The High Cost of Art Fairs – Wall Street Journal

Outside the world of fairs, much of the postwar primary art market takes the form of sales at small, midsize and large galleries, all interconnected in the ecosystem of the creative marketplace. While there’s no hard-and-fast rubric for classifying galleries, the factors that determine their status include annual revenue, staff size, depth and prestige of their roster of artists, location(s) and reputation. They exist along a spectrum, with the ubiquitous international mega-dealers (e.g. Gagosian, David Zwirner) on top and bootstrapped, hole-in-the-wall operations with little cachet beyond their neighborhoods at the bottom.

In this world, emerging artists typically begin their careers exhibiting at small and medium-size galleries, leveraging success into higher prices (and occasionally more prestigious representation) and museum acquisitions—a path to success that could also be mirrored on the dealer side. At the same time, younger and middle-class collectors have access to art, buying works from newish talent at smaller spaces even if they are priced out of works by marquee names repped by the glitziest sellers. These introductions at lower price points have been crucial in sowing seeds among a creative class that would grow into lifelong collectors, and also allowed the different segments of the market to thrive.

Art fairs have changed all this. It’s impossible to pinpoint exactly when the era of ubiquitous international fairs began, but they have been a fixture of the art market for at least 20 years, in part as a way to help galleries compete against the newly energized auction houses in an increasingly globalized world. In 2000, there were about 55 of them. By 2018, the most recent year with reliable numbers as cited in the annual Art Basel and UBS Art Market report, there were close to 300.

With this explosion of fairs, galleries have become dependent on them for sales. The report explains that “art fair sales were estimated to have reached $16.5 billion in 2018,” continuing to note that, globally, fair sales and gallery sales are now nearly equal.

These numbers obfuscate a darker reality: the deleterious effect of art fairs on small and medium-size galleries. While the hard numbers are difficult to track, an ARTnews story from 2017 cited 31 notable gallery closures in just the previous year. To compare, from 2012-15 there were only about 12 analogous closures. Additionally, according to Basel/UBS, new gallery openings are at their lowest point in at least a decade. The causes of the disappearance of these players are numerous—skyrocketing rents in art centers, changing attitudes that tend to see art as an investment instead of an end in and of itself. And there’s plenty of anecdotal evidence among gallerists about their struggles. But the art-fair model plays a singular, outsize role, bleeding the small and mid-size galleries dry.

According to a 2018 Art Newspaper story, booths at the Armory show can range from $10,000 to over $100,000. On top of booth space there are application fees costing hundreds of dollars, shipping and insurance costs, travel, lodging and often entertainment expenses. This matches the claims in the Basel/UBS report of dealers who “compared the magnitude of both their expenses and revenues from fairs as equivalent to running a gallery.”

With so many options, even choosing which fairs to apply to is a logistical nightmare. Then, once accepted, dealers usually need to sell roughly three times the total cost of attendance to make things worth it, and with so much initial investment on the line—often financed by credit—missing your numbers can have dire consequences. Add a dose of the unexpected to an already precarious situation—the cancellation of this year’s Art Basel Hong Kong because of worries about the new coronavirus is just the most recent example—and it’s easy to say that it’s never been more difficult to keep a small or midsize gallery alive.

Galleries have been rethinking their relationship with fairs and even their most basic business practices as a result. Marianne Boesky is taking her eponymous space to ADAA’s Art Show and the Independent fair this year after having been an annual participant at the Armory for over a decade, explaining that being able to focus on growing the profile of some of the artists she represents outweighs the benefits of the well-heeled crowd—and associated expenses—at the main fair. Robert Walden, co-director of Robert Henry Contemporary, which recently closed its storefront in Brooklyn, has participated in over 20 fairs, domestically and abroad, but won’t be showing at any of the fairs during Armory week because he says it doesn’t make financial sense any more.

Even shifting strategies don’t ensure a gallery’s continued viability. Financial pressure led Koenig & Clinton to close last month. Margaret Liu Clinton, in an interview with Hyperallergic, cited fair pricing as one of the aggravating factors that undid the space. And while she noted that there are benefits to some fairs, she added that “the risk to any small-scale gallery, if you do a fair and you’re not selling out your booth, is huge….they’re really so terrifying, so prohibitively expensive, and the risks are way too high.”

Art fairs aren’t going anywhere soon. So, unsexy as it may be to look at this creative realm through a market lens, it’s an indispensable perspective to take when looking at an art world that is on the precipice of changing into something beyond recognition, where salability outpaces creativity in the name of gallery survival, and high prices and inaccessibility turn off young collectors who might have become lasting patrons. How ironic it would be, then, if a system that gained traction to help galleries ends up undoing them.

—Mr. Kelly is the Journal’s associate Arts in Review editor. Follow him on Twitter @bpkelly89.