Rauschenberg’s Canyon Goes to MOMA: Nationalization Case Study

November 30, 2012

On November 28, The New York Times ran a story titled “MOMA Gets Treasure that Met Also Coveted,” which focused on the decision by Ileana Sonnabend’s heirs to donate an important artwork by Robert Rauschenberg Canyon to MOMA. Among other information, the article details the issue that made the family consider such a decision in the first place—the bitter dispute with the U.S. Internal Revenue Service (IRS), which had levied a significant inheritance tax to be paid on the artwork after it was inherited by Sonnabend’s children in 2007 ($29.2 million in estate tax and another $11.7 million in penalties).

This story was fascinating to Skate’s for several reasons. First, there is a real issue concerning the extent to which the IRS claims could be considered reasonable. Second, the nationalization case study created by this “donation” is interesting in its own right…

To read the full text with data, please click here.


Skate’s joins discussion on Technology and the Art World tomorrow 11/28

November 27, 2012
A salon style discussion presented by the Art World Forum, Wednesday 28 November, 2012, 6:30-7:30 at Paddle8, 132 Mulberry Street (5th Floor), New York.
 
Joining the conversation will be Aditya Julka, co-founder of Paddle8; Timothy Malyk, Head Specialist at Blacklots; Elena Zavelev, Managing Director of Skate’s Art Market Research; and Elena Soboleva, Specialist at Art.sy and writer for Art Market Monitor. 

This edition of the salon will address one of the current art market environment’s most pressing concerns: technology.

While other creative and luxury goods industries steam ahead, fueled by technology and no longer caught up with questions of what or how but rather when, the art world remains behind in the gates dealing with the question of ‘why?’


artnet in Free Fall – Losses Continue, Just €703,000 in Cash Left to Go

November 19, 2012

Divestment of Loss-­‐Making Operations Fails to Repair Business Model

Ability to Borrow or Increase Capital Handicapped Due to Ongoing Litigation and Mounting Losses

This week artnet.com AG released its first financial results since Mr. Neuendorf and his supporters successfully defeated a hostile takeover bid led in August-September by Luxembourg-based and Russian-funded Redline Capital Management SA.

Since the takeover bid failed on September 28, largely due to long-time artnet shareholders considering the bid price of €6.40 per share too low (the tender offer was priced at a 40% premium to the market price at the time), the market for artnet.com AG shares has collapsed, hitting €3.65 per share on November 19…

To read the full text with data, please click here.


MCH Group Expects Upswing with Strong Portfolio of Three Leading Art Fairs and Major Luxury Goods Show

November 16, 2012

Overview of 2011 and 1H 2012 Financial Results, Forecast for 2012-2013

The art market knows Switzerland’s MCH Group as the engine behind two powerful and historically successful art fairs: Art Basel and Art Basel Miami Beach. It will soon be known for Art Basel Hong Kong as well, following the company’s recent expansion into Asia with a 60% acquisition of Hong Kong International Art Fair or Art HK to kick off in May 2013.

The company is far from depending solely on events dedicated to art, however. With far bigger events dedicated to industries ranging from real estate to technology, the group’s portfolio currently combines 95 exhibitions hosted by MCH and third parties worldwide. Annually, it works with approximately 15,000 exhibitors and attracts more than 2 million visitors. MCH Group’s core asset is BASELWORLD, a luxury-goods fair that operates World Watch and Jewelry Show. The company has thus found a way to successfully operate in the art and luxury segments by staging competitive events in both areas.

Although MCH Group’s latest financial disclosures showed several areas of concern, particularly for 2011, on the whole the company continues to impress with its performance. Our analysis here addresses the performance of the MCH Group in 2011 as well as in the first half of 2012, and we look critically at statements made by the company and its ability to meet forward-looking goals.

In presenting its 2011 results, MCH Group mentioned the company’s weakened state in comparison with 2010. With a decrease in revenues by 12% to CHF 323.9 mln, the company lost two points in the rating by Pilot, falling to the 10th place. Profits also saw a dramatic fall of 45% to CHF 20.7 mln. The company explains the downturn by its high degree of vulnerability to the economic climate and dynamics of an exhibition schedule that in 2011 was less active than in the previous year. Nevertheless, the company’s segments overall and especially the Exhibition segment, which accounted for 69.4% of its business in 2011, still showed an increase in comparison to 2009, resulting in a slightly higher profits as well.

