The Value of Art: An Introduction
“A collector has one of three motives for collecting: a genuine love of art, the investment possibilities, or its social promise. I have never known a collector who was not stimulated by all three.” - Emily Hall Tremaine
The value of art can be seen to have three components, similar to The Three Graces, also known as Charities (from Greek, karitas, meaning love) or Zeus’ three daughters: Thalia, Euphrosyne, and Aglaea.
Their combined functions were to preside over banquets and to entertain the gods and their guests.
Thaila is the goddess of fruitfulness and abundance, representing Commerce.
Euphrosyne is the goddess of joy; she represents Society.
Aglaea is the goddess of beauty, which being in the eye of the beholder, is the Essential (or intrinsic) value of art.
All works of art have the potential for commercial, social and essential value. But none of these values are constant; all are enhanced or diminished by volatile tastes of different cultures.
The Three Graces, Antonio Canova, 1814-17
I grew up sleepily stumbling around art galleries with my parents on summer European travels. Unhappily attending weekly Sunday night lectures at a family friend’s house who, at 87 years old, would give us 2-hour lectures on Baroque, Modern, Impressionism – without any cue cards. He sadly passed away from cancer a few years ago; I wish I could have fully appreciated his generosity in sharing his knowledge and love for art then.
I recently started to read more about the value of art and wanted to share this curious part of the world – an intersection of the arts, investing, society – with you from an educational and (hopefully) entertaining standpoint with you. My interest in the art markets started earlier this year after being gifted The $12 Million Shark (thank you, Mac).
Charles Saatchi commissioned a work of art from upcoming young British artist Damien Hirst for £50,000 in 1991. A dead shark caught off the coast of Australia was pickled in a large tank and given the name The Physical Impossibility of Death in the Mind of Someone Living. Fourteen years later, it sold for $12,000,000 to an investment banker in NYC. Note that the shark also started decaying in its tank, turned green and lost a fin. How does a dead shark appreciate from £50,000 to $12 million in 13 years?
The Physical Impossibility of Death in the Mind of Someone Living, Damien Hirst, 1991
Art has no intrinsic, objective value – similar to currency.* Human stipulation and declaration create and sustain commercial value. The reason people continue to be enraged when they hear a piece sold for millions, is that they believe art serves no necessary function. We can’t eat, drink, drive or wear a Jeff Koons. Most people would not spend $450 million on a Leonardo Da Vinci painting – I would probably consider eight-bedroom house(s) around the world. Yet global art market sales reached $67.4 billion in 2018 and have outperformed equity markets for a number of years.
Leonardo Da Vinci, Salvator Mundi, c.1500
Get to the point, Katya! The following five market value attributes must be known and weighed carefully:
Provenance
Condition
Authenticity
Exposure
Quality
Provenance: A French term for the history or ownership of a valuable object, provenance is valued. For example, a Rothko belonging to David and Peggy Rockefeller (heavily marketing by Sotheby’s) sold for $72.8 million in 2007 – the following evening, a Rothko similar in size and date sold for a mere $29.9 million.
David Rockefeller stands beside his Untitled (Yellow, Pink, and Lavender on Rose) Rothko in 2007.
Condition: The condition of a work of art is also key factor, typically proven by a condition report itemizing the result of the physical examination by a professional in the field. The difference between a “good” and “excellent” condition rating may impact 15-20% of the value in a work, while “poor” conditions may lose up to 40%. However, sometimes this is overlooked: in the case of Damien Hirst’s pickled animals, this shark was rotting (formaldehyde should not have been used), the water turned murky. This incited a great controversy regarding the replacement of the shark: would the work still be of the same value if the shark was replaced? If you painted over a Rembrandt would it be the same? What if you replace a light bulb in a Dan Flavin neon installation?
Authenticity: In the art markets, an object is either deemed to be right or wrong, worth something or worth nothing. A questionable work may be a copy of an authentic work, an outright fake, or just misattributed. In 2016, a painting sold by Sotheby’s as the work of Dutch artist Frans Hals for £8.4 million was reassessed as fake after a pigmentation test.
Exposure: When your painting is paraded to prominent museums in New York and London, the painting’s commercial appeal increases. What would have happened if Warhol’s Marilyn Monroe were kept away hung above a fireplace mantle? Such works are said to have achieved “iconic” status – a very expensive word in the art trade.
Quality: Despite many relative and experiential characteristics, quality separates a successful work of art from one that may be merely interesting or typical. Mastery of the medium, clarity of execution, and authority of expression are vital criteria applicable to all works of art, regardless of style or subject.
Van Gogh’s Irises, 1889
These factors are important for the commercial, social and financial value of art – of which are animals of their own. My adventures in the art world are just getting started – always happy to hear your recommendations or if you want company to go to an art gallery. I’m curious in where the line is between buying art for appreciation and the “other” reasons for buying art – status, “taste”, prestige, etc. Can beautiful art be tainted by human needs of attention and importance? And big thank you to Alfredo for your gift of the book The Value of Art by Michael Findlay.
* Unless the materials used are valuable, such as Damien Hirsts’ For the Love of God platinum skull encrusted with 8,601 flawless diamonds selling for $100 million in 2007. Excerpts and information from Michael Findlay’s The Value of Art.