The price you pay for art
Collecting art is driven by passion rather than reason, so how do auction houses put a price to a work of art?
As someone who used to report on art and the art market, I have always questioned how it is priced. Not just in the secondary market by auctioneers, but also in the primary market by galleries. How does one put a price to works by a new artist for their debut exhibition, for instance?
I asked Edward Gibbs, chairman, Sotheby’s India & Middle East, who was in Mumbai for a preview of their forthcoming sales in London over 24-25 October , if there was a universally accepted methodology.
“Collecting art is driven by passion rather than reason. Estimating the price of a work of art is not an exact science because you never know how much somebody might be prepared to pay,” says Gibbs. “The theatre and drama of an auction provides a quantum factor...it could result in extraordinary prices being realized.”
Over his career, Gibbs, 53, says he has sold work for 10 times and sometimes even 100 times the estimated price. He reminds me of the 2011 sale of the Stuart Cary Welch Collection where a Mughal miniature by Govardhan titled Five Holy Men (circa 1625-30) sold for £2,953,250 (around Rs25 crore now). It still holds the world record price for a Mughal miniature. “We had suggested £200,000-300,000. And some people had said to us, ‘good luck, that’s a bit strong’. But it was chased by private collectors, institutions…it sold for 10 times the price we had suggested. Would it have sold for that price if it didn’t belong to Stuart Cary Welch? Probably not.”
I find the 100 times figure in the legendary auction of the estate of former US first lady Jacqueline Kennedy Onassis by Sotheby’s in 1996. A triple-strand pearl necklace made famous in the photograph of a young John F. Kennedy Jr in his mother’s arms, had been estimated at a high of $700 (around Rs45,500 now). It sold for $211,500. And they were not even real pearls! While faux pearls are not art unless one is being ironical, this illustrates what Gibbs says about “exponential leaps that are the result of excitement generated by the sale.”
It is not all passion, however. Past patterns, present circumstances, who’s in the market at a given moment and who’s looking are all considerations, says Gibbs. Auction houses scan their own databases and those such as Artnet and Artprice to arrive at ballpark figures. While the lower estimate has to be guided by the expectations of the seller, Hugo Weihe, chief executive officer, Saffronart, says teams pool in their expertise to come up with a final figure. “The auction house has to balance divergent interests by carefully negotiating the expectations of the seller, who wants to achieve the highest price, and the buyer who wants an attractive proposition,” says Weihe.
Even in art, stories sell. Sotheby’s forthcoming sale includes the estate of the late British artist Howard Hodgkin, who began collecting as a 14-year-old boy. His first love was Indian paintings. The presence of two works by the Indian artist Bhupen Khakhar in his collection is the result of a long friendship: De-Luxe Tailors, acquired in 1972, is estimated at £250,000-350,000, while a painting of Hodgkin’s house by Khakhar is estimated at £100,000-150,000. It would be no surprise if they sold for much higher, given that Khakhar was the subject of a major retrospective at London’s Tate Modern last year, a factor that could lead to an “exponential leap”.
Previously the international director of Asian art at Christie’s, Weihe, who has over 20 years of experience in the auction space, believes works going too far off the mark from the estimated price reveal a gross misjudgement on the part of the auctioneer. “You don’t want to misjudge either way and be embarrassed,” he says.
Weihe was the man who brought the gavel down for Christie’s record-breaking sale of Tyeb Mehta’s Mahishasura in 2005 in New York—the first work by an Indian artist to cross the $1 million mark, selling for $1,584,000. The estimated price was $400,000-600,000. “It was an ambitious estimate at the time but sometimes you just know you have a masterpiece and you go with your instinct,” he says.
The provenance of the work, its publication records, and questions like whether it was from the artist’s inaugural show or exhibited at biennales… these are all boxes you can tick to add value on top of the core value of the work, Weihe says.
The talk of art pricing sometimes seems vulgar when you circle back to the art, or the artist, itself. Weihe recalls the bittersweet moment right after Mahishasura was sold. To offer congratulations, he had walked up to Mehta, then 80, who said: “I’m an old man. The work doesn’t belong to me any more. What does this mean for me?” But then he had added that his lifelong dream was to have his work acquired by the Museum of Modern Art (MoMA). Mehta died four years after that sale. There is reason to believe that MoMA is considering acquiring his work now, probably as a result of that sale. How do you put a price to that?
The writer tweets at @aninditaghose