London Sales Will Gauge Art Market’s Health in Trump Era

http://www.nytimes.com/2017/02/24/arts/design/art-sales-london-sothebys-christies.html

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LONDON — Sales next week of Impressionist, modern and Surrealist art in London will be the first major test of the international market since President Trump was inaugurated.

Despite the current sense of uncertainty, the art world will be hoping it is business as usual, or perhaps even a better market for investment-grade Gauguins and Magrittes.

The standout lot is likely to be Gustav Klimt’s vibrant flower painting “Bauerngarten (Blumengarten).” Created in the summer of 1907 in a garden near Lake Attersee in Austria, it is estimated to sell for at least 35 million pounds, or about $44 million, at Sotheby’s on March 1.

The Klimt sale would appear to be nicely timed. This month, Bloomberg News revealed that the American media magnate Oprah Winfrey had sold the artist’s 1912 “Portrait of Adele Bloch-Bauer II” last year for $150 million to a Chinese buyer in a private transaction. Ms. Winfrey, who is not widely known as a major art collector, bought the painting at Christie’s in 2006 for $87.9 million (about $106 million today, after adjusting for inflation).

Despite contraction in certain areas of the art market, the bankability of Klimt, whose $135 million “Portrait of Adele Bloch-Bauer I” was the world’s most expensive artwork in 2006, is reaching new heights.

“He’s a totally global brand,” said Patrick Legant, a London-based art adviser who specializes in Impressionist and modern works. “Everyone knows ‘The Kiss,’ and, because of the film ‘Woman in Gold,’ more people know about the Bloch-Bauer portraits. They’re supericons.”

“Bauerngarten (Blumengarten)” is guaranteed to sell, courtesy of a third-party “irrevocable” bidder, at an auction price yet to be seen for a landscape by the artist, according to the Artnet database of salesroom results.

But who is the seller? The longtime owner of the painting has been the London-based Canadian collector David Graham, according to a person with knowledge of the matter, who declined to be identified because of art trade confidentiality protocols. Mr. Graham was the only bidder when the painting sold at Christie’s in 1994 for £3.7 million, according to the person.

Sotheby’s 2017 catalog entry states that the Klimt was “purchased at the above sale,” rather than “purchased at the above sale by its present owner.” And, though the painting is described as being “property from an important private collection,” the hieroglyphic catalog symbols below the description, once deciphered, reveal that the auction house “owns the lot in whole or in part.”

Auction houses occasionally offer artworks that they own, particularly if they had been previously guaranteed by the house and failed to sell. In this case, Sotheby’s appears to have proactively purchased the Klimt, at least in part. The auction house seems now to be “flipping” the painting at one of its own sales, where it is certain to find a buyer, thanks to the irrevocable bid.

In recent years, competition for inventory between Sotheby’s and other auction houses like Christie’s and Phillips has resulted in dwindling commissions on high-value lots. Being the seller, rather than merely the agent, brings the potential to make a bigger profit on such sales. In the process, traditional demarcations between auctioning and dealing become blurred.

“Sotheby’s is aggressively changing the way it does business,” said Wendy Cromwell, an art adviser based in New York. “It no longer sees itself as a traditional auction house, but rather as a company with huge resources that it is leveraging in all kinds of new ways.”

Sotheby’s, which is to announce its 2016 earnings on Monday, declined to comment on the details of the ownership and guarantee of the Klimt.

In January 2016, Sotheby’s paid up to $85 million for the boutique New York art advisory company Art Agency, Partners. Since that surprise acquisition, Sotheby’s has expanded its use of what Adam Chinn, the auction house’s new chief operating officer, has characterized as “complex deal structures.” Last February, Sotheby’s stock was as low as $20.26; it has been trading this week at more than $40.

Auction sales declined at both Sotheby’s and Christie’s in 2016. But the presale estimates for the February auctions of Impressionist and modern art at the auction houses are well above last year’s totals. Sotheby’s 55-lot evening auction is expected to raise at least £156.3 million, while Christie’s Feb. 28 sale of 86 lots is valued at a minimum of £101.8 million.

Holding the sales three weeks later than usual to avoid a clash with the Lunar New Year holiday has given the auction houses some extra gathering time. Offering sellers minimum prices has also helped to attract higher-value works, particularly at Sotheby’s.

Eight lots, representing more than half the value of the sale, carry house guarantees or irrevocable bids at Sotheby’s. Among them are the imposing 1944 Picasso still life “Plant de Tomates,” guaranteed by the house for at least £10 million, and the prime-period 1874 Alfred Sisley work “Effet de Neige à Louveciennes,” which will make at least £6 million, thanks to an irrevocable bidder.

Christie’s, which is privately owned, has been more circumspect with its guarantees. Only two works — the 1960 René Magritte painting of a cloud in a cocktail glass, “La Corde Sensible,” at a low estimate of £14 million; and a 1942 Paul Delvaux at £1.7 million — will be certain of a minimum price, thanks to third parties.

Dealers have identified the Russian billionaire Dmitry Rybolovlev as the seller of the 1892 Paul Gauguin Tahiti-period landscape “Te Fare (La Maison),” which Christie’s has valued in this auction at £12 million to £18 million, and of the 1949 Mark Rothko abstract “No. 1,” which is included in its March 7 contemporary sale with a low estimate of £8 million. Brian Cattell, a spokesman for Mr. Rybolovlev, said that the collector’s family trust was indeed the seller at Christie’s.

In November 2015, Mr. Rybolovlev sold Klimt’s 1904-7 painting “Water Serpents II” for $170 million to an Asian collector in another private transaction, according to Bloomberg News.

In today’s febrile geopolitical atmosphere, the top end of the art market has bifurcated. Bellwether auction seasons in London and New York continue to offer spectacular Impressionist and modern works, but the best of the best is increasingly traded privately.

“Auctions, by nature, are very public,” said Andrew Terner, a private dealer based in New York. “Generally speaking, collectors of authentic masterpieces want to avoid publicity like the plague. Even with enormous guarantees, which significantly reduce risk, auction on some level is always a gamble.”

According to a count in 2015, there were more than 2,400 billionaires in the world, quite a few of whom collect art. Since Britain’s vote in June to exit the European Union, the pound has slumped in value, making London an attractive place for international collectors to buy works, which in turn has drawn sellers.

But public auctions, however cleverly they are finessed, ultimately remain susceptible to the volatility of a wider world.

“There are lots of uncertainties,” said Mr. Legant, the art adviser. “You don’t know what next week is going to look like. Things can change with a tweet.”