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The orchestra

fresnophilWe were pleased to attend the Fresno Philharmonic’s program this last weekend. Entitled ‘Bolero’, it was one in a series of concerts designated ‘Masterworks’ featuring artists and works of particular note. Nothing on this last program was short of entertaining, and the guest artist Charles Ramirez who performed Rodrigo’s ‘Concierto de Aranjuez’ gave a rendition that was, appropriate to the series, masterful. A delightful surprise was finding Jose-Luis Novo on the podium. He provided some extempore commentary during the concert that was funny and insightful, and based on the response of both the orchestra and the audience, he’d be a worthy candidate to replace outgoing music director Theodore Kuchar.

With a full and appreciative house at the Saroyan Theater, it was almost like the good old days, my good old Philharmonic days, anyhow, truncated when we moved away from Fresno 20 years ago. Almost, or should I say reminiscent, because so many of those in attendance, and so many of those acknowledged in the program were to an uncomfortably large extent those same folk who were orchestra supporters from the time I served on the board in the early 1990’s. God bless them, they’ve kept one of our local treasures alive, but I must say, looking across the orchestra section of the hall, what I took in was a welter of white hair. When amidst a company out of which I find myself on the cusp of youth, one can only say that it is a shall we say mature company indeed.

This of course begs a question I’m certain the staff and directors of the Fresno Philharmonic  grapple with daily, how to keep the orchestra attendees at least a continuing body, and hopefully a swelling one. With Fresno’s population burgeoning, one wouldn’t think this would be a problem. Since the time I served on the board, the local population has nearly doubled, and one would expect at least some kind of incremental increase in attendance, funding, and services for the orchestra members.

Well, something(s) to ponder with thankfully a loyal cadre of supporters and attendees of still sufficient numbers who will doubtless happily soldier on, preserving- and promoting- what is surely an ornament for the community. I’m hopeful that very many others will sooner rather than later cotton on, hoick themselves up from in front of the TV and discover what glories are to be found at a Fresno Philharmonic concert.

An extremely expensive business to be in

Skate’s Market Research is reporting on how the major public components of the art market fared for 2014. The short answer is, not good, and the worst, according to Skate’s, since 2005. This would be particularly worrying for Sotheby’s, since in 2005 it was just trying to dig itself out of the morass of the price fixing scandal that sent  Sotheby’s chairman Alfred Taubman and CEO Dede Brooks to jail. In precise terms, at December 31, 2014, a share of Sotheby’s is worth 18.8% less than it was on January 1, 2014.

I had this last July written about China’s Poly Group as a possible, and as it seemed then, likely suitor for London based Bonhams, the third major international house behind Sotheby’s and Christie’s. By mid August, however, nothing more was heard on the subject. Based on the latest figures, however, Poly Group has lost nearly 28% of its value for the year, and one must surmise that the company couldn’t afford Bonham’s.

One other company I had written about was the Stanley Gibbons Group, whose significant acquisition this past year included venerable West End dealer Mallett. Although fairly flush with investor cash that allowed the acquisition, the company nevertheless lost nearly 23% of its value on the year.

While we’re all of us entranced by the occasional extraordinary consignments of Chinese imperial porcelain and European Impressionism and American contemporary art, it occludes the fact that all these businesses must slog along whether they have these elusive consignments or not. For a white, the major houses were limiting their consignments to amounts in excess of $5,000, which, frankly, seems little enough. Lately, though, with links with eBay and so-called design sales, what’s on offer is a duke’s mixture of bottom end material that no member of the accredited trade would ever have on offer. Interestingly, lately I’ve received customer satisfaction surveys from a couple of the salesrooms asking me to rate my purchase experience that for all the world are impossible to tell from the same thing I get after I have my car serviced.

