What crisis? Super rich are still buying
The financial turmoil has been an incentive rather than a barrier for the wealthy to buy art
By Olav Velthuis. Opinion, Issue 230, December 2011
Published online: 15 December 2011
On the day the endgame of the euro area began, only hours after Italian debt markets came under heavy attack, and at the very moment that the New York Stock Exchange was plummeting more than 3%, Sotheby’s evening sale of contemporary art on 9 November totalled an impressive $315.8m: 17% above its high estimate, and close to the peak for contemporary art, which was reached just before the financial crisis of 2008. While the New York auction weeks had a bad start with Christie’s evening sale of impressionist and modern art on 1 November, where more than one third of the lots failed to find a buyer, in general they showed no signs that the debt crisis is having an impact on the art market.
What explains the art market conundrum? Let’s first of all note that, historically, financial or economic turmoil has never prevented the art market from reaching its highs. Van Gogh’s Irises set a record price of $54m in November 1987, a couple of weeks after Black Monday, when almost a quarter of the Dow Jones’ value was erased. The famous sale of the New York taxi tycoon Robert Scull’s collection, which set a record for many contemporary artists in 1973, came in the middle of a long, steady decline of the stock market, and only a day after the Opec countries frightened the West by agreeing to their oil embargo. In 1931, banking panics in the US and the decline of the gold standard did not prevent Andrew Mellon, who was at the time the US Secretary of the Treasury, buying Raphael’s Alba Madonna, around 1510 (now in the National Gallery of Art in Washington, DC), from the Hermitage in St Petersburg (formerly Leningrad) for a then record of almost $1.2m.
What held for these historical precedents holds for the current art market conundrum as well: economic and financial crises go only so far in depleting the cash of wealthy collectors. According to Forbes’s rich list, there are 1,210 billionaires—200 more than last year. Their combined net worth is $4.5 trillion (up from $3.6 trillion). If only a tiny fraction of this wealth is used to pursue status goods like art, the price of conspicuous consumption will be driven up.
