Lackluster auction results raise worries for Art Basel: Disappointing results at fall art auctions cast a cloud over potential for robust prices and sales at Art Basel

Nov 19, 2008 (The Miami Herald - McClatchy-Tribune Information Services via COMTEX) -- BID | Quote | Chart | News | PowerRating -- Has the art market bubble finally burst?

Collectors and dealers have warned for years that too much modern and contemporary art was being sold, and that the prices were too rich.

Art Basel Miami Beach, where wealthy collectors have sprinted across the convention center to be the first to buy, came to symbolize the inflated market.

But as the still-unfolding financial crisis deflates luxury spending and prices for many major works fall, the art industry is questioning whether the feeding frenzy is ending.

"Prices [in the past] have been overly inflated and speculative," said Rita Krauss, a New York art consultant. "But these are not the good old times when everyone was throwing around money."

In a worrisome sign for Art Basel Miami Beach, which begins Dec. 4, results at the major fall auctions for Impressionist, modern and contemporary art have been dismal. Many works failed to sell, and a number that did went for less than they would have a year ago.

At Christie's contemporary art sale in New York last Wednesday, nearly a third of the 75 lots offered went unsold. Among them was Francis Bacon's oil on canvas Self Portrait No 1 1964, which had been estimated to sell "in the region of $40 million." Sales at the auction totaled $113.6 million, just half the low presale estimate of $227 million.

The night before, at the contemporary sale at Sotheby's New York, results were also dreary. Of the 64 pieces on offer, almost a third did not sell. Sotheby's pulled in $125 million for the night, far below the low estimate of $202 million.

"These sales reflect the larger economic downturn," said Marvin Ross Friedman, a Miami attorney and private art dealer. Poor results at the auctions, which are viewed as bellwether events by dealers and collectors, suggest the art market is finally softening after years of rapid growth.

The financial crisis is mostly to blame for the bleak auction results. Big spenders are hoarding cash, and with perhaps years of economic uncertainty ahead, art is unlikely to continue its rapid appreciation, making it a less-lucrative investment.

But a natural weeding out of the market may be under way.

"Some of these artists have no history," said Coral Gables art dealer Gary Nader. "What is to guarantee they will keep selling for $1 million? Nothing."

INSTANT STARS

The frenzied market has made it possible for some recent art-school graduates to become overnight millionaires. But history suggests that in the art world, early fame is no guarantee of future success.

"If you take a catalog from Christie's or Sotheby's from 20 years ago, half the artists aren't here anymore," said Nader, who runs Gary Nader Fine Art. "The same thing is going to happen today."

As the shakeout occurs, Nader predicts it will be works by "blue chip contemporary artists" -- known names -- that retain their values.

And there were some success stories at the New York auctions as some of the most famous work of the past century went on the block.

Kazimir Malevich's Suprematist Composition (1916), for example, sold for more than $60 million at Sotheby's Nov. 5 auction, setting a record for both the artist and a piece of Russian art. That same night, Edgar Degas' Dancer in Repose fetched just over $37 million -- an all-time record for the artist.

In contrast, at Christie's Nov. 5 auction, Edouard Manet's Fillette sur un Banc, a wistful 1880 painting of a young girl wearing a broad-brimmed hat, had no takers. It had been expected to sell for between $12 million and $18 million.

While last Tuesday's Contemporary Art auction at Sotheby's was lackluster, Alexander Rotter, head of the auction house's Contemporary Art Department, still categorized it as a strong showing considering global economic woes.

"Are we used to seeing 90 percent of the art sold? Are we used to seeing prices above the highest estimate? Yes," Rotter said. Clearly that didn't happen at last week's auction.

But Rotter said, "Given all the headlines we've been reading for the last three months, this has to be considered a success."

Among the attendees at the standing-room only event was Krauss, who travels to Miami Beach every year to help high-end clients navigate Art Basel. She said the auctions' results showed buyers were finally coming to their senses.

"A lot of things that sold for less deserve to be sold for less," she said.

Pieces by Jeff Koons, Roy Lichtenstein and Andy Warhol either failed to sell or came in below estimates.

Krauss said her buyers, who largely remained on the sidelines at Basel last year, will likely be looking for bargains. "A lot of my clients did not buy last year because prices were too high," she said. "They went around finding out how much their art was worth and were very happy."

Poor results at recent auctions were made worse by the fact that presale estimates, and guarantees, were set before the worst of the economic meltdown hit in September.

BETTER DAYS

Yet even as the financial crisis began to seriously shake global markets, much of the art world proceeded unaffected.

On Sept. 16 and 17, as credit markets froze and the Dow plunged, British artist Damien Hirst sold $200.7 million worth of new works at a Sotheby's auction in London, breaking the record for a single-artist auction. "The art market has remained surprisingly strong in light of the extraordinary economic circumstances," Friedman said.

But, in general, the London auctions were also disappointing. In October, Christie's postwar and contemporary sale in London raised less than $55.5 million, barely half of the presale estimate of $100 million to $132 million. Worsening matters, 21 of the 47 lots failed to sell.

Also in October, Sotheby's contemporary sale in London raised $38 million, well below the presale estimate of $54 million to $75 million. The most discussed lot, pop-art paintings of human skulls by Andy Warhol, sold for $7.5 million, below the estimate of $8.7 million to $12.2 million.

The upcoming 22 satellite fairs surrounding Art Basel Miami Beach also are expected to feel the pinch of recent pricing trends.

Helen Allen, executive director of Pulse Contemporary Art Fair, which will bring together 110 galleries for the show in Miami's Wynwood district, said she still expected sales, albeit in a more sober buying environment.

"I'm not expecting the kind of frenzied buying that we've seen in the past few years," Allen said. "People are feeling nervous. Obviously these are tougher economic times, but I don't think it's as dismal as people make it out to be."

Miami Herald business writer Jim Wyss contributed to this report from New York.

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