Financial Mail - Investors Monthly
PAINT A PICTURE
SA’s art works sustain the creative thinking it needs
The worth of a corporate art collection does not reside solely in its current market valuation. Measuring the value of art objectively is almost impossible and, to date, it seems no indepth studies have attempted to do this beyond the perceptual level.
Much as a curator may want to avoid it, the question of a collection’s precise worth always comes up.
Fifty years ago, in most instances, the value of a corporate art collection received little consideration other than in comparison to other extravagant expenses a company’s board may have incurred. Corporate art collections seemingly existed as nothing more than office furnishings that depreciated over time.
Today, with the exponential increase of prices in the art world, some collections have become very valuable, justifying a rethink about how they should appear on company books and be managed by the corporation.
In this regard, there are pressures from two sides.
First, with the exponential rise in value the cost of managing a collection increases dramatically, as the risks associated with keeping and growing a collection expand too. The upside is the potential return on investment, but this is not so easily realised in an unregulated market that is extremely volatile due to issues relating to sentiment and the potential of manipulation.
Second, there is an argument against retaining, and spending capital on, a nice-tohave trophy when there are more pressing societal needs.
The tension exists because corporate art collections are not really perceived as assets deserving the same diligent care as any other company asset, but rather as part of a profile-positioning public affairs endeavour. It is therefore not surprising that companies would be under constant pressure to fund meaningful, highimpact programmes strengthening society at large.
Compounding matters is the fact that the prices for the works of young, emerging and successful artists are on a level with those of celebrated veterans in the market. This means building and sustaining an art collection with relevance to present-day progress has become a lot more expensive.
Further, the Covid-19 pandemic and various lockdowns have devastated the ecology of the art world. Institutions such as museums that exhibit art have had virtually no visitors. Corporate gallery spaces have suffered the same fate.
All round there have been no opening events or interaction with stakeholders, and even a flat-lining in sales. The immediate future is not promising, as the pandemic still needs to be contained effectively and the impact of vaccines remains unknown.
Digital-based transactions have somewhat filled the void. But providing a digital experience via the web is only a temporary alternative, as the scale, texture and colour cannot be replicated on LED screens no matter how clear the resolution. Being physically in front of real art remains the best way to experience it.
Though the corporate gallery space remains intrinsically secure alongside digital innovations, the raison d’être for a corporate art collection is under review. Some corporations may consider certain options while the art market anxiously awaits any alternative models that could emerge.
Things were different and perhaps even staid before the 2008 global financial crisis.
Collecting art has been a feature of the SA corporate landscape since the 1960s. Mirroring large corporations in the US such as Chase Manhattan Bank and IBM, SA companies that include Anton Rupert’s international group, Standard Bank and Volkskas Bank (now Absa), to name a few, embarked on acquiring artworks over the past decades.
Motivations for the acquisi
“The few artists able to make careers internationally did so under challenging conditions
tions varied considerably, from enhancing the office environment to demonstrating support for artists. Rarely was the concept of “investment” or generating returns from the art collection a consideration.
Few corporations expected that art would be among the most highly valued commodities to be traded in a globalised world in the ensuing 50 years.
The art market in SA in 1970s and 1980s was plagued by isolation due to the politics of the apartheid government and the consequent protest and political instability against the regime. Artists and galleries struggled to survive in a constrained market limited to SA.
The few artists able to make careers internationally did so under challenging conditions, some never to return to their homeland.
Until the late 1980s and early 1990s certain private collectors, some museums and university collections, and several corporations actively participated in sustaining the art economy in SA.
This abruptly changed when a new SA arose as a successful democracy in 1994. A newly found confidence in and need to support the new democratic state came from corporations and individuals.
Some identified the visual arts as presenting the appropriate symbolism for encapsulating the unique SA experience of transitioning from repression to freedom. By buying and exhibiting art this way, a company could demonstrate its commitment to the new society while acknowledging the past struggle that served as the foundation for the new order.
Most corporations started art collections between 1994 and 2000. SA artworks, produced by now celebrated artists, were incredibly cheap then. For a fraction of the cost, a company could enjoy high exposure and recognition rather than funding a major advertising campaign. The unexpected benefit of a huge return on investment was still to come as the art market grew exponentially.
Not all of these collections remain as active today.
A celebrated example was Gencor, where the art collection formed an integral part of its rebranding exercise and the inauguration of its new head office in Joburg.
Selecting purchased and commissioned art works was expertly done by a team led by renowned art curator Kendell Geers, supported by CEO Brian Gilbertson.
Where is that collection today? It is now with South 32, a mining entity sold off after Gencor went through several iterations — as Billiton and then BHP Billiton.
One will be able to see a sampling of this collection at the Javett Art Centre in Pretoria in future. Though this collection’s current value is probably a few 100 times its acquisition cost, it has no presence on the company’s website or public communication.
Fortunately, the pressures described above and the attraction of generating a very good return on investment have not precipitated a sell-off by SA corporations.
Prices for SA artworks have grown exponentially since the 1990s, but the past few years have brought not only a flattening of this trend but in some categories a considerable devaluation, as certain artworks are no longer desirable as a new generation of collectors begin to fill the physical and virtual sales rooms.
When auction houses trumpet their successes with sixfigure “record” prices achieved for particular lots, this must be tempered with the reality that in many instances buyers with hard currency in their pocket can acquire top quality art at an up to 50% discount relative to prices achieved less than a decade ago.
Is selling off a collection the way? And if so, would it bolster the balance sheet? Not for companies that manage billions worth of assets. A randdenominated art collection will not make much difference.
It is not a given that such a move would publicly represent a sober re-strategising of priorities and cost saving. More likely it would be seen as a vacuous, easy way to appease a few croaking frogs in the stakeholder pond.
What the best corporate collections in SA share is a strong diversity of historical and contemporary works in various proportions. Corporate SA has not only over the past five decades played a significant role in preserving this country’s artistic heritage and supporting emerging talent, but in certain instances it has exported this to various parts of world. A case in point is Nando’s, which showcases SA artworks as an intrinsic part of its restaurant ambience in its eateries around the world.
While public institutions such as the Iziko SA National Gallery, the Pretoria Art Museum and the Johannesburg Art Gallery were once significant participants in the art world, they have begun to diminish as result of ideological myopia and due to fiscal issues. Like so many state-funded institutions, they are no longer able to fulfil their mandate as custodians of the country’s art, as their collections will remain frozen in time as acquisitions of important contemporary artists become impossibly expensive.
What has arisen in their place is the private art museum. In the past four years alone three such museums have opened in SA, all named after benefactors who have invested heavily in the art market.
These institutions, together with SA’s corporate collections, can play a crucial role in preserving the country’s artistic heritage for the future.
SA’s artistic heritage and contemporary talent is unique in its diversity. It sustains the creative thinking that this country requires to rise from present day and threatening crises. Collecting and showing off this talent from the past and the present is investing in the future. Cashing in, in the moment of Covid-19-induced crisis, or any other, for that matter, would be the worst thing to do.