The Competitive Nature Of Art Flexing
How Auction Houses Feed the Frenzy

Blossom tree branches painted on a blue background H9-5 Honesty © Damien Hirst 2021
Jasper Tordoff

Jasper Tordoff, Specialist[email protected]

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Art auctions have long been revered as thrilling spectacles, drawing art collectors, enthusiasts, and investors alike. Orchestrating sales for maximum drama and excitement, auctions often fuel the phenomenon known as “art flexing”: the trend of flaunting high-priced artworks as a symbol of wealth and status. In this article, we explore the art of the auction and situate them within their contemporary context of competitive collectors and frenzied buying. We’ll take a look at how this approach to auctions can affect the wider market and those who operate within it.

The Art of Auctions: How Auction Houses Create Drama and Frenzy

Today, art auctions have become synonymous with excitement, anticipation, and high-stakes competition. These events not only showcase exceptional artworks but also serve as platforms where collectors and investors engage in a compelling battle for prized pieces. Auction houses, such as Sotheby's and Christie's, are masterful orchestrators of this theatre, strategically curating sales to maximise drama and frenzy. This is facilitated by environments where wealth is a status symbol, and art collectors (or, in some cases, art flexors) are ready to bid at astronomical prices to draw attention to their fortune.

Of course, there is meticulous planning and execution behind these events. Auction houses employ various techniques to create an electric atmosphere, from precisely timing the bidding process to highlighting exceptional artworks and leveraging the allure of prestigious names in the art world. The result is an atmosphere pulsating with anticipation, as collectors eagerly raise their paddles or place bids online, vying for their next passion asset.

Even amid the influx of new platforms for trading art, auction houses continue to hold a high degree of significance in the art market. The reason for this is their ability to establish benchmarks for art prices, shape market trends, and facilitate the exchange of blue-chip pieces. Auctions not only provide a platform for art collectors and enthusiasts to acquire rare and sought-after works, but also offer reputable services for appraisal and authentication. And importantly, they are can generate excitement and buzz to elevate the status of artists and artworks.

As the art market becomes increasingly competitive, understanding the dynamics of auctions becomes essential for both seasoned art collectors and newcomers. The drama and frenzy they generate are not merely spectacles; they shape the course of the art world, driving prices, igniting trends, and captivating audiences. That’s where art advisory comes in. In the auction world, experts still have a key role to play.

The Role of Professional Experts in the Auction World

Behind the scenes of every art auction, professional experts play a vital role in ensuring the integrity, value, and authenticity of the artworks on offer. These experts include art appraisers, authenticators, and valuers.

These specialists are the core basis of the strong reputation that auction houses enjoy. By carefully examining provenance, assessing condition, and conducting extensive research, these experts contribute to the overall assessment of an artwork's worth.

Professional experts also assist auction houses in establishing the authenticity of artworks, safeguarding the market from counterfeit or misattributed pieces. Through their well-trained eyes and vast knowledge of movements spanning the Renaissance to contemporary art scenes, they can detect subtle nuances, brushstrokes, and details that help authenticate an artwork's origin.

Due to the complexities surrounding value, provenance and authenticity, professional opinions remain highly influential in the auction world. When a renowned expert vouches for the authenticity or quality of a work, it can significantly impact the desirability and final price. Collectors and investors often rely on these expert evaluations when making decisions about bidding and purchasing.

The Collaboration between Auction Houses and Galleries

In the art world, the collaboration between auction houses and galleries is a common theme. This partnership creates a dynamic ecosystem where artworks are showcased, promoted, and ultimately find their way into the hands of collectors.

Auction houses and galleries work symbiotically. Galleries serve as the initial platform for artists, nurturing their talent, and introducing their work to the public. Often offering programmes and support to emerging artists, these spaces provide a nurturing environment where artists can develop their style and gain recognition. By hosting exhibitions and representing artists, galleries play a crucial role in establishing their reputation and market presence.

Once an artist has an established audience, auction houses work to catalyse the sale of artworks. Auction houses curate specialised sales and auctions that generate excitement and competition, propelling the value of artworks to new heights. Partnerships between auction houses and galleries allow for a seamless transition from gallery representation to the auction stage, expanding an artist's exposure and potential market.

A dark-haired woman in a sailors hat and white shirt with the text: THERE ARE NO EXTRAORDINARY PEOPLE, ONLY ORDINARY PEOPLE WHO DO EXTRAORDINARY THINGS in block capitals.Extraordinary People © The Connor Brothers 2020

Successful collaborations between auction houses and galleries have had a profound impact on the art market. For instance, in 2022 Phillips mounted an exhibition called “New Romantics” at Seoul’s Lee Eugean Gallery. The show coincided with Frieze Seoul and KIAF, leading to a major sale at Phillips Hong Kong two weeks later.

