The Giant Bust Rocking the Art Market

0:04Our colleague Kelly Crowe covers the art market. And last week was a big one for her. It was auction week in New York. Yeah, it's kind of the art world's version of the Super Bowl. The world's biggest auction houses roll out a series of sales that happen every night of the week. And for years, this has sort of served as a public reckoning moment to reassess price levels for hundreds of the world's most expensive artists. Auction Week showcases the biggest art sales. It's a chance for art watchers like Kelly to see which artists are hot and what kind of eye-popping prices their work can command.

0:48And what was the hottest piece up for sale this auction week? So heading into last week, all eyes were on this Alberto Giacometti sculpture, a bronze bust of the artist's younger brother, Diego. It kind of came in with the highest estimate of the week at around$70 million. Collectors and curators consider the bust a masterpiece. And Kelly was in the room when it went up for sale at the auction house Sotheby's New York headquarters. It's this soaring tall building built to sort of feel like a luxury shopping mall, if you will. There's escalators that run right up the middle with galleries ringing each floor.

1:31And so you kind of go up these series of escalators and there's polite women greeting you at every floor. And everyone's in pinstripe suits and, you know, nice dresses and sort of make your way finally to this huge room that has, you can see it around six or seven hundred people. And it was pretty packed.

1:53There it is. I'm sitting there watching it, and I actually pulled out my phone and started Instagram living. Hey, guys, I'm here at some of these. And here we go. What happened next was unlike anything Kelly's seen at an auction for decades. Oh, my goodness.

2:19The collective gasp that came out of these 600 mouths in the room was so audible that it was really startling. Welcome to The Journal, our show about money, business, and power. I'm Annie Minoff. It's Monday, May 19th.

2:44Coming up on the show An auction night shocker And what it says about the art market right now

3:04The Giacometti bus that went up for auction last week is called Grand Tête Mance, or Large Thin Head. It's a bronze sculpture about two feet high of a man's head and shoulders. And it's called Large Thin Head for a reason. So what you're seeing is, it kind of depends on where you're standing. Like from the side, you're gonna see a pretty gnarly, knobby portrait of a guy with spiky hair and big ears and his mouth is sort of slightly opened and he has a collar and it's just really his head and shoulders in a bust. What's interesting is if you stand it in front of it, it becomes kind of knife edge.

3:43The creator of the piece is Alberto Giacometti, a Swiss-Italian sculptor whose work reflects the horrors of World War II. He sculpted Large Thin Head in the post-war period in 1954. Art really did change irrevocably after World War II. You just couldn't make pretty things. I mean, you see it in painting too, all these Jackson Pollock abstracts. Like the whole world just sort of exploded, and the artists are trying to figure out, how do we come back to art and make it matter differently? And so he sort of is known for creating these haunting figures. Giacometti is one of the most important sculptors of the 20th century, and collectors pay big money for his work.

4:19Other casts of the bust have sold for over$50 million, and another Giacometti masterpiece, Pointing Man, sold for over$140 million about a decade ago. All of which is to say, when this particular bust came up for auction, it was an event. And Sotheby's pulled out all the stops.

4:43I feel like when I look at the Bus de Diego, I'm feeling human. There's something like it's nearly touching my soul. Did you see the video that Sotheby's posted about this bust heading into the auction? I mean, the marketing's pretty spectacular, right? This is substantial, monumental. This is his magnum opus of what man is, of what Diego is, of what humanity is. It has a mystical presence or a divine presence. You get that duality. You get that it's both of this world, but also at the same time, it's transcendent.

5:23They do a pretty good job of making these things seem like, you know, once-in-a-lifetime opportunity. I mean, they were laying it on pretty thick. Yeah, yeah. I mean, that's their job. That's why people bring things to auction rather than just take it to a dealer and sell it privately. But a public auction does present a risk. What if the piece doesn't sell? To get around that, auction houses like Sotheby's will often find what's called a guarantor, somebody willing to buy the piece for an undisclosed price just in case no one steps up during the auction. In exchange for that guarantee, Sotheby's will typically take a bigger cut of the sale price.

6:01But in this case, the seller didn't want a guarantor. Large Thin Head was being sold by a foundation tied to the late real estate tycoon Sheldon Solo. And the Solo family was feeling confident. Zola was a famous collector, and his son believes that his dad had really good taste. And so what that has created is a scenario where, you know, they're pretty sure what the work is worth, and they're not known to budge on that, right? So I don't think Sotheby's had a lot of options. The bust would hit the auction block without a guarantor. To go up naked is what we say in auction parlance. It's very rare for a work, I think, at this price anymore to come to market naked, which, to be honest, was really refreshing for someone like me who likes to sort of see like, you know.

6:49Because it's a true test. Yeah, it's a true test of sort of how the market is and where the price, you know, should be and could be.

6:58Which brings us to Tuesday night and that packed auction room.

7:05The auctioneer started the bidding at$59 million. Now, for a minute, that seems like a good deal because the folks who knew Giacometti knew that other pieces of his, you know, had sold for far more, like over$100 million. He doesn't have a bidder yet. But he's trying.

7:29Let's see how it does. Even without a bidder, the auctioneer began raising the price tag. bringing it all the way up to the reserve price, the minimum that the seller would accept. He finally comes up to about$64 million, and then the room just hushes. Like, people who had brought out their cell phones at first, just to sort of catalog the thing, just like I was doing, they start, like, putting their phones down, which is never a good sign. And people start looking around at each other. Like, it gets, like... Awkward? Silent. The room has gotten very quiet. He's sort of stalling it at 64.2.

