The Art World: What If…?!, Season 3, Episode 6 with Allan Schwartzman
After a long, news-filled summer, host Charlotte Burns reconvenes with founder Allan Schwartzman to take stock of an art market that feels… different. From major shifts at the auction houses and slowing sales at international fairs to a mounting list of gallery closures, this episode digs into the forces reshaping today’s market. What does contraction mean for artists—especially those losing representation—and for collectors trying to buy wisely without feeding speculation? And why is keeping artists at the center of the conversation more urgent than ever?
What if this reset isn’t just a slowdown, but the beginning of a new art economy? Listen in for clear signals amid the noise—and where the art world could go next.
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Transcript:
Charlotte Burns: Hello, and welcome to The Art World: What If…?!, the podcast that imagines new and different futures.
[Audio of guests saying “what if?”]
I’m your host, Charlotte Burns, and in this episode, I’m joined once again by Allan Schwartzman. Together, we turn our attention to the art market at a moment of turbulence. From gallery closures to exposés to new beginnings, we’ll unpack what’s been happening, talking about what it means for the artists at the center of it all—and what Allan thinks might come next.
[Musical interlude]
Charlotte Burns: Allan, welcome back. Thank you so much for being here.
Allan Schwartzman: Thank you, Charlotte.
Charlotte Burns: So, today it's all things art market. It's been a long summer. There's been a lot happening, and I thought it would be a good moment for us to reconvene, shake off some dust, and talk about what's been happening, where we're going, and what it all means.
How does that sound?
Allan Schwartzman: Great. Excellent.
Charlotte Burns: So, the summer's usually a slow season, but there's been quite a lot of news coming out. Has anything particularly stood out to you?
Allan Schwartzman: Well, I guess it began with [Art] Basel, which was a fair that was noted for hearing about very few galleries that did well. I think there were few galleries that did extraordinarily well on the first floor, but many did not do well. Upstairs on the second floor, where the more contemporary galleries are located, did not seem to do much business at all. It was pretty dead up there.
What really stood out for me, going around the fair, was how few Americans there were. There were very few American collectors. I saw maybe eight, and three of them were my clients. I'm sure there were more, but not substantially more, because all the dealers commented on it to me.
So, I think there's been this overall exhaustion in part because there's been so much growth for many, many years, and we've become accustomed to and expect continual growth. And that's a fallacy. I think we're in a very different phase now, and we're perhaps at the beginning of a much longer phase of a kind of shrinkage to the art market, and there's a lot of disruption economically, globally, politically, and there's a lot of war, and threat of war, and all of this has an impact on people and their appetite for transacting, for even for looking.
Right now, I have a client who’s meeting with this weekend to go and see shows.
Of course, it's the very beginning of the season. There's very little to see, the museums are down. So, we've yet to see what this season will look like and how it will feel.
Charlotte Burns: With Basel, I've heard the same as you. A lot of dealers had a really tough time. I did hear the occasional dealer, one dealer said to me that, and they whispered it because they'd actually had their best Basel ever. And they said it wasn't them, it was someone on their team who they are very grateful to for being so phenomenal at corralling everything and making it happen. There's this real sense of the unknown, I think, with art dealers.
Let's take it fair by fair. Before we get into the kind of big global picture, because you've scene set for us so well there. With Basel, we're in September now, we're going into October, there’s gonna be another Basel in Paris. Do you think that with that particular fair, it's an instance of robbing from Peter to pay Paul, that the Swiss fair is down because of the Paris event? Do you think the Paris event will be more popular, or do you just think it's a broader market thing, that there are too many fairs?
Allan Schwartzman: There are definitely too many fairs, and there are too many fairs that are concentrated in the hands of basically two businesses who are competing with one another. And so, that seems to drive, to a certain extent, which galleries participate in which fairs. Sometimes there are galleries that will participate in fairs that they're not so interested in, but that's their gateway into the bigger fair.
And it's exhausting.
I mean, they were fairs in August. There used to be a few fairs a year. Now there are dozens of them, and many that there's great pressure to go experience, and I think at a certain point, when there's so much to choose from, it causes some people to just shut down and feel like there's not an urgency to go anywhere.
I do think that there's a greater appetite, at least on the part of Americans—and Americans are still the largest part of the contemporary art market—to go to Paris, because Paris is a much more appealing place to be spending time. Better hotels, better restaurants. There's more of an excitement about being in Paris. Having said that, the Basel Art Fair will always be the Basel Art Fair in Basel for me. So, they'll end up being perhaps two very different kinds of fairs.
Charlotte Burns: How do you see Miami [Beach] within that? Because the fair's released its exhibitor list. There's some notable names missing from that.