With market cap falling,  Sotheby’s CEO Bill Ruprecht on his way out and Christies CEO Steven Murphy gone already, one wonders  about the fate of what was formerly the wholesale part of the trade in art and antiques. I hope that, whilst thrashing around looking for revenue and profit enhancement- and not finding it- the major players in the international market for art and antiques will retrench to their halcyon roots, and leave the retail market to the tender mercies of the accredited dealer.

An expensive business to be in

News reports indicate Sotheby’s long time CEO Bill Ruprecht will leave the company as soon as a replacement is found. Although it is reported to be by his own choice, his contentious relationship with board and major shareholders makes his ‘consensual’ departure appear not ulike the prescient maidens of the village who offer themselves to the advance guard in order to seek protection from the ravages of the invading horde.

Up to this point, and presumably at the prompting of activist board members, Sotheby’s has established once again an online partnership with eBay- despite the dismal failure of a similar partnership some years ago, established a bricks and mortar presence in China, and offering aggressive advances to would be consigners in an effort to attract the  best consignments. This begs the question, to descend to the vernacular, how’s that working for you?

Not well, I have no doubt. As well as the experience with eBay, Sotheby’s nearly sunk itself not so many years ago by offering inordinate advances, only to find on sale day the consigned item fell well short of achieving a hammer price above what was advanced against it. Hard to explain this profound a misstep to the bank that provided the financing, hard on the operating statement of course, and, ultimately, hard to explain to shareholders.

We do trade with Sotheby’s from time to time, and as it happens attended a round of sales in New York just a couple of weeks ago. Although certainly not privy to any aspect of the saleroom that cannot be garnered by anyone else who reads their financial statements, I can tell you that the premises are crawling, absolutely crawling with staff. I would imagine that Sotheby’s does its best to mine the available cadre of interns from the art history departments of Columbia, CUNY, and as far afield as Princeton and Yale, but for the most part, staff are paid- not well, perhaps, but enough to earn their daily crust and exist without undue privation in one of the most expensive cities in the world. I know for a fact that the ax has fallen on the necks of a fair number of senior staffers over the last couple of years, but their departure has not made any noticeable dent in the legions of folk there earning a living.

I suppose what I mean to get at is, while profitability is achieved through a confluence of revenue and cost control- what we call pouring cash in at the top at a faster rate than it can leak out the bottom- the auction house business is an extraordinarily expensive business to be in. Moreover, it is an aspirational business- Sotheby’s is not a provisions market. It has never, nor have we for that matter, ever sold anything anyone actually had to have to get along in life. What they sell, and what we sell, are luxury goods offered as only one of a number of discretionary purchases by which the wealthy may indulge themselves.

A few years ago, and apropos of our tenth year in business, Keith and I spent some little while working up an economic and demographic profile of our client base. While I’ll coyly tell you that the precise components of our typical buyer are proprietary information, I can tell you that, based on our findings, we estimated that those individuals who fit it numbered around 50,000- in the world! To say that we, and Sotheby’s, and Christie’s, and Bonham’s, and every other member of the accredited art and antiques trade access a limited buyer pool is to make an extreme understatement. And do I have to say that this class of buyer is savvy? Believe me, they know what they want, what they want to pay, and where- anywhere in the world- it is available. I don’t think a local bricks and mortar outlet or dumbed down accessibility through eBay is necessary for the buyer who can travel anywhere in their Hawker 4000 and whose PA’s earn more than President Obama.

While of course any business wants to always appear to be in and ready for business, the efforts of Sotheby’s activist board and investors that ultimately resulted in the resignation of Bill Ruprecht will amaze me if they prove successful.  In the short term, I suppose they have, however- Sotheby’s stock rose 7% the day Ruprecht’s departure was announced.

Mallett- a reprieve?

The longest lived member of the retail trade, with roots extending well back into the 19th century, surrenders its independence through acquisition by the Fine Art Auction Group. Certainly, with Mallett’s operating statement so awash with red ink it resembled the floor of an abattoir, it is a wonder that they were able to continue to carry on in business. Their capital structure was replenished through sales of premises locations in the West End and a number of stock reduction sales (‘rationalizing inventory’ this was called- doubtless a less pejorative phrase than ‘dumping stock’) but one wonders, at this stage, what Mallett really has left to offer. Presumably the acquisition price includes an expansive view of financial blue sky.

