Here’s an idea. If you want the art you should pay for it. Promptly
Artists and dealers can be badly hit by late payments
By Lindsay Pollock. Market, Issue 216, September 2010
Published online: 21 September 2010
Whether the economy has already hit bottom, or is heading for another plunge, these are tough times for art dealers. It’s not enough to merely sell a work. Some dealers are having to fight for their money amid growing evidence that certain collectors are taking longer than usual to pay. “I strongly believe that people have genuinely good intentions,” said dealer Marianne Boesky. “What we’ve seen happen in the past few years is when it comes time to put the cheque in the mail, people may ask themselves: ‘Do I absolutely need this?’”
Trade sources said that collectors generally pay quickly—either immediately or within the standard 30 days. But there is a growing contingent who take longer to pay, or worse yet, cancel sales. While this can be problematic for secondary market dealers, it can be fatal for primary market galleries. Dealers say delayed payments can cause artists to wonder if the gallery has been paid, but hasn’t turned over the funds to the artist.
Here’s an unhappy scenario: a young gallery, with nearly empty coffers, hasn’t collected payment on six of the seven sales the dealer closed at a June satellite art fair in Basel. The dealer—who paid all fair-related expenses months ago—needs to cover his rent and overheads. He can’t pay the artist, who needs money for his own bills plus materials for an autumn show. To make matters worse, the dealer must remain calm and detached, while trying to extract payment. “It’s this old-school gentleman thing,” the dealer told me. “You don’t want to appear desperate.”
This sort of behaviour is less tolerated in other industries. High-end fashion houses require a deposit to pre-order a coveted handbag or next season’s coat, says Jackie Noble, manager of Manhattan’s designer Mina boutique and the Albright Fashion Library. “There is a certain element of trust, but we always make sure there is some form of payment to vouch for a customer’s financial standing.”
Meanwhile auction houses have tried to tighten up payment procedures. In 2008, as the economy crashed, Christie’s enacted a policy requiring buyers to pay in full before picking up purchases. Previously clients had 30 days to pay. Sotheby’s also offers little wiggle room. The fine print in the back of a Sotheby’s catalogue is explicit: “Payment is due in full immediately after the sale.” Late payers receive calls from the accounts department and even threats of legal action while interest is accrued, say clients.
Lucy Mitchell-Innes, president of the Art Dealers Association of America, said slow payers are less of an issue for blue-chip galleries, who have long-established relationships with their clients, than their younger counterparts—vetting new and untested buyers at art fairs is a daunting task. “They are swimming in Lake Erie,” said Mitchell-Innes. “That’s a very big market environment.”
Extracting funds from wealthy, distracted people with even the best of intentions can be a trial. An acquisitive collector visited Boston’s LaMontagne Gallery. She spotted a work and declared, “I love that piece! I want it.” A gallery associate, Jon Shore, said he reminded the collector she had already bought the piece on her previous visit to the gallery. An invoice, still unpaid, had been mailed weeks earlier.
One way dealers have strived to lock in a speedy payment is to offer a discount, contingent on a quick-pay schedule. But even that is never a sure thing. “You give a discount expecting to be paid in 30 days and suddenly it’s six months,” said Boesky. “You may not have offered the discount if you’d be covering that.”
Some galleries are considering non-refundable deposits, especially at fairs. But in the short term, dealers must remain vigilant about their standards and scruples, and make no compromises for any perceived short term gain. Lucy Mitchell-Innes puts it best: “Not everybody’s money is the same. It’s very important to know what you are doing, who you are selling to. It’s our job as dealers.”
Of course this all means that collectors aiming to curry favour with dealers—which may be important when the market turns up—can do so by paying promptly, now. “Those people are on the top of my list,” said Lower East side dealer Laurel Gitlen.
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