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Is a $179 million Picasso cause for celebration?

29 June 2015

From the July/August issue of Apollo: preview and subscribe here 

In May, Les Femmes d’Alger became the most expensive artwork ever sold at auction. But what effect do record prices have on the market overall?

NO

Don Thompson

What can you say about a painting that sold for $179 million, an amount that would purchase three Boeing 737s? The painting is Picasso’s 1955 Les Femmes d’Alger (Version ‘O’), which sold in May at Christie’s New York for a hammer price of $161 million. Adding the auction house buyer’s premium produced the $179 million invoice. It was an unusual auction. There were 11 minutes of bidding – the average evening auction lot takes 50 seconds. Auctioneer Jussi Pylkkänen, the global president of Christie’s, opened at $100 million and took increments of $5 million. There were 30 bids from 5 bidders. Four bidders were still in at $120 million. The identity of the purchaser is unknown.

To put the price in context, Les Femmes d’Alger (Version ‘O’) ranks only fourth on the list of record prices for artworks. The first two are Paul Gauguin’s 1892 Nafea Faa Ipoipo (When Will You Marry), which brought a reported $300 million in February 2015, and Paul Cézanne’s 1892–93 The Card Players, which sold for a reported $250 million in April 2011. Both were purchased by the Qatar Museums or the Qatar Royal Family.

Number three on the list is Mark Rothko’s 1951 No. 6 (Violet, Green and Red), which sold in August 2014 to Dmitry Rybolovlev, a Russian collector. The price was €140 million ($186 million). Rybolovlev later claimed that he had been overcharged and thus defrauded; the transaction is currently before the courts in Monaco.

Les Femmes d’Alger is the only one of these four paintings to be sold at auction; the other three were private transactions. The most expensive previous work sold at auction was Francis Bacon’s Three Studies of Lucian Freud (1969), which was estimated at $85 million and sold for $142 million. Until the Les Femmes d’Alger sale took place the most expensive known prices for works by Picasso were $155 million in March 2013 for Le Rêve (1932), and $104 million in May 2004 for Garcon à la pipe (1905).

The entire 15-painting series of Les Femmes d’Alger was purchased for $212,500 from Picasso’s dealer Daniel-Henry Kahnweiler by American collectors Victor and Sally Ganz in 1956. Ten of the 15 were later sold to the Saidenberg Gallery; the couple kept ‘O’. That version sold for $32 million in November 1997 in the Ganz collection sale at Christie’s New York. It was purchased by a Saudi collector living in London, who was the consignor of the sale at Christie’s. The painting increased in value by 459 per cent in 17 years.

High-priced artworks are examples of what an economist calls positional goods – which by definition can only be owned by a small number of people, and reflect the owner’s position in society. There’s no better positional good than a cubist Picasso, recognisable from across the room. As the income disparity between the top 0.1 per cent and the other 99.9 per cent increases, the demand for positional goods rises faster than incomes. There are more wealthy people each year than masterpieces coming to market.

What did the buyer get for $179 million? The back story emphasised by Christie’s promotion was that the series was inspired by Eugene Delacroix’s 1834 painting Femmes d’Alger dans leur appartement (Women of Algiers in Their Apartment). Many critics panned the reference and the quality. In his book The Success and Failure of Picasso (1993), John Berger said of the Delacroix series, ‘It remains a technical exercise…If there is any fury or passion implied at all, it is that of the artist condemned to paint with nothing to say.’

A vibrant secondary market means more money for primary art and more artists supported. The major downside of having a few major buyers comes if they stop buying. This will happen when Qatar and the museums in Abu Dhabi, plus a few Chinese billionaires, complete their purchasing programmes. There may come a time when many works come up for auction with high reserves and go unsold.

Don Thompson is the author of The Supermodel and the Brillo Box (Palgrave Macmillan) and The $12 Million Stuffed Shark (Aurum).

YES

Tim Hunter

People instinctively like record breakers: the fastest man, tallest building, or longest winning streak. Records provide us with a frame of reference and a benchmark by which to judge what has gone before as well as what lies ahead. Records, we are often told by sportsmen, are there to be broken: they can inspire greater performances and provide a target to aim for.

When Jussi Pylkkänen, the auctioneer at Christie’s recent sale in New York on 11 May, brought the hammer down on Pablo Picasso’s 1955 Les Femmes d’Alger (Version ‘O’),it set a new world record price for a work of art sold at auction. This was the latest in a recent spate of record-breaking sales that we have come to expect from the two main auction houses. The new record eclipsed the price achieved for Francis Bacon’s triptych Three Studies of Lucian Freud (1969), which made $142 million in November 2013.

The frequency with which these records are broken in the post-war and contemporary sales has somewhat detracted from their importance over recent years and may have led to a degree of cynicism for this much hyped area of the market. Yet this new record is significant. Prior to this sale, the previous record (after inflation has been taken into account), was not the Bacon, but a picture that had sold 25 years previously: Van Gogh’s Portrait of Dr Gachet (1890), that made $82.5 million (equivalent to $148 million today) when it was offered at Christie’s in May 1990. It is only with the sale of Picasso’s Les Femmes d’Alger that we are, in Pylkkänen’s words, ‘in new territory’.

It could be argued that breaking records at the top of the market, where only a handful of the world’s super rich can compete, bears no relation to the rest of the market, or to life in general, but this is not quite true. Record-breaking sales are a talking point for the general public and are seen, however erroneously, as a barometer for the health of the art market as a whole. They can encourage new consignments from owners wishing to take advantage of favourable market conditions and at the same time publicity may tempt new bidders into the market at different levels. The glamorous and theatrical evening sales at the major auction houses are a showcase for the wider market and we should enjoy the spectacle.

There is, of course, a danger of confusing high prices with aesthetic value; as Oscar Wilde put it, of knowing ‘the price of everything and the value of nothing’. Christie’s described the Picasso as ‘a supreme masterwork, a painting that may rank alongside any highlight of the artist’s career until that point, and one that remained unsurpassed thereafter’. A work of art is not great because someone will pay a record price for it; however record prices are often paid, as in this case, for great works of art.

We should not be bashful about this. $179 million is a staggering amount of money and I am sure we can all think of much worthier causes on which such a sum could be spent. When viewed from an historical perspective, however, the fact that exceptional artworks command enormous prices is nothing new. Art should be enjoyed by everyone, but commissioning and collecting art has always been the preserve of the wealthiest in society, from kings and prelates, to industrialists, oligarchs, and even nation states. Nor can one invoke the argument that these works are lost to the public for generations: many high-profile purchases end up on loan to blockbuster exhibitions, as part of museum bequests, or as permanent attractions in one of the many private museums being created all over the world.

Far from making art more obscure and less accessible, the general rise in prices has created calls for more regulation and transparency in the art market. Art purchased in part for investment has led to the development of sophisticated finance products to help clients manage their collections more efficiently. Enlightened governments, meanwhile, have encouraged art philanthropy by granting selective tax incentives. Record breakers are good for the market in a variety of ways and deserve to be celebrated.

Tim Hunter is the Vice President, Art Financing at Falcon Fine Art.

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