By KELLY CROW

After a summer marked by uneven sales, Sotheby's in New York plans to anchor its major November auctions with a pair of brand-name stalwarts: Mark Rothko and Pablo Picasso.

In a season of art-market uncertainty, Sotheby's plans to anchor its big fall auction series in New York this November with a pair of brand-name stalwarts: Mark Rothko and Pablo Picasso. Kelly Crow has details on Lunch Break.

John Marion, a former Sotheby's president, and his wife, Anne, a Texas oil heiress and major collector of modern art, have enlisted the auction house to help them sell Mark Rothko's "No. 1 (Royal Red and Blue)," a 1954 abstract that depicts a trio of fuzzy-edged red, pink and blue rectangles stacked atop a rose background.

Sotheby's

Rothko's 'No. 1' will kick off Sotheby's November auctions in New York

Sotheby's didn't name the sellers but dealers say the work is widely known to belong to the Marions. The house expects to sell it Nov. 13 for $35 million to $50 million.

Rothko is a master of Abstract Expressionism, and his midcentury meditations on color and modernism have sold well in good times and bad: At the market's last peak in 2007, one of his 1950 abstracts sold at Sotheby's for $72.8 million. Four months ago, Christie's in New York topped that record-setting price by getting $86.8 million for a 1961 Rothko, "Orange, Red, Yellow." That work was only priced to sell for up to $45 million.

Rothko created more than 800 paintings before he died in 1970. Today, the size and color of these pieces play a big role in his asking prices—the bigger and more sunset-colored the painting, the better, dealers say. The example Sotheby's is offering stands 9½ feet tall, eclipsing the current record holder by nearly 2 feet. The jewel-toned hues in "No. 1" are also saturated rather than pale. From a distance, it evokes a distilled seascape.

Sotheby's

Picasso's 'Woman at the Window (Marie-Thérèse)'

In a realm where museum appearances can also alter a work's value, "No. 1" can claim to be one of eight pieces created for "Recent Paintings by Mark Rothko," a major solo show at the Art Institute of Chicago in 1954. Other examples from that same exhibit have since changed hands at auction for as much as $17.3 million apiece. Several more now belong to museums, such as the Phillips Collection in Washington and the Whitney Museum of American Art in New York.

Abstract Expressionists like Rothko and Clyfford Still are seeing higher prices now in part because of renewed bidding from U.S. collectors, said Sotheby's specialist Tobias Meyer. Before the recession, Mr. Meyer said, these collectors mostly sat on the sidelines, unable to compete with bidders from Russia and the Middle East. But in the past year, Americans have returned. "The sticker shock is gone," he said.

Sotheby's said a highlight of its Nov. 5 sale of Impressionist and modern art will be Picasso's rainbow-hued portrait of the artist's mistress, "Woman at the Window (Marie-Thérèse)." The 1936 work, which is priced to sell for $15 million to $20 million, remained with the artist until his death in 1973. Its current seller, who remains anonymous, has owned it for the past three decades, Sotheby's said.

Write to Kelly Crow at kelly.crow@wsj.com

A version of this article appeared September 21, 2012, on page D5 in the U.S. edition of The Wall Street Journal, with the headline: Looking Out for 'No. 1'.

Sotheby’s
David Hockney’s ‘‘Swimming Pool,’’  painted in 1965, went for £2.5  million at Sotheby’s in London, up from  its 2007 price of £1.19 million.

LONDON — The market for contemporary art is holding up remarkably well in the midst of the deepening concerns that are engulfing the global economy.

If Sotheby’s sale on Tuesday evening might have left a different impression, it is because brazen speculation no longer flies as easily as it did until recently. The 69 lots of the 79 that came up nonetheless sold quite well, allowing Sotheby’s to post a £69.3 million, or $108 million, score.

The auction house even achieved a world auction record. Glenn Brown’s monumental canvas “The Tragic Conversion of Salvador Dalí (After John Martin)” ascended to £5.19 million, more than two-thirds above expectations. For a picture that has a touch of spoofery about it, this is not bad. As the title indicates, the apocalyptic scenery with fire burning and lava flowing reinterprets John Martin’s “Great Day of His Wrath” done in the late 1840s, and it looks a bit like a movie poster of the 1950s.

Several other works showed that big money continues to pour into contemporary art.

Jean-Michel Basquiat’s “Warrior,” dated 1982, commanded an even higher price, £5.58 million. But that was under the low estimate, and the difference with Mr. Brown’s painting is that it did not trigger competition.

