SHREWD ART COLLECTORS REWARDED FOR THEIR FORESIGHT
▶ Savvy buyers snapped up gems during the financial crash and are now reaping benefits
It’s the first thing you see approaching Glenstone, billionaire Mitchell Rales’s 230-acre Shangri-La in the fields of Potomac, Maryland: an 11-metre Jeff Koons sculpture made with 25,000 flowering plants.
Split-Rocker, inspired by a rocking toy, encapsulates the “seamless integration between art, architecture and landscape” that has been the vision for Glenstone, Mr Rales said. The museum is reopening next month after a major expansion.
The Koons sculpture was one of many key works Mr Rales acquired during the art market downturn that coincided with the 2008 financial crisis. In the year that followed, he and his wife Emily added about 50 works to their collection, which now totals 1,300 pieces, by artists including Cy Twombly, Brice Marden and Yayoi Kusama. The trove is worth more than $1 billion, according to a federal tax filing by their foundation.
“We had a chance to buy works that otherwise would never have come for sale,” said Mr Rales, who co-founded Danaher, a maker of medical instruments and industrial products in Washington. “We didn’t get bargains. But we did get great things.”
Mr Rales, like other savvy buyers, approached the financial crisis as an opportunity, finding gems – and even paying record prices – as a liquidity crunch forced some cash-strapped owners to sell, according to Bloomberg. Among active buyers at the time were billionaires Eli Broad, Leon Black and Paul Allen; French luxury goods baron Bernard Arnault; Russian fertiliser king Dmitry Rybolovlev; and wealthy Middle East collectors. Some went on to open private museums.
“The cleverest collectors buy in distressed moments, even as the heavens are falling,” said Brett Gorvy, co-founder of Levy Gorvy Gallery and former chairman of post-war and contemporary art at Christie’s. “They’re cash rich. They know what they’re doing and have confidence that the market will come back.”
It is the same strategy employed by Warren Buffett, who waits for a panic or crisis to create bargains in the markets.
The art world had a delayed response to the financial downturn. Hundreds of works by star UK artist Damien Hirst sold at Sotheby’s over two days starting September 15, 2008, when Lehman Brothers collapsed.
Split-Rocker had just gone on display at Chateau de Versailles, thanks to a loan from Christie’s owner Francois Pinault, as part of a contemporary exhibition at the gilded palace of Louis XIV.
The heady days of a boom cycle ended abruptly in October 2008, when scores of works went unsold. Auction houses endured brutal results at New York sales a month later, losing millions of dollars on guarantees they had promised sellers.
“The November sales were really painful,” said Ed Dolman, Christie’s chief executive at the time.
But even at the depths of the crisis, things did sell, sometimes for record prices, including Kazimir Malevich’s 1916 Suprematist Composition, which fetched $60 million and a 1959 Kusama painting, No 2, that went for $5.8m.
In the following years, prices for these and many other artists, including Jean-Michel Basquiat and Christopher Wool, have climbed sharply. The Kusama is now worth $34m, according to Artnet Analytics.
“People who were active at the time are very happy today,” said art adviser Sandy Heller. “Those opportunities would not have presented themselves without the financial crisis.”
Many collectors were desperate to sell. Joanne Heyler, founding director of the Broad museum in Los Angeles, remembers receiving calls from art dealers when buyers backed out. That November, Mr Broad paid $2.4m at Sotheby’s for Ed Ruscha’s painting Desire, a steep discount to the low estimate of $4m. The following month, he picked up Mark Bradford’s Corner of Desire and
Piety at Art Basel Miami Beach. “Some of the works we bought at the time are really key to our collection,” Ms Heyler said.
By the time 2010 rolled around, the art market was on the mend. Alberto Giacometti’s
Walking Man, sold by Dresdner Bank, fetched $104.3m at Sotheby’s, then a record for any artwork at auction. In May of that year, Picasso’s Nude, Green
Leaves and Bust from the estate of Los Angeles philanthropist Frances Brody fetched $106.5m at Christie’s.
“Quantitative easing happened very quickly and it had a big impact on our industry,” said Mr Dolman, now CEO of Phillips auction house, referring to the Federal Reserve’s purchase of government bonds to bolster the economy. “People had access to cash at ridiculously low interest rates.”
The art market’s downturn was relatively short-lived. Global art trade reached $64.6 billion in 2011, just shy of the $65.9bn peak in 2007.
Also a player in the stratospherically expensive art world is billionaire Yusaku Maezawa, confirmed this week as SpaceX’s first Moon tourist, who is worth $3bn and has a penchant for pricey modern art.
Mr Maezawa hit the headlines last year when he bought a Jean-Michel Basquiat masterpiece for $110.5m.
The entrepreneur has a passion for modern art and splashed a record sum for Basquiat’s 1982 Untitled, a skulllike head in oil-stick, acrylic and spray paint on a giant canvas.
He founded the Contemporary Art Foundation in Tokyo and was on the 2017 list of Top 200 Collectors of ARTnews magazine in New York.
He insists he is just an “ordinary collector” – despite his extraordinary bank balance.
“I buy simply because they are beautiful. That’s all. I enjoy classics together with the history and stories behind them, but possessing classics is not the purpose of my purchase,” he told AFP last year.
And rather than squirrel the work away, he loaned it out to museums including the Brooklyn Museum, in the artist’s hometown.
“I hope it brings as much joy to others as it does to me, and that this masterpiece by the 21-year-old Basquiat inspires our future generations,” Mr Maezawa said.
Art was high on his mind when he announced he would blast into space on one of Elon Musk’s SpaceX rockets in 2023, saying he would invite six to eight artists from around the world with him.
“They will be asked to create something after they return to Earth. These masterpieces will inspire the dreamer within all of us.”
The cleverest collectors buy in distressed moments, even as the heavens are falling BRETT GORVY Levy Gorvy Gallery