Market Monday: Giant Steps

This week, the industry news cycle was ruled by big names making big moves––some forward, some backward...

To nearly everyone's surprise, Robin Pogrebin revealed Thursday that the Met––fresh off its reported $15M renovation/expansion into the Breuer building––is actually hurtling toward a $10M deficit this year, with the budget gap allegedly set to spread as wide as $40M unless the museum takes drastic action. Officials have therefore announced a two-year restructuring plan that will likely include trimming staff, decelerating construction of the museum's new $600M modern and contemporary wing, and reducing its overall program in order to minimize exhibition-specific costs. While at least some management mistakes no doubt played a part, the Met's financial woes also speak to a hard truth in the art industry: In an era where continuous growth seems like the only guaranteed path to safety, even leading brands can still over-extend themselves. [The New York Times]

Meanwhile, across town, billionaire David Geffen single-handedly turned MoMA into the Met's fiscal counterweight by pledging the museum a $100M cash gift. In the wake of donating another $100M to Lincoln Center in 2015, Geffen's second nine-figure philanthropic bomb-drop on New York has fueled speculation that he's re-aimed his cultural giving sights away from Los Angeles and toward the Empire City for the long term. Geffen disputed that notion. But regardless of its truth or falsity, the scale of his impact once again underscores that private patrons reign supreme in the new nonprofit order––a reality made all the more powerful now that we know Geffen could literally have sewn up the Met's budget gap 10 times if he'd just made this titanic check payable to them instead. [Los Angeles Times]

Moving to the for-profit sector: We learned this week that Los Angeles's iconic Ace Gallery came under court-appointed management on April 6th, when founder Douglas Chrismas missed a payment toward his "long-running" Chapter 11 bankruptcy settlement. Many in the industry think it's a fitting fate for Chrismas, whose business practices have been as (justifiably) reviled over the decades as his curatorial decisions have been (justifiably) praised. (Case in point: In Ace's 49 years of existence, Chrismas achieved the remarkable feat of getting sued 55 times.) Bankruptcy trustee Sam Leslie, a forensic accountant, has assumed the unenviable task of trying to assess and strategically monetize Ace's sprawling, disorganized portfolio of assets. Chief among them is a reported 2,750-piece collection––with past and current Ace artists asserting rightful ownership over some of the works inside. Making matters even more complicated, Ace has no computerized inventory whatsoever. And that detail, combined with Chrismas's slithery history, leads me to believe that there are actually more artworks out there that no one but him knows about. After all, what's the advantage of avoiding databases your entire career if you're not going to keep a stash spot or two for when the law finally catches up? [The New York Times]

In related "dealers behaving badly" news: Nearly two years to the day after his Los Angeles gallery filed for bankruptcy, Perry Rubenstein was arrested and arraigned on three counts of grand theft by embezzlement this week. The charges stem from Rubenstein's alleged nonpayment of sales proceeds on three works consigned from private clients, two of which belonged to mega-collector Michael Ovitz. Although Rubenstein pleaded not guilty on all counts, I expect his attorney to move heaven and earth to work out a plea bargain as soon as possible. Strange as it may sound, Rubenstein's chances for a second act in the industry are probably better if he does time than if even more seedy details about his business emerge in open court. (As I wrote in 2014, his bankruptcy case already presents enough of a threat on that front.) Then again, I may be splitting hairs here, since just last year, dealer and ex-convict Helly Nahmad managed to present a prime booth of multimillion dollar paintings at Art Basel within weeks of completing his sentence for a federal gambling charge and fraudulent painting sale. There's no business like the art business... [Los Angeles Times] 

Finally this week, after roughly four years apart, Gagosian and Damien Hirst announced that they have decided to rekindle their once-unstoppable business partnership. The mega-gallery will welcome Hirst back by devoting its entire booth at May's Frieze New York to his work, with subsequent collaborations sure to tango on stage in the near future. Given Hirst's inability to rehab his market without a major New York gallerist, the move makes perfect sense from his end. But why would Gagosian accept this dance? I have two theories. One, Larry undoubtedly still owns a healthy amount of Hirst's earlier work from their first 17 years together. Raising Hirst from the ashes, even temporarily, would therefore create a lucrative and otherwise-nonexistent opportunity to sell high on those holdings. And two, as often as critics and analysts pan high-end dealers for prioritizing easy-to-sell work, true greats in any field sometimes seek out challenges purely to test their limits. For all Hirst's past success and art historical significance, he is undeniably a reclamation project at this point. I suspect that the competitor in Gagosian wants to prove that he can do the near-impossible by resurrecting the Hirst cash-cow from its formaldehyde vat and returning it to the top of the market. [The New York Times]

That's all for this edition. Til next time, may all your next steps be on time and on target.