Arch comments aside, most of us in the trade, while sniping at Mallett as the tony province of oil sheiks and Russian oligarchs and all other manner of the parvenu, will under a modest amount of grilling admit that, to a very great extent, Mallett amounts to the gold standard in the trade. I can think of very few items resold within the time at least since we’ve been active that did not prominently mention a Mallett provenance if there was one, which mention invariably resulted in a sale for a premium price.

With all that, Mallett has been first and foremost a retail dealer, prominent in the West End, albeit now removed from Bond Street, and on Madison Avenue. As well, they’ve been notable participants in all the best fairs, and are one of the founders of Masterpiece, arguably London’s premier fair. What, then, makes this inherently retail dealer an attractive acquisition target for a company that is essentially an aggregate of salerooms? Hard to fathom, but presumably there remains some drag left in the Mallett name, but how that contributes to the bottom line is impossible to assess. Moreover, with the core business of Mallett continuing to leak cash out the bottom at a much faster rate than it could be poured in at the top, a more patiently pursued acquisition might have been able to strike a deal with the eventual receivers.

The series

bgarner100And is there any other? What an astonishing performance- that they held on to that one run lead the entire sports population including myself has to have bar shaped bruises across the posterior from bouncing up and down on the edge of the seat. I cannot think of a time when the series MVP was more clearly defined as it was last night in Madison Bumgarner.  What can one say about his performance through the season, and certainly the post season that hasn’t already been said? And humble? What a gracious young man, who seems to have taken a number of leaves from Buster Posey’s book. I can’t help but include some kind of cliché about the graceful courtliness of the South, made manifest in the demeanor of these supremely talented young men.

Contrast this, sadly, with the hash Fox made of its post game coverage. Mind you, I think Joe Buck is likewise a class act, and enjoy him as much as the greats of my youth, Curt Gowdy most prominently among them. But the color commentators? Where’s Joe Garagiola when you need him? And the trophy presentation? How crass! An extraordinary performance by an extraordinary group of men, tarnished by a tawdry ceremony MC’d by an inept announcer in a cheesy little room. Come on Fox- spend some money. And what about that boob from Chevrolet, babbling on about the glories of the latest thing to roll off the line, and forcing into the hands of a confused looking Madison the keys to a new car. A Price is Right moment, clearly out of place.

Well, I suppose the afterwards were at best comic relief, but certainly a come down and dissonant with the precision and ultimate glory of the scene we’d witnessed for the preceding three hours. I suppose all of us, including the players, can laugh off the post game, but for me, next spring can’t come soon enough.

Bonhams, in Mandarin, that is

London’s Daily Mail is reporting that the front runner to acquire international auction house Bonhams is Poly Culture, an auction house owned by the Chinese government, and a subsidiary of the Poly Group, whose interests range from property development to arms exports. The why of this acquisition may be known in the fullness of time, but for the moment, seems rather surprising as it would likewise prove surprising to find that Bonhams has been operating with any pronounced degree of profitability and, with its recent bricks and mortar expansion on Bond Street, without a fair bit of debt. Moreover, as is endemic with any auction house, its revenue and profitability must vary wildly, depending on consignments the acquisition of which is hard to predict or control, but yet a business whose substantial monthly overhead expenses carry on regardless of the quantity or quality of consigned items sold through its salesrooms. There has been a bit of ‘rationalizing’ over the last couple of years at Bonhams, with reductions in sales, and sales venues. Bonhams has not, however, been precisely leading the pack when it comes to online sales activity, behaving in this regard more like a regional salesroom, which with its single Knightsbridge location until its acquisition a decade and a half ago of the Bond Street and regional salesrooms of Phillips, it largely resembled.

