Market Monday: Not As It Seems

This week, a quartet of stories reminding us that industry truths often defy first impressions...

Back and Forth: On Tuesday, the Neue Galerie, mega-collector Ronald Lauder's museum to the early-modern art and design of Germany and Austria, announced that it had reached a restitution settlement with Alfred and Tekla Hess, the descendants of a Jewish shoemaker, for Karl Schmidt-Rotluff's "Nude" (1914). The museum originally acquired the painting in 1999 from a Berlin auction house, which provided no indication (and may never have known) that the piece was looted from the Hesses' ancestors by the Third Reich decades earlier. Graham Bowley reports that the family raised their concerns about the work's provenance to the Neue Galerie "a little over a year ago," and that joint research by the Hesses and the institution unraveled its tangled history in the time since. However, cultural repatriation wasn't the endgame in this particular saga. Why? Because rather than keeping "Nude" for the long term, the Hesses agreed to sell the painting right back to the Neue Galerie for an undisclosed amount. 

While I expect the Hesses may suffer some slings and arrows from purists for their decision to resolve the matter by pulling a "Jerry Maguire" rather than holding onto "Nude," I see reselling the piece as a perfectly respectable and intelligent choice. The reality is that 102 year-old artworks are expensive to properly maintain, and a lump of straight cash is a lot more useful to most people in the world right now than an Expressionist nude will ever be. Nor did the Hesses do anything unprecedented here. Remember, after successfully suing Austria's Belvedere Gallery for the rights to Gustav Klimt's famous portrait "Adele Bloch-Bauer I" (in the events depicted in the recent Helen Mirren-Ryan Reynolds drama "The Woman in Gold"), the Altmann family promptly resold the painting for a cool $135M to––who else?––The Neue Galerie.

So the fate of "Nude" demonstrates once again that, contrary to the popular narrative, restitution doesn't necessarily redistribute great art from the overclass to the little people––at least, not for the long term. But it also reveals how the process can hand the little guy a big advantage with even bigger material benefits. By regaining control of a piece that a prominent collector or dealer has had in his possession for an extended period of time beforehand, restitution recipients get the ultimate gift in any sales negotiation: someone hungry to buy the work right away. This scenario intensifies the same psychological dynamic that gallerists and dealers sometimes try to leverage by agreeing to ship available inventory to collectors "on approval," i.e. to their homes or offices for a predetermined period of days or weeks. The longer someone lives with a work they love, the harder it usually becomes for them to imagine life without it. That, in turn, makes a sale more likely––and could also elevate the price higher than it might otherwise go, if the number hasn't been set in advance. In that sense, history basically sent "Nude" to the Neue Galerie on approval for 17 years. And if that unexpected journey indeed helped the Hesses secure something close to the $1M that Bowley notes similar Schmidt-Rotluff works have recently fetched at auction, then restitution delivered justice after all––just not in the form most observers usually think of. [The New York Times]

Because I Said So: On Wednesday, Peter Fish reported that the Jackson Pollock drip painting "Blue Poles" (1952) "is now worth about $350M, an appreciation of more than 300-fold on the $1.3M paid for it" by the Australian government in 1973. Unnamed sources informed Fish that the piece, which he calls a longtime "star attraction" at the National Gallery of Australia, was valued at $258M for insurance purposes in 2015. But officials reportedly decided to hike its coverage limit in advance of a scheduled loan to London's Royal Academy of Arts, where the painting will be on view through January 2, 2017, as a part of the New York School exhibition "Abstract Expressionism." (Side note: It's not clear whether the parties in charge most wanted to pad the Pollock's insurance value over the inherent risks of transcontinental shipping and handling or more unpredictable forms of volatility––like, say, the possibility that a disgruntled visitor might take a cue from this week's Russian news cycle and douse the painting with a bottle of urine.) 

With its 2015 valuation shining much-needed context on the issue, "Blue Poles" looks less like a financial success story to me than an exposé on the inherent absurdity of artwork appraisals (which I detailed in depth a few months back). By vaulting from $258M to $350M, "Blue Poles" effectively "appreciated" by 36 percent in the span of a year strictly because government officials decided they were willing to pay a higher premium in case catastrophe were to strike overseas. And in reality, the bill likely won't even come due Down Under until after the exhibition ends, since it's standard protocol for artwork loan recipients to cover insurance costs wall to wall, nail to nail, until the borrowed work returns to its owner. 

