inflection point? · oil major tears up the industry’s financial playbook

In August 2014 Simon Evans of Carbon Brief, reporting on a white paper, “Fossil fuel divestment: a $5 trillion challenge,” published days earlier by Bloomberg New Energy Finance, noted that “‘fossil fuels are investor favourites for a reason’….fossil fuel investments have a history of strong performance.

BNEF looked at seven alternative trillion-dollar sectors and found that only shares in real estate firms have paid higher dividends in recent years than fossil fuel firms.”

(Simon Evans, “Why fossil fuel divestment won’t be easy,” Carbon Brief, 27 August 2014)

Fast forward to today. Due to the impact of the Covid-19 pandemic, global energy demand in the first quarter of 2020 was 3.8% lower than in the same quarter of 2019. The IEA expects global energy demand for 2020 to decline by 6% year-on-year, a decline not seen for decades.

Annual rate of change in primary energy demand, %, since 1900, with key events impacting demand highlighted. Source: Josh Gabbatiss, “IEA: Coronavirus impact on CO2 emissions six times larger than 2008 financial crisis,” Carbon Brief, 30 April 2020; IEA Global Energy Review

The fossil fuel sector, consistently a source of large dividends over the years, is suddenly under market stress and scrutiny from investors.

While “most analysts expected the world’s largest Western super majors … to defend their dividend at almost any cost given how important the payouts are to North American investors” (Kevin Crowley, Exxon Freezes Dividend for First Time in 13 years Amid Crash, Bloomberg, 29 April 2020), Royal Dutch Shell, Europe’s largest oil company, shocked the investing world.

Shell both reduced its dividend, the first time it has done so since World War II, for Q1 2020 and, observing that it would be neither “wise” nor “prudent” nor “responsible” to do so, announced it will not follow industry practice of borrowing against its balance sheet to finance the dividend payment.

The Board of Royal Dutch Shell plc (“RDS” or the “Company”) today announced an interim dividend in respect of the first quarter of 2020 of US$ 0.16 per A ordinary share (“A Share”) and B ordinary share (“B Share”), reduced from the US$ 0.47 dividend for the same quarter last year.

The pace and scale of the societal impact of COVID 19 and the resulting deterioration in the macroeconomic and commodity price outlook is unprecedented. The duration of these impacts remains unclear with the expectation that the weaker conditions will likely extend beyond 2020.

“In response, Shell has taken decisive actions to reduce our spending and position our businesses to compete in the current lower commodity price environment and uncertain demand outlook.

“The Board of Royal Dutch Shell has taken the decision to reset its dividend to provide financial resilience and further flexibility to manage the uncertainty. Shell is taking the steps necessary to ensure that we are well-positioned for the eventual economic recovery.

(“Royal Dutch Shell plc first quarter 2020 interim dividend,” 30 April 2020)

Not only did the dividend reduction, coupled with CEO Ben van Beurden’s further announcement that Shell would not take on debt to fund its dividend payment, shock investors, it also “tore up the industry’s playbook.”

When the boss of Royal Dutch Shell Plc slashed his dividend on Thursday, he didn’t just shock investors,” Laura Hurst of Bloomberg commented, “he tore up the industry’s financial playbook.

For decades Big Oil has used the strength of a large balance sheet to borrow money when the going gets tough and keeps investors sweet until the next upward cycle.

As the coronavirus pandemic potentially causes lasting damage to energy demand, Europe’s largest oil company asked whether this strategy is sustainable.

“’I would say no,’ said Shell Chief Executive Officer Ben van Beurden. ‘It’s also not wise and prudent, nor even responsible, to pay out a dividend if you know for sure you have to borrow for it.‘”

(Laura Hurst, “Shell’s Dividend Cut Shows This Time is Different for Big Oil,” Bloomberg, 30 April 2020)

Norwegian multinational energy company Equinor (OSE:EQNR,NYSE:EQNR; formerly Statoil) announced on 23 April a cash dividend of US$ 0.09 per share for the first quarter 2020, a reduction of 67% compared to the dividend proposed for the fourth quarter 2019.  

On 28 April, BP announced an interim dividend of 10.50 cents per ordinary share for the first quarter of 2020.

Gaurav Sharma, Senior Contributor at Forbes, observing that whilst first quarter profits at BP have decreased by 67% on lack of oil demand and the crude oil price crash, the company “sprung a surprise for the market by maintaining the company’s 10.5 U.S. cents per share dividend payment, hiked by 2.4% as recently as February.”

The move,” Mr. Sharma noted, “will come as a relief to beleaguered U.K. income funds that have seen over $18.6 billion in payouts cancelled or suspended over the last six weeks.

Collectively, HSBC, GSK, Royal Dutch Shell, British American Tobacco and BP accounted for 40% of FTSE 100 dividend payouts in 2019. With BP promising to payout, HSBC holding back following regulatory pressure, GSK, BAT and Shell, which hasn’t failed to pay a dividend since the Second World War II, appear to be in the bag.”

(Gaurav Sharma, “Profits Slump 67% At BP But Oil Major Maintains Dividend Despite Coronavirus Downturn,” Forbes, 28 April 2020)

On 29 April, Exxon Mobil Corp., based in Irving, Texas and the largest oil company in the Western Hemisphere, announced that for the second quarter 2020 it will pay a dividend of 87 cents per share. This is the same amount that was paid per share for the first quarter of 2020.

For the first time in 13 years, ExxonMobil “froze” its second quarter dividend to the amount paid in the first quarter.

Kevin Crowley of Bloomberg notes “Before now, Exxon had an uninterrupted streak of April increases going back to 2007.”

Most analysts expected the world’s largest Western super majors, including Exxon, to defend their dividend at almost any cost given how important the payouts are to North American investors. Before today, Exxon was the third-largest dividend payer in the S&P 500 Index behind Microsoft Corp. and AT&T Inc., according to data compiled by Bloomberg.”

The freeze may not derail Exxon’s multi decade streak of annual increases,” Mr. Crowley continues. “Even if the company maintains quarterly payouts at the current level for the rest of 2020, the annual outlay will be $3.48 a share, or 1.5% above 2019.

“’It’s definitely a sign of the times and to be expected given the price environment,’ said Jennifer Rowland, an analyst at Edward D. Jones &Co. The payout is “secure” because the company has capacity to take on debt to fund it, she said. On an annualized basis, the dividend will cost Exxon almost $15 billion this year.”

