The Not-So-Special $100 Million Giacometti

Yes, it is conceivable that your daughter could have done that. But she didnt, unfortunately for you. Because it sold at auction this week for just over $100 million.

It was bought by Stephen Cohen, the hedge fund impresario several of whose employees are now in the slammer, though he, himself, has dodged the long arm of the law. So far. What did you expect: a school teacher or a book store employee was going to bid? It was probably either him,  a Russian oligarch or a Chinese property developer.

But what's curious is that the piece is not unique. Giacometti made six of them. Which raises interesting questions about the nature of value in the knowledge era. It reinforces the notion that being ahead of the crowd now requires being in its center. That ubiquity may have greater value than singularity.

Or it could just mean that like football teams and big houses, certain assets accrue value no matter what anyone thinks they're 'actually' worth. Whatever that means. JL

Felix Salmon reports in the New Yorker:

The art market, at its very highest reaches, has always appealed much more to vanity than to connoisseurship
By any reasonable standard, it was an astonishing result. A sculpture by Alberto Giacometti, “Chariot,” sold for $100,965,000. Not only did this piece break the hundred-million-dollar barrier; it also accounted for a quarter of the money that Sotheby’s raised from the seventy-four lots of its Impressionist and Modern Art Evening Sale.
And yet, in the current overheated art market, the hundred-and-one-million-dollar Giacometti was a bit of a disappointment, really: a damp squib. Sotheby’s had projected that it would set “a new world record” for sculpture on Tuesday night—beating the $104.3 million paid for a different Giacometti in London in 2010.

Naturally, Sotheby’s did everything in its power to drum up interest in this work. The catalogue essay is a case study in hyperbole, informing us that, “with this glorious sculpture, Giacometti made his triumphant mark on history.”
The essay is also very clear about whom it’s targeting. The art market, at its very highest reaches, has always appealed much more to vanity than to connoisseurship; auction-house prose is designed to reflect the aspirations of the collector, rather than to explore the inherent quality of the artwork. “Giacometti’s extraordinary “Chariot” is his masterpiece and ranks among the definitive achievements of 20th century art,” the essay begins. “With its painted surface and rich, golden patina, the present sculpture is perhaps the most important bronze that the artist created.”

The word “golden” and its cognates (“gold,” “gilt,” “the metal most prized by man”) echo throughout the essay’s glossy pages. The art market has become a world of conspicuous consumption—a hundred-million-dollar sculpture is simply the most ultra-luxe end of the luxury market, a gilded toy to one-up the guest who arrives in a Bugatti. Art, at these levels (or even at a tenth of these levels) is instantly recognizable: you see a Giacometti and you know, in a fraction of a second, that it’s a Giacometti. It’s branded. And if you know anything about the high-end auction market, then when you see “Chariot” you’ll know that it’s “Chariot,” the hundred-million-dollar sculpture.
That’s probably why Sotheby’s was willing to say in public that “Chariot” was going to set a new record: to the kind of person with the means and desire, owning The Most Expensive Sculpture in the World only provides that much extra cachet and status. If you’re already spending a hundred million on the thing, why not toss in a little more and get a record-breaking sculpture instead? The extra cost should be a virtue, and it’s not like you need the cash for something else.
In the end, the sculpture didn’t quite sell as planned. That’s always a risk, with auctions. The idea is to get some theater going, to get two alpha males furiously competing for a single priceless object. But in the case of “Chariot” there was no competition: beyond the lot’s guarantor—a person or syndicate who promised in advance to buy it for a certain sum—it looked as though there was only one real bidder in the room. The auction settled quickly for a ninety-million-dollar hammer price (the extra eleven million dollars was added on by Sotheby’s for what is technically called a “buyer’s premium.”) More interestingly, there’s a good chance that, after marketing costs and guarantor’s fees and enhanced hammer, Sotheby’s ended up actually losing money on what might well turn out to be its biggest sale of the year. Sotheby’s, just like its collectors, is a trophy hunter, and uses splashy lots like this one to attract the much smaller consignments on which it really makes money. You can expect that almost all of the net proceeds from this sale went to the seller and/or the guarantor, with effectively nothing left over for Sotheby’s itself.
But if you’re looking for paradoxes in this sale, that isn’t the biggest one. The most interesting aspect of the hundred-million-dollar Giacometti is that it isn’t unique. “Chariot” comes from an edition of six—each of which, we can now assume, is worth roughly the same amount. When Giacometti made this sculpture, he didn’t create a hundred million dollars in present-day value; he created six hundred million dollars. Even if you believe the Sotheby’s catalog copy, you have to adjust its meaning slightly. It should have read, “The present sculpture is one of the most important half-dozen bronzes that the artist created.”
It’s entirely rational to think that value goes down as edition size goes up—that if a sculpture is in an edition of six, then it will be worth less than if it were unique or in an edition of two. But the art market is weird, and doesn’t work like that—or, at least, it doesn’t work like that anymore, since it has become an extension of the luxury-goods market. In order for an artist to have value as a brand, he has to have a certain level of recognizability—and for that he needs a critical mass of work. Artists with low levels of output (Morandi, say) generally sell for lower prices than artists with high levels of output—the prime example being Andy Warhol. The more squeegee paintings that Gerhard Richter makes, the more they’re worth.

In the case of “Chariot,” the other versions of the sculpture don’t dilute the value of the art so much as ratify it. Just look at the list of institutions that own a copy: the Nelson-Atkins Museum in Kansas City, the National Gallery in Washington, the (wonderful) Giacometti Museum in Zurich, and MoMA. (The other two copies, including the one Sotheby’s just auctioned, remain in private hands.) You might want to own the “Desmoiselles d’Avignon,” but you can’t, because it’s in MoMA. With “Chariot,” however, you can own a sculpture that is treasured, and owned, by the world’s greatest museums. That makes it more valuable, not less. At the margin, increasing an edition size can increase the value of a work, so long as the other versions end up in high-prestige collections.
Even oligarchs like to save on taxes if they can.
Update: Sotheby’s was in fact itself the guarantor on this particular lot: it guaranteed the seller a certain minimum, regardless of what happened in the auction room. If, as seems likely, that minimum was more than a hundred and one million dollars, the company will have lost money on the sale, its overheated catalogue copy notwithstanding. On the subject of which: the bronze casting, which gives the edition its gilded status, can be more properly attributed to Pierre Matisse, Giacometti’s dealer, than to Giacometti himself. It was Matisse who realized—way back in 1951—that gold sells.