Allan Schwartzman: That's what really stood out for me, was how many galleries that were not returning to Miami. And I think that's in part because a lot of these galleries are challenged in their businesses, and they're having to make choices as to where to go. And each of these fairs, whether you're flying from New York to Miami or New York to Basel, they cost a lot for galleries to set up, to maintain, to keep their staff going, to stay in hotels that require minimum days’ stay with double rates, and so on.
I have not personally been to Miami in several years, and I don't feel the same need to go that I used to feel, even though it's much easier to get to. And that's in part because I have a substantial staff, and everybody wants to go to as many fairs as they can. And so it's easier for them to be going.
We've transacted, I've transacted with clients, but it's usually with works that we were aware of before the fairs and works that we were familiar with and made commitments to prior to the fair or when something comes up, there's always somebody at the fair and I'm able to communicate and see the work through FaceTime and speak to the clients about it. So, we still transact.
Charlotte Burns: The other thing, obviously, with Basel is that it's announced a new fair in Qatar launching in Doha in February. It's its fifth event, the newest show. What do you think that means for the art market? What do you think that represents for the kind of growth of the Middle East? How relevant do you think that is for the participants in the art market?
Allan Schwartzman: I think that remains to be seen. The Basel Art Fair that will be in Qatar sounds to me like it's of a very focused nature, a more curated nature. My understanding is that it will all be solo booths, that it may feel more like exhibition spaces than art fair spaces. I don't know that there are many people from outside the region that would go to the fair just to go to the fair, but there are many that are very interested in visiting the region who have not been. Perhaps that offers opportunity to choose to go at that time rather than another time.
I will say that Qatar has done an especially great job of bringing art from around the world, especially from Europe and the United States, to audiences that wouldn't otherwise have access to it, and they've also created programs within their communities that create a generation of viewers that would not have naturally existed prior to this.
Charlotte Burns: What I'm wondering is whether that era of endless expansion is over, though. We’re looking at the fifth Basel, but we could be talking about something else. We could be talking about Frieze, we could be talking about the gallery business, we could be talking about the expansion of auction houses, whatever it is. But if we are saying that certain events are less relevant, there is an expansion, but also in other areas, as a shrinkage. Whereas perhaps, five or 10 years ago, there was an assumption that there would be another expansion, that there would be another market, that there would be more growth.
Are we just moving pieces around in the market? Are we maybe just moving to look at the Middle East instead of looking at growth in Europe now, or growth in other parts of America? So, maybe Miami becomes less relevant, but the Middle East becomes more so? Is that what you think is happening in the future of that kind of art fair model? That the art fair model's not necessarily going away, but it becomes about finding where there is relevancy and who that's for.
Allan Schwartzman: I think the art fairs are as internationalized as auctions, meaning that the majority of work that sells at auctions, certainly outside of New York and London, is sold to people who never see it until after they've purchased it. So, whether something appears in New York or London or Paris or Hong Kong, the material is accessible to people from everywhere.
So, the auctions are no longer audience-specific. Even if they have their aspects that are audience-specific—like in a British auction, you'll have focus on British art that you won't see elsewhere, or Chinese art in Hong Kong. And I think art fairs are very similar at this point.
Charlotte Burns: You think things are becoming more global and less local?
Allan Schwartzman: I think in terms of auctions, they're certainly more global. In terms of art fairs, the visitorship can become more global. Not necessarily the material itself.
Charlotte Burns: Oh, right. Okay.
Allan Schwartzman: Depends on the fair. Certainly, the fair in Dubai is very focused on art from the Middle East. I would expect that Qatar will be much more international.
Charlotte Burns: We've talked about Basel. Let's talk a little bit about Frieze. Frieze was sold by Endeavor Groups Holding—which has been its parent company since 2016—and it was sold to a new events and experience company founded by Ari Emanuel in a deal valued at around $200 million, which is expected to close in the third quarter of this year. It was a kind of interesting deal because it was sold for more than anyone expected it to sell. Ari Emanuel was involved in the original sale to Endeavor, and now he's back involved. It was Frieze again. So, it seemed a kind of specific deal. What do you think about the sale of Frieze?
Allan Schwartzman: Well, I don't know what impact that actually has on who shows and who goes to see the fairs. Most of what drove the audience and the dealers to Frieze in the early years was Amanda Sharp and Matthew Slotover. Galleries had very close relationships with both of them, both because of their work for Frieze Magazine, which is where they began, which was a nonprofit, but also because they did such a great job of developing relationships. There were many dealers that spoke about not wanting to continue to do Frieze after the early years, but feeling obliged to because of those relationships. Then they created Frieze Masters to keep Frieze alive, and then they created New York to keep Frieze London alive. And then they created Los Angeles to create yet another area of excitement.
So, it seems that the fair kept expanding to stay alive rather than to grow naturally. A lot will depend upon who's actually running those fairs and what convening power they have. It's hard to imagine that a fair like Frieze will be able to maintain that same level of commitment and drive if the sales aren't there just because of the relationships.
