Skate’s Annual Art Investment Report – Part 2

February 5, 2013
Welcome to Part 2 of Skate’s Annual Art Investment Report for 2012!

Skate’s has expanded on its prior rankings of global e-commerce players and listed art industry companies to create the Skate’s Art Industry Scorecard. This new tool serves as a comprehensive research platform for better global art industry information and analysis.

The most important takeaway from this research effort is the massive and ongoing change that is taking place in the art industry. This change can be seen in the search for new business models aimed at further broadening the global art trade. One clear implication of this change is that the art industry is becoming an increasingly consumer driven sector of the global economy.

The system of selecting and ranking companies in Skate’s Art Industry Scorecard is largely based on numerical data combined with subjective factors and will thus likely cause a certain degree of controversy. We therefore offer it as an “open source” document and invite our readers to provide feedback and suggestions on how to improve the methodology going forward. Please send feedback to skate@skatepress.com.

In the third and final part of our Annual Art Investment Report, which will be published in early February, we will share our thoughts on where today’s art industry transformation will lead us. Specialty art retail and art destination management companies are our favorite business models of tomorrow.

Click here to download Part 2

Annual Report-Part2


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.


Skate’s at Deloitte’s 5th Art & Finance conference at Art Basel on June 15

June 7, 2012

Skate’s presents the overview of the latest trends in art valuation and art appraisal market practice at Deloitte’s 5th Art & Finance conference at Art Basel on June 15.

To download the presentation, please click here.


A Busy Month for Skate’s Art Stocks: Art Basel Operator Acquires Majority Stake in Hong Kong’s Asian Art Fairs Limited

May 16, 2011

On May 6, MCH Group, operator of the Art Basel art fairs, announced that it was taking a majority 60% stake in Asian Art Fairs Limited, which operates the fast-growing Hong Kong International Art Fair. Although MCH Group has not disclosed the value of the deal, it does state that it retains the option to purchase the remaining 40% of the shares in 2014.

MCH Group also announced that while the timing for the Hong Kong International Art Fair would be brought forward to February to better complement the schedules of Art Basel and Art Basel Miami Beach, it will continue to operate under its previous name in 2012 with eventual development of the event under the Art Basel brand name.

MCH Group’s bet on Hong Kong is a logical one given the fact that the city is now, by many estimates, the world’s third most important art market. Yet, given that Hong Kong still focuses heavily on Chinese art, the move is not without risk, especially given the very real possibility that China will fail to develop into a global center for art investment that aims for capital protection, something New York and London can more reasonably lay claim to.

MCH Group (SWX:MCHN) shares were up 10.27% YTD as of May 16, 2011.


Skate’s Participates in Armory Show Panel

March 14, 2011

On Friday, March 4, 2011, Michael Moriarty, Chairman of Skate’s Art Market Research, participated in a panel called “Art Funds: Is Now the Time?” at this year’s Armory Show. The panel was sponsored by The Art Fund Association (“Art FA”), a strategic partner of Skate’s that was founded in 2009 to serve as a forum for leaders, investors and practitioners in the global art fund industry.

2011 is shaping up to be a big year for the art fund industry. Just several days before this year’s Armory Show, on February 28, Agana, one of Russia’s leading local asset management firms, filed a notice with Russian regulators confirming the securitization of various photographic art collections through a new fund called Fotoeffect. According to the filing, Fotoeffect owns RUB 14 billion worth of art (approximately $0.5 billion), which according to Skate’s art funds database makes Fotoeffect the world’s largest investable art fund in terms of net asset value.

Participating in the panel were Pamela Auchincloss (Artist Pension Trust); Sandy Kemper (The Collectors Fund); Javier Lumbreras (Artemundi Global Fund); Judd Tully (Art + Auction Magazine); Michael Plummer (Artvest Partners LLC) and Michael Moriarty (Skate’s Art Market Research). The panel was moderated by Michael Sellinger (board member, The Art Fund Association; Principal, Cottelston Advisors).



Annual Art Investment Report by Skate’s: 2010 in Review, Forecast for 2011

December 30, 2010

Dear Reader,

Welcome to the Annual Art Investment Report by Skate’s. Published by Skate’s Art Market Research since 2006, this report covers global art market trends and provides forecasts for the coming year. Our coverage is focused on the universe of global artists (647 names as of December 27, 2010) whose works are represented in Skate’s Top 5000, our database of the world’s most valuable art based on auction prices. We also follow all publicly traded companies operating in the art industry around the world, tracking their performance with Skate’s Art Stocks Index.

