Economic Downturn Hits Contemporary Art; Collectors 'Are Just Being So Cautious'

Skulls by Andy Warhol

Here is more for you all to know . Please enjoy article by Kelly Crow (and you will eat crow after reading it!) from the Wall Street Journal about recent ART auction results.

OCTOBER 20, 2008
Not a Pretty Picture at Auctions
Economic Downturn Hits Contemporary Art; Collectors 'Are Just Being So Cautious'
By KELLY CROW

After months of gradual softening, the contemporary art market suffered a sharp downturn over the weekend at a mid-season round of auctions held in London, with many collectors wary of making seven-figure bids for new artworks amid the global financial crisis.

Yet the world's chief auction houses -- Sotheby's and Christie's International PLC -- managed to calm some fears of a broader market meltdown by convincing many of their sellers to accept lower prices, which helped entice bargain hunters from the U.S. and Europe.

Overall, Sotheby's and Christie's evening sales of contemporary art brought in a combined £54 million ($93.4 million), well below their combined presale estimate of between £88.4 million and £118.3 million. The result was down 19% from similar sales last October. Boutique auction house Phillips de Pury brought in £5 million, less than a third of its expected total and representing only 25% of its sale's potential value.

"People are just being so cautious," says Roberto Annicchiarico, a Milan-based dealer. "Before, collectors had to take whatever art they could get from dealers and auction houses, but now those collectors are saying, 'Kneel down and ask nicely.' "

Christie's won this latest round over Sotheby's by selling £32 million at its evening sale on Sunday, below its presale estimate of between £57.8 million to £75.6 million. The star of the sale was Lucio Fontana's 1963 futuristic black oval, "Concetto Spaziale, La Fine di Dio," sold to a private buyer for £9 million, below its £12 million estimate. A pensive portrait of Francis Bacon by Lucian Freud also sold for £5.4 million, inching over its £5 million low estimate.

Of the 47 lots offered by Christie's, 26 found buyers, achieving 62% of its potential value. Among those works that didn't sell were two particularly pricey disappointments: Gerhard Richter's 1986 abstract, "Claudius," which had been estimated to sell for around £6 million, and Francis Bacon's honey-hued portrait of a friend, "Portrait of Henrietta Moraes," which bore a low estimate of £5.5 million.

Two days earlier, Sotheby's evening sale brought in £22 million, far below its £30.6 million low estimate but besting its £9.9 million total at last year's sale. Its top lot was a rainbow-colored set of 10 "Skull" silkscreen paintings by Andy Warhol that sold to collector and dealer Jose Mugrabi for £4.3 million, under its £5 million low estimate. Mr. Mugrabi didn't need to put up much of a fight to win the work: His only rival was a Sotheby's specialist bidding on behalf of an unknown client.

Later in the sale, a European collector bidding over the telephone paid £2.8 million for Gerhard Richter's red "Abstracke Bild," under its £3 million low estimate. An American telephone bidder, meanwhile, paid £1.6 million for an untitled painting by Jean-Michel Basquiat. The Basquiat had been estimated to sell for between £1.5 million and £2 million. Of the 62 works offered by Sotheby's, 17 failed to find buyers, including pieces by Cindy Sherman, Yan Pei-Ming, Erik Bulatov, Sigmar Polke and Marlene Dumas. The sale achieved 72.5 % of its potential value.

In a twist, 40% of the winning bids came from Americans, up from 19% at last year's sale. After the sale, New York collector Larry Warsh said he was "relieved" that a majority of the works had sold. But he said collectors who decide to put their works up for auction will need to scale down their expected price levels for art by as much as a third until the financial markets begin to climb again.

Most of the works offered during the London sales were consigned by sellers -- and given estimated prices -- at least three months ago when the financial outlook was somewhat sunnier. Over the past two weeks, the auction houses have been working overtime to persuade these sellers to lower their reserves, or the minimum price needed for the work. In the case of Damien Hirst's sculpture, "The Blood of Christ," at Sotheby's, the low estimate was £1 million but the auctioneer kicked off the bidding level at £400,000. The work sold for £825,250. Phillips' sale on Oct. 18 was highlighted by Warhol's "Flowers", which sold for £735,650, nearly reaching its £800,000 high estimate, but the crowd in the salesroom were more focused on artist Takashi Murakami, who sat in the front row and watched as his two-story-tall sculpture, "Tongari-kun," stalled at £3.2 million, just shy of its £3.5 low estimate, and failed to sell. Overall, 38 of the 70 artworks offered by Phillips failed to find buyers, including pieces by Richard Prince, Ron Arad, Ed Ruscha, Lisa Yuskavage and Eric Fischl.

After the sale, Phillips' Chairman Simon de Pury said he was "disappointed" by the result, adding that collectors "obviously took a wait-and-see approach" to the sale. He said he and his staff might work to further lower the reserve levels set for works already consigned to Phillips' important New York sale scheduled for next month.

The London auctions, which conclude with Christie's day sale on Tuesday, coincided with the city's biggest contemporary art show, the Frieze Art Fair, which also saw fewer sales despite large crowds, according to dealers exhibiting in the fair.

Tiqui Atencio, a major London collector, attended the fair and several auctions but says she didn't buy a thing: "I'm behaving right now."

Write to Kelly Crow at kelly.crow@wsj.com