It's like a gallery. Very few galleries are able to sustain multi-generational ownership when they're not dynastically owned by families. And so, I think what we can find something similar within art fairs that without the original founders behind the fairs, there's less of an ongoing commitment to those fairs. The decisions of galleries, whether or not to participate, they'll likely depend much more on whether they've been able to generate the sales and they feel the need to go to those places, whether they think they'll get a new audience. I do think that the general reduction in galleries' participation in fairs is because, in a period where business is shrinking, galleries will be more selective.
Charlotte Burns: If you had to look into your crystal ball of which regions, which fairs you think will be most relevant to galleries, what if you could predict which are the fairs, which are the regions that you think galleries will keep on their roster?
Allan Schwartzman: I think Basel, first and foremost, is the leader. It always has been, and it remains so. I think Frieze, to a lesser extent, still has significant international presence.
Charlotte Burns: Is there a particular Basel? Is there a particular Frieze? You know, Frieze Seoul, Frieze New York, which kind of iterations of those?
Allan Schwartzman: Well, London will always have the prestige of being the hometown, but I can see where New York has a likelihood of attracting a larger number of, not visitors necessarily, but of actual buyers. It's just a lot easier and more convenient to go to New York, where the fair is a fair, and then all the galleries are a fair.
Charlotte Burns: Yeah, it's like people always used to rag on the Armory, but it was always a solid moment to transact.
Allan Schwartzman: Correct.
Charlotte Burns: Which, of course, Frieze now won't.
So, let's talk a little bit about galleries. A lot of galleries are making tough decisions. Not only which fairs they're going to take part in, but also whether they're even gonna stay afloat. We have in front of us a long list of galleries that have been closing. What started as a trickle in 2023 is now looking much more like a river, and is now much broader in terms of the kinds of spaces that are closing.
What stands out to you?
Allan Schwartzman: Well, the first thing that stands out to me is when JTT closed. I think that Jasmin [Tsou] put together a great program. She was adventurous. She saw ahead of others, artists who had…strong artists that would have a likelihood of lasting and who have, and that's a gallery that was about to move. They had gotten a new space, they were growing, and instead she reached the realization that she had to close. That, in fact, she didn't have the financing to keep the gallery going. That, to me, was extremely sad.
Then, more recently, the closure of Tim Blum's gallery, I think, is a huge moment because Tim is one of the greatest gallerists of our time. He's shown so many great artists and developed, worked closely with great collections. I certainly did a lot of work with him. Things that I'm credited with being an expert in, I know because of Tim. I don't know about Gutai because of Tim, that was developed independently, but, I know about Mono-ha because of Tim. I know about [...] because of Tim. And because he organized museum-quality exhibitions and got access to the greatest works that remained by the artists of both of those movements, we got to see the best of that art. We got to see museum-quality shows, and I was able to place the best works in the [Howard] Rachovsky collection, which is the collection I work on that has been the most focused on that.
So, seeing a gallery like that—a gallery that showed Mark Grotjahn and Takashi Murakami from the beginning—now close at the moment that they were about to open a brand new space in New York, in a what seemed to be a very substantial space, I find that extremely sad. But I think clearly he was faced with seeing what was happening in the market and experienced it himself. He reached the decision that he needed to close.
And so, I think that opened the door for a lot of other galleries, particularly galleries operating at a smaller scale than him, to realize “if I'm continually challenged, I don't have to hold on. I can make a decision to leave if I feel like I can leave with some kind of dignity,” or even not.
We've heard of more closure since then, and I suspect that we'll hear of even more. Having said that, there are many galleries operating at the mid-market level that have found ways to survive and have done it quite well. Galleries like [Andrew] Kreps. So, we'll see. I don't think we're walking into an avalanche of closures, but I do think that there’ll continue to be closures.
[Musical interlude]
Charlotte Burns: You've been navigating the art market for decades. What feels different now? If you think about the gallery scene specifically.
Allan Schwartzman: The nature of what a gallery is, how it gets formed, what it stands for, how it evolves, how it creates pricing consistency, all of that has gone, or certainly most of it has gone.
Charlotte Burns: Yeah, talk me through those.
Allan Schwartzman: I started off, and throughout the eighties and nineties, and going into the early 2000s, certainly up to the early 2000s, a gallery was a place that represented a group of artists. They were usually artists of a certain generation that defined the core of the artistic spirit of that generation, and they would grow and add artists over time. But it was usually in ways that built upon the spirit and the history of that gallery. And a gallery represented 16 artists, 12 artists, 20 artists. They didn't represent 112 artists, which is where we find ourselves now. And so, the idea that an artist would remain with a gallery for decades was very viable.
