Dealing in a Down Market

IN these particular times," says Rupert Otten, art dealer and accountant, "it is extremely difficult to make a living as a dealer, and you have to be very imaginative." With numerous galleries closing, and others waiting for better economic times, Mr. Otten's observation can hardly be disputed.

I met him at an art fair in London called "World of Drawings and Watercolours" held concurrently with "Art '92: The London Contemporary Art Fair." These two occasions presented a good opportunity to talk to dealers about their business approaches - to ask them what factors determine the prices of art works. Their answers suggested that no single influence predominates: Auctions, museum curators' fads, public taste, TV shows, even art writers all have a bearing.

But the ingenious strategies of dealers themselves also have a powerful effect on price levels. Some of these dealers are new to the game and bring previous professional experience to it.

Mr. Otten, for example, is a chartered accountant and is on the boards of a number of commercial galleries. So he has been well placed to "learn about the market. I saw the things they did right, and the things they did wrong," he says.

Now he is director of Wolseley Fine Arts, a 2 1/2-year-old firm specializing in modern British and European drawings from 1900 to about 1950. Passionate about drawings as the "first run of an artist's eye," Otten is also vitally "interested in the business of dealing," he says. This gives him a potent mix of commercial instinct and aesthetic judgment.

Though Otten's company is public, he has also chosen to be part of a growing fraternity of private dealers who do not have the burden of renting and maintaining gallery spaces.

His stand at the drawings and watercolors fair was one of about two displaying art of recognizable quality. Most of this rather desperate fair was devoted to pretty sub-Victorian pictures of amiable lasses washing clothes or sweet children allegorizing spring. Otten has more admirable aims. One of his drawings was even bought by the Ashmolean Museum in Oxford.

One of Otten's favorite strategies as an "imaginative" dealer is "arbitrage." This involves exploiting differences between markets internationally.

"America," he says, "is a good example of a place to buy British art. Americans have been keen collectors of British art for many years." Prices at auctions or prices acceptable to collectors may well be lower than in Britain. So a drawing by a British artist like Christopher Wood in the United States "can be acquired at a very reasonable price. Brought back to England, it will not be overpriced in relation to whatever else is being offered here."

Similarly, Otten applies arbitrage to the home market, though with more difficulty. "It requires collectors or ex-collectors to wish to dispose of their collection. They are usually prepared to take a modest price, particularly if they bought it cheaply years back." Country prices also reflect levels of appreciation that are less than in the city, and this gives imaginative city dealers opportunities, too.

Otten admits the arbitrage principle can sometimes go wrong - as when he eagerly attended an auction in France where Mr. Wood's drawings were offered. He mistakenly assumed the French had little interest in Wood. He was completely wrong. The prices skyrocketed, and he didn't buy.

"But ... if I could find a Christopher Wood in America...," he hazards.

One of London's influential dealers, Leslie Waddington, came up with a different - and drastic - strategy. At the opening of "Art '92," he caused some consternation by telling the London Times that he had just cut all his prices by 30 percent and that any dealer who didn't was crazy.

This is not the usual practice of art dealers who want to keep the value of their artists' work steady. Angela Flowers, director of Flowers East, confided she was "not pleased with Leslie Waddington." She was indignant that he should dictate to other dealers what they should do.

Madeleine Ponsonby, director of the New Art Center, observed stoutly that she had not cut her prices 30 percent. Nor had Marianne Jesperson, director of Collector Contemporary Art, another private dealer.

"But then we didn't put our prices up as high as Waddington's," she said with a laugh.

Andrew Kalman of the Crane Gallery, also at this fair, didn't mention the Waddington Decree. But he did give me extensive insights into "imaginative" art dealing as it is done today. He, too, is new blood with only two to three years as a dealer. Formerly, for a few years, he was a stockbroker. His father is Andras Kalman, who has for a great many years run the successful Crane Kalman Gallery down the road from Harrods.

An outstanding show in mid-1990 at the Crane Gallery was of American artist Hans Hofmann (1880-1966). At "Art '92," a fine Hofmann entitled "Mia Impressione" looked for a buyer with $311,500 to spare. But more accessible to current clientele strapped for funds were works on view by Jenny Franklyn, Mary Newcomb, Winifred Nicholson - the staple fare of both of the Kalman galleries, with prices in the region of $7,000 to $25,000.

The Kalman strategy towards Hofmann, however, tells something about how a successful dealer can operate in good times and in not so good times. The Hofmann ($311,500) was offered in 1990 for a little over $356,000. So there is a concession to the recession.

All the same, the Crane Gallery is making a vigorous commitment both commercial and aesthetic to Hofmann. The Kalmans bought extensively from the New York gallery Andre Emmerich, which more or less controls the Hofmann estate. Even before their own show, the Kalmans' own buying had helped to up the prices of Hofmann's work. They then made a decision to place "premium prices" (as high as $445,000) on certain works in their show, unwilling to come down from this new plateau. It was a deliberate bid to incr ease Hofmann's values and push forward his reputation in Europe.

Andrew Kalman maintains that there are multiple factors determining art prices. But a recognition by a dealer that an artist has been undervalued, especially an artist who happens to be dead and whose supply of work is limited, can be one of the most potent forces for success, he says.

An overall recession may effect such a strategy, of course. But the dealer's commitment needs to remain steady - allowing for small, temporary dippings of prices - until the market improves. The Kalmans remain confident that Hofmann's prices still have a long way to rise. Time will tell.