Still, we do see a number of Chinese nationals participating in sales at Bonhams, certainly in the well attended Asian art sales in San Francisco. Interestingly, our experience has been that Chinese buyers will often pay more at auction than they will for comparable pieces offered for sale through the accredited trade. Presumably the Chinese buyers have divined that the auction house is a wholesale resource, and consequently, so the received wisdom goes, the best buys will necessarily be made there. That may once have been so, but in this age when online marketing makes all things transparent to both buyer and seller, everyone in the trade in art and antiques has to be price competitive.

But one other thing occurs to me, and this has to do with the nature of the Poly Group itself.

Few people will remember, although it was only a few years ago, that Butterfields, the old line San Francisco auction room acquired by Bonhams, was formerly owned by investor Bernie Osher, who used the salesroom not just as a profit center but as an adjunct to his own collecting interests. The best consignments, if they were pieces that were within his collecting ambit, were purchased by him by private treaty. It may be that that is part of the motivation of the Chinese government, the Poly Group’s alter ego, in an effort to flesh out Chinese institutional collections, and do it on the quiet.

Perhaps that’s a strategy that will pay off. Perhaps- but one wonders whether, with the ongoing operating expenses and debt servicing requirements of Bonhams, whether the Poly Group won’t find, at the end of the day, that they have paid a premium price, very far removed from a wholesale price, for acquisitions.

The Fresno arts scene

An interesting facet of spending more time in the local berg after an absence of nearly 20 years is to find and gauge the level of dynamism in the arts community. Sadly, arts organizations around the world are suffering from a lack of funding, brought about by a dearth of societal and consequently governmental interest. What used to garner even occasional public interest is now co-opted by the internet, social media, and 157 channels of cable TV in every home.

With all that, arts organizations are soldiering on. Locally at least, not very many new on the scene, but those with which I was familiar either through participation or financial support, are surviving, even if in a reduced state.

And, even 20 years on, very many of them continue to be reliant on a familiar cadre of names, for financial support and also for governance. Familiarity with a number of those who over time have wormed their way into positions of influence with many of the arts organizations, moving from one to the other and then back again, is a worrying phenomenon. Although probably not unique to Fresno, that a very few people seem to control what goes on in the arts functions to exclude participation by very many others, and goodness knows, with the meteoric growth in population locally, the pool of talented potential board members and active participants has doubtless increased. Not everyone is home watching TV.

‘Give, get, or get off’ is, or should be, the simple by word of non-profit boards of any stripe, but not subscribed to by very many local board members. It was the other evening at dinner out my misfortune to sit, by happenstance, at a table adjacent to one of these serial board members, whose financial contributions have always been, shall we say, limited. He is convinced, as he has repeated to me many times, that the boards he sits on would be unable to function without the valuable advice he provides to the professional management. Hmmm… He once told me he would clandestinely approach management below the executive director level to let them know that, if they had any problems, they could approach him directly for an assist and guidance. As well, this fellow will gleefully tell new board members that, since they’re new, their contributions to the board may not be as useful as his, given his long tenure. Divisive, dismisssive and interfering, he would hardly be considered a dream director, yet he’s served on at least half dozen prominent local boards.

I suppose what one has to get over is that, while arts organizations need money, endemically, they don’t need all that much advice, and certainly not much from those who are not arts professionals. This hasn’t occurred to my ‘dream director’, or to a number of others, nor has it occurred to any one that direct outreach to potential directors can’t be limited to just one’s circle of board cronies.

Sotheby’s and eBay

In what must be characterized as the desperate move of a slow learner, Sotheby’s has made their financial straits apparent in their plan to, yet again, link with eBay in an attempt to bolster their core auction business. In a New York Times article of a couple days ago, it appears that Sotheby’s feels left in the dust given the bricks and mortar expansions of rivals Bonham’s, Phillips, and Christies, and so is desperately, it seems, moving down-market. I suppose senior management overlooked the fact that, in the case of Bonham’s, following on from their 60,000 square foot expansion on Bond Street last year, the auction house is now on the market.