(Kevin Crowley, Exxon Freezes Dividend for First Time in 13 years Amid Crash, Bloomberg, 29 April 2020)

See:

Josh Gabbatiss, “IEA: Coronavirus impact on CO2 emissions six times larger than 2008 financial crisis,” Carbon Brief, 30 April 2020

First Quarter 2020 Interim Dividend,” Royal Dutch Shell Plc, 30 April 2020

Laura Hurst, “Shell’s Dividend Cut Shows This Time is Different for Big Oil, ” Bloomberg, 30 April 2020

Dividend Information, ExxonMobil dividends per common share,” Exxon Mobil, 29 April 2020

Kevin Crowley, “Exxon Freezes Dividend for First Time in 13 years Amid Crash,” Bloomberg, 29 April 2020

BPp.l.c. Group results, First quarter 2020“, 28 April 2020

Gaurav Sharma, “Profits Slump 67% At BP But Oil Major Maintains DividendDespite Coronavirus Downturn,” Forbes, 28 April 2020

Equinor reducing quarterly cash dividend for first quarter 2020 by 67%,” Equinor, 23 April 2020

Mikael Holter, “Norway Oil Giant Slashes Dividend to Weather Oil-Market Crash,” Bloomberg, 23 April 2020

Financial Times, “Shell dividend cut puts Big Oil investment case in focus” 

Simon Evans, “Why fossil fuel divestment won’t be easy,” Carbon Brief, 27 August 2014

Nathaniel Bullard, “Fossil fuel divestment: a $5 trillion challenge,” White Paper, Bloomberg New Energy Finance, 25 August 2014

coronavirus, climate change, the environment, & the arts: positive steps forward

“To my mind, one does not put oneself in place of the past; one only adds a new link.”

 Cy Twombly, quoted by Gagosian

“an elemental Dionysian force of madness rising, like a ‘fire that rises from the depths of the sea'”

Malcolm Bull, “Fire in the Water,” in Cy Twombly Bacchus Psilax Mainonmenos, exh. cat., New York, 2005, p. 55), quoted in Lot Essay, Cy Twombly (1928-2011), “Untitled” (acrylic on canvas, painted in 2005), Christie’s, Post-War & Contemporary Art Evening Sale, New York, 15 November 2017, Lot 15 B

Cy Twombly (1928-2011), “Untitled” (acrylic on canvas, painted in 2005). “Untitled” sold at the Christie’s Post-War & Contemporary Art Evening Sale of 15 November 2017 in New York realizing a price of US$ 46,437,500

Over ten feet high and sixteen feet in length, “Untitled” is the largest example from a group of giant-scaled paintings that Twombly created beginning in 2003 at age 75.

Twombly makes use of spirals of linear loops, culminating fifty years of regularly invoking scrawls, whirls, and writing/drawing.

In his catalogue essay, “Fire in the Water” that accompanied the first exhibition of Twombly’s Bacchus series in 2005, Malcolm Bull argued that the abiding theme of these paintings was that of an elemental Dionysian force of madness rising, like a “fire that rises from the depths of the sea” (M. Bull, “Fire in the Water,” in Cy Twombly Bacchus Psilax Mainonmenos, exh. cat., New York, 2005, p. 55).’ – Lot Essay

Like Dionysian forces of madness, we are all experiencing the dislocation caused by the current COVID-19 pandemic.  

Individuals, families, supply chains, industries, markets, businesses, nations – all are affected.

This pandemic, however terrible, unexpected, and unprepared for, may in part be an outcome of behaviors that we have, however unwittingly, engaged in over decades.

We are all – individuals, peoples, cultures, animals, plants, functional objects and works of art, buildings, systems of transportation, agriculture, and education, etc. etc. etc. – inextricably embedded in nature. We are part and parcel of and subject to the forces of physics. Part and parcel of and subject to the elements and interactions of chemistry. 

As living, breathing creatures, moreover, and complex systems of systems. we are part and parcel of and subject to the complex forces of biology.  We are calibrated precisely, over long periods of time, to our biosphere.

If and should we take our biosphere for granted, fundamentally alter the composition of our atmosphere, and tamper with our climate, the unexpected can occur. Mayhem may let loose,

And so it has.

Yet, in the arts we are global. We reach across time, across space, across borders, across cultures, across nations. We represent mind and passion, interests and preferences. We come from an abundance of backgrounds and industries. 

We may lead, each in our own place, taking steps to realize our ambitions anew.

Together we will have impact.

While we work in our many spheres of activity, what steps, however simple, might we take to realize our objectives while mitigating risks of future such dislocations?

If we want “to do something to prevent disease emergence, first of all we need to seriously reconsider how we do business with the biosphere.”

Q & A: A Harvard Expert on Environment and Health Discusses Possible Ties Between COVID and Climate,”

“We need to hear what nature is trying to tell us, which is clear: let’s be smarter about how we do business with the biosphere and stop disrupting the climate we depend on.” 

 Conversation on COVID-19 with Dr. Aaron Bernstein, Director of Harvard C-CHANGE

Two recently published articles are insightful. In them, Dr. Aaron Bernstein, MD, MPH, Director of The Center for Climate, Health, and the Global Environment at Harvard’s T.H. Chan School of Public Health (Harvard C-CHANGE) offers guidance.

Please take a few minutes to read them in full:

Neela Banerjee, “Q & A: A Harvard Expert on Environment and Health Discusses Possible Ties Between COVID and Climate,” Inside Climate News, 12 March 2020

A Conversation on COVID-19 with Dr. Aaron Bernstein, Director of Harvard C-CHANGE, ” Harvard C-CHANGE  

Excerpts follow, giving us some idea of what we probably already know but don’t always think about or consider in the decisions we make on a daily basis:

The bottom line here is that if you wanted to prevent the spread of pathogens, the emergence of pathogens, … you wouldn’t transform the climate.”

Q & A: A Harvard Expert on Environment and Health Discusses Possible Ties Between COVID and Climate,”

The separation of health and environmental policy is a dangerous delusion. Our health entirely depends on the climate and the other organisms we share the planet with.”