A glance at the prices previously paid for “Warrior,” done in the late artist’s street graffiti style, helps explain its failure to arouse enthusiasm. Five years ago, it sold for £2.82 million, also at Sotheby’s. Buyers apparently felt that allowing the clever consignor to cash in almost double his 2007 outlay was generous enough.

Earlier in the sale, bidders had been more willing to compete over another composition by Basquiat, “Saxaphone,” painted in 1986, two years before his death. Did they like it better because it is covered with inscriptions? Or were they more tolerant of profit-making when spread over a 15-year period? In 1997, the consignor had bought “Saxaphone” at Sotheby’s New York for $244,500. This week, it fetched £2.72 million, about $4.25 million.

After deduction of the sale charge to the buyer, more than 12 percent, which the auction house cashes in, and of another charge payable by the vendor at a privately negotiated rate, this leaves the consignor a profit of $3 million.

Other clever financial coups were made. David Hockney painted “Swimming Pool” in 1965 in a manner that suggests admiration for Magritte’s faux-naif style with a faint avant-garde whiff. In 2007, its owner, Magnus Künow, acquired the Hockney at Sotheby’s for £1.19 million. This week, it realized £2.5 million.

Francis Bacon’s 1980 “Study for Self-Portrait” also proved to have been a judicious bet. Bought in 2001 at Sotheby’s New York for $2.76 million, the Bacon sold this week for £4.52 million, more than $7 million. From a vendor’s perspective, this is brilliant.

Sadly for Sotheby’s, the sale did not look brilliant at all — quite the contrary, if one merely considered the wild estimate, £5 million to £7 million, plus the sale charge. The attendance glumly watched the Bacon being knocked down to a lone bidder who paid £1 million less than the low estimate.

In this dull atmosphere, the auctioneer Tobias Meyer appeared to be extracting bids from a reticent room when these actually resulted in large prices.

Bidders occasionally displayed some zest. Piero Manzoni’s crumpled canvases coated in white kaolin, with not much else to identify them as art, were vigorously chased. “Achrome,” done in 1959-1960, sold for £2.61 million, matching the ambitious middle estimate.

The problem on Tuesday was not that buyers lacked the wherewithal or the will to spend it. They simply declined to be held to ransom by consignors playing around with estimates and assorted reserves designed to ensure huge profits. If Sotheby’s specialists went along with their vendors’ whims, this means that they had no other way to cajole them into consigning their goods.

Christie’s experienced no such trouble. Its Wednesday evening sale, definitely more substantial, put the market back into perspective. With 60 lots adding up to £132.81 million, Christie’s almost doubled the score achieved by Sotheby’s.

The mood in the room was very different. This was partly because the session included several works seen as hugely desirable by those who follow contemporary art. But the fact that estimates had been set more closely to what the market is prepared to accept played a role in turning the Christie’s session into the success story of the week.

The sale, conducted by Jussy Pylkkanen, president of Christie’s Europe, quickly took off.

The third lot consisted of two fluorescent light tubes by Dan Flavin. It was “number two from an edition of three,” Sotheby’s noted. The fluorescent tubes fetched £205,250, well above the high estimate. Next, a bunch of empty mussel shells spread over a panel coated with resin, plus a “plastic bag filled with mussels,” went up to £433,250. It took the Belgian artist Marcel Broodthaelers eight years to put the finishing touches to his “work,” completed two years before his death in 1976.

A vast canvas inscribed “Cy Twombly, Roma, 1962” came on its heels. Blobs of paint squished out of tubes are crushed at wide intervals on the off-white ground and a few gray lines are trailed across, with no obvious purpose. But Twombly, who died last year, has been reestablished as a blue chip among the postwar artists. The “Untitled” picture realized a price of £2.16 million.

Moments later, a delirious reaction was triggered by Yves Klein’s monumental “Le Rose du Bleu (RE22).” Sponges and gravel are stuck on board, held by synthetic resin painted pink. The French artist executed this work two years before his death in 1962. In order to enlighten viewers who might fail to grasp the meaning of the pink sponges and gravel, Christie’s quoted the late French art critic Pierre Restany, according to whom “madder rose represents the Holy Spirit before the gold of the Father and the blue of the Son.” Restany even spoke of Klein’s “Cosmological Trilogy of personal transmutation of colors.”