Still, I suppose the prospect of tapping into the reported 150 million eBay users at the lowest of the low end of the art and antiques market seems too tempting to pass up. All this reminds me of the story of the optimistic little boy who, when put in a room full of horse manure, started shoveling furiously. When asked why, the boy replied, ‘With all this horse manure, there must be a pony in here somewhere.’

Well, perhaps there is, but what I know for certain is that eBay serves as a recreation for vast numbers of their users, who spend their spare time tinkering with their accounts while selling and buying $25 items. I’d opine that the rate of compensation for the average eBay user is probably about 30 cents an hour.  And how is that divisible, exactly, by the six figure salaries  of Sotheby’s senior employees?

Suffice to say, the linkage between Sotheby’s and eBay strikes me as, shall we say, a poor fit that cannot be any better now than it was the first time the company’s tried it.

When word surfaced a few weeks ago that Bonham’s was in play, I asked my partner Keith McCullar if he was interested in being in the auction business. His response was an emphatic no. Actually, his no was intensified by a word we hear frequently these days that begins with the letter ‘f’.  Nevertheless, point taken. The better auction houses in the better venues are plagued inherently by high overheads and wildly fluctuating revenues. Yes of course a high end collector would prefer to make his purchase or consign his seven figure item in a lovely venue, but the fact is, these types of items are not daily making their way through any saleroom.

Moreover, the actual number of these types of items is finite, and so, frankly, are those people who would constitute a market, either as buyer or seller. After we had been in business ten years, Keith and I thought we could put together an economic profile of our customers, and mind you, even at the lower end of our business, our buyers are not strangers to any of the major salesrooms. But the fact is, we calculated that this pool consisted of only perhaps 50,000 people- in the world! To say, for instance, that on any given day an Eli Broad will be purchasing a Jeff Koons sculpture is ludicrous, but the fact is, in terms of appearance and accompanying overhead, the auction houses have to appear as though that very thing will happen.

Further on fake

The news media is historically given to hyperbole, so to say the art world is reeling over the revelations of fake Rothko and Pollack paintings is for me, albeit cosseted in my own little sphere, not much news. After the ABC Nightline broadcast, my email inbox was about as full as it always is and no welter of phone calls prevented anyone from ringing through.  In fact, I sold a painting- mind you, a painting by an artist well established in the canon, and the painting itself with a fairly long provenance.  I suppose what I’m saying is that the art world remains pretty much as it’s been.

What amidst the media brouhaha I managed to sell was a painting by an artist whose work we had handled before, which painting had been fairly extensively restored, with the upshot of those restorations creating some problems of their own. While one of the giveaways, per the ABC correspondent, that a Pollack was a phony was the use of a yellow pigment of a type unavailable to the artist, our painting, of mid 19th century vintage with a fine linen support, had been cleaned, revarnished, and mounted on hardboard sometime in the middle of the last century.  Does this make for difficulty in determining a painting’s authenticity? Absolutely. Does or should this kind of thing raise suspicions and affect the picture’s merchantability? Well- yes and no.

I hedge because, frankly, what results in a sale is as varied as the paintings we handle and the buyers who purchase them. We always chuckle when we see on broadcasts like Antiques Roadshow discussions about original condition, because the fact is, for most period material, either fine or decorative, if it is a century or more old, original condition often time means poor, unsalable condition. Invariably, canvas stretches and paint shrinks, leading to paint loss and tears to the support, and the very varnish used to protect the painting’s design layer is typically over time so yellowed and so approaching opacity that what’s depicted in the picture plane is often difficult to make out.  Our general rule of thumb is, whether painting or furniture, everything requires significant restoration at least once a century. When one sees a picture of some age that appears fresh from the easel, what one is admiring, without knowing it, is oftentimes the restorer’s art.  The yellowed varnish that is removed takes with it a fair old bit of the design layer which the skillful restorer oftentimes has to put back with his brush which, he hopes, will be guided by his knowledge of the original artist’s working technique- if that can be determined. Or, as is frequently the case, by the restorer’s own best judgment.

