Museums and the Financial Crisis (Update # 8)

In what can be seen as an omen of what is still to come, three stories this weekend sum up how the financial crisis will affect the so-called “art world.” From the Seattle Post-Intelligencer:

When Seattle Art Museum Director Mimi Gates announced her retirement in June, she was credited with striking an agreement with Washington Mutual whereby SAM was able to afford its 2007 expansion by sharing real estate with WaMu. What a difference a year makes. If SAM and WaMu are joined at the hip, can SAM flourish as WaMu falters? Museum spokeswoman Nicole Griffin says yes. “Everything is in transition,” she said, “but we feel confident in the provisions of the lease agreement.”

We’ll see about that. In today’s NY Times, Edward Wyatt reports that the Los Angeles Museum of Art (LACMA) has received a $45 million cash gift for a Renzo Piano pavilion and $10 million worth of artworks from Lynda and Stewart Resnick. This is good news, the bad news:

Cultural institutions have been left wondering in recent weeks what will become of some of their largest financing sources as a national economic crisis unfolds. Four prominent financial institutions that were significant contributors to museums and arts programs — Bear Stearns, Merrill Lynch, Lehman Brothers and Washington Mutual — have shut down, been acquired or seized by regulators.

Maybe LACMA can deaccession some of its collection. Speaking of deaccessioning, the Washington Post reported on Friday that:

The Corcoran Gallery of Art plans to sell 10 paintings from its permanent collection at a public auction in December as a first step toward refining the museum’s focus and providing funds for purchasing future works.

More on the Corcoran deaccessioning on Clancco’s Deaccessioning Blog.

UPDATE 8: Oct. 15, 2008. Two good articles on this topic in today’s Art Newspaper. Josh Baer writes:

Speculation in young artists is over, and the smaller dealers will be hurt the most. …The theory: speculation in art (and young art) is over. When several guaranteed Rudolf Stingel works failed to sell at auction last winter, it signalled the end of a certain kind of buying of art. It wasn’t just the sub-prime crisis–it was a signal of something far more important.

One (possible) good thing coming out of this financial mess:

Perhaps a return to the importance of museums, critics and alternative spaces for validation and the introduction of new art.

Lindsay Pollack on the bright side of the financial crisis:

“The crisis is quite good for dealers as it means we are being offered high quality paintings which we can sell by private treaty,” says New York private dealer Nick Maclean. “If the market slides, people are afraid to put things out there into a free market where there’s a fear the money won’t be there to prop it up,” adds New York art advisor Todd Levin. “The last thing people want to do is to watch it flame out in a public fashion.”

On the flip side:

[O]bservers of the art market see reason for worry, suggesting the swollen pool of art buyers is bound to thin as quickly as bankers’ bonuses. “Collecting is an exciting diversion for people who are enlarging their personas,” says William Goetzmann, director of the International Center for Finance at Yale’s School of Management and former director of the Denver Museum of Western Art “But when you have a crisis that forces them to spend more attention and focus on the business problems at hand, it’s a question whether they are going to maintain that level of excitement for works of art.”

UPDATE 7: Oct. 9, 2008. From today’s NY Times, Sales Underwhelm at Art Auctions.

Adding to speculation about how the worldwide economic downturn will affect next month’s big auctions in New York, two sales abroad drew disappointing numbers. On Tuesday an auction of Islamic and Indian art at Christie’s in London sold just 47 percent of its 439 lots, Bloomberg News reported.

UPDATE 6: Oct. 6, 2008. From the BBC:

Asia’s contemporary art market suffered a blow at the weekend as bidders failed to buy several paintings at a major Sotheby’s auction in Hong Kong.

UPDATE 5: Oct. 6, 2008. From today’s Earth Times:

The booming market for Chinese art appears to be the latest victim of the global economic downturn, a Hong Kong news report said Monday. A Sotheby’s auction of 20th-century Chinese art Sunday in Hong Kong saw 71 of the 110 lots go unsold, the South China Morning Post reported.

And this from yesterday’s Boston Globe:

Arts organizations across the state say they’re bracing to hear from more donors… generous and loyal givers squeezed by the economy. To prepare, they’ve been making lists of potential cuts, enacting hiring freezes, and shifting reserve funds so they’re better protected and easier to get at.

“Because so much of the fund-raising everywhere in the last five years has come from the financial world, I think it will color all of your planning,” said Hans Morris, president of Visa Inc. and head of Mass MoCA’s finance committee. “If I had [potential donor] who had been at [collapsed firm] Lehman [Brothers], I wouldn’t call right now.”

UPDATE 4: Oct. 3, 2008. The Guardian’s Jonathan Jones on why the art bubble will burst:

But I can’t help thinking there is a disturbing analogy between the credit culture that has come crashing to a halt and the inflation of reputations in contemporary art. As we enter another London autumn with another wave of the latest geniuses, maybe some controls need to be brought in to prevent a similar failure of credit undermining the art world. …The credit boom in art is far from over. It will go on – until it ends. But current events are proving that everything ends: even capitalism.

And from Reuters, this on the cooling off of the Chinese art market:

The bullish Chinese art market will likely come under increasing strain in the coming months amid the bleak global economic outlook, say dealers and market participants ahead of major seasonal sales in Hong Kong….Sotheby’s shares have dropped 22 percent in the past three months, and 61 percent over the past 12 months.

UPDATE 3: Oct. 2, 2008, From The Art Newspaper:

There are still those who profess to believe that there are markets that can continue to operate in isolation; auctioneers and dealers have been saying for months that buyers from growing economies such as China and Russia can make up for the likely retirement of western buyers. But news of Lehman Brothers’ collapse didn’t only see the Dow Jones fall 500-points: Asian stocks nosedived (the benchmark Shanghai Composite Index closed down 4.5% on 16 September), and on 17 September trading on Russia’s main stock exchange–one of the best performing indexes in recent years–was suspended following sharp falls in share prices prompted by the news from Wall Street.

UPDATE 2: Oct. 1, 2008, From Bloomberg.com:

Lehman Brothers Holdings Inc. owns about 3,500 contemporary artworks that have been displayed in the investment bank’s offices around the world, and the fate of the collection is unclear.

UPDATE 1: According to The Gulf Times, dismal sales at the Lyon and Turnbull auction signal a collapse in the contemporary art market.

To the gathered dealers, there was no longer any scope for optimism. The sale, or lack of sales, was incontrovertible proof that the money-spinning contemporary art market has collapsed into what one shocked expert called: “a bloodbath”. Moss’s picture did later sell for £33,600 – just above its low estimate – after the dealers hit the phones to drum up business. That did little to lift the gloom at the sale by the auctioneers Lyon and Turnbull in central London as even work by popular graffiti artist Banksy struggled.

Another blood-inscribed piece by Doherty, as well as work by Sean Scully, Sam Taylor-Wood and a host of other artists also failed to reach their reserve prices.

The sale’s outcome will send a chill through the art world, despite a headline grabbing auction by Damien Hirst just two weeks ago, which netted the artist £111mn at Sotheby’s.

Tags: deaccession, Deaccessioning