Thursday, July 16, 2009

Your First Recession as a Dealer? Must-Read Advice in The Art Newspaper

On Page 30 of the Art Newspaper's summer edition (they were kind enough to offer me a quick, free subscription to their new digital edition, which is lovely, but now that I have been flipping through it on my laptop [love the sound the pages make when you turn them!], I'm already looking forward to the time I can get the iPhone version...hint, hint) is an article every young art dealer currently struggling must read. I don't mean should read either...if you want to stay in business, rush to that article, which summarizes a panel discussion by seasoned art dealers in London discussing how to get through a recession. It's full of the very best, most honest advice I've read on the subject anywhere.

Some of the advice offered contradicts other advice. One panelist suggested now was a good time to standardize relationships with artists by binding them to contracts. Another countered that it's better to offer artists contracts when times are good and you have more to offer them. But among the gems in the report were the following:
"If you sit in the gallery feeling sorry for yourself, you've had it," said [London dealer Alan] Cristea. "The most important thing is to see the new reality as a creative challenge. The moment you view it that way you'll almost certainly get through it. You can get far more satisfaction out of doing reasonably well now than you could get from doing well two years ago because anyone could have done incredibly well two years ago. It was like falling off a log."
And, in support of what I argued here, as well as some truly priceless advice about the long run, Thomas Gibson noted:
Do not be put off at starting up in a recession, as you will learn much more prudence this way--I started in 1969/70. When the next recession comes, and it will, make sure you are in a position not to have to sell while being in a position to buy. After World War II, the Rosenberg gallery in New York held an extraordinary exhibition of Cubists: Picassos and Braques. Nothing sold. Mr and Mrs Rosenberg took the works upstairs to their flat. Then, in the 80s they brought them down again and people marveled--"Where did you get these fantastic works?" Every one of them sold. Remember the old maxim--a dealer earns a living by the art he sells, but a fortune by the art he keeps.
Some of the advice offered was heartless, even if worth heeding:
"Cut costs as quickly and radically as you can. Speed is the most important thing. Don't wait, don't let it get out of control. Act immediately." This is the advice of Karsten Schubert, the German-born London dealer.... The process is "very painful" says Schubert because "you are dismantling what you've built over the last few years," but the only way to continue operating is to "let very qualified staff go very quickly and very brutally" and, where possible, to reduce overheads such as rent.
No matter how challenging it gets, however, young dealers must resist the urge to panic. Having woken at 4 in the morning, having run the numbers in my semi-conscious slumber, simply horrified at the "new normal," I know all too well how panic can seize you, but as London arts lawyer Nicholas Sharp noted:
The panic must be overcome quickly...and the debt must be tackled head on. Although clients are asking for advice on "how to deal" with it, Sharp concded that "lawyers can't be much use because, in most cases, the debt is not disputed. It's simply money owed which can't be paid." The best thing is "to try to deal with problems before they arise. Go to your creditors and talk to them--set up deals where you can pay them in installments," said Sharp.
Like I said, this is the most honest, most helpful advice on the topic I've read anywhere and it's a real credit to the London dealers and arts professionals willing to share their wisdom with younger gallerists.

Labels: art market


Blogger C. L. DeMedeiros said...

Good Morning!Edward

What's new
when art is such a luxury?


7/16/2009 10:19:00 AM  
Blogger Bromo Ivory said...

A good friend of mine once told me (c. 1997) about business "Macroeconomic conditions affect everyone ... you are not in 'a bubble of awesomeness' immune to a recession."

For me, the "obvious" addition from your is not to panic. While easy to intellectually grasp, is really hard to do, at, as you said, 4 in the morning as you contemplate "the new normal."

7/16/2009 12:19:00 PM  
Anonymous Cedric Casp said...

You know...I'm trying to put my feets in the shoes of a strugglig art dealer, and I'm thinking: Is it really the time to focus on a roaster of about 12 artists with half of them that aren't selling much? Or more the time to open a space to a lot of new artists seeking representation (without promissing anything), just by arranging group shows that serve as testing grounds for what sell the most? Just my 2 cents.

Cedric Casp

7/16/2009 05:36:00 PM  
Blogger C. L. DeMedeiros said...

I'll drink to that!

7/16/2009 11:00:00 PM  
Blogger George said...

The recession is almost over.
The US stock markets have bottomed, Wall street bonuses will expand this year, the dollar will hold its own and inflation will inch higher.

We have nothing to fear but fear itself.

Honest injun

7/17/2009 01:09:00 AM  
Anonymous Anonymous said...

Is the situation worse in London than New York? What about Germany?