8:17He just needs one mid. I can't do it.

8:27Everyone's sort of waiting with bated breath for one of them to take the bait. And then, four minutes later, they didn't.

8:40And then when the hammer, you know, came down, the collective gasp that came out of these 600 mouths in the room was so audible that it was really startling.

8:58No one stepped up. to buy the most anticipated piece of the week. There wasn't a single bidder. The thing flopped. Sotheby's chief executive said that the auction house stands by the importance of the Giacometti piece.

9:19What this bust bust says about the art market? That's next.

9:43What was your reaction in that moment when you realized, this thing isn't going to sell? Well, immediately my heart starts racing, right? Because, you know, I've been covering the art market for 20-odd years. I mean, I have to go back to, like, 2008 to remember a piece that sold at this level, you know, this badly or that didn't sell right at this level this badly. Luxury markets like the art market can be a powerful economic indicator. In 2008, art collectors were nervous. This flop might be a sign that they're nervous again. A Sotheby's executive made the point that collectors might be concerned about the current political and economic turmoil.

10:23The art market is an alternative asset, just like real estate, you know, and it tells us how wealthy people spend their money. And you kind of want to see how the world's wealthiest people, who are arguably more insulated than the rest of us, how confident or wary are they to go big or go home, you know, when it comes to these artworks that are over$30 million, over$50 million. It's a very small pool of people to begin with, but you can glean a lot about how they feel about the overall market's health by seeing how willing they are to go shopping.

11:02Just a few months ago, it seemed like they were willing, at least for the right piece. We talked to you not long ago in December about this banana taped to the wall that sold for$6 million. The banana at the grocery store costs about 30 cents. This one just sold for$6.2 million. The cryptocurrency entrepreneur paid more than$6 million for this piece at an art auction last night. And that seemed to be a good sign for the art market at the time. Like people were definitely feeling spendy. Was that a red herring? I'm not sure if it was a red herring or if it was just like the great sort of theater, right?

11:47You know, it went viral from the moment it was taped up to the wall at the fair. It had a whole backstory that this generation of collectors and young people and folks on Instagram, you know, were dressing as this banana for Halloween. It sort of had this pop culture breakthrough. You know, I just think you really have to capture a different level of attention to burst through.

12:10Maybe the banana was an exception. Or maybe the economic mood really has changed since December. We could look at how Wall Street was doing, you know, at the end of last year versus, you know, how it was doing three months ago when a lot of this property was getting gathered for this sale as opposed to how it's doing now, right? Very different kind of mood about the economy. Yeah, very roller coaster, very volatile, and the tariffs are a factor. And so all these little factors can affect a collector sitting in the room or sitting on their computer watching something sell. What makes them push the button and what makes them not?

12:44The whole week wasn't a bust. There were some notable success stories. People did buy things. They weren't buying things really for more than$16 million, but they were. And sort of some fluky things sort of did very well. You know, this Frank Lloyd Wright desk lamp was estimated to sell for$3 to$5 million, and the thing sold for like$7.5 million, like a record for Frank Lloyd Wright at auction. Some contemporary pieces did well, too, like artist Marlena Dumas' Miss January, which sold for$13.6 million. It set a new record for a living female artist. So what did these pieces that did sell kind of show us about changing tastes?

13:27Are people looking for something different right now? Yes, there are some taste changes and every market cycles differently, but little truths sort of emerge from each one. And this one, it's going to sound so overly simplistic, but beautiful things sold really well this season. That seems like a no-brainer. Yeah. But in fact, a few years ago when conceptual art was all the rage and when sort of snarky, cynical, like, you know, if you don't get the joke of the banana, right? Like, you don't understand it. Like, there was a time very recently when calling something beautiful or, in dealer parlance, calling it decorative was really a slam.

14:07Like, ooh, that's a decorative piece, meaning that it was pretty, it wasn't tough, it didn't have some political bite. This week, we really saw really beautiful things sell well. I asked some folks about this, and they basically just said, like, Like, you know, when real life is tough, you know, collecting is meant to be an escape. You retreat to beauty. Yeah, it's meant to be a respite. And it's not a moment where people really want to be challenged with the toughness of art. They really want to be consoled by the beauty of it. And so this is why perhaps the Giacometti, which reminds us of the angst and the existential crises that followed World War II, maybe it just didn't have that moment.

14:54What do the sellers of this bus do now? So they get it back. They may just take a breath and make sure that, you know, the vultures don't sort of scoop it up at a bargain basement prices. It's known as burning the work, right? So you've put this work up to the world to say, I think I want to get this price. And when everyone watches it not get that price, like there's no shot you're ever going to get anything close to that price for a very long time. You sort of burned the work. Yeah, you're sunk. And so at the very least, you're knocking probably 20 million off this work.

15:31How long could this bust bust cast a shadow over the art market? Is this something that people are going to be able to move past quickly or will it linger? I don't think they're going to move past it quickly. No. What auctioneers want is for everyone to feel safe and OK buying art. That's what sellers want so that they can get a good bang for their buck. That's what estates want so they can offload things. But honestly, collectors, you know, with the paddles, make the call. And if they're still a little nervous, then the houses are going to have to be really careful about where they price things.

16:15That's all for today, Monday, May 19th. The Journal is a co-production of Spotify and The Wall Street Journal. If you like our show, follow us on Spotify or wherever you get your podcasts. We're out every weekday afternoon. Thanks for listening. See you tomorrow.