A select group of artists rarely appear at auction. If you want to own their work, you’ll need more than just deep pockets

A rare Brice Marden 1988-98 painting, the calligraphic black and white Cold Mountain I (Path) is up for grabs to the highest bidder. From a series of six works, the painting will be offered at Sotheby’s in New York on 12 May, estimated at up to $15m. Promoted by the house as the most significant Marden ever to sell at auction, three others in the series belong to major museums. Two in private hands are dramatically described by Sotheby’s senior specialist Anthony Grant as “unlikely to be sold anytime soon, if ever”. Marden sits comfortably on the list of artists hardest to obtain on the primary market, according to an informal poll of dealers, advisers and collectors. The “Cold Mountain” series was reserved for sale to only the most prominent of collectors, which is why it brings allure and cachet to its moment under the gavel.

While the Marden sale may be a coup for Sotheby’s, it is mud on the face of Marden’s dealers who strive to protect the artist from such an uncertain fate. The work had been originally sold by Marden’s European gallery, Thomas Ammann Fine Art, to the Zurich-based Daros Collection, which sold it to the current seller, reportedly Seattle real estate developer Richard Hedreen. Instead, dealers hope and sometimes insist that collectors allow them to resell works. Several prominent names including Andrea Rosen have stated they have restrictive resale clauses in certain sales contracts. The game can get nasty. Dealers will blackball collectors who buy and then flip at auction. Protecting art can get pricey as dealers are often obliged to protect the work either by buying and holding auction inventory or at least bidding to be sure the final price is above some respectable threshold.

Gordon VeneKlasen, a partner at the Michael Werner Gallery, has been selling paintings by the German artist Sigmar Polke for over 20 years. VeneKlasen estimates he has sold more than 100 and, over time, the value of those works have increased, conservatively more than ten times. But the statistic he points to with pride is the fact that only a handful of these works have ever reappeared at auction. At Werner, as at other galleries representing artists whose demand far outstrips supply, the objective is not merely to sell. “The nature of our gallery, from the very beginning, has been based on placing artists in collections that matter,” says VeneKlasen.

This notion of “placing” works of art is nothing new. American artists and art dealers’ distinction between authentic collectors and speculators—and preference for the former—dates back to the 19th century, according to art adviser Sheri Pasquarella, who teaches a graduate-level course on the history of the art market at New York’s Fashion Institute of Technology. Today these practices continue, though they are usually conducted quietly, behind closed doors. The issue was recently thrust into the news with a legal spat pitting Miami Beach collector Craig Robins against powerhouse Chelsea dealer David Zwirner (see p1). Robins is accusing Zwirner of failing to make good on an alleged promise to give the collector first crack, after museums, to purchase one or more paintings by the sought-after South African painter Marlene Dumas. The artist was the subject of a MoMA retrospective in 2008, and her work has sold for as much as $6.3m at auction. But Dumas hasn’t had a solo gallery show in New York since 2001: so “Against the Wall” at the David Zwirner gallery, which closed last month, included 17 paintings which collectors are vying for. Zwirner sees things differently. “Robins is a well-off art collector who is annoyed at not being given the special privilege to jump ahead of every other individual and buy whatever he wants from an exhibition,” says a memorandum filed by Zwirner’s lawyer.

Despite Robins’s efforts to use the courts to force Zwirner to give him access to prime Dumas material, art lawyers say dealers may sell at their own discretion. “It’s free commerce and people are free to sell, or not to sell work to whomever they choose,” says Thomas Danziger, of Danziger, Danziger and Muro LLP. Danziger adds this excludes discriminating on the basis of gender, race, sexual preference and other protected categories. In fact, many market professionals say choosy selling is essential. “When done correctly, you end up building a career,” says Danziger.

Art adviser Allan Schwartzman says strategic placement is a gallery’s core obligation to its artists. “A primary market gallery’s principal job is to protect the developing and fragile markets of artists,” says Schwartzman. “It would be easy to see the idea that you wouldn’t sell something to someone as elitist or abusive, but the idea of placing the art supports the financial, critical and art historical value of the work.”

All the angling and manoeuvring to “place” and essentially protect the work is aimed at eventually landing works in museums, not auction catalogues. “Every dealer’s anxiety about a work less than two years old is that it winds up in a night sale,” says Schwartzman. When paintings fail to sell at auction, or sell for weak prices, it can taint the work, if not the artist’s reputation. “We have seen over and over in the marketplace, when a number of works come for sale in the secondary market at auction, and are passed, it has a tremendous impact on how people feel about an artist and their marketability,” says Miami collector Dennis Scholl.

On those occasions when a work does appear on the block, dealers resort to a host of crafty strategies. Sometimes the aim is bid to win, with the dealer able to afford to buy and either resell or hold a work. Other times dealers say they aim to be the underbidder—ensuring the piece sells above a reasonable threshold—but not stuck with the goods themselves. In another scenario, the dealer tries to “place” the work at auction. In this instance, certain collectors are called on. They are alerted to the upcoming sale and urged to buy.

