Art Basel’s Parent Company, MCH Group, Cuts Regional Fairs Amid Major Losses
MCH Group, the Swiss fair conglomerate that owns the Art Basel fairs, announced significant cost-cutting measures on Friday, including that it will abandon its two-and-a-half-year-old initiative to acquire regional art fairs around the globe. The move was announced by interim CEO Hans-Kristian Hoejsgaard, who took over direction of the live marketing giant in September amidst significant declines in revenue from its once-marquee Baselworld watch and jewelry fair.
MCH will consolidate its focus on the three Art Basel art fairs in Basel, Miami Beach, and Hong Kong, as well as Masterpiece London; Design Miami, with editions in Basel and Miami Beach; Baselworld; its car fair, Grand Basel; and a further, unspecified “large number of exhibitions focused on the Swiss market,” according to the announcement.
MCH still plans to use its majority stake in Masterpiece, acquired in December 2017, to expand its geographical footprint, with Asia first in its sights. The Art Basel Cities initiative, which encountered challenges in its initial location, Buenos Aires, and has yet to announce any further cities since its launch in March 2016, will also reportedly continue. However, Grand Basel’s expansion to Miami Beach in 2019 has been postponed indefinitely.
In an email sent to Artsy, Hoejsgaard said that the changes aim to capitalize on Art Basel’s success and to make up for the losses suffered from its watch and jewelry fair holdings.
“Art Basel, with its strong market position, is one of the most important pillars in the MCH Group’s portfolio, which is to be strengthened further,” he said. “In its current situation, MCH Group simply does not have the resources required for further expansion of the participation portfolio with regional art fairs.”
He added that the Art Basel Cities initiative was, unlike the regional fairs, aligned to be part of the Art Basel brand, and thus will be “further developed on the basis of the experience gained so far.”
A spokesperson for Art Basel confirmed that the fair has cancelled two longtime sections at Art Basel in Miami Beach, Film and Public, which, in past years, have brought outdoor sculptures to Collins Park in front of the The Bass, but said that this decision was unrelated to MCH’s cost-cutting measures. “With the renovation of the MBCC completed in time for our show, Art Basel’s priority this year is on maximizing the new state-of-the-art facilities that the building will provide,” Dorothee Dines, the global head of media relations for Art Basel, told Artsy in an email.
The MCH Design and Regional Art Fairs initiative, intended to allow MCH to create or buy up events that cater more to one city rather than the international art community, appeared promising when announced in March 2016. The conglomerate acquired a majority stake in India Art Fair in September of the same year and a minority stake in Art Düsseldorf in February 2017. This past July, MCH announced plans to launch Art SG in Singapore.
Now, the group’s stakes in India Art Fair and Art Düsseldorf will be sold, and it will no longer support Art SG, which was slated to have its first edition in Singapore in September 2019. Hoejsgaard said in a statement that these significant cuts are the first step in a comprehensive review of the entire group’s initiatives aimed at renewing financial stability.
“This is a highly demanding process and will take a prolonged period of time,” he said. “Our biggest challenge lies in finding the right balance between the measures required to stabilize the company and the investments which—despite limited resources—we must make in the future.”
Formerly a cash cow for MCH, Baselworld has floundered in recent years amidst a shrinking market for luxury watches; a significant number of exhibitors have dropped out of the fair, and losses have mounted for its parent company. As many as 850 of the fair’s exhibitors had dropped out over the course of two years, slashing its number of booths by 57 percent. Chatter at the Messeplatz in March suggested that Baselworld could end altogether following its 2019 edition, according to industry publication Hodinkee.
In the email statement, Hoejsgaard said that he is “convinced that there will be a Baselworld 2020.”
In a bid to save money for Baselworld’s biggest brands, which routinely have spent millions each year on their stands, MCH asked Art Basel to hold its Unlimited section upstairs in Hall 1 of the Messe Basel this past June, so that the watch booths could remain intact downstairs year round. Nonetheless, in July, Swatch Group, the fair’s biggest client with 18 individual brands, cut all ties to Baselworld and released a fiery statement from its CEO, who accused fair directors of being snobby, arrogant, and unable to do new things. Several other brands followed, and in September, MCH Group announced that losses could exceed $100 million. Then-CEO René Kamm exited the company days after Swatch Group’s announcement.
India Art Fair and Art Düsseldorf must now search for investors to buy out MCH Group’s respective stakes. The Swiss expo conglomerate had purchased a 60.3 percent stake in India Art Fair’s organizer, Seventh Plane Pvt. Ltd, and a 25.1 percent stake in International GmbH, the company that operates Art Düsseldorf, both at unreported valuations. In a statement to Artsy, Hoejsgaard said, “MCH will fully support the fairs until a new shareholder will be found.”
Sandy Angus, chairman of Angus Montgomery Arts, the exhibition company that owns stakes in the India Art Fair, Art Central in Hong Kong, and Photofairs Shanghai, and was slated to help launch Art SG in partnership with MCH Group and the fair producer Tim Etchells, said he disagrees with MCH’s decision and believes that there are still significant opportunities in regional fairs.
“Obviously, I’m disappointed, but I don’t think that’s any surprise,” Angus said Friday morning during a phone call from St. Petersburg, Russia. “We know that MCH as a group has been going through a number of problems, having to redirect their priorities, and this is a consequence of that redirection.”
He was not able to say whether Art SG would continue on without MCH (Hoejsgaard said he was confident it would). Despite the dramatic sell-off, Angus continues to be confident in regional fairs’ important role in the global art market.
“The response to our regional fairs has been overwhelming,” Angus said. “MCH is concentrating very strongly on its core businesses, and Art Basel is its core businesses, which it will protect at all costs. I’m sorry that regional art fairs have been discarded from their ambitions.”
Nate Freeman is Artsy’s Senior Reporter.