Notable partnerships have resulted in groundbreaking sales, record-breaking prices, and increased visibility for artists. By working together, auction houses and galleries ensure a steady supply of artwork so that the art market continues to flourish.

Private Auctions: Behind Closed Doors

Beyond the spectacle and grandeur of auction houses, there is another set of art transactions that takes place away from the limelight: private auctions. These exclusive events offer a different approach to buying and selling artworks, providing a more intimate and discreet setting for collectors and investors.

Private auctions take place behind closed doors, often in elegant galleries, prestigious residences, or confidential venues. The guest lists are carefully curated, comprising a select group of collectors, art enthusiasts, and industry insiders. This exclusivity adds an air of secrecy and allure to the proceedings, attracting individuals with reputations in art collector circles.

Private auctions also offer something auction houses do not: the opportunity for in-depth discussions and negotiations. In this intimate setting, participants have direct access to the artwork, allowing them to closely examine the pieces they are interested in. The absence of a larger audience can create a more relaxed atmosphere, fostering more considered bargaining and personal connections between buyers and sellers.

For the high-end art collector, there is also a level of discretion at private auctions. Participants can discreetly acquire or sell artworks without the public scrutiny often associated with public auctions. This confidentiality allows for strategic acquisitions, particularly when building a private collection or exploring investment opportunities.

That said, the market impact of private auctions is disputed. While some insist that private auctions feed into the overall health of the market, there is an issue with transparency in the private setting. The secrecy around inner circle dealings tends to mean exact figures don’t reach the open market, which can affect fair competition at general auctions.

On top of that, private auctions compound the art world’s issue with exclusivity and barriers to access. Invite-only events tend to draw in the art-collecting elite, which equates the process of buying art with a luxury-level price tag.

Certainly, notable private auctions throughout history have seen exceptional artworks change hands, often at staggering prices. In 2020, Sotheby’s sold a nine-foot-tall Alberto Giacometti sculpture in a secret bid where the starting price was $90 million.

While public auctions attract attention and generate excitement, private auctions offer a different experience for those seeking exclusivity, confidentiality, and a more personalised approach to acquiring or selling artworks. Away from the frenzied bargaining that takes place at public auctions, art flexing isn’t as relevant—but these private sales do come at the cost of exclusivity and expense. The art market accommodates both realms, catering to the diverse preferences and requirements of collectors and investors.

How Art Auctions Shape Artists’ Careers and The Art Market

As one of the key marketplaces for artwork, auctions have a profound impact on artists and the broader art market. The outcomes of auctions can significantly shape an artist's reputation, career trajectory, and overall perception of their work.

When an artist's artwork achieves high prices at auction, it often garners attention and raises their profile in the art world, attracting the interest of collectors, galleries, and institutions. The buzz generated from auction successes can propel an artist's career to new heights, opening doors to prestigious exhibitions, commissions, and collaborations.

Conversely, the disappointment of an artwork failing to meet expectations at auction can have repercussions. Known as 'burned' artwork, it may create a perception of decreased market interest or devalue an artist's body of work. Artists must navigate the competitive nature of auctions and carefully consider the timing and presentation of their artworks to ensure optimal results.

Auctions also play a crucial role in shaping the broader art market. The prices achieved at auctions, especially for blue-chip and highly sought-after artworks, establish benchmarks that influence the valuation of similar pieces. Auctions serve as a barometer of the art world, reflecting its ever-evolving dynamics and the shifting tastes and preferences of collectors.

The results can spark trends, drive prices upward, and create a sense of urgency among collectors and investors.

The Effect of the Pandemic on Auction Houses

Of course, the art market doesn’t exist in a vacuum. Like many other industries, it experienced significant disruptions during to the global pandemic. As a historically in-person format, auction houses had to quickly adapt to the new realities and find innovative ways to continue their operations.

One of the most notable impacts of this was the shift to online platforms. With in-person gatherings and events restricted, auction houses rapidly expanded their digital presence, hosting virtual auctions and implementing robust online bidding systems. This transition allowed bidders from around the world to participate remotely, broadening the reach and accessibility of auctions.

The increased reliance on online platforms presents both challenges and opportunities. Namely, auction houses have had to invest in secure technology to facilitate smooth online bidding processes. Now competing with other online marketplaces, auction houses have also had to enhance their digital marketing efforts to engage potential buyers in a crowded digital space.

Despite the challenges, the art market demonstrated resilience during the pandemic, with online sales surging in various sectors. Auction houses embraced the digital shift and found creative ways to replicate the excitement and drama of live auctions through virtual experiences. Through technologies such as live streaming, interactive bidding, and virtual exhibitions, auction houses managed to provide a rich and immersive environment for collectors.

