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chux03
11th September 2008, 20:09
Sep 11th 2008

From The Economist print edition

Talented, greedy and utterly confident, Britain’s biggest-selling artist hopes to overturn the basic laws of economics as well as the rules of the art market
AP

SOTHEBY’S is awash with colours. Pink. Turquoise. Orange. Red on the left. Blue on the right. But it is only when you reach the first floor that you hit the bling. Two burnished gold cases hang on the wall filled with manufactured diamonds as big as your thumb, and in the centre of the room the pièce de résistance, “The Golden Calf”, a creamy-coloured bull with a curly pelt and testicles like rugby balls, all lovingly preserved in formaldehyde and crowned in gold, with golden horns, golden hooves and a golden crown.

“It’s mind-blowing,” says Damien Hirst, the 43-year-old artist who created the Midan calf and the other pieces waiting to be auctioned at Sotheby’s London headquarters in New Bond Street. Dressed fashionably in black, with rings on his fingers and shades on his nose, Mr Hirst is an impish figure with a strong streak of humour. But even he is momentarily silenced before the scale of the display. “There are so many things coming from so many directions. Can’t be normal, can it?”

No, it can’t. Auction houses like Sotheby’s and its rival, Christie’s, traditionally sell only art that has been bought and sold before. Even their sales of modern and contemporary art usually exclude anything that is less than five years old. To mount an auction of new work by a single artist and in such quantity—223 lots estimated to bring in at least £68m ($120m)—looks like bragging. Yet on September 15th, in the early evening, Oliver Barker, Sotheby’s youthful international specialist, will bring down his gavel on the first lot, a colourful triptych of butterflies and diamonds entitled “Heaven Can Wait” that is estimated to sell for up to £500,000. The auction is so big it will take two days to get through. The accompanying catalogue comes in three volumes, and is encased in its own slipcover. Such a sale has never been attempted before.

Only the brave sell at auction, for it is impossible to control who buys or what price they will pay. Some of Mr Hirst’s pieces will sell easily, especially if several bidders descend on the same work at once; others will be knocked down more slowly. Mr Hirst is flooding the market, but he hopes his prices will rise, thereby challenging one of the basic laws of economics. At the same time, he is breaking the art market’s traditional rules. For nearly 20 years his dealers have nurtured his career, placing his work in high-profile museums and in the hands of carefully selected wealthy collectors. By going down the auction-house route, Mr Hirst is now preparing to cut them out. “The final frontier protecting contemporary art galleries from the relentless encroachment of the auction houses has been emphatically breached,” wrote Roger Bevan, an art historian and critic, in an editorial in the Art Newspaper when the sale was announced last July.

Mr Hirst’s dealers are powerful men who are used to getting their own way. Larry Gagosian, a flamboyant New Yorker who first gave Mr Hirst an exhibition in 1996, controls more art space than any dealer in the world: three galleries in New York, one in Los Angeles, two in London, one in Rome. In October he will take on a temporary space in Moscow, and he also has an office in Hong Kong. If he and Mr Hirst’s London dealer, Jay Jopling, founder of the White Cube gallery, should choose to turn against Mr Hirst, lot after lot may fail to reach the prices that his work has come to command.

Mr Hirst is, of course, not the first artist to give his dealers the finger. Picasso did it nearly a century ago. “Le marchand—voilà l’ennemi,” Picasso said of Léonce Rosenberg in 1918 as the first world war was coming to an end. Mr Hirst credits the man he calls his manager, Frank Dunphy, a sprightly 70-year-old accountant, for dreaming up this sale. “Frank has my best interests at heart. Dealers say they do, but they don’t.”

Although Mr Hirst and Mr Dunphy had been working on this auction for 18 months, remarkably nothing leaked out before they were ready. By May the time had come to inform the dealers of their plans. Mr Hirst called his old friend Mr Jopling, while Mr Dunphy called Mr Gagosian. “It sounds like bad business to me,” he says Mr Gagosian told him. “It’ll be confusing to collectors. It’s a bad move.”

By July, when the formal announcement was made, both dealers were ready to put a brave face on the proceedings. “As Damien’s long-term gallery,” Mr Gagosian said through a spokesman, “we’ve come to expect the unexpected. He can certainly count on us to be in the room with paddle in hand.” Mr Jopling chose to refer to Mr Hirst’s much-publicised £50m diamond skull that was unveiled last year, but failed to sell as hoped: “8,601 flawless diamonds notwithstanding, ours has never been a traditional marriage and I look forward to many more adventures to come.”

Sotheby’s motives are easy to understand. In recent years both the leading auction houses have aggressively turned their businesses into global operations, chasing new wealth in Russia, China and the Middle East, expanding their services to include “art advice”, finance, shipping and insurance, and moving into the primary market that has traditionally been the dealers’ turf. Nowhere is this more visible than in contemporary art.
Primary colours

The past 25 years have seen more than 100 major new museums built around the world, each intent on acquiring, on average, 2,000 pieces, says Don Thomson, author of “The $12m Stuffed Shark”, a new book about the economics of contemporary art. With fewer Old Masters or Impressionist paintings coming on to the market, many of these institutions have focused on buying dramatic contemporary work to make their mark. The number of wealthy collectors has also multiplied 20 times, many of them for the same reasons focusing on the only sector where supply is expanding: contemporary art. Everyone who can afford it wants an iconic work, which explains the constantly rising records.

For the auction houses, primary dealing is an obvious way of expanding. In 2006 Sotheby’s paid $56.5m for Noortman Master Paintings, a leading dealer in Old Masters. Less than a year later, Christie’s bought Haunch of Venison, another firm with a high profile, which had been founded by two former directors of Christie’s contemporary-art department. Noortman gives Sotheby’s an entry into the Maastricht art fair, the pre-eminent dealers’ fest; through Haunch of Venison Christie’s French owner, François Pinault, has become the biggest art trader in the market.

In addition, both auction houses have put considerable effort into becoming brokers, putting together buyers and sellers. Many pieces that fail to achieve their reserve price at auction are quietly sold afterwards in “private-treaty” deals negotiated by the auction houses. In 2007, Christie’s chalked up $542m- and Sotheby’s $730m-worth of private after-auction sales, ranking the auction houses among the biggest primary dealers in the world.

Sotheby’s has always kept very close to Mr Hirst. It cemented the relationship in 2004 when it auctioned the contents of Pharmacy, a once-trendy London restaurant. Mr Hirst had a very small share in the venture, but he provided the paintings that hung on its walls and designed all its fixtures. When the Hartford Group, Pharmacy’s then owner, told Mr Dunphy it was preparing to close the restaurant and throw the fittings into a skip, he drove round in a truck and bought everything he could find—the ceiling, doors, windows, flooring, lights, chairs, tables, cutlery, glasses, even the matchbooks—for £50,000.

Sotheby’s Pharmacy auction, at which Mr Barker also presided, was expected to bring in £3m; instead it made more than £11m. (A little-known episode in the Pharmacy story that stuck in Mr Dunphy’s mind would inspire much of the thinking behind the upcoming Hirst sale. One of his accounting clients cashed in a lacklustre Equitable Life insurance policy in order to buy some Pharmacy eggcups; she failed to get them, but Mr Dunphy never forgot the idea of holding a sale in which there would be “something for everyone”.)

Continues here:

http://www.economist.com/books/displaystory.cfm?story_id=12202493