Bonus time for art business?
The return of Wall Street wealth should give New York’s art fairs a boost
By Charlotte Burns and Melanie Gerlis. From Armory daily edition
Published online: 02 March 2011
NEW YORK. It is bonus time on Wall Street and although rewards are not back to pre-2008 levels, bankers with a taste for works of art once again have money to spend at the Armory Show, which opens today to invited guests.
“New York’s financial industry concentrates its bonus pay at this time of year and a lot of spending happens in its wake,” says Gregory Miller, art collector and a managing director at investment bank Greenhill & Co, who is visiting the Armory and Independent fairs this week. Collector Julian Treger of investment fund Audley Capital, who will be at the Armory Show, agrees: “People have a whole bunch of money to spend in February, so March is the perfect time to put it to work—it’s a good moment to have an art fair.”
Is the timing deliberate? “Bonuses are important, but in reality it was about not clashing with the auctions or spring break,” says the Armory Show founder and director Paul Morris, adding: “Though I would love to take credit for thinking of that.” Lucy Mitchell-Innes, president of the Art Dealers Association of America, which opens the 23rd edition of its annual fair, The Art Show, to the public today, and director of gallery Mitchell-Innes & Nash, says: “It’s a happy coincidence that there are fresh things coming to the market at a time when people feel like rewarding themselves, but we didn’t design the fair with this in mind.”
While bonuses are down around 40% compared with the market’s peak in 2007, and some of the bankers will take home more in deferred stock than hard cash this year, “people earning north of $1m won’t be curtailing their lifestyles. Affluent art enthusiasts will continue to have a strong appetite,” says David McCormack, a partner in global markets at Westwood Partners.
America’s art world has historically benefited from the patronage of its great bankers, men such as John Pierpont Morgan and Andrew Mellon. Despite this illustrious past, financiers were more recently associated with the fevered speculation that drove the art market to record prices and the subsequent collapse, and dealers are now coy about confirming the industry’s importance. Nonetheless, “it is a fact—there are successful bankers who buy art and pay for it with their bonuses,” says Thaddaeus Ropac, participating at the Armory Show (P94/1011). “When it is good on Wall Street, it is good on 25th Street,” says Adam Sheffer of Cheim & Read, showing at The Art Show (A16), referring to the Chelsea gallery district.
Just because bankers trade for profit in their day jobs, it does not mean they apply the same tactics to art. “There are a lot of young people in the financial industry who are buying art, but not necessarily speculating,” says Lower East Side gallerist Augusto Arbizo of Eleven Rivington, at the Armory Show (P94/952). He has brought some works for under $10,000 to the fair. This price-point is attractive to financial buyers, say some. “Many of the bonuses going into the art market come from people starting to build their wealth rather than those at higher-priced levels,” says Michael Moses, founder of the Mei Moses Fine Art Index.
Nonetheless, some pockets in the industry are deeper than others and “people with significant sums to spend are more likely now to go for works by established artists with well-tested markets, which are arguably more solid from an investment perspective,” says Miller.
With fluctuating currency levels, volatile stock markets and widespread inflation concerns, art is increasingly seen as a safe asset. “This idea is spreading,” says Fred Alger, a former Wall Street tycoon and co-founder of new publication The Art Economist. “There is no question that both the rising stars and the established ones represent a fine store of value.” Events this week are focusing on this potential, including the panel discussion “Everything you can’t afford to not know about art as an investment”, due to be hosted on Wednesday morning by Montage Finance. “There will be plenty of bankers in the room,” said Montage founder, and former hedge-funder, James Hedges, prior to the event.
The increased liquidity and confidence of the city’s financiers does not, however, necessarily mean a gold rush at the 13 New York fairs this week and numerous gallery shows. “You’re either an art buyer or you’re not,” says McCormack.
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