What is clear is that the sponges and gravel transmuted into gold: At £23.56 million, the work set a world auction record for the artist.

As the sale went on, it became evident that the key to success was not the artists’ aesthetic orientation. If non-representational works like the Klein soared sky high, so did figural art in all its trends.

Francis Bacon’s “Study for Self-Portrait,” done in 1964 in an Expressionist vein, soared to an astronomical £21.54 million.

An untitled Basquiat done in 1981 in the late American artist’s distinctive style also pleased bidders. They sent it climbing to £12.92 million, setting a world auction record for Basquiat’s work.

While the ease with which the Bacon and the Basquiat both surpassed expectations could be accounted for by their instant punch, the bland, more naturalistic Lucian Freud was again favorably received. A small “Head of a Greek Man,” portrayed in October 1946, exceeded the estimate by half at £3.4 million. It was followed by “Naked Portrait II,” painted in the mid-1970s in a style that might be seen as looking back to the work of Manet. That work went for £4.29 million.

Pop art indebted to comic books as a source of inspiration also went down well. Roy Lichtenstein’s “Reflections on Jessica Helms,” painted in 1990 in a belated throwback to the American artist’s early work in the 1960s, found a taker at £4.01 million.

Add “Structure (2),” a superb abstract composition done in 1989 by the German artist Gerhard Richter, which sold for £12.69 million, the fourth-highest price on Wednesday, and few would question the eclecticism of bidders. Names seemed to be the determining criteria of desirability, sparing buyers the ordeal of having to make a decision based on the art itself. When these criteria were met, money flowed as easily as ever.

The message this week is clear: The market for contemporary art is full of vitality. But buyers will no longer put up with speculators playing games at their expense.

 

LONDON – At Christie’s post-war and contemporary art auction here on Wednesday evening – an event aptly described by the super dealer Larry Gagosian as “Masterpiece Theatre’’ – collectors from around the world dropped millions of dollars on works by many of the major names of the 20th century, and record prices were set for two of them: Yves Klein and Jean-Michel Basquiat.

Hoping to capture the attention of both established collectors and new-rich ones from places like the Middle East, Russia and Asia, Christie’s had marshaled its international connections, pulling in exceptionally strong artworks for an evening auction like few others London has seen. The sale totaled $207.3 million, against an estimate of $160.1 million to $216.9 million, the highest total of any auction in the category that Christie’s has held in Europe.

Unlike Sotheby’s, whose auction on Tuesday evening made $108 million with more works of lower value, Christie’s reached for the stars.

Three bidders wanted Klein’s “Le Rose du Bleu (RE 22),’’ an organic landscape of pink sponges and pebbles that was bought by a telephone bidder for $36.7 million, a record price for the artist at auction and well above its high estimate of $31.2 million. (Final prices include the buyer’s commission to Christie’s: 25 percent of the first $50,000; 20 percent of the next $50,000 to $1 million and 12 percent of the rest. Estimates do not reflect commissions.) The painting, which was being sold by an anonymous collector, was one of the earliest of just 12 such sponge reliefs that the artist produced in pink rather than his trademark ultramarine blue.

The other record was achieved for a 1981 Basquiat canvas of a primitive figure with clenched teeth, his oversized hands held high in the air. It had been estimated to bring $15.6 million to $23.4 million, but was purchased by a telephone bidder for $20.1 million. (The painting had last been up for sale at Sotheby’s in New York in 2007, when it brought $14.6 million.) Brett Gorvy, chairman of Christie’s post-war and contemporary art worldwide, who took the winning bid, described the buyer as “a seasoned European collector who had been looking for the right Basquiat for years.”

“There was strong American buying tonight,’’ Mr. Gorvy said after the sale. “But Europeans were even stronger.’’ (Surprisingly, he added, there was little action from either Asian or Russian buyers, in contrast to many recent sales.)

Another hefty price was paid for Francis Bacon’s “Study for Self-Portrait,’’ a 1964 full length painting of the artistperched on a bed, which was expected to sell for between $23.4 million and $31.2 million. After it failed to sell at auction at Christie’s in New York in 2008 it was the subject of a law suit, in which the owner, a family trust led by the Connecticut collector George A. Weiss, claimed that Christie’s had reneged on a $40 million guarantee (a sum promised the seller regardless of a sale’s outcome). That suit was settled in July of last year, with Christie’s agreeing to pay the trust an undisclosed.

