Monday, March 2, 2009

Collectors as Market Makers

There was a fascinating article in the New York Times Sunday Magazine about Jose, David, and Alberto Mugrabi, the famous and powerful collectors of Warhols and other Pop and contemporary artists. (Article here.) With over 3000 works and over 800 Warhols in their collection, they have evolved into an entirely new kind of collecting animal: the market maker. Following over 100 auctions a year, the Mugrabis buy and sell their inventory and protect/defend/run up the prices of their artists all over the world. They are likely involved in one way or another in every major transaction of Warhol's art that occurs on the planet. They collect on a scale and in a pattern unlike nearly all other collectors: they are full-time professionals.

This got me thinking about this collecting approach and its impact on the photography markets. We know of only a very small number of photography collectors that operate as market makers in any form, but there are a few that use this model. The challenge to this approach is that it requires enormous scale and meaningful financial resources. More importantly, it takes time to amass a significant inventory of any one artist's best output (unless one buys an estate in one fell swoop) and then real effort to follow each and every transaction that occurs for that artist going forward.

It seems to us there are a couple of bright lines that define collectors. The first is when a collector makes those first handful of purchases that change his/her perspective from someone looking for decoration for their walls to someone fascinated and obsessed by the art and the artists. The second bright line comes when a collector evolves to the point that they are buying art they don't really have room to display (we call this "buying for the box" and unfortunately, we would reluctantly place ourselves in this category). At this point, the collections are larger, more defined, and often more manic.

The Mugrabis and the others like them in the uppermost tier have moved beyond another final bright line. They are gathering inventory at such a pace and scale that they effectively start to corner the market in their areas of interest, which leads them to behave in ways that are wholly different from other collectors. We might call them pseudo dealers, or wholesalers, or just museums in the making. I'm not sure that we have any conclusion to offer here, other than given the fact that most major collectors are extremely wary of talking about themselves and their collecting activities in public, it was interesting to see the piece about the Mugrabis in the magazine section. Of course, when you are a market maker, you live in the bizarro world where big PR is actually a good thing.

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