Tools for Culture

Imagine a movie that starts with a scene inside the Victoria & Albert Museum. “Hey,” says a bright spark. “Let’s get people to come here by bringing together as many of the great film costumes of history as we can. Let’s have Darth Vader’s helmet and cloak and Captain Jack Sparrow’s pirate outfit.

“Hell, let’s have Dorothy’s ruby red slippers from The Wizard of Oz. They’ve never been out of America before, that’ll get them queuing around the block.”

Cue worried faces. “Great idea,” says a quiet voice in the corner. “But how do we pay for it? These things ain’t cheap.”

Indeed not. It cost more than £1 million to gather up outfits from vaults around the world and show them at the V&A in 2012, but the Hollywood Costumes exhibition was one of the most successful in the museum’s long history. It could not have happened without the help of Harry Winston, a name that was new to most of the 250,000 visitors to the V&A in the three months the items were on show.

Winston, a jeweller in New York in the early days of the past century, had the idea of lending his best diamonds to Hollywood stars as they walked the red carpet. His name lives on in an American corporation, which gave money and support to the V&A as a way of making itself better known in this country, with spectacular results. “We would not be able to do anything on this scale, with this ambition, without them,” says Laura Sears, head of corporate partnerships for the V&A.

The collaboration is one of those being honoured by the Arts & Business Awards, in partnership with Jaguar Land Rover, whose shortlist is revealed in The Sunday Telegraph today.

They range across seven categories, celebrating the involvement of business with every kind of arts activity, from a theatre prize put up by the property company Bruntwood in association with the Royal Exchange Theatre in Manchester, to Louis Vuitton’s sponsorship of digital art for young people in south London. Harry Winston and the V&A are up for the Sponsorship Award, alongside BP’s support of the National Portrait Gallery and BSkyB’s investment in innovative works at Tate Liverpool.

Sir Peter Bazalgette, the new chairman of Arts England, said last month: “I don’t think business is pulling its weight at the moment. They have recalibrated and reset their balance sheets since 2008 but have not come back into the arts sponsorship game. They can do more and it is in their interests to do so.”

But these awards celebrate those who do pull their weight. They are the ones defying the double-dip recession and bucking the trend. If the story of the arts in Britain today was told on film, it would be a slasher movie, with a bloodbath of cuts endangering projects of all kinds across the country. But in the midst of the carnage, some beautiful things are happening. The latest figures show arts sponsorship by business has risen by 3 per cent, after falling for four years in a row.

“You get a whiff from the Government that business should feel honour-bound to help out. That’s never going to work,” says Philip Spedding, director of Arts & Business, a charity whose president is the Prince of Wales, and which puts artists together with moneymakers, for mutual benefit. “We’ve always been clear that businesses investing in arts and culture need to get something in return. We’ve got to battle with the idea that sponsorship is really philanthropy in disguise, or the whim of the chairman. The awards are there to show that businesses are doing this and it really makes a difference to them.”

So what do they get out of it? The feel-good factor and a bit of a buff-up for the brand, obviously, but there’s more than that. Some City corporations believe their employees are more grounded, more creative and more useful after being lent to the boards of arts organisations, he says.

“There is also an argument that says you should participate in building up a city where the best staff want to work. There are a variety of reasons why Frankfurt has not become the financial capital of Europe, and one is that London is a lot more fun to live in. That’s about the culture. You can see the finest art, opera and theatre.”

One city with a firm grasp of this is Manchester, where the council puts a great deal of energy into providing a home for the arts and creative industries. “You get a sense of the regional pride in being a world-class cultural city,” says Mr Spedding. “They want to be seen as the second capital of Britain.”

Stephen Sorrell of the law firm Eversheds agrees. He’s a member of the leadership team of Arts & Business and also on the board of the trust behind Home, the new cultural hub in Manchester bringing the Cornerhouse art cinema, the Library Theatre and galleries into one building, with hotels, leisure facilities and a public piazza. “Five years ago, it would have been a supermarket. Arts and culture is acting as a catalyst for regeneration in a way it hasn’t before. We earn our money from this community, from the city council and from various public agencies, so you can see why it would be a good thing to support them directly.”

The award for the best long-term partnership could go to Manchester, for the Bruntwood Prize. This has so far seen eight new works put on at the Manchester Royal Exchange. The shortlist also includes Bath Spa University’s work with Bath Festivals; and the Macquarie Group (a banking and fund management company) with Streetwise Opera.

At first, it’s hard to see what this has to do with Harry Winston, whose name was so synonymous with Hollywood glamour that Marilyn Monroe interrupted the song Diamonds Are a Girl’s Best Friend to say: “Talk to me, Harry Winston, tell me all about it.”

Harry died in 1978, but when the V&A came cold-calling, it was looking for a way to raise its profile after six years in London. As well as giving money, the company lent a diamond necklace to the exhibition, published a booklet and made a film.

“They took every opportunity to get their name out there,” says Laura Sears. “Their expectations were extremely high. The primary objective was press coverage. They wanted to get their brand everywhere, in all the newspapers, luxury magazines, everything.”

