thinking laterally, and refusing to fall into the old traps were just lip service?

The fall of Masterpiece London could be the first sign that exhibitors have smartened up after all. If so, that’s good news for the galleries, who should be able to drive harder bargains with fair organizers, or just say no altogether. But don’t assume that previously healthy mid-market expos are all due for a death march. Their exhibitors aren’t the only ones who can slash costs and cut deals to survive hard times. So we might see leaner floor plans, less amenities, and even layoffs, but I doubt we’ll see a mass extinction.

[Artnet News]

That’s it for this week. ‘Til next time, remember: in the fair sector as in the rest of life, it takes at least three examples to make a trend.