(Bloomberg) — David Schrader was frustrated.
A $10 million art deal stalled last week in London because a painting packed in a wooden crate couldn’t be moved. It was too bulky and heavy for one person to lift, yet not big enough to be carried by two handlers with at least six feet between them — a strict social-distancing rule. And a forklift was out of the question for an item so valuable.
“It was pretty maddening,” said Schrader, the private sales chief at Sotheby’s. “You can’t inspect it. You can’t open it. You can’t move it around.”
Such is life during the coronavirus pandemic.
As art dealers hustle to find new ways to do business, many are facing hurdles that threaten to derail sales. Closing a deal usually hinges on the work’s condition, a process that requires an in-person examination, high-resolution photos and access to art handlers and warehouses. The item may need to be taken to a buyer for a viewing or require an export license. Performing such rituals is now more difficult, with companies cutting staff, experts quarantined and collectors afraid to let strangers into their homes.
“There are lots of these logistical quagmires,” Schrader said. “Every state, every country, every shipper has a set of rules they comply with. A lot of these mundane tasks you can’t do remotely.”
Online Sales
Myriad works of art are sitting in storage, unable to be delivered to their new owners following recent auctions and fairs, according to advisers and shippers. As sales have shifted online, it can be weeks or months before buyers will be able to enjoy their prizes.
Belgian collector Alain Servais said he has no idea what happened to the Kristin Baker painting he bought at Christie’s for $25,000. The shipping details were finalized the same week the coronavirus shut down New York’s art scene.
“I’ve had no answer from Christie’s,” he said. “I don’t know who is in charge, when it will arrive. I don’t know anything.”
Christie’s post-sale service team has been working with partners and clients to communicate problems and “ensure that any shipping delays are swiftly rectified within the guidelines of government closure orders,” the auction house said in a statement.
Art dealer Freddy Insinger managed to ship a Richard Prince painting for a client to Amsterdam from Brussels, just as Belgium announced its lockdown in March.
“I called eight different art shipping companies,” he said. “I got the last truck that was able to cross the border.”
Another deal in Milan fell through, however, because the warehouse closed and Insinger was reluctant to release the money without knowing when he would get the work.
“In these times you really have to count on the relationships you’ve built over the years, so people will go an extra mile for you,” he said.
Being Flexible
Relationships have been critical for consignors facing longer time lines after auctions were postponed. Some are trying to reschedule sales, which were supposed to take place in April and May, for October or November. Others are pulling works from auctions to sell them privately.
“We are trying to be flexible with consignors and work with them to do a deal,” said Schrader, who closed 30 transactions in the past two weeks. “Certain things we converted from auctions to private sales to create more flow. If a person was going to sell in three months, he can sell it now, which would give him cash so he can buy something else.”
Sales all but froze in the second half of March as New York became the pandemic’s epicenter. Advisers would get offers from galleries for the works of artists with long waiting lists, things typically reserved only for top collectors. Courtesy discounts on the primary market have increased to 20% from 10%, advisers said.
‘Bigger Discount’
Wendy Cromwell, a New York consultant, said one gallery offered her a 20% discount for a primary-market “A+++ painting” by an artist she’s been asking about for years without success. The work was priced at more than $400,000. The gallery wanted to get paid the following day.
“That never happened in my entire career,” said Cromwell, who’s been advising for 18 years. “My client said: ‘Then I want a bigger discount.’” In the end, the parties agreed to split the difference.
On the secondary market, buyers are asking for discounts as steep as 50%, but sellers aren’t quite that desperate.
“At the moment there’s a scavenger-type of mentality,” said Brett Gorvy, co-founder of Levy Gorvy Gallery. “People are sensing blood, but the blood is not really there. We won’t really know about this market correction until a major auction happens.”
©2020 Bloomberg L.P.
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