That there is no hard, fast and immutable rule for restoration, and that techniques have changed over time, complicates matters even further.  In the case of the painting remounted on hardboard, we see this fairly often and while it is perhaps not ideal, in the cases where we have seen it, it provided a simple, durable lining. No lining is ideal. Stretching the canvas over the lining and the effect of the heat table invariably result in a flattened appearance, with brushstrokes and impasto marking the technique of the artist diminished in the process.

Perhaps this discussion of restoration runs afield from outright fakery, but the fact is, artworks, even when genuine in their origin, oftentimes, and perhaps inevitably, have that originality occluded the result of attentions that were of the best intention. And these attentions might be interpreted to be if not fakery, than at least misleading.  Moreover, though personally we try to limit whatever restoration we carry out to what is the least required and always the least invasive, most of our clients require that paintings be wall ready and furniture pieces be room ready.  We do, like everyone else, have our living to earn, so pieces do need to be in saleable condition.

That’s where disclosure by the dealer comes in, as it should with all members of the accredited trade, and where better to disclose than in writing and on the face of the invoice.

Fake

Just at the moment, the English trade is in an uproar over some on-air claims by TV presenters about the extent of fakery in the art and antiques world. Naturally, particularly those in leadership positions in the various accrediting associations have taken issue with those claims, and rightly so. A favored client of mine who happens to be a senior jurist once put it this way- ‘If you don’t know your jewels, know your jeweler.’ Of course, for the novice or occasional buyer, the best advice they can ever be given is to shop with members of the accredited trade.

Frankly, though, unaccredited dealers are the overarching presence in the trade, and nothing in the world prevents whoever has the fancy, and the bank book, from opening a shop, or more likely, establishing a website, for the marketing of whatever it is they want, and, as long as they can get away with it, making outlandish claims. But this presumes a nefarious intent, and while that doubtless includes a given percentage in any line of endeavor, often those in the trade operate out of ignorance, to the detriment of those who choose to purchase from them. I am reminded of a dealer fairly close to home who often sold things that were, as they say in the trade, composed of antique elements. This gentleman honestly thought that, if a given percentage of an item was old wood, no matter what subsequently had been done to dolly up the piece, there was nothing wrong with representing it as an antique. We had another experience with this same dealer, wherein he pointed to a darkly stained hall bench that was not old, telling me that, if I found something similar for a given price, he would buy it from me. I said that I would, but anything I represented to him would be period. ‘But that’s period!’ he exclaimed, pointing to the piece the like of which he wanted from me. I could tell from the look on his face and the tone of his voice that he honestly felt that the bench in his shop darkened with lamp black, shellacked and waxed and distressed with rappings from a length of chain was the real deal.

A few years ago, all of us remember the scandal associated with an internationally famous dealer now amongst the heavenly chorus whose stock in trade was to a great extent things that were made up- extremely well, as it happened, fooling a lot of people for a long, long time. Surprisingly, despite the beauty and vaunted attributions of these pieces, none of them seemed to have much in the way of provenance. Hmm…  I suppose this is an argument for caveat emptor, but I have to say that this same chap was a good friend to the design trade and his frequently generous discounts occluded the fact that what he had to sell was decidedly dodgy.

Unfortunately, the plethora of online trading that takes place that marks a revolution in retail that affects even the trade in art and antiques distances the good dealer from the good faith purchaser. What we’ve found, though, is the better online platforms now require more and more from participating dealers in terms of disclosure, and are less and less tolerant of those dealers who don’t deliver as advertised. Still and all, harking back to my friend the federal judge, nothing yet substitutes for, as he put it, knowing your jeweler.