That started to break down in the mid- and later-eighties as the secondary market grew and as there was a greater…a sense that a lot of art that galleries put a lot of energy into placing well so that it wouldn't reemerge in the secondary market, so that works could be placed in collections where they were likely to go to museums if not outright promised to go to museums. And where there was consistent annual price stability or price growth, that went out the window, and you began to see prices rising to meet the secondary market level.
In some instances, that actually made sense because if an artwork got away from a gallery and from a collector and sold at auction for an extraordinary price, it scared out more material to show up at auction. If a gallery raised the primary market prices to the secondary market level or to close to it, it meant that there was a lot less speculative buying. It was harsh to see prices go up tenfold in some instances, but I think it created stability.
At the same time, it reduced the likelihood of the artists experimenting with what they were creating because they were already feeding a market, and that market had certain expectations. I think it made certain artists more conservative. It created more of an imbalance where some things sold, some things didn't sell, whereas when prices were much lower, shows would sell out. And so, the commercialization of art, I think, has had a great impact on collecting.
Charlotte Burns: Can I ask you a question? If that developed in the eighties, then what happened during the kind of great crash, when Japan pulled out [of] the market, and there was that kind of quiet decade.
Allan Schwartzman: The early nineties?
Charlotte Burns: Yeah, in the early nineties or then again in the .com crash in the early 2000s.
Allan Schwartzman: I should say this, that when the stock market crashed in 1987, there was an expectation—or there was a fear—that money would disappear from the art market. What we saw instead was that demand for art grew at a much more dramatic trajectory, and that was because rich people were still rich and they needed to put their money somewhere. And so you had more and more money going into art. When the market hit a certain crash in the early nineties, the art market, it was because there was too much buying. The very rich weren't challenged in terms of their liquidity, but people who were rich but not, let's say, filthy rich, or perhaps buying more as though they were seeing prices rise, and they got caught up in a kind of investment game that was not the reason that brought them to art collecting.
And so, as you had markets slow down, money got tighter, interest rates rose, that then caused a real halt to buying. And you would find people would still transact when they could see a great opportunity, but action was much slower.
Charlotte Burns: Where did it go from there? Where did it start picking up? Because by 2005, it's great guns again. Is that where we started moving into that new phase?
Allan Schwartzman: I think even before that, it picked up a lot.
There've been these moments of pause, and these moments of pause last a year, two years, not very long, and then it kept growing. So, we're now at a point where the market's just not growing. It's not growing because it couldn't sustain that long-term growth. It couldn't sustain those rises in prices. It couldn't sustain the growth in the number of artists. As demand for art grew, you had a lot more people going to art school and becoming artists and becoming artists with the expectation that they could support themselves from it, which was a much more commercial approach. And some of those were very viable artists. They were thoughtful artists. Maybe they weren't vital artists, but we grew into a professional class, and I don't think that you can multiply greatness.
Charlotte Burns: I read a really great quote by Kerry James Marshall, around his exhibition at the Royal Academy [of Arts] in London, and the interviewer asks him a little bit about the market and recognition and this kind of stuff, and gets a kind of side eye, and Kerry James Marshall says, “Nobody's entitled to recognition. You don't get recognition just because you do stuff. A lot of people do stuff. Nobody at the time I came up ever expected to make a living as an artist. That just wasn't the way it worked. I always thought I would work a job and do the work that I wanted to do on the side when I got off from work.” I thought that was really interesting. And then, he also talked about the market and said, “it's like a Ponzi scheme. The people who get in early always make a killing. People who come in late, just when the bubble's gonna burst, they get taken to the cleaners. It has zero to do with the value or the integrity of the art. It may as well be Bitcoin.”
What do you think of that?
Allan Schwartzman: I totally agree with what he is saying.
I did an interview many years ago with John Baldessari, and he was talking about his students at CalArts, who were the Pictures Generation. This was in the mid-seventies, and they were his students. There was no art market for contemporary art. No one was interested in the work of young artists. John had a certain stature and presence, and he did sell, but not many artists of his generation, meaning the generation after Minimalism, sold particularly well. And John said that he could see a shift in attitude amongst his students when he was teaching that generation, let's say from ‘74 through ‘77. He said that “in my generation, the highest achievement for an artist was to be on the cover of Artforum Magazine. For the generation that I taught, I could see even before there was an art market that the highest achievement for them would be a sold-out exhibition.” So, I think that marks a real shift, and those artists were formed in the spirit and under the values that were John Baldessari’s, but nonetheless, they came of age as artists in the market that began in 1980. And so, they had an expectation of sold-out shows, and you saw a shift in the artist community take place as certain artists became more successful than others. It shifted the social structure. You saw a lot more artists going to benefits. You never saw artists going to benefits in the seventies. In the eighties, you saw a lot go into benefits and appearing to want to live the lives of their collectors.