A Conversation on COVID-19 with Dr. Aaron Bernstein, Director of Harvard C-CHANGE

Simply put, “The likelihood is high that this [a next pandemic] will happen. This has happened through human history but the data we have shows that the pace is accelerating. That’s not terribly surprising. We’re living in highly dense urban places. Air travel is much more prevalent than it used to be. And climate is a part of what is fundamentally reshaping our relationship with the natural world.”

Q & A: A Harvard Expert on Environment and Health Discusses Possible Ties BetweenCOVID and Climate

You look at climate change, we have transformed the nature of the Earth. We have fundamentally changed the composition of the atmosphere, and, as such, we shouldn’t be surprised that that affects our health.”

If you look at the emerging infectious diseases that have moved into people from animals or other sources over the last several decades,the vast majority of those are coming from animals. And the majority of those are coming from wild animals. We have transformed life onEarth. We are having a massive effect on how the relationships between all life on Earth operate and also with ourselves. We shouldn’t be surprised that these emerging diseases pop up.

The principle is that we’re really changing how we relate to other species on Earth and that matters to our risk for infections.”

Q & A: A Harvard Expert on Environment and Health Discusses Possible Ties Between COVID and Climate”

Historically, we have grown as a species in partnership with the plants and animals we live with. So, when we change the rules of the game by drastically changing the climate and life on earth, we have to expect that it will affect our health.

A Conversation on COVID-19 with Dr. Aaron Bernstein, Director of Harvard C-CHANGE

How might we in our private and business capacities be smarter about how we do business with the biosphere and stop disrupting the climate we depend on?

First, think.

All industries, markets, and economies, including the arts, the art market, and the art economy, are interconnected and all are viable only within our shared biosphere.

“Art” is not self-existent. Art as a phenomenon, culture as a phenomenon, works of art, cultures, collections of works of art, collectors, and all parties to art are inextricably embedded in and dependent on nature.

Take time and steps to learn about and understand the biosphere. Take steps to reconsider how we, in every sphere of work and activity, do business with the biosphere.

We have an opportunity to consider ways to optimize connections, culture, art, the business of art, and the biosphere jointly.

Some simple steps that can be taken:

Minimize travel

Whether curator, museum director, staff, or trustee, collector, dealer, gallerist, advisor, interested party – vet travel requirements.

Minimize travel powered by combustion of hydrocarbons.

“We need to drastically decrease our greenhouse gas emissions from fossil fuels like coal, oil and natural gas.”

A Conversation on COVID-19 with Dr. Aaron Bernstein, Director of Harvard C-CHANGE

It goes without saying that travel by foot or by bike is encouraged. Travel by electric-powered cars, buses, and trains – especially insofar as the electricity is generated from renewable, non-hydrocarbon sources – is also encouraged.

Amsterdam-based art dealer Jan Six XI, for instance, bikes to and from work, and across town to consult with experts. (Russell Shorto, “Rembrandt in the Blood: AnObsessive Aristocrat, Rediscovered,” The New York Times Magazine, 27 February 2019)

Work with local partners

We are all somewhere. We do not need to be everywhere.

If you need to do work or close a transaction somewhere else, research, identify, vet, and work with local partners.

Optimize resources and connections made available online

Information, images, and opportunities to meet and discuss face-to-face, even in groups, abound online. As we are now seeing in abundance, education and research can be conducted online. Relationships developed through written and verbal communications optimized online, by mail (even mail that goes through the post office), and by telephone.

As much activity is migrating online, vet also your online service partners and their delivery options.

This website, for instance, is hosted by AISO.net. AISO.net is powered 100% by solar energy generated on site. The company does not make use of carbon credits. Members of staff are knowledgeable, of course, very personable, and extraordinarily helpful. They are great to work with.

Reduce carbon dioxide and greenhouse gas emissions from ongoing operations of physical plants

Galleries,museums, homes, businesses, offices, schools and universities, hotels,hospitals – all house works and collections of art.

Real-life steps can be taken to reduce use of hydrocarbon-based energy sources and achieve net-zero energy.

Expert and experienced stakeholders including architects, engineers, designers, builders, energy consultants, and sources of finance are able and ready to assist.

Information about service providers will follow.

Amsterdam’s Van Gogh Museum can serve as a model. The Van Gogh Museum operates 100% on renewable (wind)energy. (See Van Gogh Museum, sustainability, and accompanying infographic.)

Change habits of mind and behavior

Allow time for foot and bike travel. Schedule meetings and work requirements accordingly. 

Enjoy the great outdoors en route to work, home, meetings, and shopping.

Enjoy your locality

See:

Cy Twombly (1928 – 2011), “Untitled” (acrylic on canvas, painted in 2005), Christie’s, Post-War & Contemporary Art Evening Sale, New York, 15 November 2017, Lot 15 B 

Coronavirus, climate change, and the environment, A Conversation on COVID-19 with Dr. Aaron Bernstein, Director of Harvard C-CHANGE”, Harvard C-Change, 20 March 2020

Aaron Bernstein, MD, MPH, C-Change,Center for Climate, Health, and the Global Environment, Harvard T.H. Chan School of Public Health

Neela Banerjee, “Q&A:A Harvard Expert on Environment and Health Discusses Possible TiesBetween COVID and Climate,” Inside Climate News, 12 March 2020

Russell Shorto, “Rembrandt in the Blood: An Obsessive Aristocrat,Rediscovered,” The New York Times Magazine, 27 February 2019

Vermeer’s “The Milkmaid”

“So also Vermeer creates a story. A story of everyday life. And it’s amazing, I think, how he’s able to make this everyday scene into a monumental painting.”

Taco Dibbits, General Director of the Rijksmuseum

Put up for sale (for tax purposes) by the Six family in the early 20th century, “The Milkmaid” attracted the attention of American financier J. Pierpont Morgan who would have brought the painting out of the Netherlands.

“The Milkmaid” was, however, not sold to Mr. Morgan nor did it leave the Netherlands.

Instead the painting was acquired in 1908, together with 38 others also offered by the Six family, for 750,000 guilders by a consortium comprised of the Rijksmuseum, the government of the Netherlands, and the Rembrandt Society.

Successfully retained at home, “The Milkmaid” entered the protective custody of the Rijksmuseum where it has remained since.

Johannes Vermeer, “The Milkmaid” (c. 1660, oil on canvas)

“The Milkmaid,” painted in oil on canvas by Delft painter Johannes Vermeer in about 1660, describes a maid standing in the dairy kitchen of a Delft household making a bread pudding.

