Smaller artworks, bigger profits

NEW YORK • Mr Brett Gorvy has been dreaming about this show for years.

During two decades at auction house Christie's, where he rose to become chairman of the firm's postwar and contemporary art department, Mr Gorvy was often frustrated by the razor-thin margins on some of the biggest trophies.

So in late 2016, when he decided to join forces with former colleague Dominique Levy, he knew that the first show he curated for Levy Gorvy Gallery would focus on the less sensational, yet more lucrative segment of the art market - small gems from key collections.

That exhibition, Intimate Infinite, is set to open on Sept 6 in New York and will include almost 100 artworks worth an estimated US$400 million (S$548 million).

Billionaire hedge fund manager Steve Cohen and the Whitney Museum of American Art are among those that loaned pieces. More than two-thirds of the items on display are less than 50cm tall.

"At auction, here are always these items that top collectors focus on," Mr Gorvy, 54, said in an interview at the gallery, where cardboard models of the exhibition were studded with tiny replicas of the artworks.

"They are these small jewels. None of them is very high in value."

While paintings such as the US$450-million da Vinci or US$300-million de Kooning get the most publicity, the sweet spot for the trade is about US$1.5 million to US$5 million, Mr Gorvy said.

That price point draws the most buyers at auctions, galleries and fairs - and generates the fattest commissions for brokers.

"That's where you can hold onto your margin," he said.

With fierce competition for fresh material, dealers and auction houses often forgo profits for the bragging rights of selling the most expensive works.

Auction houses charge a buyer's premium of about 20 per cent of the hammer price on the first US$4 million of an item and a percentage on amounts exceeding that.

But to win the most desirable works, they often hand over much of that fee to the seller.

Shares of Sotheby's tumbled 5.6 per cent on Aug 6, the most in six months, after the company reported a drop in auction-commission margins.

The margin decline was partly based on the sale of two large guaranteed paintings, chief financial officer Michael Goss said in a conference call with analysts.

"They can make a lot less on a US$10-million picture than on a US$2-million picture," Mr Gorvy said of auction houses.

Small artworks of the highest quality often spark bidding wars. A 38-by-50.8cm self-portrait by Rudolf Stingel fetched US$4.5 million at Sotheby's in May, more than doubling the low estimate.

Six months earlier, the auction house sold an entire batch of 86 small works on paper from the Diamonstein-Spielvogel Collection of key 20th-century artists for US$59.7 million.

Exhibitions such as Levy Gorvy's offer a glimpse into an opaque segment of the art market.

Private sales by dealers accounted for 53 per cent of the US$63.7 billion in total art sales last year, according to UBS Group and Art Basel.

Top galleries demonstrate their influence by staging museum-quality exhibitions featuring loans from major public and private collections. Insiders watch such shows to glean information about new trends and available troves.

Officially, there may not be many - or any - works for sale, but unsolicited offers are usually entertained.

Just 10 per cent of the items on display at the Levy Gorvy exhibit will be for sale, including a 19.5cm square canvas marked with thick white strokes by Robert Ryman, Untitled #32, which fetched US$1.1 million at auction in October. The asking price is now US$1.8 million.

The works on display offer a "value point and incredible pleasure", Mr Gorvy said. "They have a magical quality at the time when people need some light in their lives."

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A version of this article appeared in the print edition of The Straits Times on August 24, 2018, with the headline Smaller artworks, bigger profits. Subscribe