That certainly happened. Winston was also just about to open a boutique in Harrods, so the timing was perfect. “They also wanted opportunities to build client relationships, so they were looking at our opening events and parties and how many invitations they would have. They are a luxury brand and that’s how they drive sales.”

Dennis O’Connor, the UK managing director of Harry Winston, says the partnership with the V&A delivered “above and beyond” what the company expected.

The Arts & Business Awards suggest not just a few happy endings like this for people in the arts, but – as the enemies of Darth Vader would put it – a new hope.

India’s super rich help fuel art market

by Adam Davidson | Source: The New York Times

When Edvard Munch’s iconic painting The Scream went for about US$120 million and became the most expensive artwork ever sold at auction, it seemed like we had reached the climax of a fine-art bubble. After all, from 2003 to 2007, the fine-art market grew even faster than subprime housing. And then it kept on growing, pausing only momentarily during the crisis before hurtling even further upward. Eleven of the 20 highest prices ever paid at auction have occurred since 2008, when the global economy all but collapsed.

Many economists say that art can’t be in a bubble because, frankly, it’s not much of an investment in the first place. Unlike stocks, an artwork’s price reflects numerous nonfinancial intangibles, like the pleasure of owning a painting or, perhaps more important, its ability to signal the owner’s vast wealth and erudition. While stocks can provide an ongoing payment stream and are traded in public markets, art collectors must pay to protect their investments. It’s also much harder for collectors to resell expensive art. Not only is the market opaque, but few artists have real long-term value. Sergey Skaterschikov, who publishes an influential art-investment report, says that no painting bought for US$30 million or more has ever been resold at a profit.

Artwork itself may be a lousy investment, but selling it can be pretty profitable. Because each piece of fine art is unique and can’t be owned by anybody else, it does a more powerful and subtle job of signaling wealth than virtually any other luxury good. High prices are, quite literally, central to the signal. You’re spending US$120 million, in part, to show that you can blow US$120 million on something that can’t possibly be worth that much in any marketplace.

Art is often valuable precisely because it isn’t a sensible way to make money. And perhaps as a result, it has become even more valuable of late. Benjamin Mandel, an economist at the Federal Reserve Bank of New York, has been studying the art market because, he says, “it’s a great way to study asset price valuations.” Mandel read reports suggesting that the market was growing at an unsustainable clip. For one thing, prices have gone up far faster than global GDP.

But then Mandel realised that we had been looking at the market incorrectly. Fine art, he said, is not really part of the overall global economy. Instead, it’s part of the economy of a small subset of the super-superrich, whom some economists call Ultra High Net Worth Individuals. And their economy, unlike ours, is booming. In that alternate world, fine art as a percentage of the economy has stayed stable over the last decade, in part because a flood of new UHNWI’s in China, India and other developing nations has entered the art-buying market with great enthusiasm. In 2003, the sales at Christie’s Hong Kong totaled US$98 million. Last year, they were US$836 million.

The art market is a proxy for the fate of the superrich themselves. Investors who believe that incomes and wealth will return to a more equitable state should ignore art and put their money into investments that grow alongside the overall economy, like telecoms and steel. For those who believe that the very, very rich will continue to grow at a pace that outstrips the rest of us, it seems like there’s no better investment than art.

So how can a thirsty outsider get in on this market’s profits, short of opening a gallery or becoming an expert adviser? That’s the supposed role of art investment funds, like the Fine Art Fund. Fund managers remove the pleasures and ego-stroking that distort the investment principles of art ownership by collecting money — the minimum investment at the Fine Art Fund is US$500,000 — from individuals, much like a hedge fund or asset management firm does. These assets then serve to create something of a virtual art gallery. Managers use art expertise and close industry connections to try to buy art cheaply, sell it high and return the profit to their investors.

In this sense, the current art market seems a lot like the Gold Rush. In the late 1840s, there were tons of people who wanted to find gold, but it was mainly the middlemen, who sold the pickaxes and gold pans, who made money. And right now, the world is going to need a lot more pickaxe salesmen — advisers, consultants, gallerists, buyers. One confident art-fund manager told me that his pitch is simple: there are only around 3,000 top-quality items sold each year and more than 3,000 people want them. The number of buyers is growing faster than the amount of art.

The pitch is great, except that many art funds have collapsed. That’s because art isn’t gold, or any other commodity in which units can be evaluated objectively. The value of any artist’s work is determined by an insider world of cultural arbiters who coordinate with one another. They know long before the rest of us which new artist is going to have a big show, who is going to be trashed in a review or whose piece was just sold privately for a small fortune.

Because the art market isn’t regulated like financial securities, insider dealing is generally not illegal. In fact, being a truly influential insider is so rewarding that the slots are zealously guarded. Larry Gagosian, perhaps the world’s most influential gallery owner, needs a nearly impossible combination of skills — deep art knowledge, master salesmanship, charm, ruthlessness, financial savvy and the respect of the artists themselves — to maintain his edge and root out competition. When you start a consulting service or invest in an art fund, you are an outsider seeking to make money in a shadowy market filled with brilliant insiders just like him. No wonder it rarely works.