Charlotte Burns: I guess it's also when art starts moving into the secondary market and you see it getting resold and the artist not getting a cut of that. When things are selling on the primary market for not much money, it's sort of here nor there, but when things are selling for a massive profit and the artists aren't getting a cut of that, that becomes more problematic.
And obviously, there's the argument that artists aren't taking part in the risk. If things aren't selling, the artists don’t get the downside of that either. But when you go through a period of massive growth, like the market has been, the artists become rightly, a little more aggrieved that they're not benefiting from that growth.
I wanna ask you a little bit now about when we see all these closures, how does that impact the artist? You mentioned a lot of galleries now have enormous stables of artists. Even small galleries, represent 40, 50, 60 artists, larger galleries representing well over a hundred. There's a lot of artists, a lot of not great artists, but a lot of good-to-fantastic artists now, not with representation. What happens to those artists in this period of time? Where do they go? What happens to their work? Have we been through a period like this before at this scale, where there are so many artists without representation? There aren't that many homes for them. They're not getting swept up and picked up necessarily. There are a few of them, but not en masse, for sure.
Allan Schwartzman: Well, that's the story that will get written in the coming years. We don't know what's gonna happen to a lot of these artists. I'm fairly confident, I'm sorry to say that the volume of galleries that are closing are not gonna be countered by a growth of new galleries. Most of these artists aren't being absorbed by successful large-scale mega galleries. So, there's a filtering process that takes place. What options there are for artists who don't reach, who don't make it to those galleries is certainly unclear. Certainly in the work that I do, I'm focusing a lot on working with artists and artist estates on legacy planning, and that's precisely to help create long-term life to an artist, particularly an artist who's no longer with us, that might otherwise slip between the cracks.
Charlotte Burns: I was talking to a dealer this morning who said, “Yeah, the market's getting pretty boring. Everyone's out there chasing the same thing, and people want it a little bit more cheaply. It's ‘get me a [Claude] Monet, a [Pablo] Picasso, a certain type of [Jean-Michel] Basquiat’. It's a little bit dull.” That doesn't speak well for artists who are making interesting art either.
I know you spoke about artists who are no longer with us, but what about living artists who are making interesting art? What do you think about their options going forward? If the market's becoming more conservative, is that correlating with what you are seeing in a much more conservative market in terms of what people wanna buy?
Allan Schwartzman: I am not seeing a huge appetite for collecting young artists’ work. We encourage it very much with the collectors we work with. I encourage collectors who are interested in more historical work, even to devote a small percentage of their collecting budget to the work of young artists. I think it's important for collectors of all generations and all degrees of involvement to see art as being the product of a living, evolving being, and not as being something that just appears. And so, I think supporting artists is important. I think providing money for artists when artists are in difficult financial situations is meaningful.
And, I think it's been very destructive to the collecting of the work of living artists to be focusing primarily on prices and numbers and what sells for what at auction. I think that can be very misleading as to what's actually going on, because sometimes an artist doesn't perform well at auction, does extraordinarily well and consistently sold by their primary market galleries, and it's important for a collector involved in contemporary art to be part of a system that supports the idea of creating art and not just of buying products.
[Musical interlude]
Charlotte Burns: Okay, Allan, let's talk about dollar value and price points, which have been shifting downwards in the market. A dealer in classic post-war told me they'd reckon that values are down in that sector by around 10 or 15%. And they also said, “Are we in a recession? No one wants to admit it, but things are pretty tight out there.” They thought that things were much tighter in the contemporary section. Values would be down a lot more. Dr. Clare McAndrew's Art Basel [and UBS Art Market] Report found that values were falling at the top end, both at auction and with galleries, but that there was a higher volume of sales at lower value.
How far down do you think values are? Do you agree with what the Art Basel Report finds, that things are down at the top, so there's a higher volume at a lower value point? And do you think that the contemporary values have fallen further than the kind of classic post-war?
Allan Schwartzman: It, of course, varies artist to artist. Some artists aren't down at all. They continue to rise. But I do think the expectation that prices would continue, would always be rising, was faulty. And we're seeing that impact on pricing. Some of what we're seeing is an impact on appetite, and some of it is an impact on pricing.
We know of galleries that are discounting more heavily than they naturally would have in the past. I think there's a certain resistance to reducing prices, but I do think for a lot of artists who were accustomed to having a show every few years and have it sell out and then have their prices rise somewhat conservatively year after year after year, I think they now find themselves out on the edge of a cliff with nowhere to go.
And so, I think while there's a huge resistance to reducing prices, I do think that a lot of artists and the galleries representing them would benefit from just taking a deep breath and doing some real sharp cutting of prices. One has to make the art accessible to a marketplace in order to support an artist.