The more recent announcement of the results for the first six months of 2012 already show considerable performance improvement compared to the same period last year. With major shows including BASELWORLD taking place during the first half, the company’s interim financials provide a solid indication of the picture for the entire year, as the second half is not expected to make a significant contribution. The company’s operating income saw a sound increase of 18% largely due to the success of the Exhibition segment. Furthermore, profit skyrocketed by 57% to reach CHF 39.5 mln. MCH Group notes that these results could have been even better if not for the CHF 8.4 mln cost of pension fund restructuring.

MCH Group’s current activity provides solid evidence of future strengthening both on the local level as well as internationally. One of the company’s strong suits is the mutually beneficial business mix of three segments: Exhibition, Infrastructure and Event services. MCH Group’s Infrastructure segment is based on CHF 477.6 mln worth of book value of fixed assets that largely consist of state-of-the-art exhibition centers in Basel, Lausanne and Zurich. MCH Group is on schedule to complete a massive expansion of its flagship facility in the city of Basel (Messe Basel), creating a solid base for further growth and making the firm uniquely positioned to continue its consolidation drive in some of the world’s most profitable trade shows categories. Heavy investment of CHF 430 mln in Messe Basel, which is currently the most significant funding in the entire history of Switzerland’s exhibition industry, is expected to contribute to the quality of the events. The upcoming BASELWORLD, scheduled for April 2013, will be presented at the newly created venue.

Infrastructure contributes a relatively small percentage to the company’s revenue, however: 5.4% during the first six months of 2012. This small contribution is explained by the fact that only external revenues generated from third parties are accounted for in the calculations; income from MCH events is not included but is instead reflected in the Exhibition segment. The core focus and main income source for the company, MCH Group’s exhibition activity currently presents the premier art event on three continents: Europe, North America and now Asia. Focused on Modern and Contemporary art of the 20th and 21st centuries, Art Basel, Art Basel Miami Beach and Art Basel Hong Kong annually exhibit works from approximately 800 galleries. The company also continues to expand its portfolio of exhibitions. Apart from the most significant acquisition of Art Basel Hong Kong, it added Lausannetec, Didacta Schweiz in Basel and Lausanne, and Tipiace in Lugano.

The third Events segment contributes around 17% to the group’s total income by supplying construction, catering, multimedia events and digital printing services to its exhibitors. According to MCH Group, this segment is characterized by the greatest vulnerability to the economic climate.

The second largest company in Skate’s Art Stocks Index with a market capitalization currently exceeding CHF 300 mln, MCH Group also projects a positive picture with its stock performance.  With 27.2% year-to-date capital gains, it is currently one of the best performers in the index. On January 1, 2012, MCH Group’s share price was CHF 38.25; as of November 12, it stood at CHF 50.80. While MCH Group’s shares have already appreciated significantly this year, the company continues to lay a foundation for further growth.

Skate’s expects MCH Group to show significant further performance improvement in 2012 and moving into 2013. A strong business and a clear leader in several areas of exhibition activity, the company is far from stagnation. Instead, it presents a strategy of active development on internal and external levels, investing in existing services and assets as well as diversifying into other geographic regions.

To read the full report with data, please click here.


Monthly Art Investment Ideas – November 2012

November 13, 2012

This issue of Skate’s Art Investment Review focuses on the most important auction results in October, as well as major upcoming sales at Christie’s and Sotheby’s.

In this Issue:

  • October Sales Results: Entrants to Skate’s Top 5000
  • Andy Warhol Market Phenomenon
  • Celebrity Portraits by Andy Warhol: Men, Women and Himself
  • Top 3 Art Investment Ideas for November 2012
    • Marlon by Andy Warhol   
    • Flowers by Andy Warhol
    • Hammer and sickle by Andy Warhol
  • Investment Benchmarks of the Warhol Market

To read the full report, please click here.

 


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