In this issue:

1. 2010 Art Market Overview
2. Changes in Market Capitalization
3. Top 10 Traded Artists in 2010
4. Best ERR Transactions in 2010
5. Worst ERR Transactions in 2010
6. Top 10 Female Artists
7. Artists Who Passed Away in 2010
8. Leaving Skate’s, Value Reduction
9. Top 20 New Entrants to Skate’s Top 5000
10. Skate’s Art Stocks
11. The Global Art Market and Art Industry: Forecast for 2011

Seven Predictions for the Art World in 2011:

1. Art securitization will be the most important new trend to watch
2. Christie’s will go public if it is not sold to new owners, at least one more IPO in the art industry will take place in 2011
3. Artnet will harvest its investment in online auctions and will become the top performing stock in 2011
4. MCH Group will be pressed to launch online strategy for Art Basel events
5. The value of Skate’s Top 5000 will exceed $30 bln and its threshold price will go over $2 mln
6. Warhol will overtake Monet as the world’s second most valuable artist
7. More attention will be paid to photography

Click here to view the full newsletter.


Art Securitization: All Systems Ready – Video Now Available

December 15, 2010

We are pleased to announce that full video coverage of our most recent event, Art Securitization: All Systems Ready, is now available. This event was held by Skate’s Insiders Club on December 2, 2010 at the Shore Club Hotel in Miami Beach as part of this year’s Art Basel Miami Beach.

Please note that the video below is divided into two parts.


Monthly Art Investment Ideas from Skate’s Art Market Research: December, 2010

December 6, 2010

Skate’s Art Investment Review

Welcome to the December issue of Skate’s Art Investment Review. As always, our coverage is focused on the universe of global artists (currently 631 artists) who are represented in Skate’s Top 5000 database of the world’s most valuable art according to auction prices. To learn more about Skate’s Top 5000 and the artworks and artists represented, please visit http://www.skatepress.com.

In this issue of Skate’s Art Investment Review we focus on the most important November results, as well as on the major upcoming auctions held by Christie’s and Sotheby’s:

“Art Impressionniste et Moderne,” Christie’s, December 2
“Art Contemporain, ”Christie’s, December 8-9
“Impressionist & Modern Art,” Sotheby’s, December 8
“Contemporary Art,” Sotheby’s, December 7

Click here to view the full newsletter.


Blue-Chip Chinese Artists Sell Alongside International Heavyweights At Abu Dhabi Art Fair

November 17, 2010

The recently concluded Abu Dhabi Art Fair was a success in more ways than one for top Chinese contemporary artists. Not only were they exhibited alongside other global heavy-hitters like Anish Kapoor, Damien Hirst and Andy Warhol, but works by Ai Weiwei, Zeng Fanzhi and Yan Pei Ming sold to unnamed collectors and institutions.

All three artists were represented at the fair by major international galleries, with Ai represented by Gallery Hyundai, Zeng by Hanart TZ Gallery, and Yan by David Zwirner…

To read the full article, please visit Jing Daily.


Headline Sales of Modigliani in New York Set Stage for November Milan Auctions

November 17, 2010

Skate’s Market Notes

The auctions in Milan this November are taking place against the backdrop of global art market euphoria. Sales in New York earlier this month confirm continued strength for proven Impressionist and Modernist artists, but they also point to recovery for a number of established Contemporary artists like Richter, Basquiat and Murakami.

While great attention is always paid to sales in New York and London, as well as in Hong Kong to a certain extent, other markets are also seeing interesting activity. What is happening in the world of Italian art, for example?

First, the market extravaganza in New York this month saw spectacular sales of works by Livorno-born Amedeo Clemente Modigliani, most notably Nu assis sur un divan (1917), which sold for $68,962,500 – a record for the artist. With this month’s sales, Modigliani has overtaken Vincent van Gogh as the world’s 9th most valuable artist on the basis of total auction sales. So far, Modigliani has proven to be a strong investment case; repeat auction sales of his works consistently achieve positive investment returns (on average, 11-13% on an annualized basis).

Aside from Modigliani, two other Italian artists (Boldini and Morandi) enjoyed positive returns on the repeat sales of their works that took place in New York earlier this month.
Click here to view the full article.


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