Why art auction records keep being broken

Updated 22nd December 2015
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Why art auction records keep being broken
Written by Abigail R. Esman, CNN
It's a warm evening back in mid-May. A few stray latecomers are just finding their seats as Christie's auctioneer Jussi Pylkkanen starts up the bidding. "Wonderful painting," he says. "One hundred million to open it."
And so it begins, the numbers rising quickly: one hundred five, one hundred ten, one hundred fifteen million. One hundred twenty.
Suddenly the bidding for Picasso's brightly-colored 1955 "Les Femmes d'Alger" stops. The room is still. Someone on the telephone offers $121 million. "Why not?" laughs the auctioneer.
And on the numbers rise again, past $130 million, past $140 million, $147 million, $148 million. By now, the bidding is between anonymous buyers on the telephone with Christie's experts.
At $159 million, just as Pylkkanen calls "fair warning," a caller raises the stakes: "$159.5 million. A second later, a counterbid closes the sale at $160 million, and applause rocks the room.
With premium, the buyer will pay a total of $179.4 million, making this the most expensive painting ever purchased at auction.
What's striking about this sale, however, is not just the record-breaking figure. It's that such sums paid for important works of art are becoming almost commonplace.
Only six months later, on 9 November, Chinese taxi driver-turned-billionaire Liu Yiqian buys Amedeo Modigliani's "Nu Couché for $174.4 million, also at Christie's New York.

Factors driving record-breaking art sales

How to explain it?
Largely, this has come from a confluence of forces: an eager and growing field of art collectors worldwide; international economic growth, which increases competition for highly valued pieces; carefully-calculated estimates, set to stimulate bidding; strategic and aggressive marketing by the auction houses; and the built-in ability for these global auctioneers, with their experienced and well-connected teams of experts, to locate the very best paintings and sculptures in the world.
Indeed, says John Hays, Deputy Chairman for The Americas at Christie's, this ability is paramount. "You have to have the specialists who understand what the market perceives to be the top. It's like going to the prom with the best looking girl in school: you don't need a marketing plan."
But clearly it helps to have one -- which is why both Sotheby's and Christie's go all out to promote their top offerings: an auction, after all, is only truly successful if many people all want the same work and so, bid against one another to get it. And for that, they need to be enticed.
Lisa Dennison, Chairman of Sotheby's North and South America and the former director of the Guggenheim Museum explains: "We do pro-active outreach well in advance to a sale to get people interested and excited."
Works are toured to major markets: London, New York, Hong Kong, the Middle East. "Then there's the catalogue, the online catalogue, Sotheby's TV. You bring as many people as you can into the headquarters through dinners and cocktail parties, and your global specialists center there and try to sell the work."
Still, in the end, it is the collectors who drive the market, Hays and Dennison agree: the auction houses can only try their best to fulfill desire. And these days, collectors know what they want.

New breed of buyers

"Today's buyer doesn't buy in a vacuum," Dennison says. "People are doing their research. If I say 'Our Modigliani portrait is the most important to come up in the market,' I have to be able to back that up, because the market is smart."
Buyers now, in other words, understand those things that make a work great or significant: distinguished provenance, rarity or freshness to the market, or that, say, a Modigliani nude is rarer than a Modigliani portrait.
A work that has a solid history of museum exhibitions also holds a certain cachet, its importance in the artist's oeuvre verified, as it were, by curators, scholars, and others.
So, too, can something that belonged to a celebrity, even one not particularly well known as an art-world figure, like Yves St. Laurent or Eric Clapton (whose Gerhard Richter "Abstraktes Bild" sold for over $34 million in 2012, setting a record for a work by a living artist).
Nonetheless, sometimes even the house experts can get it wrong, Dennison admits, as when a red Lichtenstein enamel work came up at Sotheby's during the same auction season that a blue one was being offered at rival Christie's.
"We thought ours was more valuable because it was red and red is more popular," she recalls, "But in the end, the blue sold higher. They liked the blue one. Maybe it goes better with Warhol."
But with auction records nearing $200 million, and private sales that have already even surpassed the quarter-billion mark, can the momentum continue?

What to expect in 2016

Both Hays and Dennison are optimistic, as are other market experts, though Fabian Bocart, an art market analyst and founder of Tutela Capital, cautions that new records may be less likely in 2016 "because of a weaker China, Russia, and Middle East."
On the other hand, he adds, "there will be more candidate artworks for these records because people are turning more to auction houses to sell their masterpieces.
"There's a demand that has not been met," says Dennison, who says she is confident in a "strong, global market for art." Look for more Abstract Expressionism and Pop Art works on the market, and figurative paintings of artists like Freud and Bacon. Dennison also points to "extraordinary examples of Minimalism -- Serra, Judd, and Ryman -- and in the Impressionist world, Modigliani, Picasso of all periods, and beautiful Impressionist paintings, Monet in particular."
But no matter what the trends call for, and wherever the prices go, she says, "when it's about the emotion and not the money, that's divine. We don't want people to think about the estimate. We want people to think about the art work."