Art & Finance Newsletter #5
Finishing this edition of the newsletter (later than usual) from Los Angeles. Here to meet with artists, a private equity firm and in NYC (for one day) to meet with a private bank. Good fun.
Recently I've received an unusually high amount of requests from my Mainland China network inquiring about structuring art collections into art funds. A couple reasons come to light in the initial conversations:
Raise money for private museum expenses
Raise money to buy more art
Raise money
I'm not sure an art fund is exactly what everybody needs...but it is what more and more people want.
My real question: is the Chinese government offering less subsidies for museum development & expenses or is this another creative method of capital flight? Or possibly it is just a natural progression as more collectors and UHNWI realize their collections can be put to work?
On to the art market...
Valuing an artists posthumous production
The questions of whether to and how to posthumously produce artworks by known artists, is becoming increasingly salient as a cohort of esteemed artists reach their seventies, eighties and even hundreds, and they and those around them look ahead for how best to persevere and enhance their legacies.
Protecting the artist's market is an essential part of protecting the artist's legacy seems to be the generally accepted consensus. Valuing these works you ask?
Most posthumous editions will sell for about 30% less than originals. Artists that produced very little work while they were alive, a difference between the lifetime and posthumous works can far exceed the 30% average. There are other artists who produced a large amount of lifetime works where prices for posthumous works remain high. e.g. Andy Warhol.
Conclusion - do your diligence and do not rely on rules of thumb when arranging purchases for yourself or clients.
Artsy - How Dead Artists Continue Producing Work
UK sanctions affecting auction markets
On 15 May at Christie’s New York, Kazimir Malevich’s Suprematist Composition (1916) sold for a record $86m. Major Malevich paintings of unquestionable provenance are rare, but on 20 June Christie’s London is due to sell a very different kind of Malevich—a landscape from 1911 (est £7m-£10m). As with the Suprematist Composition, the landscape is being offered in the firm’s Impressionist and Modern art sale rather than a Russian auction.
Malevich is more established globally than, say, Goncharova or Larionov. But while the international appeal of Malevich is unquestioned, what about other Russian material? Are hostile relations between Russia and the West having a dampening effect on consigning, and will Russian buyers be shunning the June sales in London?
Interesting to watch this space and see the opportunities that may be created in the private markets.
The Art Newspaper - Sanctions hitting UK auction markets
Speaking of structuring collections in China
Follow the link in green below to read an article from March of this year in which Budi Tek, the Indonesian-Chinese collector and owner of Yuz Museum Shanghai, describes what he chose to do with his collection and his private museum.
"The plan also entails changing the legal status of the Yuz Museum. Tek has long called for an overhaul of the legal framework for China’s private museums, because the law currently makes little provision for private museums to succeed their founders. He now wants to separate the Yuz from his personal estate, which will pass to his large family, and hopes to transfer legal ownership of the museum to a foundation with a board of trustees. “Budi is trying to find a third path between the government and operating as a private organisation,” Govan says."
Be in touch with me if you have any experience with the situation regarding private museums in Mainland China.
The Art Newspaper - Preserving the Yuz Collection
Not long ago, when I started the newsletter, I had stated that I would keep you posted on significant art events around the world. Well I missed one of the largest art events of the year...Art Basel. Which is happening this week. I'll touch on this fair and others next time.
Don't forget to tell your associates and colleagues about this newsletter!
Until next time,
Blake