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|Art Market Guide 2000
by Richard Polsky
|One of the perils of writing a book that makes financial recommendations is that everyone remembers when your opinions turn out to be wrong. You can be right 90 percent of the time, but your readers are quick to point out how the other 10 percent of your predictions went astray. As far as the 1998 Art Market Guide is concerned, "Exhibit A" in support of this theory is my chapter on Jeff Koons.
Personally, I remain baffled as to why Koons' work continues to appreciate. In search of answers, I have made a specific point of looking at it closely. To that end, I spent a lot of time with the artist's remarkable live-flower encrusted sculpture, Puppy. As most art world followers know, Koons installed the 43-foot-tall floral topiary in the heart of Rockefeller Center in New York during the summer of 2000. It was a winner. But I walked away wondering how an artist can create such a great work of art and still continue to produce so much kitsch.
Regardless of my own taste, the fact remains that Koons has had an impressive run at auction. Starting in November 1999, records for Koons weren't just set, they were obliterated. Several of his exquisitely crafted porcelain sculptures came up and easily cruised through the million-dollar barrier. You have to remember that until then, the prior record for a Koons was only $250,000 for Stacked, a wooden totem pole of animals sold at Sotheby's New York, May 6, 1997. Now, during the last twelve months, not one but seven Koons sculptures have exceeded that figure.
However, the work that made the most noise was the record-setting Pink Panther -- which is easily described as a blond semi-nude woman hugging the cartoon Pink Panther. Estimated at a seemingly ambitious $600,000-$800,000, bidding proceeded in $50,000 increments until the work was knocked down for $1.8 million at Christie's New York, Nov. 16, 1999.
Suddenly, Jeff Koons prices were in Andy Warhol territory. Many observers thought the results were a fluke. Then, a work from the same series, Woman in Tub, brought $1.7 million at Christie's New York, May 16, 2000. Like it or not, the Jeff Koons market is for real -- at least for now.
There's more. His equally absurd wooden sculptures also started to sell for big money. A pair of costumed bears that looked liked they had escaped from a nursery rhyme brought $486,500 at Christie's New York on Nov. 16, 1999. A banal couple of carved Yorkshire terriers with ribbons in their hair sold for $258,750 at Sotheby's New York on May 17, 2000. About the only thing that seemed to make sense during the last year was when one of the artist's signature basketball tanks actually passed at auction (at Christie's New York, May 16, 2000).
After advising readers not to buy Koons because of his work's overwhelmingly garish qualities, it seemed that these very qualities were attracting scads of buyers. It makes you wonder, who are these collectors willing to write such huge checks? Since the auction houses never disclose the identity of buyers, you're left to guess whether they are bona fide collectors, dealers or just plain speculators. Let's examine each of these scenarios.
Taking the high road, let's assume the majority of the Koons pieces are being bought by collectors who really love his work. This assumption means that these are people who are going to hang onto the work -- for at least a generation. It also means that since most major Koons works are fabricated in editions of three (plus one artist's proof -- always a ridiculous ploy -- why not simply call the work an edition of four?), a whopping 25 percent of that edition is effectively removed from the market. If, indeed, collectors are buying most of the work, then the Koons market is quite serious and will continue to appreciate.
Continuing down this path, let's say that most of the recent buyers at auction are dealers. Logic dictates that they are either past or present primary dealers of Jeff Koons. These are people who have insider information. Having sold works over the years, they know where the bodies are buried. They also know which collectors and museums are currently in the market. This means they can make an informed decision to buy for their inventories knowing full well what the odds are in favor of placing the work in the future. If dealers have really been buying Koons because they have confidence in their ability to resell the work, then once again, the Koons market is solid.
Let's examine the last possibility -- that Koons's works are being bought at auction primarily by speculators -- which would be the most troubling scenario of all. This means that various dealers/collectors have decided to put Koons "in play" much like a company that is a potential takeover subject. A dealer who speculates usually already owns a number of works by the artist he is pursuing. One obvious way to speculate is to bid up a work similar to ones that you already own. If you succeed in buying the work, then in theory you've raised the value of your current holdings. If you're merely the underbidder, then so much the better. You've then increased the value of your inventory without laying out any cash.
The problem with speculating is that it becomes a pure investment. That means that if you've spent $1.8 million on the Pink Panther, you now have carrying costs of roughly $180,000 a year on the sculpture (that is, the 10 percent return on the $1.8 million that you are not getting from investing in stocks or some other financial instrument). That's fine if the other Koons works you own were bought years ago when prices were only a fraction of that. But if you're a more recent player, you'd better pray that prices continue to go up. If the bubble bursts on the Koons market, the mad scramble for the exit will resemble the current deflation of many Internet stocks.
In summary, for better or worse, Jeff Koons is here to stay. He's in the art history books. In that respect, he's a little like those nasty fire ants that invaded the deep South a century ago, and which continue to expand their range with virtually no chance of being stopped. Like it or not, people who live in those areas already colonized have to accept the ants and learn how to live with them.
If you already own a work by Koons, you might as well learn to live with it and hang on for the long run -- or put it up to auction while the getting is good. It's still too early to say where prices will settle. To get into the Koons market now (unless you're buying newly released work) with the thought of making a smart financial bet, is a little like believing those fire ants will go away.
Jeff Koons, edited by Angelika Muthesius (Taschen)
Jeff Koons: The Banality Show, a videotape by Paul Tschinkel
RICHARD POLSKY is a private dealer specializing in post-1960 works of art. Questions or comments can be directed to him in San Francisco at Polskyart@aol.com.