Stefan Simchowitz. Image still from Artsy’s “The Art Market, Explained” © Artsy 2016.
In January, the Austrian dealer Thaddaeus Ropac publicly called for a blacklist of flippers, or people who quickly resell works of art for profit, a practice common in the art world even in today’s relatively muted market.
Blacklists have long been a largely unspoken part of a dealer’s business practices, and were particularly prevalent in 2013 and 2014, when flipping works by emerging artists such as Oscar Murillo, Israel Lund, and Lucien Smith was rife. Although the market has considerably cooled since then (2016 auction results fell by double digits year-over-year at Christie’s and Sotheby’s), Ropac says the market still needs to guard itself from people who buy art for investment rather than passion.
“Flipping is still a big problem, and mainly at auction where we still see the highest prices,” he says. “It’s a very delicate issue; we need to be very careful who we sell works to.”
Ropac clarifies that he is not working on a physical blacklist, but says galleries often work together.
The dealer points to the fact that several of his artists are seeing huge jumps in value at auction. One prominent example is Adrian Ghenie, who first appeared at auction in 2011 when his painting Swimming Pool (2006) fetched $22,500. The Romanian artist broke his record five times in 2016, and now stands at £7.1 million for Nickelodeon (2008). The primary market prices for his works are between around $500,000 and $1 million.
“Ghenie has been flipped at auction for many multiples of his primary market prices,” says Todd Levin, the director of the New York-based Levin Art Group. “When some collectors who bought this work for significantly lower prices see these kinds of results they can be tempted to sell, flooding the market, and that can create downward pressure on prices.”
The traditional channel for a flipper is to quickly resell work at auction, but this may be changing as private sales account for a growing share of the market.
“If you read the way that some collector-dealers work, such as Stefan Simchowitz, for example, it does seem there is still a fair bit of what one could call ‘flipping’ happening privately,” says the New York dealer Ed Winkleman.
Not everyone thinks this is a bad thing. Simchowitz, a Hollywood film producer and high-profile collector often described as a “flipper,” argues that speculation is healthy for the market—perhaps even necessary.
“Many galleries wish the speculators would come back,” he says. “Instead they are closing their doors because so many of these people bought art and kept the business going.”
Speculation, he adds, “helps promotion and builds awareness,” which can help propel an emerging artist’s career.
But others in the trade say flipping has the opposite effect. “The velocity and ferocity of flipping increased exponentially between 2010 and 2015 and created instability in the market, particularly for younger artists,” Levin says. “Many younger artists’ careers were severely damaged.”
Whether a collector will be blacklisted often comes down to the dynamics of their particular relationships. Some collectors may buy so much, or be so powerful, that their dealers may look the other way, says Levin.
“In some cases major collectors have enough power in the market so that galleries can’t afford to blacklist them—for instance, if a collector is a significant trustee at an important museum,” he says.
But few would admit to doing so, says Winkleman, noting that in New York, at least, the dealer is legally mandated to prioritize their artists’ best interests.
“A dealer who represents an artist is legally considered their ‘agent,’” he says. “No one would ever publicly admit to turning a blind eye to flipping.”
If blacklists can ensure a collector can’t buy from a certain dealer, waiting lists are a way of incentivizing buyers to act responsibly. Dealers say waiting lists are a way of ensuring their artists are placed in the best collections and institutions possible, in order to elevate their standing and protect them from potentially harmful flippers. But collectors say dealers who hold back inventory aren’t just protecting their artists. The Dutch collector and entrepreneur Bert Kreuk has called the custom of maintaining waiting lists for artworks “practical extortion tools.”
“It is not uncommon that your position on those waiting lists equals the degree of your submissiveness,” Kreuk says. “It is a way of keeping control. But when you are not easily intimidated or manipulated, you run the risk of going from waiting list to blacklist.”
In 2013, Kreuk caused a stir for exhibiting works from his collection at the Gemeentemuseum in The Hague shortly before auctioning 11 pieces at Sotheby’s. Dealers said Kreuk had shot himself to the top of waiting lists with the promise of the museum show, but misled them about his plans to then sell some of the works. Kreuk told The Art Newspaper that he never said he was buying exclusively for the exhibition, and that around half a dozen dealers contacted him directly to offer works for the show.
Kreuk says he needs to constantly circulate works as he refines his collection of roughly 800 works, a practice some may call flipping.
“While I am improving the collection, I presently sell and add works at about the same rate,” he says.
In today’s global art market, though, when artists are represented by a number of dealers around the world, enforcing a blacklist may not be feasible. One gallerist may decide to blacklist a particular collector, but if others don’t follow that lead, the effort is moot.
“This old concept of globalized, underground blacklists has been defanged to a certain extent,” says Levin.
Idee di Pietra in Gstaad, Switzerland