The season may have been something of a fizzle at the beach, but in the art market, it was the longest, hottest summer in years. On a Friday afternoon in August, Michael McGinnis, director of contemporary art for Phillips Auctioneers, sat at his desk in the cramped East 79th Street offices of the upstart, London-based firm surrounded by a mountain of catalogues and artworks in -- and out of -- packing crates. As five o'clock approached, the newly rich collectors he cultivates were fleeing the city for their art-filled, humidity-controlled beach houses. But McGinnis was doggedly plowing through transparencies of recent works by Matthew Barney, Jeff Koons, and Cindy Sherman -- fashionable artists whose works he hopes to sell for record sums at auction this fall. Above all, McGinnis was keenly aware that by the end of summer, he must nail down an impressive array of works for the all-important fall sales, which begin on November 13.
With Phillips as the new wildcard in the 250-year slugfest between Sotheby's and Christie's, the competition has never been more intense. "It's insanity -- we're incredibly busy," says McGinnis, a relentlessly cheerful, plump-cheeked 30-year-old who quit Christie's last year to launch Phillips's contemporary department.
And the battle has not been without what the Pentagon calls collateral damage. Dealers once watched from the sidelines as Christie's and Sotheby's duked it out over old masters, Impressionists, and Abstract Expressionists. But to the dealers' horror, the auction houses have moved aggressively in the past two years to seize control of the contemporary-art market. Gallery owners complain that the extravagant prices achieved recently at auction have prompted speculators to buy artists' latest works in galleries, then flip them at Sotheby's, Christie's, or Phillips for a quick profit, inflating the fragile careers of artists the galleries have painstakingly nurtured.
"I think it's reprehensible," says Barbara Gladstone, a prominent Chelsea dealer. "When I see works from 1999 at auction in 2000, my blood boils. These artists are people with careers. It's a reflection of unmitigated greed, and I think it should be regulated."
Gladstone argues that art created in the past decade should be excluded from public auctions -- a high-minded proposal that is unlikely to come to pass. "If an artwork is over ten years old, I think, okay -- the statute of limitations is up," she says.
"The galleries are the big losers in this game," fumes a prominent SoHo dealer. "When collectors sell work from our gallery at auction, we don't make a dime, and neither does the artist. If the piece does badly at auction, everyone suffers. If the piece does well and we raise our prices to match the auction price, the collectors get angry. And if we don't raise them, the artist feels betrayed -- artists are very sensitive -- and they threaten to defect to another gallery. It's a no-win situation."
Some established collectors also find it in bad taste. "If you put something up at auction, you can hurt the artist's market," says Herbert Schorr, a veteran bi-coastal collector of emerging artists. "To me, if I want to make money, I'll make it in the stock market. But I must admit that I am in a very small minority."
The auction houses plead innocence. "I don't try to encourage people to sell work they just bought last week," says Philippe Ségalot, head of Christie's contemporary-art department, who is more than familiar with such expressions of dealer rage. "But I cannot ignore it, because if I don't take it, they will go to the competition."
The spring 2000 auctions in New York produced record sums for the work of 35 artists including Phillips's, whose first glitzy contemporary evening sale fetched an impressive $11 million. Out of Sight, Out of Mind -- a 1991 sculpture by Damien Hirst consisting of two severed cattle heads preserved in formaldehyde -- sold for a staggering $552,500 at Phillips, a record for the 35-year-old British artist. Bidding was fierce, even though the sculpture itself was stuck in London. A polite salesroom announcement elicited a few chuckles: U.S. Customs was demanding that the purchaser sign an affidavit guaranteeing that Hirst's grisly handiwork would be used solely as an artwork, in order to prevent the potential spread of mad-cow disease. No less remarkably, Woman in Tub -- an über-kitsch 1988 porcelain sculpture by Jeff Koons of a headless woman grabbing her breasts as an intrepid visitor with a snorkel attacks her from the bottom of her bubble bath -- sold to an unidentified telephone bidder at Christie's for $1.71 million.
With the fall auction season rapidly approaching, there's no shortage of deep-pocketed collectors with the superior vision required to admire the aesthetics of pickled cows' heads and headless porcelain pornography. And with the spring's high prices egging the auction houses on to score an even bigger autumn, McGinnis and his formidable rivals, Christie's Philippe Ségalot and Sotheby's Tobias Meyer, spent their summers jetting from villa to chalet to dacha to ranch in order to cajole coveted artworks from collectors. To close their deals, the three experts and their various deputies often fly thousands of miles to view a single picture. "It's important to see it firsthand before we make a serious commitment," says McGinnis, who recently flew to Switzerland for the day to visit a collector. "The stakes are high in these auctions, and you have to be 1,000 percent confident that you're going to be able to sell it."
Among the tantalizing contemporary works the three are confident about selling in the fall sales are another Damien Hirst, In Love/Out of Love, from 1998, that McGinnis estimates will sell for $400,000 to $600,000. And at Christie's, Philippe Ségalot has lined up Charles Ray's Male Mannequin, a sculpture that Christie's describes as "a self-portrait in some sense as the genitalia is anatomically correct and cast from life," which he has estimated at $700,000 to $900,000.
In grabbing the contemporary dealer's secondary sales, the auction houses are adjusting to a seismic shift in the marketplace and evolving tastes. Impressionist paintings and early-to-mid-twentieth-century artworks have long produced top dollar, but superb examples are increasingly scarce. Most are locked away in museums and private collections, or have become exorbitantly expensive. But newly wrought, contemporary pieces -- some on which the paint is barely dry -- are in prodigious supply. "Thirty years ago, we were collecting Abstract Expressionists when that was still affordable," Schorr says of his switch to emerging art. "We buy young art," his wife, Lenore, adds. "It's more challenging. It's the thrill of discovery."
In their enthusiasm for these new artists, many ignore the fact that the stratospheric prices being achieved at auction for recently created works are eerily reminiscent of the inflated market of the eighties that immediately preceded the art-world Armageddon of 1990, when prices and confidence plunged. A dismal contemporary auction at Sotheby's in November 1990, where 58 percent of the artworks offered went unsold, remains a painful memory to some.
"Very few people seem to have learned the lessons from the end of the eighties," observes Matthew Marks, a leading Chelsea dealer who isn't tickled to see the market froth over. "I'm not that old, so I don't see why I can remember it, but so many people old enough to be my parents' age don't."
A cautious skepticism, however, may be hard to maintain in the face of positive market pressure. At Sotheby's evening sale on May 17, a multi-edition photograph created in 1998 by Andreas Gursky sold for $181,750 -- a record price for the popular German artist, and an astonishing sum given that it was selling in galleries only two years ago for just $30,000.