Larry Gagosian, billionaire

By Felix Salmon
April 8, 2011
Artelligence conference, and interviewing art collector Adam Lindemann for a Reuters video.

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On Wednesday, if all goes according to plan, I’ll be attending Marion Maneker’s first Artelligence conference, and interviewing art collector Adam Lindemann for a Reuters video after he and his wife have delivered their talk on “the truth and fiction of art as an asset class”. I’m also very much looking forward to the panel on art funds, which I hope includes one or two die-hard skeptics. (If it doesn’t, I’m willing to pinch-hit!)

The art market is becoming big business these days, as Kelly Crow’s business-minded profile of Larry Gagosian attests:

Dealers who track how he prices his gallery shows estimate he sells upwards of $1 billion worth of art a year…

He flies in a roughly $40 million Bombardier Global Express private jet and has a personal chef on call at his Madison Avenue headquarters. He has homes in New York, the Hamptons and St. Bart’s in addition to his home in Los Angeles…

Mr. Gagosian now needs to supply about 60 distinct shows a year with fresh art…

Mr. Gagosian employs a far-flung staff of close to 150, many hired from auction houses, museums and banks, to manage his empire. Sales directors at each gallery are assigned a few artists apiece, like account managers. In London, for example, Millicent Wilner, who has the account for Mr. Hirst, says she calls or emails the artist daily. Directors earn a 10% slice of the gallery’s commission whenever they close a sale, and a New York gallery director for Gagosian, Sam Orlofsky, said his colleagues often jockey for the right to sell the most coveted pieces in any show. “Sometimes it feels a little ‘Glengarry Glen Ross,’” Mr. Orlofsky said…

Plans are on hold, for now, to expand anywhere else, Mr. Gagosian said. He conceded he did some “exploring” in the Middle East last fall when he exhibited roughly $1 billion worth of art from his personal collection in a new pavilion on Abu Dhabi’s Saadiyat Island.

As Maneker points out, part of what makes Gagosian special and allows him to charge seven-figure sums for just about any artist he feels like anointing is not so much his pull with artists but rather “his control over a body of collectors willing to pay his prices because of Gagosian’s track record”.

At any given point in time, there are probably dozens of collectors who can be phoned up by a Gagosian gallery director uttering the magic words “Larry thinks you need this”, who will agree to buy whatever it is, on the spot, on the strength of nothing more than an emailed JPEG. Part of that’s due to Larry’s great track record in the past; part is also surely fear that if they say no, they’ll lose their precious privileged access to his artists.

The weird thing about this phenomenon is that the people buying into it know that it’s a bubble:

The dealer says he “lives in complete denial” about a successor. It’s a critical issue, since Mr. Gagosian plays such a central role in elevating and maintaining the amount paid for his artists’ work.

When asked what would happen to the market prices for Mr. Gagosian’s artists without the dealer there to support them, Jose Mugrabi, a major Warhol dealer who sometimes consigns pieces to Mr. Gagosian’s shows, said simply, “I shudder to even think of it.”

This bubble is hard to burst: David Segal, in a wonderful profile, hinted that there might be serious trouble at the gallery during the height of the financial crisis, but that didn’t last long, and now the Gagosian preeminence seems more solidly entrenched than ever. In the short term, that’s good for the contemporary art market: Larry simply won’t allow it to collapse, so it won’t. But in the longer term, as we all know, the longer that bubbles inflate, the nastier their bursting turns out to be.

One thing I haven’t seen anywhere is Forbes or anybody else taking a crack at estimating what Larry Gagosian’s personal net worth might be. Given that he’s the price-setter for most of the art that he owns, there are obvious problems in any such calculation. But when Crow says that Gagosian has “a lifestyle on par with his billionaire clients”, that might well be because he’s just as rich as his billionaire clients. And I’m quite sure that every major museum in the world is quietly trying to cultivate him in an attempt to get a significant bequest of whatever art he might be happening to hold when he dies.

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