Charlotte Burns: I had some really interesting conversations with some dealers recently. They were saying that the place where they were finding wiggle room was in the secondary market because they didn't want to appear to be cutting prices more than the kind of regular-ish amount in the primary space, but that if works were coming back to them, they could cut more than they would typically recommend on the secondary market. So, if a collector was coming back to them saying, “Look, I need to sell this work,” they would say, “Well, we'd like to try and get you this amount, but what we would suggest for a quicker sale is going for this lower figure.” And I was mentioning that to an auction house person, and they had a really interesting take on it; that years ago there was that dynamic between auction houses and galleries where galleries would say auction houses were destroying financial markets for artists, which also meant destroying artists' reputations because they would be burning their careers because the prices would go up too quick, and then people would pump and dump the work because auction houses were accelerating value in an unsustainable way. And this auction person said, “But now you have galleries doing that. If you're pushing primary artists to astronomical figures, then we can't beat that.” You know, auctions can't beat that. The primary market's gone too far too fast for a lot of artists.
If that is the case, what does that mean for the promise of the art market? That it is in some ways a store of value, which is what the auction houses and secondary market dealers have been saying for such a long time, that art is somewhere where you can grow value.
Allan Schwartzman: Well, it's a place that where you have been able to grow value for many decades, and now it's less so. You can in certain select ways, but collecting thrives by buyers who are not looking first and foremost for value. If a gallery takes back for resale the work of an artist they represent, but they say they can only get a price that's substantially below what the collector paid for it, they're sabotaging the commitment of collectors to those dealers because those dealers are saying, “We can't sustain these prices. These prices aren't real.” It's, “we're selling you things for much more than they're actually worth.” And so, that's dangerous. That's rooted in auctions where many things, where most works of contemporary art sell for far less than—this is of course outside of the evening sales—than they would in the primary market.
So, I think the questions arise about why is one collecting art? If one's collecting art primarily for investment purposes, then it's a highly risky place, and one where you have to be, have almost the spirit and the attention of a day trader to do well with it. If on the other hand, one is buying, not for investment, but for long-term commitment with an understanding that they're not buying foolishly, that they're not spending way above what something is worth or if they're spending above what something is perceived to be worth, if they're doing it with intention, with an understanding that work is building the collection more significantly than it's building their balance sheet.
But I think that it's likely that confidence in primary market galleries that can't support the prices for their artists' work is going to result in some less of a commitment to individual dealers than…it used to be that you would have a few collectors that one really trusted and would continue to collect with, and they served a collector well. I think now collectors much more of an independent agent when galleries do not have the ability to sustain the values for works that they've priced at a certain level.
Charlotte Burns: Yeah, it also suggested to me that the gallery needed the money if they were gonna get the work in at that price.
Let's talk a little bit about the auctions. There has been a lot of action in the auctions. There's been something of an exodus from Phillips, and Sotheby's has been the subject of a 12,000-word exposé by Sam Knight in the New Yorker.
Let's start with Phillips. Cheyenne Westfall stepped down as a global chairwoman after eight years. Jean-Paul Engelen has joined Acquavella as a director, and Ed Doman resigned as an executive chairman, joining a consortium of ex-auction execs, including his son, Alex Dolman, Brett Gorvy, Philip Hoffman, and Patti Wong, to form a new consultancy. So, Philips continues under new leadership, but quite drastically changed.
And meanwhile, Sotheby's laundry has all been aired in public, thanks to the New Yorker, which has gone deep into things with a subhead asking “Can Sotheby’s survive its billionaire owner?” Calling [Patrick] Drahi a “wizard of debt”.
Drahi, obviously, bought Sotheby’s in 2019. When he bought it, Sotheby’s was valued at $3.7 billion, and he said he bought Sotheby’s to triple his investment. Around a quarter of the workforce has left. Sales fell last year by 23%—although, as we've discussed, there has been a wider fall in the sector. The holding company managed by Drahi has extracted more than $1 billion dollars in dividends from Sotheby's, mostly to manage its debt load.
In fall ‘24, the Abu Dhabi sovereign wealth fund, ADQ bought a minority stake in Sotheby's for around $1 billion dollars. Moody's has downgraded the company's debt, citing governance concerns and the continued extraction of dividends.
There were Drahi leaks, which also showed that Drahi has invoiced the auction house for the first two years of the contract for $26.4 million for services, including his guaranteeing of works at auction, introductions to banks, and his strategic advice on direction.
And meanwhile, employees past and present have described the business approach as unnecessarily chaotic and Shakespearean.
I guess here the question is a ‘what if’: what if the auction business, as we've come to understand, cannot hold. If the model, as we've come to think of it, is shifting so drastically that there are changes afoot that we don’t foresee. I think we take the auction houses for granted. Do you think that that is just the case, that things will continue forever, that we'll always have the kind of duopoly with Phillips on the side, or do you think things are going to change?