Bread, protected from the mice in a chest hanging by the window up on the wall, is readied in a basket on the table. A blue porcelain pitcher holds beer to be used as yeast. The milkmaid pours milk, delivered to the door from the countryside, from an earthenware pitcher.

Taco Dibbits spoke engagingly of “The Milkmaid” during his presentation of 26 January 2018 at the Yale University Art Gallery: “Understanding the Rijksmuseum: The History of a National Museum”.

“And then there is the first big intervention of the State. “The Milkmaid” by Vermeer, she was about to be sold to the US, and the Dutch said, ‘no, this cannot happen,’ and a committee was formed, in the Netherlands everything goes by committee, a committee was formed, consensus was reached, it was brought into Parliament, and it was unanimously decided that this painting  should be acquired for the country, and it has been in the Rijksmuseum since the the beginning of the 20thcentury.

“For Vermeer, it is incredible to see how well preserved it is. And it’s a large part of its magic.

“You really feel his brushstroke and the way he indicates the brittleness of the bread and the breadcrumbs

Johannes Vermeer, “The Milkmaid” (c. 1660, oil on canvas, detail)

“and the way he with little dots, you can still see them on the paint surface, and the way he depicts the dark blue skin of the milkmaid, she’s been cleaning, probably in cold water, the way he does that, and contrasts it with the dark blue behind it, it is an amazing painting.

“And it’s a painting that tells a story, a story of a lady, or a maid in  this case, standing in the dairy kitchen, a kitchen on the north. There is a window, but you see the mold. I always say it is the most beautiful plaster wall ever painted, you see the mold here. And the windows on the north, a small hole in the window to show that it’s really glass.

“Bread is in the chest, hanging up against mice.

Johannes Vermeer, “The Milkmaid” (c. 1660, oil on canvas, detail)

“You know it’s cold because there’s a stove here, with a little piece of pottery, within it hot coals.

“And here is the milk. The milk would be delivered at the door from the country, delivered at the door in large buckets.

Johannes Vermeer, “The Milkmaid” (c. 1660, oil on canvas, detail)

“And there is a pitcher with beer which is used as yeast.”

Johannes Vermeer, “The Milkmaid” (c. 1660, oil on canvas, detail)

Taco Dibbits, “Understanding the Rijksmuseum: The Story of a National Museum,” Yale University Art Gallery, 26 January 2018

“The Milkmaid” was “probably purchased from the artist by his Delft patron Pieter Claesz van Ruijven (1624-1674), who at his death appears to have owned twenty-one works by Vermeer.”

The twenty-one paintings were sold in 1696 from the estate of van Ruijven’s son-in-law, Jacob Dissius.

At this sale, “The Milkmaid” was described as “exceptionally good” and brought the second-highest price. (Vermeer’s “View of Delft,”c. 1660-1552, now in the collection of the Mauritshaus, The Hague, fetched the highest price, 200 guilders).

Auctioned in 1719, the painting belonged to at least five Amsterdam collections before it was acquired by one of the great collectors of Dutch art, Lucretia Johanna van Winter (1785 – 1845) who in 1822 married into the Six family of collectors.

Years later, in the early 20thcentury, heirs of the two sons of Lucretia Johanna van Winter intended to auction off “The Milkmaid” together with 38 other paintings in their collection. American financier, J. Pierpont Morgan, expressed interest in acquiring the painting.

In order to keep “The Milkmaid” in the Netherlands, the Rijksmuseum, with support from the Dutch government and the Rembrandt Society, purchased “The Milkmaid,” together with the other 38 paintings, in 1908 for 750,000 guilders.

See:

The So-Called Dissius Auction (1696 sale of 124 paintings by the artmerchant Gerard Hoet)”, Essential Vermeer

The Milkmaid by Johannes Vermeer,” Walter A. Liedtke, The Metropolitan Museum of Art, 2009, p. 22

The Milkmaid,” The Rijksmuseum

TacoDibbits, “Understanding the Rijksmuseum: The Story of a National Museum,”Yale University Art Gallery, 26 January 2018

Art Basel to Offer Online Viewing Rooms

As latent risks emerge, industry, business, and individuals adapt. Opportunities, and benefits, are discovered in and developed from such adaptation. Opportunities and benefits are discovered also in forward-looking mitigation.

Inaugurated in 1970 by Basel gallerists Ernst Beyeler, Trudi Bruckner and Balz Hilt, owned and managed by Switzerland-based MCH Group, art fair giant Art Basel, facing health, travel, and concomitant business risks posed by the emergent Covid-19 virus, cancelled Art Basel Hong Kong 2020.

The Art Basel fairs, offered in Basel, Miami Beach, and Hong Kong, have succeeded as an effective venue for introducing galleries, works of art, and collectors to each other.

The fairs, while offering face-to-face interactions, are, however, premised on travel, often long-distance. The fairs are premised further on the gathering of large numbers of people together in one place at one time.

The travel and costs (staff, booth rentals, insurance, hotels and lodging, shipping of works of art, …) involved with the fair – and the many art fairs that have developed over the years – are expensive for galleries and collectors alike.

The travel, further, can increase risk. Combustion of hydrocarbon-based fuels releases carbon dioxide into the atmosphere. 

Carbon dioxide molecules are precisely calibrated to attract and retain, in our atmosphere, photons of thermal energy that reach the earth from the sun. (See infographic.) Increasing levels of carbon dioxide in our atmosphere leads therefore to greater thermal energy (heat) in the atmosphere.

Acidification of the oceans, that themselvesabsorb about 30% of the carbon dioxide released into the atmosphere, also takes place.

Increased atmospheric heat leads to consequences such as melting of arctic permafrost, melting of glaciers, sea level rise, fires, storms, the release of pathogens and concomitant health risks. (See infographic developed by Zurich-based reinsurance giant Swiss Re.)

 With regard to large numbers of people gathering together in one place at one time, this currently may pose a risk of transmission of the emergent coronavirus (COVID-19).

To reduce such risk, the Swiss Federal Council, on 28 February 2020, issued an ordinance forbidding the holding of public or private events in Switzerland where more than 1,000 people are present at the same time.

