Anatomy of an art fair: how the sums add up
Staging a major art event is pricey, but the income more than compensates
By Melanie Gerlis. From Art Basel Miami Beach daily edition
Published online: 07 December 2012
Although it is notoriously pricey for galleries to attend major art fairs such as Art Basel Miami Beach, with dealers moaning variously about the cost of stands, travel and transport, little attention has been paid to what has to be forked out by the fairs themselves.
No official numbers are given for the cost of running an art fair, but the major outlay is on venue hire, plus labour, and marketing. For the established fairs, the venue can set them back a good $500,000 before any kitting out (walls, lighting, signage) has begun, and then there are the labour costs to consider (in Miami, these are relatively high). “One way or another, it’s an expensive proposition to build the show,” says Marc Spiegler, the director of Art Basel.
Marketing costs are the most elastic. “They can be as little or as much as you want,” says Tim Etchells, the co-founder of Art13 (which launches in London next year) and one of the original founders of ArtHK. Excluding other overheads, such as staff salaries, these tend to account for at least 25% of fairs’ expenditure budgets, and include servicing the needs of VIPs, as well as the posters and PR needed to bring visitors and galleries to the fair. These costs are rising as visitors become more discerning. “The days when an art fair was just a flea market on steroids are over. Now everything has to be of a high standard,” Spiegler says.
For the established fairs, there are essentially three income streams to balance costs: fees paid by the exhibiting galleries make the biggest contribution, followed by sponsorship and then ticket sales. Organisers are, again, tight-lipped about the exact numbers, but galleries showing at Art Basel Miami Beach pay $685 per sq. m, so with an average stand size of 80 sq. m in the main fair, the total income from the 200 exhibitors equates to nearly $11m. (At Frieze, the cost per sq. m is higher but the average stand size is smaller, so it pretty much evens out.) The fee includes “certain services and build out of the stand”, says a spokeswoman for Art Basel, meaning that a basic wall structure, technology and lighting are included.
Sponsorship is the other important income stream for art fairs, and for those with big-name banks in tow, this can mean nearly $1m a fair from the main sponsor alone. Other supporters, such as those who provide cars or hotel rooms for VIPs, offer more of a “payment in kind” service—one VIP car can be worth more than $1,000 once the drivers, fuel, parking and other costs are taken into account, so this can be a more useful form of sponsorship for all involved. As well as its main sponsor, UBS, Art Basel Miami Beach lists 18 other “sponsors and partners”, including BMW, the Raleigh Hotel and Ruinart champagne.
The amount raised by ticket sales is difficult to gauge as it depends on how many visitors actually pay to get into the fair (and to what extent these visitor numbers are massaged). But if half of the expected 50,000 visitors to Art Basel Miami Beach were paying this year’s full-price day charge of $42, then that equates to another $1m in the fair organisers’ coffers.
For the satellite fairs (of which there are again nearly 20 in Miami this year), the marketing spend comes in lower, as they are partly riding on the coat-tails of the main events. Spiegler says Art Basel has “dozens of people working around the world to bring collectors and exhibitors to the show”—something the surrounding fairs don’t need to do. Perhaps this is one reason why so many satellite fairs seem to survive, while regional events appear to be more fragile.
The smaller events are run with less money, though, so they are more vulnerable to the slings and arrows of each year’s edition. “We’re not making a quick buck; it’s a massively capital-intensive exercise,” says Cornell DeWitt, the director of Pulse (the Ice Palace, 1400 North Miami Avenue, until 9 December). He says that his event, also held in New York in May, is profitable, but this can change “from fair to fair”. The added insecurity for satellite fairs is finding a regular venue. This year, Art Asia Miami and Scope (both until 9 December) have moved from Wynwood to 36th Street in midtown Miami. “There are around half a dozen new fairs in Miami every year, so we’ve had to work carefully to get a long-term lease,” DeWitt says.
The bottom line is that once a fair is deemed a success, organisers can manage the costs and income to their advantage. Etchells, who sold ArtHK to Art Basel in 2011, says fairs are generally managed to make a profit in their second or third year. “You expect to lose money in the first year [to build the brand],” he says. “The challenge is not to invest so much in this phase that you can’t pay it back.”
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