ART AS INVESTMENT
What makes a painting worth so
Van Goghs "Irises" Sells for $53.9
Million to an Undisclosed Buyer
by Mary Dymon
An upsurge of excitement rippled through the art market when Vincent Van Goghs
masterpiece, "Irises", sold for a record price of $53.9 million at the New York
Galleries of Southeby Park Bernet a few years back. The staggering sum for the Van Gogh
remains the highest price paid for a painting at public auction to date.
"Irises" came from the collection of John and
Joanne Payson, avid art collectors and owners of Hobe Sound Galleries, Florida and Maine,
and The Midtown Galleries, New York. Prior to the sale, the Van Gogh had been exhibited
(courtesy of the Paysons) at the Westbrook College Museum in Maine.
"The buyer is unknown. He was represented by an agent
at the auction and only three or four individuals at Southebys were aware of his
identity," Payson explains. "Even though the event received worldwide attention
and careful scrutiny by the media, he has been able to preserve his anonymity."
What determines the price of a painting? Payson says the
artist is the most significant factor, but only a starting point. To bring a top price, a
painting must also be thoroughly typical of the artist. In other words, for a painting to
bring a high price, even when the artist is considered to be a master, the painting must
also have been painted in the style which people have come to think of as characteristic
of the artist. Van Goghs "Irises" exemplifies this point.
Prices have been rising at a phenomenal rate at every major
art auction since the 1950s. In the span of a single week this past November,
Sothebys and Christies sold an unprecedented $430 million of artwork between
them. Works from three single-owner collections accounted for nearly 40 percent of the
total. Also, in 1988, the sale of Jasper Johns "False Start" at $17.05
million established a record for a painting by a living artist.
Payson predicts the next individual sale to shake up the
art world will occur next fall when a Picasso will probably appear in the market.
"That sale should be in excess of $60 million," he says. A work by Picasso,
"Acrobate et Jiune Arlsquim", was sold for $38 million late in 1988 in London.
Such tremendous growth in the participation of art
collecting and dealing today has brought an increasing fascination with the art market and
the way it works. Collectors vary from the young enthusiast who ventures $100 for a
painting by an unknown artist, to the deep pocket connoisseur who pays millions for a work
by a great master like Van Gogh. There are more people collecting art now than at any
other period in history, and they are collecting from a wider spectrum of artists and
For the first time ever, a living artist like Jasper Johns
can make a good living. Yet relatively few people, even among collectors, know why art has
become such big business. Both buyers and sellers continue to ask themselves: "what
is this work of art worth?"
Values in the art market have never been clearly defined,
but valuations are continually being demanded for tax and other purposes. Accepted price
levels for works of art are established by the interplay between auctioneers and dealers.
(Public auctions are generally attended by large groups of interested dealers.) A market
for art exists simply because most people take natural pleasure in possessing beautiful
things. In fact, Payson advises beginners to concentrate on their own likes and dislikes
as opposed to value potential.
"When you start collecting art, you shouldnt
think about the investment potential in it. Buy it because you like it," Payson says.
A market for art is created the moment two people wants to
possess the same work of art. A middleman, usually an auctioneer or dealer, then comes on
the scene to determine which of the two parties is prepared to pay the higher price.
Fine art is becoming more and more a part of the public
psyche. There are art galleries and art stores, books on art, magazine devoted to every
facet of the subject, newspapers with art sections and now, even a cable TV station. The
overall demand for artwork is booming.
Another factor on the demand side of the art market is the
influence of the schools of investment in vogue at a given time. Those watching the
financial transactions of the wealthy follow art investment trends, adding to the demand
for works by particular artists.
On the supply side, the supply of fine artwork is
absolutely limited. With notable exceptions like Jasper Johns, investment-quality artwork
generally implies a dead artist. As more of this limited supply is purchased, there is
progressively less available for sale. So, the remaining demand must be satisfied out of
this limited and now-decreased supply.
It looks like the perfect investment: An increasing demand
coupled with an absolutely limited supply. Now, add to that the prosperity of the
1980s and you will begin to understand the attraction of the art market.
This period of plenty has created surplus funds for an
increasing segment of the population. Stock market yields have been low overall, making
this market progressively less attractive to the individual investor. Art, as an
alternative investment, is not being overlooked.
"Collecting art for the purpose of investment must be
carefully considered. Were talking about a long-term investment," Payson
explains. "Art buys can be a hedge against inflation, but you must understand that
most appreciation occurs over time."
Payson began his collection at 21 years of age when he fell
in love with a painting and bought it. His mother, Joan Whitney Payson, was even younger
when she started collecting at age 19. It was Mrs. Payson who acquired "Irises"
at an auction in 1947 through the guidance of a private dealer, Carman Messmore-Knoedler.
She paid $80,000. Legend has it that Mrs. Payson thought the price tag was too high. It
was Messmore who encouraged her to make the purchase by teasing, "Now Joan,
dont be so stingy!" (By the way, "Irises" first sold for 250 francs
"You can see why it is very important to like the art
you buy since you will probably have it for a significant period of time," Payson
says. "Surprisingly, it doesnt require a large investment to start. It does
require study and knowledge, however,
"Lets say, for example, you like American
realists from the 1930s and 40s. Find the galleries that sell that kind of work. Ask the
dealers about the arrangements, terms and details concerning tradebacks. Will they stand
behind the painting? When considering the price of a work, there are certain guidelines,
points where you should take a closer look. If a watercolor is priced over $1,200 or an
oil over $5,000, start asking some questions: Is the artist included in a museum or
corporate collection? Is the artist alive? Has he or she participated in any major shows?
Get as much information as possible. Also, check the auction records.
"You will probably acquire from only a handful of
galleries. My mother acquired from three galleries, two in New York and one in London.
"Interaction at the top level, the auction market,
should be approached very cautiously. Works more than 100 years old are not guaranteed by
large auction houses. You should work with a dealer you trust implicitly. A good dealer
will study the provenance of a painting, tracing its history to its origin. Your dealer
may also work with an art expert in determining provenance. Also, it its the dealer
who should advise you on how high to bid, or you may want to ask him to bid for you."
With his subtle grin and gentle personality, Payson
possesses the soul of an artist himself. His is sensitive, perceptive and has acquired the
ability to recognize great art. Payson brings to his Hobe Sound Galleries an impressive
array of outstanding new artist. Many of these new artists he helped develop himself
either through his school in Maine or by offering the artist the opportunity to show. In
sum, the art in his gallery in Hobe Sound is a reflection of the man himself: Colorful,
yet subtle, thought provoking, intelligent and financially sound.
Payson, like many important collectors of paintings, does
not buy art just to sell it. His paintings are his treasures and a major love of his life.
Of course, a price tag can be attached, as with the Van Gogh, but more often it is enough
for Payson to know that the value is there and that it can be passed on to museums or
public institutions as his contribution to the cultural aspect of society.
Art investment is often cloaked by a veil of secrecy. It is
a very personal marketing process based more on human emotion than on any predictable
In the end, the investor-collector comes back to a
subjective assessment of quality. As beauty lies in the eye of the beholder, so lies value
in the mind of the buyer.
Guide to American and European Prints at Auction 16th Century to Present
Sothby's Art at Auction: The Art Market Review 1994-1995
Auction Book; Worldwide Contemporary Art Results from 1993
|Mary Dymon is a partner in Langley, Dymon &
Downs, Inc., one of the Internet's premier web site development companies.
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