MCH Group has, accordingly, not only cancelled Art Basel Hong Kong 2020 but has also postponed further events and trade shows such as the Baselworld Watch and Jewellery Show 2020 (until January-February 2021), the garden exhibition Giardina in Zurich, and Habitat-Jardin in Lausanne.

Fortunately there are means of bringing galleries, works of art, and collectors together that are premised neither on long-distance travel nor on the gathering in one place of multitudes of people.

Art Basel has been developing such a means, an initiative that, as “the art market continues to evolve, exemplifies its longstanding commitment to fostering a healthy art world ecosystem by creating new ways for its galleries to reach collectors from across the globe.”

The initiative is a digital-only platform for Art Basel’s galleries and collectors. The inaugural edition of Art Basel’s Online Viewing Rooms are planned to go live on 20 March 2020.

“Online Viewing Rooms will give visitors the opportunity to browse thousands of artworks presented by Art Basel participating galleries, many of which will be online exclusives. The exhibiting gallery can then be contacted directly for sales inquiries. The Viewing Rooms will run in parallel to the three shows in Basel, Miami Beach, and Hong Kong.”


Art Basel to launch Online Viewing Rooms,” Art Basel

While recognizing “’the essential personal interactions that continue to underlie the  art market,’” Art Basel Global Director Marc Spiegler notes that “’the Online Viewing Rooms will provide galleries with a further possibility for engaging with our global audiences.'”

All the galleries that were accepted for the cancelled 2020 Art Basel Hong Kong have been invited to participate, at no cost, in the launch of the Online Viewing Rooms.

Art Basel is not the first to organization to provide a means for galleries, works of art, and collectors to meet online. New York-based Artsy has been doing so for several years.

The process of selecting works of art, acquiring them, and developing a collection requires intent, effort, patience, and work. Such work is conducted in increments over a long-term.

Relationships of mutual trust and reliance, between collectors, galleries, and dealers, some private, are developed.

Qualifications of all parties are established. Buyers and sellers alike vet each other for acknowledgement and understanding of contract law as well as willingness to agree and adhere to contractual terms.

As works of art are identified for purchase, high-resolution images taken from multiple angles can be shared. Condition reports, provenance, and valuations provided.

The process enables collectors to learn and value not only the aesthetic, historical, and, increasingly, financial qualities of such works of art but also the supply chain logistics.

Supply chain logistics are themselves complex, often crossing cultures, history, collections, sovereign entities such as cities, states, and nations, and laws.

Supply chain logistics and the logistics of collections management evolving to include collaborations not only with art professionals but also with those with in a variety of industries. These industries include science, tech, law, engineering, energy, water, design, architecture, finance, and, insurance.

Insurance especially in a new iteration: in regard to transparent, data-driven identification of risk together with public/private collaborations structured to foster preemptive mitigation of risk.

See:

Art Basel to launch Online Viewing Rooms,” Art Basel

Anny Shaw, “MCH Group postpones Baselworld watch fair as Swiss authorities ban large events over coronavirus fears,” The Art Newspaper, 28 February2020

Christian Jecker, “MCH Group postpones forthcoming events,” MCH Group Media Release, 28 February 2020

Carbon Dioxide Absorbs and Re-Emits Infrared Radiation,” UCAR Center for Science Education

Swiss Re, “Special Feature: It’s existential – climate change and life & health,” 22 May 2019

NOAA, “Ocean Acidification

Trio of gallery greats commence sales of works from the Donald B. Marron Family Collection

Good contemporary art reflects the society, and great contemporary art anticipates.

Donald B. Marron (quoted by Pace Gallery, “Acquavella Galleries, Gagosian and Pace to Handle Sale of Donald B. MarronFamily Collection”)

Kelly Crow of the Wall Street Journal has reported that two works by Pablo Picasso, “Femme au beret et la collerette” (Woman with Beret and Collar,” 1937) and “Seated Woman (Jacqueline)” (1962) have been sold from the Donald B. Marron Family Collection to collector Stephen Wynn. It is reported that Mr. Wynn paid approximately $105 million for the two paintings.

Sales of works from the family collection are being conducted by a collaboration of gallery greats – Pace Gallery, Gagosian, and Acquavella Galleries. Bill Acquavella (son of Acquavella Galleries founder Nicholas Acquavella), Larry Gagosian (founder of Gagosian), and Arne Glimcher (founder of Pace Gallery) each worked with Mr. Marron in the development of the collection.

The collaboration, “the first of its kind, signals a new way for families to handle the sales of their collections” (Gagosian).

Under the terms of the collaboration, the galleries are charged to work jointly and privately to place and sell the works in the market. They are charged, further, neither to disclose publicly what is or is not available for sale nor to disclose an estimate for the collection.

The collaboration appears to have been the brainchild of Marc Glimcher, son of Arne Glimcher and president of Pace Gallery.

Eileen Kinsella of Artnet News, reporting that the plan came together quickly, quotes Mr. Glimcher:

“’I heard that [the Marron family] were considering going to auction and I just picked up the phone and called Larry [Gagosian] and said, ‘We should really present an alternative to the family. It’s tragic for this collection to go to auction,’” Glimcher recalled.

“After reaching out to Bill Acquavella, who also had a longstanding relationship with Marron, “’we all came and presented an idea to the family of how we would do it” around a month ago.’”

The Acquavella family – sister, brothers, and father – came on board. Eleanor Acquavella, Bill Acquavella’s daughter, reports that they“’ liked the idea of competing with the auctions on a great estate.’” They acknowledged, however, that “it would be hard to pull off.'” The galleries would be required to “’compete financially,'” and otherwise, to win to the business.

Indeed. Financial guarantees for the collection, in the amount of $300 million, had been offered by auction houses Christie’s, Sotheby’s, and Phillips.

Especially in the face of those guarantees, “’“the key,’” observed Gagosian’s COO Andrew Fabricant, “’was to meet the fiduciary requirements of an estate, which is complicated.

“‘We had to convince the family and the lawyers. The challenge was to be in line and competitive and still have some daylight for running with an exhibition and sales.”

A joint New York exhibition of May and June, is being organized by the three galleries. Including works from the family collection together with loans from institutions,  the exhibition “will chronicle Marron’s collecting activities, including his early acquisitions in the 1960s and 1970s, his museum stewardship, and his pioneering work reinventing how corporations build art collections around a singular vision.”

