Jonathan Binstock is the head of Citibank’s art advisory and finance operation — the shop which was famously founded by Jeffrey Deitch. Recently, he put out a four-page research report on Gerhard Richter. According to Binstock’s report, Richter “has recently emerged powerfully as the next great market force among the tradition of 20th century painters including Pablo Picasso, Willem de Kooning and Andy Warhol”. What’s more, “it is clear that he is in the process of being catapulted to a rare and illustrious realm of authority”. And he turns out to have been a great investment, as this chart from the report purports to demonstrate:
Binstock was kind enough to agree to come in to Reuters to talk about this report, which I’m not really a fan of. For one thing, I don’t think there’s much in the way of meaningful information in Binstock’s chart, and I think it’s incredibly dangerous to make it seem as though artists are investable assets which can be compared in some way to the S&P 500. Binstock says that he’s “trying to bring a level of financial professionalism to the project”, but I’m pretty sure that most of my readers would be able to come up with two or three ways off the top of their heads in which the above chart is unprofessional.
In any case, Binstock is very much part of the way in which the art world is turning individual artists, like Gerhard Richter, into asset classes. When I asked if his phrase about Richter “being catapulted” was a classic momentum-trade analysis, Binstock replied that “yes, he’s being catapulted, and I think that’s an imprimatur that comes now from the market”. In other words, Binstock is now lumping Richter in with Picasso, de Kooning, and Warhol just because Richter paintings are selling for large and ever-increasing sums at auction.
But here’s the thing: Picasso, de Kooning, and Warhol aren’t just good artists, they’re important artists — among the most important of the 20th Century. They permanently changed the way we look at and think about art: what it is, what it can do, what it should look like. Richter’s no slouch on that front, but he’s not in their league, and never will be. What’s more, there’s a very clear distinction between Richter’s important art, on the one hand — think fuzzy black-and-white paintings interrogating Germany’s attitudes to its own history — and his expensive art, on the other. Here’s how Binstock describes the expensive art:
A particularly desirable series of abstract paintings from the late 1980s and early 1990s provides an excellent case in point. The artist made a stunning array of these in a convenient easel size of roughly 48 x 40 in (122 x 102 cm) — domestically scaled objects with overwhelming wall power. Their beautiful rubbed surfaces are among the most delectable of all Richter’s abstract conceits. A red and blue example, sold at the same Sotheby’s sale mentioned earlier, brought $6.3 million, an extraordinary price for a painting that might have been $2 million in late 2007. Indeed, another painting from the series, primarily white and especially creamy, made $1.8 million in October of that year.
Check out the adjectives: “convenient”. “Domestically scaled”. “Wall power”. “Delectable”. “Especially creamy”. This isn’t art, it’s interior design for the private-jet crowd. Binstock is talking here about what he calls “the mid-market”, which he defines as paintings in the $1 million to $5 million range. (Yes, $5 million is now officially the new middle market.) The middle market is where you find apartment-sized, instantly-recognizable paintings which look nice above the fireplace.
Picasso, de Kooning, and Warhol all faced art-world opposition to what they were doing: they were breaking rules, creating something challenging and new. It took a long time for the art world to embrace them, and to this day their work still carries a frisson of transgression. Richter’s expensive art, by contrast — the colorful squeegee paintings, or the beautiful candles — is perfectly calibrated to middlebrow taste, and has never been remotely controversial.
Remember that when we’re looking at extremely expensive art, we’re looking, pretty much by definition, at the art which is most coveted by incredibly rich men. (That’s why paintings of women have always sold for much higher sums than paintings of men.) And while your typical incredibly rich man might well have a lot of sophistication when it comes to arbitraging the capital structure of potential takeover targets, his taste in art is most likely to run very much in line with Matisse’s famous quote about how a painting should be like a comfortable armchair. Richter’s “beautiful rubbed surfaces” sell at a premium for exactly the same reason that the apartments at 15 Central Park West sell at a premium: they’re modern yet timeless, incredibly easy to live in, and utterly inoffensive.
This didn’t make it into the video, but Binstock and I talked a bit about Richter’s mirror paintings, and he told me about a blood-red piece which sold at Sotheby’s in London a couple of weeks ago for about $750,000. He loves that work; I, too, am very partial to the Richter mirror paintings, especially the room devoted to them at Dia: Beacon. But the mirror paintings are very much at the highbrow end of the Richter spectrum, which means that they barely even count as “middle market” as far as the Richter money-scale is concerned.
I therefore had to ask Binstock about the famous declaration by Tobias Meyer of Sotheby’s that “the best art is the most expensive art because the market is so smart”. Binstock said that “in some cases”, Meyer is correct, but he then reversed himself, noting that “you can buy a Velásquez for a lot less than a Richter”. How does that make any sense? “It’s a question of supply and demand,” said Binstock. There might be a much greater supply of Richters than of Velásquezes, but, he said, “there’s much more demand”.
It’s worth quantifying this for a minute. I went on to Artnet to see how many works by Velásquez had sold for more than $100,000 in the history of its database: the answer is three. There’s the portrait which sold at Bonham’s in December for $4.6 million, and then there’s one other portrait, of Saint Rufina, which has sold twice: at Christie’s in New York in 1999 for $8.9 million, and then again at Sotheby’s in London in 2007 for $17 million.
Richter, by contrast, has no fewer than 545 works in the Artnet database which have sold at auction for more than $100,000. If you want a Richter, and you have the money, it’s trivially easy to buy one: you can get one directly from any number of art dealers, or you can just wait until the next round of art auctions, where I’m sure a lot will be available for sale. Even so, there have been 15 different Richters which have sold for more than $10 million since 2007; two of them beat the $17 million Velásquez figure in 2011 alone. There are so many Richters for sale these days that the tenth-most-expensive Richter to sell at auction in 2011 still managed to bring in $5.7 million; in total 108 Richters sold at auction in 2011, at an average sale price of $1.85 million apiece.
Is it really possible that demand for Richters is so much greater than demand for Velásquezes that Richters can flood the market and still sell for more than $20 million, while Velásquezes, which come along once a decade or so, fetch only $4.6 million? That’s what the market is telling us. But I don’t think that the laws of supply and demand are particularly useful here. In many ways, the high prices we’re seeing for Richter represent a liquidity premium, and also the way in which rich people are happier dropping enormous sums of money on art if those sums have already been ratified by dozens of other transactions at similar valuations.
If you look down Wikipedia’s list of the world’s most expensive paintings, there’s certainly a fair few pieces by artists who come up for sale only rarely — Klimt, van Gogh, Titian, Pontormo. But they’re very much outnumbered by Picassos and Warhols with quasi-commodity status. And if you want to be charitable to Binstock, that’s really all he’s saying in his research note: that Richter is becoming a commodity just like Picasso and Warhol, and that the commodification of an artist is generally accompanied by a significant increase in that artist’s valuations.
I would never encourage speculating on the art market: it’s a rigged game, which you’re almost certain to lose. But if you really want to do it, here’s a tip: buy work which (a) is instantly recognizable as coming from the artist in question; (b) looks great when hung on the wall of an expensive apartment, and (c) comes from a fecund artist with a massive output. Oh, and if you can, get a painting with lots of red in it. And remember, you’re not buying great art, or art you particularly love. You’re second-guessing, buying the kind of art you hope that billionaires are going to covet in the future. It’s a pretty soul-destroying exercise, with a low probability of success. But if you’re the kind of person who marks your art collection to market, you probably don’t have much of a soul to begin with.