One reason the works need to be protected is that contemporary art comes loaded with temptation. With the explosive rise in contemporary art prices, primary market prices are sometimes well below the auction price tag. One such artist is Scottish painter Peter Doig, whose auction record stands at $11.2m for his 1990-91 painting White Canoe. “Doigs, as soon as they are out the front door, are worth five times as much,” says VeneKlasen, who represents Doig, along with dealer Gavin Brown. Hence the need for serious vetting. “It would be hard for Joe Average to walk in off the street and buy a major [Robert] Gober or [Charles] Ray sculpture,” says New York adviser Todd Levin. Gober and Ray figure on the list of most in-demand artists, say collectors, dealers and advisers. Dealers say they will discuss prospective buyers with their important artists, who have a voice in approving who buys what work. The dealer effectively vouches for the prospective buyer, and if the work is flipped, it is the dealer who will face consequences. “If there is a failure, if things go wrong, there’s only one person who is going to be blamed and that’s the dealer,” says VeneKlasen.

Herein lies one of the art market’s biggest ironies: when it comes to the most coveted artists, money matters least. “Money doesn’t count in this game. Everyone has money,” says New York art adviser Liz Klein. “The question is, besides money, what can you give me?” Many say that the Vogels—Herb, a former postal worker, and his wife Dorothy, a former librarian—represent the paragon of the ideal, pure art acquirers. On civil servant budgets, they sought out difficult conceptual and minimalist works of art. They were childless—heirless—and promised the cream of their collection to Washington’s National Gallery. “The beauty of collecting art is that the one who spends the most money doesn’t have the best collection,” says Schwartzman.

The hierarchy is well established. At the top are museums, especially major institutions like MoMA. For artists, being acquired by a prestigious museum is a career milestone, say dealers. The recent proliferation of private foundations has also meant that these institutions may rank as desirable custodians since work may be more likely to be displayed at a foundation than a large museum. Trustees at influential museums like the Tate Modern or the Whitney, usually follow. The underlying agenda: that the work will ultimately be donated to a museum. Other desirables include collectors who share their collections with the public, or who are considered tastemakers. Dealers repeatedly say they seek a proper “context” for the artwork, meaning that the other works hanging on a prospective buyer’s walls can help or hurt the chances of a transaction.

Dealers say they also favour their long-time, loyal patrons who have acquired works regularly from a range of artists on the roster. One dealer recalled a Chelsea show by a popular painter. Four oil paintings were for sale. A major hedge fund collector, who happens to be a Guggenheim trustee, made a play for one of the works. He didn’t have a chance, said the dealer, having never bought at the gallery before. Savvy collectors have other ways to ingratiate themselves with a dealer: offers to purchase and donate to a museum, or fund an exhibition catalogue to win points.

The art placing strategy can sometimes turn heavy-handed. Stories abound of dealers requiring collectors to promise works to museums in exchange for access. Then there is the awkward dialogue with prospective customers. Some dealers take a straightforward approach, explaining their selection process. “The elegant way is to say something like ‘my highest priority is to sell as many works to museums, and even though you are an important collector, I’m not able to offer you the first pick’,” explains Schwartzman. The dealer might then ask for a collector’s first, second and third choices. Another popular script is for a dealer to just flat out lie and say a work is on hold for a museum, when it is not.

So are all these machinations worthwhile?

“If it’s done correctly, it’s essential,” says Schwartzman. “Art would not rise in value and retain value if it didn’t feed into a system of validation.” Dennis Scholl says the vetting systems ultimately benefit museums, artists, collectors and dealers themselves. Scholl has earned his own access over the years by loyal patronage at galleries including Casey Kaplan and Tanya Bonakdar. “People who are new to collecting sometimes don’t understand. It’s not about walking into a gallery and pointing. You are not buying an automobile. You are buying something unique.” The bottom line, says Scholl, is dealers want to know if a collector “will behave”. “Behaving is at best buying work and promising or giving it to a museum,” says Scholl. “Next is putting it in a home and being willing to lend. [Then comes] buying a work, putting it in your home and letting it sit there for a very long time.”

Dealer Zach Feuer also places museums first but he isn’t always as keen on the big name collectors. “I think too much importance is placed on star private collectors,” says Feuer. “A lot of times long-term collectors are not necessarily the big name collectors.” Feuer says he scouts for buyers who are “engaged to the work, as opposed to the names”. Ultimately, there is only so much a dealer can oversee: “Controlling the market is a ridiculous idea,” says Feuer. “The market doesn’t get controlled. You only make it more complex for yourself.”

Conditions have eased up for buyers, in tandem with the softening of demand for contemporary art. Auction totals dropped by 60% from 2008 to 2009, according to a report published by art economist Dr Clare McAndrew, in step with the global financial crisis. “It’s certainly not first come, first served. It never has been,” said Scholl. “But it feels that there has been more supply than demand. There’s more flexibility in terms of pricing and [fewer] demands on collectors.”

Given the complex mating rituals of art acquisition, one wonders if, in the long run, any of these strategies make a difference? “If you have a talented artist, does this kind of manipulation really [have] an effect? If you are dealing with someone who has a real talent, one would like to believe that they will be successful irrespective of a dealer’s micro-managing,” says Danziger. “Similarly, one would expect that even a good dealer cannot make an untalented artist successful.”