See:

Kelly Crow, “Steve Wynn Pays $105 Million for Pair of Picassos,” The Wall Street Journal, 24 February 2020

Eileen Kinsella, “The $450 Million Marron Collection Is the Art Market’s Ultimate Prize. Now, Three of the World’s Top Rival Galleries Are Joining Forces to Sell It,” Artnet, 19 February 2020

Acquavella Galleries, Gagosian, and Pace to Handle Sale of Donald B. MarronFamily Collection,” Gagosian

Acquavella Galleries, Gagosian and Pace to Handle Sale of Donald B. Marron Family Collection,” Pace Gallery

Pace, Gagosian, and Acquavella selected to sell – jointly and privately – works from the Donald B. Marron Family Collection

Three galleries – Pace, Gagosian, and Acquavella – have been selected to sell, jointly and privately, works from the Donald B. Marron Family Collection. The arrangement was agreed on 18 February by Donald Marron’s widow, Catherine. The galleries expect the majority of the works to be placed with new owners, representing great collections, this spring.

Works from the Marron collection will be exhibited from April 24 to May 16 at Pace and Gagosian in Chelsea (New York). The timing, not coincidentally, coincides with Tefaf New York Spring and Frieze New York.

 Works to be exhibited include Pablo Picasso’s “Femme au beret et la collerette” (“Woman With Beret and Collar,” 1937; already sold) and Mark Rothko’s “Number 22 (Reds)” (1957). Select works will be loaned from institutions to highlight those from the Marron family collection.

Asking prices will be publicized only for works that remain unsold by the time of the exhibition.

Observes Marc Glimcher, president of Pace, “One of the responsibilities of our galleries—and we represent many or most of the artists that are in the collection—is to see that these works move from one great collection to another.”

Donald B. Marron passed away on 6 December 2019 at the age of 85. He had served as President, CEO, and Chairman of the Board of PaineWebber. While at PaineWebber he helped initiate the company’s corporate art collection. PaineWebber, founded in Boston, Massachusetts in 1880, was acquired by Swiss banking giant (and sponsor of Art Basel) UBS in 2000. From 1985 to 1991 Mr. Marron served as president of the board of trustees of New York’s Museum of Modern Art.

Over the course of decades a collection of approximately 300 works, with a reported worth of upwards of $450 million, was assembled. The collection includes paintings by Pablo Picasso, Mark Rothko, Cy Tombly, Henri Matisse, Fernand Léger, Brice Marden, Willem de Kooning, Ellsworth Kelly, and Gerhard Richter amongst others.

Reflects Pace’s Marc Glimcher, “All three galleries were very close to Don, and all participated in building that collection with him.”

Eleanor Acquavella told Artnet News that “when Marc called, I really liked the idea of competing with the auctions on a great estate. My father and brothers and I talked about it and thought it would be hard to pull off. … We certainly had to compete financially and otherwise.”

Said Andrew Fabricant, COO of Gagosian, “The key was to meet the fiduciary requirements of an estate, which is complicated. We had to convince the family and the lawyers. The challenge was to be in line and competitive and still have some daylight for running with an exhibition and sales.”

Sales have commenced. Kelly Crow of The Wall Street Journal reports that billionaire former casino-resort magnate Steve Wynn, who appears on ARTnews‘ list of Top 200 Collectors, has paid around $105 million for two paintings by Pablo Picasso, “Woman with Beret and Collar” (1937) and “Seated Woman (Jacqueline)” (1962).

See:

Eileen Kinsella, “The $450 Million Marron Collection Is the Art Market’s Ultimate Prize.Now, Three of the World’s Top Rival Galleries Are Joining Forces to Sell It,” Artnet, 19 February 2020

Tim Schneider, “The Gray Market: Why History Equipped the Mega-Dealers to Win the $450 Million Marron Estate (and Other Insights),” Artnet News, 24 February 2020

Margaret Carrigan, “Donald B. Marron’s $450m collection to be sold by Acquavella, Gagosian and Pace galleries in New York,” The Art Newspaper, 19 February 2020

KellyCrow, “SteveWynn Pays $105 Million for Pair of Picassos,” The Wall StreetJournal,  24 February 2020

Tessa Solomon, “Embattled Billionaire Collector Stephen Wynn Buys Two Picassos From the Marron Estate for $105 M.: Report,” ArtNews, 24 February 2020

collecting Old Masters

From quattrocento to early 19th century Europe, the term “Old Master” generally refers to artists of skill who, in theory, were fully trained “Masters” of their local artists’ guilds and worked independently.

In practice, works produced by pupils, workshops, and studios of Masters are included in the term.

The term does not refer to a specific art historical style or movement.

Christie’s, using the term “Old Masters” to denote a category of painting that spans 500 years, is “redefining old masters for the 21st century global art market.”

Redefining, and re-positioning, the category for the 21st century global art market, the auction house is drawing interest from buyers in the contemporary art market and from around the world.

From artist to condition to subject to provenance, Christie’s has produced a helpful guide for buyers and prospective buyers in the Old Masters painting market: “Old Master paintings: 5 things for a new buyer to consider.

Pointers follow.

Price

Prices for Old Masters paintings realized at Christie’s range from a few thousand dollars to the hundreds of millions.

An exceptional $450,312,500 /£342,182,751 (including buyer’s premium) was realized in New York on 15 November 2017 for “Salvator Mundi”.

“Salvator Mundi” (c. 1500), attributed to Leonardo da Vinci, was sold to Prince Bader bin Abdullah bin Mohammed bin Farhan al-Saud of Saudi Arabia, friend and associate of crown prince Mohammed bin Salman. The painting was earlier included in the National Gallery’s 2011-12 exhibition of Leonardo’s surviving paintings.

Artist

“Is the artist an established name? Is the work from a good or particularly pivotal moment in the artist’s career or development? Is the attribution given in full (or qualified as ‘Studio’/‘Circle’/ ‘Follower’ of the artist)? Is the work included inthe key literature on the artist — and if not, have the currentexperts been consulted? Has the work been included in any recentseminal exhibitions on the artist?”

Christie’s, “Old Master paintings: 5 things for a new buyer to consider”

Provenance

Which collectors have been drawn to the work and “considered it worthy of their collections”?

Which exhibitions has the work been included in and where?

