AAP’s investment fund, which had raised $125 million and invested just over half that in artworks, was achieved in less than two years, and probably had made AAP the second-largest art investment fund in the world—an indication of Cappellazzo and Schwartzman’s connections and clout.
Although AAP would no longer offer full-service advising as an independent agency, other agencies were certain to try to fill the gap, particularly given the favourable response to Sotheby’s acquisition and because Art Agency is now out of the artist-representation field.
Dealers were understandably unenthused about Cappellazzo or anyone else taking on the role of advising their artists (or their collectors) on how to achieve career goals, and would be less happy if an auction house tried to. If a super-agent can provide these services to
, or even to established, mid-level artists, what remains for the traditional dealer? The über dealers—Gagosian
or Hauser & Wirth
—can all afford to lose an artist without threat to their individual galleries’ future.
The threat is greater when a mainstream dealer loses a mid-level successful artist. The profit model for the mainstream dealer is that for every ten new artists she represents, on average four will not be well received by collectors and will leave the gallery after one or two shows.
Three will show for a few years before dropping out. Two will have long, moderately profitable careers. At best, one will be well received. The one well-received artist has to generate enough profit to justify the dealer’s investment in the other nine. If that one artist moves to an adviser (or is poached by an über dealer), the mainstream gallery’s profit model is threatened.
The concern most often floated about advisers, and especially about the new model, is that they will also act as private dealers, recommend the work of artists that they represent, or sell work from their own inventory. When advisers also act as dealers (or in Cappellazzo’s case as an employee of an auction house), they transgress one of the rules of the Association of Professional Art Advisors. That involves avoiding the perception of possible conflict of interest.
The agent-who-is-also-a-dealer problem was the subject of one of the most talked-about art disputes of 2015, one that at the time of writing was being shopped as a movie. The case involved Yves Bouvier, a Swiss freeport warehouse owner and art adviser/dealer, and Dmitry Rybolovlev, a businessman from the Urals region of Russia and one of that country’s wealthiest persons.
Rybolovlev is almost a caricature of the popular image of a Russian oligarch living in the West—one reason why this saga might make a good movie. In recent years he purchased Donald Trump’s Palm Beach mansion through a limited liability company for $95 million, Sanford Weill’s Manhattan condo for $88 million, and then the Greek island of Skorpios from the Onassis family for an undisclosed amount. The latter two transactions were via a trust owned by his daughter Ekaterina. In 2016 he had the 61,000-square-foot Trump French provincial Palm Beach home—which he had never occupied—torn down. Over the same period, Rybolovlev’s former wife Elena was awarded a reported $4.5 billion after a seven-year divorce battle.
Using offshore companies, Rybolovlev spent $2 billion over an eight-year period to purchase almost forty works of art through Bouvier—by Picasso,
. The Rybolovlev–Bouvier feud that ensued has several components. One
is the accusation by the Rybolovlev’s family trust that Bouvier, as part of assisting in the acquisition of art, overcharged by just over $1 billion for the purchases. Read that again and be awed: a collector sued because he was overcharged $1 billion on $2 billion of art purchases.
Rybolovlev says he believed Bouvier was acting as an agent in the transactions, negotiating the best price and charging a 2-percent fee. Bouvier claimed it should have been clear he was functioning as a private dealer, purchasing art and reselling to Rybolovlev for whatever he could negotiate.
Another allegation is that Bouvier misled Rybolovlev about the acquisition cost of a Modigliani painting for which Rybolovlev was charged $118 million. Rybolovlev said that he encountered art adviser Sandy Heller over lunch during a Caribbean vacation. He asked Heller the normal opening question in such an encounter, “What was the last lot you sold?” Heller mentioned the Modigliani. Rybolovlev asked the selling price, and after checking for permission with his principal, Steve Cohen, Heller responded that it was $93.5 million. This implied that Bouvier had taken the difference, $24 million, as an undisclosed profit. In January 2015, Rybolovlev filed a criminal complaint in Monaco, asserting fraud and other misdeeds; the case was ongoing as this was written.