Auction houses falling on hard times as art market hits bottom

August 20, 1991|By Rita Reig | Rita Reig,N.Y. Times News Service

NEW YORK -- In one week in May 1990, the Japanese industrialist Ryoei Saito paid $160 million for two paintings bought in New York: $82.5 million for van Gogh's "Portrait of Dr. Gachet" (1890) at Christie's and $78.1 million for Renoir's "At the Moulin de la Galette" (1876) at Sotheby's.

This year, by comparison, the most expensive work auctioned was Degas' "Racehorses" (1870s), which was sold for $9.7 million in June to an unidentified buyer at Christie's in London.

After five years of rapidly rising prices, the frenzied buying of art at auction is over. Sotheby's and Christie's have gone into reverse: the two auction houses, the world's largest, announced record declines in total sales for the season, which ends on Aug. 31.

Sotheby's is projecting a 59 percent decline in international TC sales, to $1.3 billion from a record $3.2 billion in 1990. Christie's worldwide sales are expected to fall 50 percent, to $1.2 billion from $2.4 billion.

At both houses the sagging sales figures are attributed to the worldwide economic recession and the Persian Gulf war.

Additional reasons are cited by knowledgeable auctiongoers, especially in the categories of Impressionist, modern and contemporary art, where the greatest declines occurred.

At the top of the list is the retreat of the Japanese, who regularly toppled auction records for five years. This season, though, they stayed away as economic problems and financial scandals -- some relating to art buying -- spread to Tokyo. Throughout the year, Japanese dealers and collectors bid and bought infrequently.

"The Japanese stock market peaked early last year and then came skating down," said Robert S. Salomon Jr., the chief investment officer of the asset management subsidiary of Salomon Bros. "They certainly have money but they are feeling a lot poorer."

The absence of Japanese buyers contributed to a decline in sales of artworks produced over the last century to one quarter of last season's volume. At Sotheby's, sales of Impressionist, modern and contemporary works slid to $406 million from a record $1.6 billion, and at Christie's they declined to $325 million from $1.25 billion. Significantly, the figures at both houses dropped to levels last seen in the 1986-87 season, just before art prices took off.

Despite the figures, Michael L. Ainslie, the president and chief executive officer of Sotheby's Holdings, the parent company of the auction house, expressed optimism.

"I think we have seen the bottom of the market," he said. "I think we are going to see a gradual recovery. I don't think there will be a dramatic recovery until the leading economies of the world begin to show much more strength."

Christopher Burge, the president of Christie's in the United States, said the downturn was no surprise. "We said right along it was going back to where it was in 1987," he said. "My next prediction is you will see the present pattern holding for the next three or four years."

Others, however, are not so sanguine.

Allan Stone, a New York contemporary-art dealer, said: "We are in a market which is searching for its bottom. We're in tough times and we're going to be in tough times for four or five years."

Thomas W. Weisel, the chairman of Montgomery Securities of San Francisco, and a contemporary-art collector, said art buyers were having a variety of business problems.

"It's going to be a long time before this area bottoms out," he said. "Any time you have a pendulum that has swung so far one way it takes time for it to swing back."

Richard Gray, a Chicago art dealer, said: "The market is very, very soft. I went to London in June with the hope and expectation that we had bottomed out and might see an upturn. It did not happen. We've had some very good business, but it's been very, very slow.

"I don't even think it's the fact that money is tight. People are not optimistic. By and large this market has always been supported by people who have money. I don't think that money has gone away. Most people are just scared."

The number of unsold artworks has increased drastically. In sales of Impressionist, modern and contemporary art this season as many as 40 to 50 percent of the artworks offered did not sell, compared with as few as 10 percent a year ago.

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