Restored? “Slightly neglected?” Rare?

“It is better to invest in a slightly neglected work, which can be treated relatively easily with sensitive restoration, than in one that has been subjected to numerous campaigns of restoration in the past, some of which may have resulted in the original surface beingabraded and over-painted. If in doubt, consult a restorer.”

Christie’s, “Old Master paintings: 5 things for a new buyer to consider”

In terms of rarity, research how prolific the artist was and how frequently his work appears on the market.

When excellent condition and rarity combine, magic happens. Works can realize exceptional prices.

Subject matter

Subject matter includes royal sitters, historical figures, topographical views, city views, university towns, landscapes, still lifes.

See:

Old Master paintings: 5 things for a new buyer to consider,” Christie’s, 25 November 2019

Old Masters,” Artsy

Old Masters,” Christie’s

Old Master,” Wikipedia

Leonardo’s Salvator Mundi makes auction history”, Christie’s, 15 November 2017

David D. Kirkpatrick,“Mystery Buyer of $450 Million ‘Salvator Mundi’ Was a Saudi Prince,”New York Times, 6 December 2017

is sexy really a measure?

With Art Basel Hong Kong 2020 cancelled, art institutions and openings in China delayed, important spring art auctions in New York postponed, New York’s Art Week 2020 postponed, private museums closing, travel impeded by the COVID-19 virus, wildfires raging in Australia, and floods in Venice, we may rightly ask what the heck is going on.

Henry Moore: Two Piece Reclining Figure No. 5

Behaviors and institutions that we may have taken for granted – art fairs, travel, museums, museum openings, art loans, traveling exhibitions, gallery openings, the buildings that house works and collections of art, cities, heritage – show themselves as vulnerable.

Vulnerable to various risks – geopolitical, natural (flood, fire), illness, travel (viruses are clever particles, requiring host cells in order to replicate; when host cells travel, so do viruses), funding, disengagement, generational change, wrongdoing, and “art-washing” among them.

In a country where there has always been more space than people, where the land and wildlife are cherished like a Picasso, nature is closing in. Fueled by climate change and the world’s refusal to address it, the fires that have burned across Australia … are forcing Australians to imagine an entirely new way of life.”

(Damien Cave and Matthew Abbot writing in The New York Times, The End of Australia as We Know It, 15 February 2020)

Buildings are deteriorating faster than ever before. It’s indicative of the changing environment and climate.”

Syfur Rahman, Department of Archeology of Bangladesh, quoted in
Heritage on the Edge, How people around the world are protecting their cultural sites against climate change,”
Google Arts & Culture in collaboration with CyArt and ICOMOS

Our shared history is at risk”

(“Heritage on the Edge, How people around the world are protecting their cultural sites against climate change,” Google Arts & Culture in collaboration with CyArt and ICOMOS)

The thousand-year equilibrium long maintained in Venice may, in the space of a century, have been destroyed. With little regard for the safeguards balance provides, risks of flooding, loss of habitats, and loss of livelihoods are increasing.

Venice is “a city that for over a thousand years has built a wonderful equilibrium between a human component, ecological component, art, nature. And in the last century, we have basically almost destroyed that balance.”

(Shaul Bassi, director of the Center for Humanities and Social Change at Ca’ Foscari University of Venice, quoted in Sylvia Poggioli, “With Waters Rising And Its Population Falling, What Is Venice’s Future?”, NPR, 30 November 2019).

In the face of protests, coronavirus, and the cancellation of Art Basel Hong Kong 2020, Tim Schneider of Artnet News asks

Did the coronavirus merely provide a politically agnostic opportunity to call off an event that many Western exhibitors alleged had already lost viability after the ongoing pro-democracy protests convinced a significant number of their buyers and artists to opt out months earlier? 

“And if so, did the organization take until February 6 to decide strictly because its international galleries were facing shipping deadlines? Or was something else entirely at work?”

He suggests that

“To decipher the answers, it turns out that we may have to look in what many, if not most, people view as the single unsexiest realm of arcana in the entire art market: insurance policies.”

(Tim Schneider, “The Gray Market: Why the Coronavirus Canceled Art Basel Hong Kong When the Protests Couldn’t (and Other Insights),” Artnet News, 10 February 2010)

Is sexy really a measure? Is insurance so arcane?

Let’s for a moment look at insurance, and risk, from another angle: able to track perils in real time, Swiss Re is changing the way it understands and models risk. Assessing risk and underwriting risk using real-time data rather than past data, Swiss Re will offer insurance products structured not only as ex ante compensation products but also as anticipative risk management services.

“With new insights from an ability to track perils in real time, we are able to change the way we model and understand risk. This will allow new means of risk assessment and underwriting, augmenting our traditional process of using past data. These shifts will see the nature of insurance products begin to change from ex ante compensation packages to anticipative risk management services.”

(“Underwriting: The Next Generation,” Edi Schmid, Chairman Swiss Re Institute and Group Chief Underwriting Officer, 30 April 2019)

Real value may be developed through collaboration with stakeholders, public and private, globally, together with expertise and capital offered by organizations such as Swiss Re.

What are forward-looking modeling and understanding of risk? What might a shift from ex ante compensation packages to the provision of anticipative risk management services enable?

How might long-term value be developed while using real-time data to anticipate and manage risk?

Let us work to better understand risk and risk management. We might then position ourselves to better enable long-term protections of works and collections of art together with the heritage, information, and value they represent.

See:

Virus,” Science Daily

Underwriting: The Next Generation,” Edi Schmid, Chairman Swiss Re Institute and Group Chief Underwriting Officer, 30 April 2019,

Damien Cave and Matthew Abbott, “The End of Australia as We Know It,” The New York Times, 15 February 2020

Georgina Adam, “Not here to stay: what makes private art museums suddenly close,” The Art Newspaper, 13 February 2020

Elizabeth A. Harris, “As Virus Tightens Grip on China, the Art World Feels the Squeeze,” The New York Times, 13 February 2020

You Want to Pull Your Hair Out’: Artists and Gallerists Respond to the Long-Awaited Cancellation of Art Basel Hong Kong,” Ysabelle Cheung, Artnet News, 7 February 2020

Tim Schneider, “The Gray Market: Why the Coronavirus Canceled Art Basel Hong Kong When the Protests Couldn’t (and Other Insights),” Artnet News, 10 February 2020

Alexander Walter, “Opening of Tadao Ando’s He Art Museum in China delayed due to coronavirus fears,” Archinect, 3 February 2020

Heritage on the Edge, How people around the world are protecting their cultural sites against climate change,” Google Arts & Culture in collaboration with CyArt and ICOMOS

Sylvia Poggioli, “With Waters Rising And Its Population Falling, What Is Venice’s Future?”, NPR, 30 November 2019

Image: Henry Moore’s “Two Piece Reclining Figure No. 5” (bronze, 1963-1964) overlooking the Øresund at the Louisiana Museum of Modern Art, Humlebæk, Denmark. Donated to the museum by the Ny Carlsbergfondat.