Allan Schwartzman: I think it was always questionable whether the auction world could grow beyond a duopoly. One thing that's not necessarily visible to most people, is that even if, let's say Christie's is doing better than Sotheby's or seems to be doing far better than Sotheby's, most consignors still go to both houses to see what they have to offer and they go where the best deal is, they don't necessarily go where the best expertise is. And so marketing is critical.
When we [Art Agency Partners] joined Sotheby's in 2016, Christie's had taken a take-no-prisoners approach to the market. Christie's went after getting as much great material as they possibly could, and you saw a great imbalance between the evening sales between Sotheby's and Christie's. Christie's having far more of the top lots, and far more of the estates and private collections that would come to market. And Sotheby's, the need to compete in any way that they could, even if they were giving away their profit. And when we came in, we said that that wasn't sustainable. And so let's risk not getting the best material, but at least have the possibility of turning a profit, which meant not having such strong or such equal evening sales. It all meant focusing a lot more on day sales. And what ended up happening is that there developed greater confidence that Sotheby's, which was in a far poorer position, was actually real. That what you saw happen at auction was real. That it wasn't manipulated, and that created greater confidence in the market, and that created the opportunity for Sotheby's to grow more substantially in its presence, which did in fact end up happening.
What happens behind the scenes today? I'm not as plugged in, and I don't pay as much attention to, but I do think that the banner evening sales, even if there are years in which they don't make money, will continue to be the driving force or the forward-fronting face of Sotheby's and Christie's. It's sort of how with a fashion designer, the couture line, even when it makes no money or loses money, is in fact what brings the prestige to the company to ultimately sell the perfume and sheets.
Charlotte Burns: Do you see there will be more change in the ownerships? There's a succession plan in place at Christie's, so that seems to have relative stability, and Drahi has said that he doesn't intend to change. Obviously, ADQ has a minority stake in the company. Phillips is unclear, I mean, doesn't look like there's any announcement that it intends to shift ownership either. Do you see that there will be further change in ownership?
All of them have changed their business model to some extent. Sotheby’s has become more focused on luxury more broadly.
Allan Schwartzman: I don't think there's sexy businesses to buy nowadays, and so it will be harder to change ownership that can change.
So, François Pinault saw Christie's as being the jewel in the crown of one of the grandest luxury businesses in the world. And so, that became important to him. It was a private company too, which meant that they didn't have to publish their results or whether or not they turned a profit. And so, as a result, they could comfortably create the appearance of doing extraordinarily well in beating out the competition.
And so, I think the perception of what it means to win changes. I don't know that there's a next generation of people out there who see owning an auction house as being a jewel and a crown to whatever it is they're achieving financially, otherwise.
Charlotte Burns: You're touching on something here, which is the transparency of the auction business, which, briefly was a little more transparent, because Sotheby’s was a publicly traded company, is now not a publicly traded company. And also, things became less transparent in the pandemic years, unrelated to the art business, because New York State changed business laws to make it a little bit easier for businesses in general. And it impacted the auction houses because they no longer had to disclose certain things, and that included financial interests.
You'll remember those many years where there was minutes-long at the beginning of an auction where they'd say, “and there's a financial interest in lots 3, 5, 11,” and everyone would sort of groan because it became absurdly long. Now, if there is financial interest in lots, nobody has to disclose that. And chandelier bidding used to be a thing, nothing like that has to be disclosed anymore.
So, there is much less transparency now around auction, including the financials of the company, because none of the companies are public, but also including what's even disclosed to the trade.
Do you think any of that matters to the trade? And do you think any of that matters more broadly to collectors who aren't as savvy?
Allan Schwartzman: I don't think it matters to collectors. I think at the end of the day, most people buying at auction know what they're interested in. They know what they're willing to pay. Sometimes they'll get carried away to a certain extent if they really have to own something, but I see much more sober bidding going on, which is in large part why we're seeing a price reduction at auction.
Charlotte Burns: Why are you seeing much more sober bidding? Is that because of the market or?
Allan Schwartzman: I think people come in informed. They know what something's worth, they know what the primary market prices are. If it's a contemporary artist, they know what things they're trading for privately, and they bring that knowledge with them when they bid at auction. I don't think you find as much runaway bidding.
There's also a lot more bidding that takes place with people who are not in the room, and so there's less of a drive to perform for an audience and be the winner.
People don't even want it to be known when they buy something.
Charlotte Burns: Is there another way of saying that the market's smaller, there are less new people?
Allan Schwartzman: Oh, there's certainly less new people. The market's not growing.
Charlotte Burns: Yeah.
Allan Schwartzman: I should say the participants aren't growing.
Charlotte Burns: Right.