A new focus on flexibility has permeated other areas of auction house operations. The pandemic prompted increased support for clients, with some houses implementing extended payment terms as well as enhanced shipping and logistics services. In place of experts at the scene, many auction houses provided virtual consultations to facilitate smooth transactions in a time of uncertainty.

As the art market continues to recover and adapt to the changing landscape, the lessons learned during the pandemic are likely to shape the future of auctions. The digital advancements and online presence established during this time are expected to remain integral to the auction house model, offering a blend of in-person and virtual experiences to cater to a diverse range of collectors and investors.

Fundamentally, the pandemic served to prove the continuing relevance of a traditional institution. Auction houses have proven their resilience and adaptability, and their continued evolution will undoubtedly contribute to the growth and accessibility of the art world in the post-pandemic era.

Auctions vs. Private Sales: Choosing the Right Option

Art auctions and private sales represent the two main avenues for art collectors and investors. While both have their pulls, it is often the case that different acquisitions require different approaches. Understanding the differences between the two is crucial for making the right choice for a particular artwork.

While auctions offer an open platform that generates excitement and competition, the format of an auction makes it harder to get expertise if you’re just starting out. Auctions typically also come with commission fees and other costs. To sell, you’ll pay 15% of the hammer price plus marketing, cataloguing, shipping and storage fees; and to buy, you’ll pay 25% of the hammer price plus VAT. If the artwork sells for well over the high estimate you could also be subject to a 1-2% performance commission.

Private sales, on the other hand, take place directly between the buyer and seller, or via a broker, without the public spectacle. These transactions offer a more discreet and personalised experience, allowing for focused negotiations and tailored agreements. While the absence of public bidding is not quite as atmospheric as a traditional auction, private sales and auctions afford collectors more time and space to make a decision.

When deciding between auctions and private sales, consider the nature of the artwork itself, the seller's objectives and timeline, and the buyer's preferences and budget. Highly sought-after blue-chip artworks often thrive in auctions, while private sales may be more suitable for niche or specialised pieces.

Seeking guidance from art advisors or consultants, such as those provided by MyArtBroker, can provide valuable insights to navigate the decision-making process and ensure the best possible outcome for all parties involved.

Navigating the Art Auction World: Insights and Tips from MyArtBroker

MyArtBroker is dedicated to assisting collectors and investors in navigating the art auction landscape with confidence. While our brokers can assist collectors in private sales with our bespoke brokering service, we also have a wealth of in-house knowledge on the art market, auctions, and artwork valuation.

You can read our full guide on buying or selling at an auction here.

The nature of the prints and editions market in which we specialise differs to that of the originals market. With editions, if the price isn’t right for the buyer at that moment of sale, there is no particular incentive to keep bidding. Auctioning a print doesn’t have the same urgency attached to it as does a one-of-a-kind masterpiece. Usually, collectors can find another opportunity for a print from the same series.

If you are looking to buy or sell prints exactly when you want - without cost or the logistics of moving it - then most auction houses simply can’t accommodate the request. This is due to their pre-planned calendar and the overheads of running a traditional auction model. The alternative, of course, is a private sale.

At MyArtBroker, our objective is to get you the same return as you’d get at auction (or better). We can do this at a time convenient to you, on your terms, and without risk. Thanks to our optimised digital service, we don’t need to charge a commission, meaning our seller and buyer’s fees are always at 0%. You have the ability to sell whenever you want, at the very best time to release the value of your work.

We are home to the largest dedicated network of contemporary and modern prints and editions in the world. This private network means we can help you source a print or a buyer seamlessly.

In the fast-paced and ever-evolving art market, having a trusted advisor by your side can make all the difference. MyArtBroker's commitment to providing personalised guidance and insights empowers collectors and investors to navigate the art world with confidence and achieve their desired outcomes.

Staying Strategic in the Competitive World of the Auction House

The competitive nature of art auctions is a key market dynamic. While art flexing can occur in any corner of the market, the frenzied bidding at auction houses is ripe for extravagant displays of wealth and expenditure. Nonetheless, the auction house is still a pivotal site of trading and collecting in the art world. Auctions have a profound impact on artists and the art market, shaping reputations and career trajectories.

When choosing between auctions and private sales, it's important to consider the specific artwork, objectives, and budget. The pandemic has further transformed the auction landscape, with auction houses adapting to online platforms and embracing digital innovations.

In navigating the art auction world, seeking guidance from art advisory and consultation services is invaluable. MyArtBroker, with its expertise in art appraisal, authentication, and market trends, empowers collectors and investors to make informed decisions. Our insights and network help to navigate the complexities of the private sales process, ensuring confidence in art transactions.

Understanding the competitive nature of the art auctions is crucial for collectors. In a nutshell, art investors have to be strategic if they’re buying or selling under the hammer. Continual learning, engagement with the art world, and leveraging expert services will enhance the experience of the captivating realm of art auctions.

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