The New Art Sharks
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New York real estate baron Aby Rosen slips out of a late afternoon meeting for a quick tour of the art collection on display at Lever House on Park Avenue, one of his 32 properties. In the conference room, a couple of Warhols (he has more than 80) and a funky Tom Friedman sculpture made of old cartons. Out in the lobby, an oddly mundane Jeff Koons installation of 30 new basketballs in a glass case. Down the hall, some big oils painted collaboratively by Warhol and Jean-Michel Basquiat. Also on display: works by sculptors Gary Hume and Louise Bourgeois and a Christopher Wool painting.
It's a dream collection, a mixture of new and not-so-new artists whose prices have increased three, five, and even seven times in recent years. Yet Rosen is blasé about how much all this art is worth. "Maybe 30 or 40 million bucks," he says. "I never think about that. It's just here, part of the environment, part of what we live with every day."
Every age of wealth has its mega-collectors who help set taste and stock museums with the art of the era. And in this era it's increasingly upstarts such as the German-born Rosen, 46, who moved to New York 20 years ago after having run the family real estate company in Frankfurt since his teens. In the last few years, you can track the new names creeping into ARTnews magazine's annual list of the world's top 200 collectors: U.S. hedge fund, real estate, and media barons, Korean retailers, German advertising tycoons, and French money managers are mixing with the old guard, such as Los Angeles philanthropist Eli Broad. Many among the new generation share Rosen's insouciance about spending enormous sums for works they really want. "I call them all 'hedge fund guys,' but what they really are is people who've made a ton of money very fast," says Miami hotelier and veteran collector Donald Rubell.
Many of them may also be riding for a fall. The newcomers don't always play by the old rules and, as in their day jobs, they take huge risks. Their cash has allowed them to muscle to the top of many dealer lists and pay lofty top auction prices when they can't get enough from galleries.
Yet many are chasing the same trendy artists and driving up prices unsustainably fast. Want a coveted work by New York photographer Richard Prince or the hot Los Angeles multimedia artist Mike Kelley? They're up fivefold or more in recent years: Prince's works now top $1 million, and hedge fund manager David Ganek is one of two buyers who paid $688,000 for a copy of a 1991 Kelley photo series at the New York auctions in May. Paintings by octogenarian artist Tyeb Mehta have had a similar runup in just three years, to as much as $1.6 million, partly because New York hedge fund manager Rajiv Chaudhri is buying works by Indian artists whom he believes have "been touched by magic." And don't even ask about Beijing-based Zhang Xiaogang. Contemporary Chinese art is the trend du jour, so prices for his work have climbed maybe twentyfold in 18 months, topping out at nearly $1 million in March.
The fierce bidding has some longtime collectors buying less or focusing on younger artists. Hollywood producer Dean Valentine, a long-established collector, derides some new buyers as "hedge-fund dim bulbs" and gripes that "you can't collect in depth anymore unless you're a billionaire." But others are paying the price to stay in the game. Dealers figure that art world heavyweight Ronald Lauder recently anted up $135 million for a 1907 portrait by Gustav Klimt, probably the highest price ever paid for a painting, because he feared what would happen if the work went to auction.
Everyone knows it can't last. Artprice.com, which tracks auction results, figures prices in the U.S. now stand 44% above their mid-1990 peak, just before the last crash. Worldwide, 454 works exceeded $1 million at auction in the first half of this year, up from 130 in the same period of 2003. Yet the buying continues, fueled by boom-time thinking. Rosen, for instance, says he isn't worried about having paid $2.7 million recently, nearly seven times the 1999 price, for a kitschy Koons sculpture of the comedian Buster Keaton. "If you own 12 other Koons, as I do, [paying a high price] makes you happy," he says. "You're just beefing up the value of your other pieces." That's why dealers pursue veterans like Rubell and Vail (Colo.)-based Kent Logan, an early buyer of Chinese contemporary art, trying to buy works in their collections. "The sums are astronomical," says Rubell. "Dealers offer us a good price, and when we say no they offer to double, triple, quadruple it. Maybe it's stubbornness, but we always refuse."
Not all longtime collectors do. The Big Kahuna among the hedge fund guys is Stamford (Conn.)-based Steven Cohen, who art world insiders believe has spent at least $500 million in six years of collecting. He has bought a Jackson Pollock from Hollywood's David Geffen (for $52 million, according to The New York Times) and a van Gogh and Gauguin from casino operator Steve Wynn (reportedly for more than $100 million). Lately, he has turned his attention to post-World War II works, says Sandy Heller, one of his main art advisers, partly because great Impressionist and modern pieces are scarce.
Cohen is snatching up some of the best contemporary pieces. Last year he paid London ad mogul Charles Saatchi $12 million for a 1991 installation by Britain's Damien Hirst that consists of a 14-foot shark pickled in formaldehyde, believed to be the highest price ever paid for a work by a living artist. Trouble is, the shark has deteriorated, so Cohen is getting Hirst to refurbish the piece. Paying millions for a rotting shark may seem wacky, but the purchase played in the art world as a major victory for New York's Museum of Modern Art over London's Tate, the thinking being that Cohen will give the shark to MOMA. Heller calls the work "a masterpiece" and says MOMA is one of several institutions Cohen would consider if he decided to give it away.
Pickled shark isn't particularly outrageous by today's standards. One of Rosen's more in-your-face treasures, displayed in the Lever House courtyard, is a 35-foot painted bronze sculpture by Hirst of a naked pregnant woman with half her skin flayed off and a fetus hanging from her womb. Rosen paid $2.5 million for it two years ago.
Bizarre as some of the works seem, the collectors are making a wager almost as old as art: That the greatest works often seem strange in their own time and the challenge is to pick the ones that will last. "You get to play your personal vision against art history, and if something becomes more valuable, in a sense it vindicates your judgment," says Adam Lindemann, 45, a major collector and author of the new book, Collecting Contemporary (Taschen, $29.99).
Truth be told, most of this art will end up in museums, many built by the collectors themselves. For instance, Russian banker Peter Aven, 51, who has assembled one of the world's best collections of late 19th and early 20th century Russian art, says he hopes one day to build a museum in Russia modeled on New York's Frick Collection, founded by steel baron Henry Clay Frick.
In the meantime, everyone wonders how the newcomers will react when the market finally heads down. Some already appear to be taking profits. Hedge fund manager Adam Sender, 37 (sendercollection.com), is selling part of his collection this fall, including works by such top-dollar trendsetters as Prince, Kelley, and Germany's Andreas Gursky. Todd Levin, Sender's curator, says Sender is just rejiggering his holdings and intends to continue buying art "for decades to come."
Still, most of today's big buyers have never seen a bear market -- only 39 collectors in ARTnews' current Top 200 were on the list in 1991 -- so Rubell has his doubts about their staying power. "We'll see what happens when things go into the crapper," he says. "The true collectors will be the ones who keep buying art."
By Thane Peterson