That leads me to something else. I was thinking of this question about the transparency and the idea that people know, because this month there's been a lot of talk about the $86 million scandal, the kind of Ponzi scheme that the former dealer—well, I guess he wants to be a dealer again—but that the dealer, Inigo Philbrick was running because there's been a recently released BBC documentary and a new book by his former best friend and one-time gallery partner, Orlando Whitfield. Inigo famously fled to Vanuatu after the scheme he was running started to fall apart, and he'd been selling more than a hundred percent ownership in the same works of art, faking documents, and inflating values, and of course, lying to convince buyers, sellers, and middlemen and women to transact.
The reason I thought this was interesting for this conversation from the last question is because the way in which the Berlin partners found out about being duped by him was because they checked the price of a work that they part-owned with him, a [Rudolf] Stingel’s [portrait of Pablo] Picasso on Christie's website. They took off the amount that Inigo told them they'd been guaranteed. And according to New York State, previously, before this law changed, you had to remove the guarantee amount from the final amount. And so, now you wouldn't have to do that. You wouldn't have to declare whether there was a fee or anything like that. The Berlin group, they'd been in the art market for a long time, and they still were completely unaware of this scam. It took that small detail of the art market to be able to understand it.
And I wanted to ask you, one of the questions is this idea that it's a kind of broader malaise or corruption within the art market, rather than one bad egg. And I wanted to ask you your thoughts on those sort of scams. You know, we see them from time to time, we had the Knoedler scam, and they catch up people in the trade. So, do you think they're to do with heated markets?
Allan Schwartzman: I think it can happen at any time there's fast cash, and art and deals are agreed upon, simply by saying yes. I mean, you need trust in order to have confidence to move forward, and every once in a while, there's somebody who comes along who's…there are people get into trouble financially, unintentionally, and then there are others who are criminal. And I think we've seen a number of criminals over the last few years in the art market, and it's extremely sad that people trusted people they should not have trusted. There certainly have been certain dealers who seem to have been consciously involved in selling fakes, in overpricing works, and having money paid under the table. And those situations that I know of are all people for whom there was wide suspicion within the field. The sad situation is the person who wasn't in on that inside awareness.
Charlotte Burns: Do you think there's something specific about the art market that makes it vulnerable to that?
Allan Schwartzman: Well, yes, it's not a regulated market. I'm not encouraging there to be more regulation within it. It's been pretty good at self-policing, but occasionally, there is someone who comes along, and it's because there's potential for fast cash, and because there usually are not agreements signed when people agree to buy works of art.
[Musical interlude]
Charlotte Burns: Allan, I know we're running out of time. Let's do some ‘what ifs’. What if you could bring about a single biggest change to the art market? What would it be?
Allan Schwartzman: Oh, I don't know that I think about changing the art market.
If I could bring about a single change, it would be to keep the focus ultimately on art as having been made by living creative people who strive for and some actually do achieve brilliance. And that ultimately gets into the history of art. The fact that Caravaggio was a rogue and a criminal doesn't in any way diminish or impact the greatness of his art. And I think that this hyper-focus on market and value and prices compromises the focus that I always hold dear of the artist as being central to the creative act.
Charlotte Burns: Well, I was gonna ask you advice. What if you could give some advice to collectors, but I guess that's it.
Allan Schwartzman: Yeah. My advice to collectors is buy wisely, get advice. If you're a young collector and you don't have a substantial budget, join the museum group in your community, for not a large annual donation. You can be part of a group where you have access to great curators who give great advice and could lead collectors in a great way, and always support artists, even if it's a tiny percentage of your budget, always by the work of young artists as part of what you do. And feel comfortable giving money directly to artists when there's a need. We work with one young collector who supports artists in the projects they work on that are not connected to collecting, even when they're artists whose work they collect very deeply.
So, I say belief in the artist is the most important thing, the most valuable thing to a healthy art economy.
Charlotte Burns: Thanks so much, Allan. I really appreciate your time.
Allan Schwartzman: Thank you, Charlotte.
[Musical interlude]
Charlotte Burns: Next time we’re in conversation with the fantastic artist Sin Wai Kin, who takes us into new realms.
Sin Wai Kin: It was during the pandemic. I had just gone through a breakup. I had just chopped all of my hair off, and I became obsessed with listening to NSYNC and the Backstreet Boys again.
It was interesting to me thinking about this kind of format because looking at how identity, personhood, even, is constructed under capitalism. At the time, I thought I wanted to be with them, but it turns out that actually, I wanted to be them.
Charlotte Burns: It’s a wonderful show. I can’t wait for you to listen.
This podcast is brought to you by Art&, the editorial platform created by Schwartzman& and executive produced by Allan Schwartzman. The series is produced by Studio Burns with audio design by Tamsyn Kent. Follow the show on social media @schwartzman.art.