right of first refusal
Post #574 • July 7, 2005, 8:54 AM • 63 Comments
Something about this (from the Art Newspaper) doesn't add up:
In the currently super-heated market for contemporary art, galleries are increasingly seeking to maintain control over an artist's work, even after it has been sold. Today several dealers of contemporary art are placing a right of first refusal in their sales documents, requiring buyers to offer the art back to the dealer before selling to anyone else. Some, including dealers, maintain that these restrictions protect artists, the market, and even collectors. However critics of these contracts disagree.
If I were a collector and thought that a work in a gallery was undervalued, my attempt to flip it at auction, if successful, would benefit all concerned - I cash in, and the gallery would establish a higher market price for the artist's other work at no risk to itself. And if I were a smart collector, I wouldn't try to flip something I thought would tank. Why not risk it? Because, apparently:
Gilbert Edelson, a lawyer who is counsel to the New York firm Katten Muchin Rosenman LLP, and vice president and counsel to the Art Dealers Association of America, says that "If an artist's work is selling at rapidly increasing prices, speculators can be drawn into the market to purchase only for resale, rather than as collectors. The artist's reputation can be damaged if a work goes to auction and does poorly or doesn't sell. A repurchase right gives the dealer some market control and the artist some protection".
In the fashion world, last year's styles get put out to the curb. In the fashion-driven end of the art market, that Destroy part of the cycle works against dealers, whose artists simply can't innovate in the manner of the design houses without losing their identifiable style. If a gallery is going to market an artist as young and up-and-coming (one or two of my galleries present me that way), it can't simultaneously make a case for the longevity of the work. Perhaps the galleries are trying to save their younger artists from having lucrative but brief careers, but it looks like they want it both ways: a quick ascent to stardom followed by permanent fixture in the heavens. I would guess that the heavens are not so kind as to permit that more than rarely.