Big returns in small packages: an art exhibit dream comes true

New York

BRETT Gorvy has been dreaming about this show for years.

During two decades at Christie's, where he rose to become chairman of the firm's post-war and contemporary art department, Mr Gorvy was often frustrated by the razor-thin margins on some of the biggest trophies.

So in late 2016, when he decided to join forces with former colleague Dominique Levy, he knew that the first show he curated for Levy Gorvy Gallery would focus on the less-sensational, yet more-lucrative segment of the art market: small gems from key collections.

That exhibition - Intimate Infinite - is set to open on Sept 6 in New York and will include almost 100 artworks worth an estimated US$400 million. Billionaire hedge fund manager Steve Cohen and the Whitney Museum of American Art are among those that loaned pieces. More than two-thirds of the items on display are less than 20 inches tall.

"At auction there are always these items that top collectors focus on," Mr Gorvy, 54, said in an interview at the gallery, where cardboard models of the exhibition were studded with tiny replicas of the artworks. "They are these small jewels. None of them are very high in value."

While paintings such as the US$450 million da Vinci or US$300 million de Kooning get the most publicity, the sweet spot for the trade is about US$1.5 million to US$5 million, Mr Gorvy said. That price point draws the most buyers at auctions, galleries and fairs - and generates the fattest commissions for brokers.

"That's where you can hold onto your margin," he added.

With fierce competition for fresh material, dealers and auction houses often forgo profits for the bragging rights of selling the most expensive works. Auction houses charge a buyer's premium of about 20 per cent of the hammer price on the first US$4 million of an item, and a percentage on amounts exceeding that. But to win the most desirable works they often hand over much of that fee to the seller.

Shares of Sotheby's tumbled 5.6 per cent on Aug 6, the most in six months, after the company reported a drop in auction-commission margins. The margin decline was partly based on the sale of two large guaranteed paintings, chief financial officer Michael Goss said in a conference call with analysts.

"They can make a lot less on a US$10 million picture than on a US$2 million picture," Mr Gorvy said of auction houses.

Small artworks of the highest quality often spark bidding wars. A 15-by-20-inch self portrait by Rudolf Stingel fetched US$4.5 million at Sotheby's in May, more than doubling the low estimate. Six months earlier, the auction house sold an entire batch of 86 small works on paper from the Diamonstein-Spielvogel Collection of key 20th century artists, for US$59.7 million.

Exhibitions such as Levy Gorvy's offer a glimpse into an opaque segment of the art market. Private sales by dealers accounted for 53 per cent of the US$63.7 billion in total art sales last year, according to UBS Group AG and Art Basel. Top galleries demonstrate their influence by staging museum-quality exhibitions featuring loans from major public and private collections. Insiders watch such shows to glean information about new trends and available troves. Officially, there may not be many - or any - works for sale, but unsolicited offers are usually entertained.

Just 10 per cent of the items on display at the Levy Gorvy exhibit will be for sale, including a 7.7-inch square canvas marked with thick white strokes by Robert Ryman - Untitled #32 - which fetched US$1.1 million at auction in October. The asking price is now US$1.8 million.

Sensual yet minimalist paintings by Ryman, 88, a Museum of Modern Art guard-turned-celebrated artist, will greet the visitors on the gallery's ground floor, where the focal point will be a loan from the Whitney. They will be paired with delicate scribbles by the late Cy Twombly.

On the second floor, works by commercially undervalued post-war female artists such as Lee Bontecou, Hannah Wilke and Eva Hesse will face off with their male peers, including Jasper Johns and John Chamberlain. One of the works is Johns' White Target from Mr Cohen's collection. While it's not for sale, dealers estimate it is worth US$85 million to US$125 million.

The personal fantasy worlds created by artists are on display on the third floor, including collages by Bruce Conner, the late West Coast artist with a cult following and growing institutional recognition; drug-induced drawings by late Belgian poet and painter Henri Michaux; Joseph Cornell's boxes; and sublime graphite renderings of snow, waves and stars by Vija Celmins.

The works offer a "value point and incredible pleasure," Mr Gorvy said. "They have a magical quality at the time when people need some light in their lives." BLOOMBERG