In my eyes, the newly escalated worth of "Blue Poles" once again impales the notion of art as a legitimate investment vehicle. Yes, it's true that many, if not most, financial assets are ultimately only worth what a buyer can be convinced to pay for them. But when the current owner can magically make an artwork's value jump without even getting a new buyer involved, that's not "appreciation." It's illusion. [Australian Financial Review]

Return of the Queen: Just days after a weekend profile in which she came off like the Napa Valley's pearl-wrapped, pastel-armored angel of vengeance, world-class philanthropist and alleged fire-breathing autocrat Dede Wilsey retained control over the board of the Fine Arts Museums of San Francisco, which encompasses both the de Young and Legion of Honor. The development defies a July report from the San Francisco Chronicle that Wilsey would resign her dual roles as the nonprofit's CEO and board president in the wake of a $2M settlement paid to former FAMSF chief financial officer Michele Gutierrez, who claimed she was wrongfully terminated after blowing the whistle on Wilsey for authorizing an improper transfer of $457,000 in institutional funds to the husband of one of her former de Young surrogates. While Wilsey did pass the CEO mantle to director Max Hollein at Wednesday's board meeting, the only apparent difference in her role going forward will be a shift in title, from "president" to "board chair." Intent on decapitating any doubts about the meaning of the title revision, Wilsey told the press, "Absolutely nothing has changed. It's just semantics––they thought 'chair' sounded more important."

This outcome certainly qualifies as a moral victory for Wilsey. And based on her earlier comments that she would make her detractors "look like a bunch of idiots" for underestimating her while she "laughed herself silly" from her rightful nonprofit throne, she seems to be luxuriating in that moral victory like some Gothic warrior-queen filling a claw-footed tub with the blood of her enemies. However, neither Wilsey's freshly reinforced authority over the FAMSF's fundraising body nor the settlement with Gutierrez stop the California attorney general office's ongoing investigation into her alleged misuse of museum money––a probe that some fear could still lead to the FAMSF's losing its nonprofit status. Until we get resolution on that front, though, Wilsey's dogged desire to retain power, combined with museum employees' accusations that she runs the de Young and Legion like her own "personal fiefdom," serves as a valuable reminder that the nonprofit side of the art industry can be just as cutthroat and ethically dubious as the for-profit sector. And why wouldn't it be? After all, some of the same people keep both worlds turning. [The New York Times]

Mistaken Identity: In her latest roundup of noteworthy Los Angeles exhibitions, critic Hunter Drohojowska-Philp unearthed a major conflict of interest in MOCA's recently debuted career survey of Italian artist Gaetano Pesce. Drohojowska-Philp points out that many of the cast-resin vessels in the show are loaned from the same private collector: John Geresi, who doubles as a "self-proclaimed [Pesce] scholar." While Drojohowska-Philp states that Geresi contributed 31 sculptures to the show (with no reference to the denominator), Christopher Knight of the Los Angeles Timesclarified in a Sunday follow-up piece that the actual number is 34... out of a total 39 sculptures on view. It would already be dubious of MOCA to intake such a high proportion of a retrospective from a single source, but the situation gets as sticky as the floor of an old porno theater when you also factor in that Geresi receives official credit from the museum as the exhibition's co-curator.

This unforced error qualifies as a particularly egregious one for MOCA, since the institution just spent most of 2010-13 weathering a gauntlet of scandal under former director Jeffrey Deitch (who often operated with such seeming disdain for classical nonprofit standards that I found myself wondering if he had a public humiliation fetish). The misstep most apt to the Pesce-Geresi affair was arguably Deitch's decision to enlist at least one guest curator with possible vested interests to help organize what may be the most divisive museum show in Los Angeles history: 2010's graffiti group-grope "Art in the Streets." And yet MOCA hasn't been the only American museum flirting with curatorial co-dependence in the post-recession era, either. As Knight points out, similar issues were raised by the New Museum's infamous 2010 exhibition "Skin Fruit"––curated by Jeff Koons entirely from the holdings of mega-collector Dakis Joannou––and the Hammer's 2015 show of Canadian modernist painter Lawren Harris–– curated by Harris aficionado Steve Martin (yes, that Steve Martin).

Yet I would argue that MOCA has done something more extreme––and potentially even more impactful––with the Pesce show: anointed an individual as a museum-level curator despite a total lack of verifiable scholarly credentials, industry stardom, or significant outreach beyond his own collection. Roger Gastman, the most scrutinized of Deitch's guest curators for "Art in the Streets," had written more than 20 books on the subject beforehand, including a major history of the genre published by HarperCollins. Although I'm sure he took some input from Joannou, only Koons––like it or not, one of the giants of late 20th and early 21st century art–– was officially credited as a curator on "Skin Fruit." And although Martin is an enthusiastic collector of Lawren Harris's work (not to mention a modern-day renaissance man), none of the pieces in the Hammer show came from his personal holdings. In contrast, MOCA effectively transformed Geresi from just another rich patron into a member of that magical, mystical order we call "experts," strictly because he was willing to temporarily hand the museum what was already in his home(s), office(s), and/or art-storage unit(s). Going forward, then, his new identity as a museum-level curator may convince some in the industry to upgrade the importance of everything Geresi says, does, and owns––by ANY artist––which may, in turn, grant him far more opportunities and added value than a simple upcharge on his 34 Pesce vessels if he resells them after the MOCA exhibition. And in that sense, the museum hasn't just dipped back into the murky waters of for-profit institutional patronage. It may have dug the ethical cesspool to a new depth. [Initial report: KCRW | Follow-up: Los Angeles Times]

That's all for this edition. Til next time, remember: Whether inside or outside the art world, there's more to almost every situation than meets the eye.