7/17/2009 01:12:00 AM  
Anonymous Dalen said...

Either this guy is inciting disillusioned panic, or these some 400 comments are reprensentative of the general mood in the U.K. He's not discussing the artworld in particular, but I think it's relevant. If there's a persistent rain on our picnic in America, it's an all-out thunderstorm over there.

7/17/2009 10:01:00 AM  
Blogger Bromo Ivory said...

Recession over? Maybe. But we have a tremendous amount of lost ground to recover before it will feel like it did before. (Provided this isn't just the result of massive cash from the Fed and Congress, that makes us go back in the tank once it ends - and it must)

Most businesses have seen sales drop between 20 and 80% - and given consumers don't have the means or desire to spend more than they make (given the risks of unemployment which will continue to rise!) - it is uncertain when the art gallerists will see an uptick in their sales.

We'll see an uneven and slow recovery, but it will be years (if ever) before it will feel like the good times again. It may never quite get to be like it was in 2005-2007, certainly in luxuries.

7/17/2009 11:00:00 AM  
Blogger George said...

Bromo, I think the recession is just about over but I also agree we're not going back to the way it was.

This is a good thing, we are currently experiencing the most unequal distribution of wealth in recorded history.

The numbers are staggering (I need a fact check, this is from memory) but 1% of the people own 57% of the worlds wealth. This is a recipe for disaster.

7/17/2009 11:12:00 AM  
Blogger Bromo Ivory said...

George -

Agree. I read Will and Ariel Durant's "Lessons of History" book - and about wealth distribution, from Chinese history primarily, and to a lesser degree the West - if you have a high degree of inequality in income and wealth, society tends to become less and less stable, and you either forcibly redistribute wealth through taxation, etc, or there is some sort of uprising, war or some such that makes everyone become poor - and the cycle starts again.

Though it has never been on such a world wide basis - I wonder how one could handle this?

7/17/2009 01:19:00 PM  
Anonymous Cedric Casp said...

Communism got to an extreme, and now capitalism is reaching its own extreme. We simply need to develop new socio-economic models (knowing that extremes are dead ends).

You need gratification because it motivates people (absolute socialism is demotivating), but you also need to make people understand that they are not on their own in this life, that we are in this together (the increase of crime since the 1990's has a lot to do with people thinking they are on their own, and street gangs are created so that people get back this feeling of belonging, but to disastrous effects of moral destabilization).

I understand why people invented religions a while back, because they can be great social stabilizer. We need to come up
with a scientific reasoning behind moralism, because more and more people are waving the flag that moral is a joke while society seemingly begins a new era of decadence where abuse and bleak permissivities of all sorts occur.
(Rappers singing about knocking their bitches dead on the head being one).

Cedric Casp

7/17/2009 05:39:00 PM  
Blogger George said...

I agree with Cedric's observation and think it's time to rethink what economics should be

I ran across this Happiness: Lessons from a New Science

Teaser to the pdf...
A new social science field—the study of happiness—could ultimately transform how governments make decisions. Policymakers may one day use a system of national well-being indicators to track a country's happiness in the same way we now monitor economic conditions.

The study of happiness lies at the junction between economics and psychology. In large surveys, random samples of people are quizzed about their mental health and how happy they feel with their lives and other indicators, including their income, job, and marital status. Their answers allow researchers to study the links between happiness and life events. Psychologists find that happy people are prone to more successful lives—in social relationships, work, and health.

Lord Richard Layard, one of Britain's most prominent economists and a world expert on unemployment and inequality, has published a new book which describes this important new field. In Happiness: Lessons from a New Science (The Penguin Press, 2005), Layard argues that money can't, in fact, buy happiness. Layard redefines what happiness is, how to get more of it, and provides bold recommendations for policymakers.

7/17/2009 10:09:00 PM  
Blogger tony said...

Being a primitive sort of person it strikes me that nature so designed things that man's survival was and still is rooted in the fact that not only is he a social creature but is also socially dependent for the protection & benefit of the whole. This being so if we buck the natural order it is inevitable we get f,,,ed, Having followed the run up to the Presidential election I am aware how the mere word 'socialism' is enough to throw not a few Americans into a state of fear & hatred, In a country which has so long prided itself on a sense of individualism & independence I am not optimistic that political & financial leaders are ready to relinquish their stranglehold on power & wealth for the greater good, Having said that America and it's people have often shown an extraordinary degree of largeness of heart & I can only hope for a measure of the same in the current situation. It could be for the greater good of her people and the world at large; anything else will not be enough,

7/20/2009 01:26:00 AM  

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