 

Gustave Caillebotte (1848-1894): “La Rue Halévy, vue du sixième étage”

Offered at the Sotheby’s New York Impressionist & Modern Art Evening Sale of 14 May 2019 with an estimate of US $6 – $8 million, Gustave Caillebotte’s “La Rue Halévy, vue du sixième étage” (oil on canvas, 1878) sold for US $13,932,000 (with fees).

Hasso Plattner, co-founder of the German software company SAP, SE, is said by The Canvas to have purchased the painting. Mr. Platter founded the Barberini Museum that opened in Potsdam in 2017. A member of “The Giving Pledge” established by Bill Gates and Warren Buffett, per Forbes magazine he is the 94th richest person in the world.

Gustave Caillebotte, “La Rue Halévy, vue du sixième étage” (oil on canvas, 1878)

Hasso Plattner’s collecting focus is the art both of the Impressionists and of the German Democratic Republic. He is said to be the buyer also of Monet’s “Meules” of 1890. “Meules” remained in the collection of Bertha Honoré Palmer and her family for nearly a century, also selling at Sotheby’s Impressionist & Modern Art Evening Sale of 14 May 2019 for $97 million (hammer) / $110,747,000 (with fees).

Caillebotte (1848 – 1884) exhibited “La Rue Halévy, vue du sixième étage” in the Fourth Impressionist Exhibition of 1879.

Napoleon III had introduced ambitious reforms during the 1860s, charging Georges-Eugène Haussmann with a radical reconfiguration of the then medieval city.

Space was created by razing many parts of Paris, developing a grid of straight roads, avenues, boulevards, and modern apartment buildings with grand balconies and large windows that faced the street, offering views of the boulevards below.

Caillebotte – lawyer and engineer by training as well as artist – explored the modern Paris in his work, adopting viewpoints high above the busy city streets.

The elevated vantage point of “La Rue Halévy, vue du sixième étage” afforded Caillebotte the freedom to view and manipulate perspective, tilting the ground of the picture plane in a manner that has been considered characteristic of his work and one of his greatest contributions in the move towards Modernism.

See:

Art Industry News: Did a German Software Billionaire Buy Monet’s $111 Million Haystacks? + Other Stories,” Artnet News, 16 May 2019

Gustave Caillebotte, “La Rue Halévy, vue du sixième étage,” Lot 17, Impressionist & Modern Art Evening Sale, 14 May 2019, Sotheby’s New York, Catalogue Note

Kelly Crow,”Monet Sells for $110.7 Million, Setting Artist and Impressionist Records,” Wall Street Journal, 14 May 2019

Kelly Crow, @KellyCrow, Tweet, 14 May 2019;

Kelly Crow, @KellyCrowWSJ, Tweet, 15 May 2019

Katya Kazakina, @theartdetective, Tweet, 14 May 2019

Catherine Hickley, “Software billionaire plans to turn decaying Potsdam restaurant into museum for East German art,” The Art Newspaper, 2 April 2019

your money, your life, your choice ・ Harvard invests in water

‘Because we believe its physical products are going to be in increasing demand in the global economy over the coming decades,”

Harvard Management Co., the Harvard University endowment manager, likes the natural-resources asset class.

In a warming planet, few resources will be more affected than water, as droughts, storms and changes in evaporation alter a flow critical for drinking, farming, and industry.

Even though there aren’t many ways to make financial investments in water, investors are starting to place bets.

“Buying arable land with access to it is one way.

“In California’s Central Coast, ‘the best property with the best water will sell for record-breaking prices,’ says JoAnn Wall, a real-estate appraiser specializing in vineyards, ‘and properties without adequate water will suffer in value.'”

The Harvard Management Co. has, since 2012, been buying agricultural land, with rights to sources of water, on California’s Central Coast. The idea was pitched to Harvard by agricultural investment advisory firm Grapevine Capital Partners LLC, founded by Matt Turrentine, formerly of his family’s Central Coast grape-brokerage business, and James Ontiveros, a local vineyard manager.

Harvard’s investing guidelines say respecting local resource rights are of increasing importance ‘in the coming decades as competition for scarce resources, such as arable land and water, intensifies due to increasing global population, climate change, and food consumption.’”

Investors who see agriculture as a proxy for betting on water include Michael Burry, a hedge-fund investor who wager against the U.S. housing market was chronicled in the book and movie ‘The Big Short.’ In a 2015 New York Magazine interview, Mr. Burry was quoted as saying: ‘What became clear to me is that food is the way to invest in water. That is, grow food in water-rich areas and transport it for sale in water-poor areas.'”

In California vineyards, the water-proxy math is compelling. When grapes are harvested, about 75% of their weight is water. Owning vineyards effectively turns water into revenue.”

Kat Taylor, an environmentalist and wife of hedge-fund billionaire and liberal activist Tom Steyer, resigned earlier this year from Harvard’s board of overseers in protest of the endowment’s investments in things such as fossil fuels and water holdings she says threaten the human right to water.

‘It may, in the short run, be about developing vineyard properties,’ she says of Harvard’s California investments. ‘In the long run, it was a claim on water.'”

See:

Harvard Amasses Vineyards – and Water. A bet on climate change in California gives it agricultural land and the rights below it,” Russell Gold, The Wall Street Journal, 11 December 2018

In Drought-Stricken Central California, Harvard Hopes to Turn Water Into Wine,” Eli W. Burnes and William L. Wang, The Harvard Crimson, 13 April 2018

Michael Burry, Real-Life Market Genius From The Big Short, Thinks Another Financial Crisis Is Looming,” Jessica Pressler, New York Magazine, 28 December 2018