On Wednesday night William Acquavella, the Manhattan dealer, bid for the work by phone in what became a protracted battle against Christopher van der Weghe, another Manhattan dealer. Mr. van der Weghe won, paying $33.6 million. “We knew we would have to fight for it,’’ Mr. van der Weghe said after the sale, describing the client he had bid for only as an international collector. “Quality is more important these days than ever.’’

Gerhard Richter has been a consistent winner over the past few years and on Wednesday night “Strutur (2),’’ a richly painted 1989 canvas of alabaster whites and gunmetal grays, sold to a telephone bidder for $19.8 million. It had been estimated to bring $14 million to $18 million.
Lucian Freud, who died a year ago, has a loyal following too, especially after the recent exhibitions here and in New York. Two works by him both brought strong prices. “Naked Portrait II,’’ a 1974 painting of the artist’s lover Jacquetta Eliot curled up asleep, had been expected to sell for $5.8 million to $6.8 million; it made $6.7 million. And “Head of a Greek Man,’’ a 1946 portrait, fetched $5.3 million, well above its estimate of $2.3 million to $3 million. Both paintings were purchased by telephone bidders.

Not everything sold high. Jeff Koons’s monumental stainless steel sculpture “Baroque Egg with Bow (Blue/Turquoise),’’ from 1994-2008, was snapped up by Ivor Braka, a London dealer, for $4 million, just under its low estimate. “Koons is one of the truly ground-breaking artists of the 20th and 21st centuries,’’ Mr. Braka said after the sale, “and to buy something like this at this level, especially given the elevated prices for other artists, was great. Some days you just get lucky.’’

June 13, 2012

On the eve of this summer’s annual Art Basel fair in Basel, Switzerland, I’ve noted that some art writers have eagerly predicted the demise of the so-called “art bubble”; a few of them are persuasive enough to instill real fear and a loss of confidence. It almost makes you wonder if their doomsday predictions could actually come true. Well, fear not, they won’t.

 There are two main reasons for the popularity and persistence of the art bubble apocalypse myth. First, it makes good copy: gloomy predictions always draw an audience. Second, the thought that collectors, speculators, dealers and advisors are reaping the financial gains from these “insane“ prices seems awfully unfair to many of those in the art world who don’t. But it’s not the prices that are wrong, it’s the logic that is flawed: art and the art market are two altogether different things. The goal of the art market is to sell artworks and achieve the highest possible price; there’s no morality in it. Sometimes these prices may sound extreme, vulgar, indulgent or decadent, but many things are this way, and you don’t, for instance, read many articles lamenting the obscene sizes and prices of today’s mega-yachts—or cruise ships, for that matter.

Let’s put the art market in perspective. Think about the value of Google, which boasts a $189 billion market cap, or Facebook, with a market cap of $58 billion, down from an IPO price of about $100 billion only a few weeks ago. The average trading volume of Google in a single day is $2.4 billion dollars. The approximate total sales in the entire global contemporary art market in a year is around $6 billion, or what would likely be only two or three days’ worth of trading in Google stock. If these companies’ young billionaire founders, Sergey Brin or Mark Zuckerberg, bought up all the contemporary art sold in an entire year, they wouldn’t even feel the pinch.

Two weeks ago, in an article in The New York Times Magazine that asked if we are in an art bubble, business writer Adam Davidson admitted to understanding nothing about the art market, but still managed to come to a sound conclusion: the art market “is a proxy for the fate of the superrich themselves.” His view is that as long as the rich get richer, art prices will hold steady or increase. My bet is that he’s right. But he ends his article by confusing art and the art market: “It makes me happy to think that this world of art-as-investment is a minuscule fraction of the art world overall.” But one has nothing to do with the other; why should the “art world overall” bear any relation whatsoever to the $120 million paid at Sotheby’s last month for Edvard Munch’s The Scream?

