Despite Gloom, Modern Art Booms

Christie’s and Sotheby’s contemporary art sales generated at least a third less money than predicted, and many items were unsold.

The auction houses’ New York sales are considered an important test of how price levels have changed since the summer and of how buyers will respond to the top-selling works, said Ian Peck, CEO of the art finance firm Art Capital Group.

The last such sales, in May, generated more than US$500 million between the two houses.

Last week, Sotheby’s withdrew Pablo Picasso’s Arlequin, one of the star lots at its Monday sale, for private reasons.

The move was “a sign that auction houses and buyers fear the risk of a downturn in prices is too great to ignore,’’ Peck said.

That fear also was evident in an online auction last week when a 1717 Stradivari cello reached a record bid of US$1.35 million but failed to reach its estimated value of US$1.48 million to US$1.97 million or its reserve, according to Tarisio, an auctioneer of fine stringed instruments and bows. The reserve is the lowest undisclosed price the consignor agrees to sell a work.

Sotheby’s and Christie’s said on Monday they were cautiously optimistic about the outcome of the Impressionist and modern art sales this week and postwar and contemporary art sales next week.

“The result will speak to market expectations,’’ said Guy Bennett, international co-head of Impressionist and modern art at Christie’s. “It won’t just be about one sale. The market is far deeper and broader than that. I think we found the right balance in terms of price points and also the quality of the things we’re offering.’’

The Fulds reportedly are selling a group of abstract and minimalist drawings at Christie’s on Wednesday of next week. The highlight of the 16 Master Drawings of American Post War Art from a Private Collection is a 1951 Willem de Kooning drawing of a nude called Woman, estimated at US$4 million.

Another important indicator in the art auction market is the number of guarantees by the auction houses. A guarantee is the undisclosed sum sellers are promised regardless of whether the work sells or not.

To offset risk that some works would not sell in the current financial climate, Sotheby’s has cut guarantees from $458.5 million last year to US$306.1 million this year.

Christie’s has guaranteed six out of 85 works in its Impressionist and modern art sale today, compared to the spring, when it guaranteed 16 out of 58 works from the same period.

“The things that we have chosen to guarantee this season we feel very comfortable with, we feel we made the right decision and we’ll see how the market reacts,’’ said Bennett.

To hedge against risk, Sotheby’s had lined up a buyer for Malevich’s Suprematist Composition who had placed an irrevocable bid on the abstract painting. If the painting went higher than the agreed-on price, which wasn’t disclosed, then the bidder with the irrevocable bid would be compensated according to prior arrangements.

The painting was recently returned to the artist’s descendants following a court battle and after residing for many years in the Stedelijk Museum in Amsterdam.

Despite the troubles in the market, as recently as last month the glimmer of the art market’s strength was evident when works by Damien Hirst sold for US$200 million at Sotheby’s in London.

Sotheby’s CEO William Ruprecht, in an interview last month, said “there’s no question’’ that some buyers are not willing to pay as much as before. “But there’s also no question that there’s an awful lot of interest in important works of art,’’ he said.

Peck said the “worst situation in the upcoming auctions would be for people to lose confidence in art as an asset or its perceived liquidity.’’

Among the other works coming up this week and next are Untitled (Boxer), a 1982 Jean-Michel Basquiat painting owned by Lars Ulrich of heavy-metal band Metallica. Christie’s expects it to fetch more than US$12 million at next Wednesday’s sale but feels it could surpass the current Basquiat record, US$14.6 million.