India’s booming economy creates art investors

Source: BBC

India’s booming economy is creating a slew of art collectors interested in the latest investment opportunity and foreign galleries are arriving in the main metropolitan areas hoping to cash in on this new-found market.

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An Emirate filling up with artwork

by Sara Hamdan | Source: The New York Times

As Qatar develops a sophisticated art scene, with exhibitions by high-profile artists and plans for nearly a dozen new gallery openings in the next 6 months, analysts say an increasing number of Qatari buyers and collectors are becoming major investors in art.

Qatari officials tend to be tight-lipped about acquisitions, but art experts say major purchases in the past few years have included US$72.8 million spent in 2007 at Sotheby’s for Mark Rothko’s White Center, formerly owned by David Rockefeller, and a record US$250 million reported, though not confirmed, to have been paid last year in a private deal for a Paul Cézanne, The Card Players.

Qatari buyers make up to 25% of the Middle East’s US$11 billion art market, according to calculations by Philip Hoffman, chief executive of the Fine Art Fund Group, an art investment management and consulting firm based in London. His team manages an art fund for clients with a minimum of US$3 million in investable assets that became available to Mideast clients last year through a partnership with Emirates NBD, a bank based in Dubai. The fund taps the Middle East art market, which Mr. Hoffman believes is set to triple in the next 5 years and gain an even bigger foothold in the US$3 trillion international art market.

“Qatar is clear on wanting to build phenomenal art collections and aware that if they want amazing pieces like the Cézanne work, they will have to pay the hefty US$250 million price tag — and they are capable of doing it,” he said in a telephone interview. “Purchases like this will become benchmarks for the pricing of very rare art.”

JPMorgan Chase and Deutsche Bank have also set up art funds in the region to ensure that they do not miss opportunities in this burgeoning market.

Wealthy people with US$1 million or more to play with are increasingly looking for capital growth and risk diversification by putting money into “passion investments,” including art, said the World Wealth Report 2011 by Merrill Lynch and Capgemini. The report said 22% of passion investments were dedicated to art, with 42% of financial advisers surveyed noting that “high net worth clients invest in art primarily for its potential to gain value.”

Auction houses are feeling the benefit. Since Christie’s set up an office in Dubai in 2005, its client base has grown by 22 to 25% annually, including new collectors from Qatar, according to Isabelle de la Bruyère, director of Christie’s Middle East. She said 60% of those new clients go on to bid in Christie’s international sales. “This means they are not just one time collectors; they start with buying art from their own region and then expand,” she said in an interview at Christie’s offices in the Dubai International Financial Center. “This is important in nurturing a sustainable art market.”

Sustainability is vitally important for the continuing development of Qatar’s art scene, which has grown dramatically over the last 3 years.

Current exhibitions in Doha’s museums bring shows by several high-profile artists to the Middle East for the first time, ranging from quirky pieces by the Japanese pop artist Takashi Murakami to the dreamlike sculptures of the late French artist Louise Bourgeois. “Qatar is going through an art renaissance,” Jean-Paul Engelen, director of public art programs for the Qatar Museums Authority (QMA), said in a telephone interview. “At the moment we have 3 major international exhibitions, which is very rare in the Mideast, and we will alternate to feature local artists next.”

Mr. Engelen, who formerly worked at Christie’s in London for 16 years and moved to Doha last year, said that “Qatar has a vision to become a global leader in the arts.”

A commitment is being made to support regional artists in addition to building collections of renowned works by established international artists, according to Antonia Carver, the fair director of Art Dubai. Sheik Hassan bin Mohammed bin Ali Al-Thani, who founded Mathaf: Arab Museum of Modern Art, in Doha, has been supporting artists for years and providing “residencies” before they were known in this part of the world, Ms. Carver said. “News about Cézanne and Damien Hirst hits headlines, but it’s perhaps these more localised forms of patronage — such as Sheik Hassan’s care for Iraqi artists over several decades — that are particularly meaningful within the region,” Ms. Carver said in an e-mailed statement.

To advise on establishing a long-term art presence in Qatar, an international team of art buyers, including Edward J. Dolman, a former chairman of Christie’s, was brought in to Doha to help run investments and museum projects for the royal family. “Qatar’s royal family are very much like modern-day equivalents of the Medicis in 16th century Florence,” said William Lawrie, part owner of the Lawrie Shabibi gallery in Dubai. “What they and the Qatar museum authority have been doing is collecting art in various categories and organically developing a truly impressive art scene. Qatar is very far ahead of the curve, not just in works commissioned on site, but also works on loan from collectors around the world,” he added. “They are making it a point to engage with the global art scene.”

With such an agenda, it comes as no surprise that Qatar, largely through its museum authority and the investments of the royal family, has become one of the world’s biggest buyers of art.

“More of the world’s best paintings will be heading to Qatar in the next 3 years,” said Mr. Hoffman, the Fine Art Fund Group chief. He added that Saudi Arabia and the United Arab Emirates also had great potential to be influential art market players.