Mr. Davidson is hardly the first journalist to brood on a bubble in recent years. U.K.-based writer Ben Lewis’s documentary The Great Contemporary Art Bubble, which predicted an art market crash, came out in 2009—good timing. But, though the market did dip, sadly for Mr. Lewis it then rebounded and has now risen, in some cases, to new heights. The esteemed Souren Melikian also recently intimated he felt the bubble when he said: “Right now, the art market situation offers uncomfortable similarities with the state of affairs in the spring of 1990,” so bubble predictions today aren’t the exception, they are the norm.The latest entry in the department of doom and gloom comes from Artnet.com’s endearing Charlie Finch, who last week fearlessly gave us his take on this precarious situation in a piece titled “Will the Art Market Crash?” He posited that the perfect storm of bad worldwide economic news means that the market cannot “continue its contrarian record sales indefinitely.” He then convincingly played the economist, speculating that deflation will make the rich horde cash and stop spending on art, and then midrange collectors “will panic … as collectors argue that the $100 million Munch might just as well be worth $10 million in an environment of falling prices.” Mr. Finch took the full cold plunge when he spouted, “I predict that, in six months, art prices will be down, across the board, by 50 percent, falling faster with no takers.”

Extreme views make for exciting reading. Their conclusions may differ, but Messrs. Davidson, Lewis, Melikian and Finch all share the same premise: art values are in a precarious “bubble.” Having been a zealous contemporary art collector for some 20 years, and having recently opened my own gallery, I do not share their view. No one can predict the future, but let me fill in some of the blanks for my soothsaying, doomsday-predicting friends.

All is not well in the art market and hasn’t been since late 2008. While a few trophy pieces make record prices at auction each season, like colorful Basquiats (if they are from 1982), and colorful Richter abstractions, underneath this spectacle things move with difficulty and sometimes grind to a halt. Today’s collectors are fickle, they find comfort in following the prevailing trends, and so what’s hot now can very easily be cold tomorrow. All that glitters is not gold.

Despite the highflying golden outliers, there is no bubble and there hasn’t been one since the one that burst in the 1990s. My prediction is that there will never be one again. I don’t see art market history repeating itself, and I don’t fear a tulip-style crash. Fine art was undervalued for a long time, and for a number of reasons. Before the Internet, the glitzy retail auctions and the now-ubiquitous art fairs, collecting tastes were often quite regional. Aside from a few global names, Europeans were primarily interested in collecting European artists, and Americans bought Americans. Even inside the U.S., the Los Angeles art market was separate from the one in New York. West Coast museums know it too; they recently staged the massive “Pacific Standard Time” series of exhibitions to showcase the generation of excellent artists that never quite made it out of L.A. Well, it still didn’t really work.

Today the picture is very different: L.A. dealers who operate from Berlin sell hot artists to collectors in New York, while new and hungry Filipino or Chinese collectors regularly appear at art fairs in Basel or Paris. I’m not suggesting that there are all that many of them; I am well aware that there are very few people with the money and the conviction to purchase a historic Munch for $120 million or a Cézanne for $250 million, but there are a few, and it’s likely that with time there will be more. Consider that this phenomenon is not restricted to art alone; just this week a 1962 Ferrari GTO, one of only 39 ever built, sold privately for $35 million, a world record for a car. The collectable car market also crashed in the ’90s but today, for the top trophy cars like GTOs, Testarossas or Spyder Californias, it is going up higher and higher and looks like it will never turn back. However, if you are thinking that a ’50s Porsche Spyder or a ’60s Aston Martin DB4GT will ever make these numbers, you are likely to be very disappointed. The big prices exist only for the rarest of Ferraris, though a prewar Bugatti or Alfa-Romeo may perhaps squeeze into these megabuck garages once in a while.

Art isn’t the only asset class to have often been repriced. The value of some vintage French Bordeaux wines has tripled over the past few years (though beware this is not the rule with all wine). When the Chinese coveted Château Lafite, it jumped by a factor of two or three times the value of a comparable Château Latour. The Chinese were the big buyers (as recently as last year), so Lafite ruled the wine market, though many experts might argue it tastes no better than a fine Latour or Mouton Rothschild. Now the Chinese buyers have backed off, so Lafite prices are easing off: Château Lafite may have been in a bubble, but the wine market overall was not and is not.

There is, theoretically, a limited supply of “trophy”-grade historic art, though the definition of what is or is not “historic” is a moving target and subject to constant change and review. Those outstanding record blockbuster sales notwithstanding, a global, informed and well-travelled audience has repriced fine art as an asset class. Collectors as a rule are willing to pay more for emerging, young, midcareer as well as blue-chip art, and this phenomenon will not reverse itself—though it might slow down, and I believe it already has.

Nothing is forever, of this we can be sure, but that doesn’t mean we will ever go back to the way it used to be. Those who are enthusiastically waiting to hear a big “pop!” in the market bubble will yet again be disappointed. From now on all we are likely to hear is a tight snap or a faint crackle.