Are New Investment Millionaires Investing in Art?

Are New Investment Millionaires Investing in Art?

Lisa Crawford Watson

The dot.com revolution and a booming economy has created a surplus of millionaires (8 million last year). And professionals in the art business have one question–

It was the fall of 1983, and Tom McCormick was taking a well-deserved, post-law school break in the Yosemite Valley. While hiking the trail to Vernal Falls, he ran into preeminent western photographer, Ansel Adams. “Pardon me,” he said to the artist; “I just want to tell you I really like your work. If I had any money, I’d invest in some.”

“You ought to go down to the gallery and buy some posters,” the old man responded. “I’ll go in and sign some prints for you.”

“Mr. Adams said you’d be in,” said the curator as she pulled out seven signed posters and handed them to the young lawyer.

“At $17 a piece, I maxed out my Visa buying them,” he said, “but they’re still my favorite images.”

Which says a lot for a man whose funds aren’t quite so limited nearly two decades later. In fact, as the c.e.o. of eOutdoors.com, a worldwide outdoor marketplace exchange for individuals and businesses that cater to outdoor enthusiasts, McCormick’s success has enabled him to invest in significant art–if he so chooses–and if he can find the time.

These days, more and more people are getting the chance to make that decision. In fact, in recent years, the number of millionaires in this country has doubled to 8 million and counting. This surplus of potential luxury spending could mean big payoff for gallery owners and publishers.

While seven $17 posters may seem like a significant investment to some, to others, art would not become an investment until it ransomed at least one year of a dot-com salary and promised to appreciate. And those are buyers many artists and gallery owners have begun courting.

“It seems to me that the more informed, the more mature millionaire is investing in art at higher levels,” said sculptor Richard MacDonald. “But, other than those few, people really don’t have a sense of what to buy or whether they should. They certainly don’t look at it as an investment. They’re used to buying Internet stocks, used to operating within their own world. So, education becomes a big goal of the artists and galleries to educate people to the value of art.”

If you buy art “right,” MacDonald said, it’s no different than buying stocks, except you get to hang it on a wall or feature it in the entry and enjoy it every day. For the most part, high-dollar players don’t buy their own stock or real estate–or whatever area in which they would like to invest–where they don’t have particular expertise. Instead, they call on professionals. Similarly, the right art consultant can help collectors and potential Collectors assess an intelligent purchase and, at the same time, acquire what they like.

“I have found that people with new money, be it the dot-com-ers or other, have expertise in some areas, but it isn’t necessarily art,” said interior designer Janice Gistinelli of Pebble Beach, Calif. “In my experience, these people are not that sophisticated about art. Some want to select art that suits their own personal vision; others just want something that matches the sofa. Certainly there are experienced collectors, but there are also those who buy Chagalls because they think they’re supposed to, even if they don’t necessarily like or understand them.”

There always will be the students and experienced collectors of fine art. And, today, there are plenty of people buying art simply because they can. And yet, while the originals are selling, nouveau riche are also buying prints and reproductions likely because they are buying art more for personal than financial appreciation.

“One of the reasons we moved into Kirkland [Wash.] and opened a second gallery in June is because the new millionaires in that area are buying art,” said Rohana LoSchiavo of Phillips Publishing and Fine Art, also in Carmel, Calif. “We are very aware that a high percentage of our collectors are working in the dot-com industry and auxiliary services–the accountants, lawyers, designers–the wealth is being spread around. We don’t get the sense, however, that they’re buying for investment. They’re buying what they like.”

Scott Manha of Scott Anthony Manha Designs, who serves as a designer and purchasing agent for clients around the world, works both with serious art collectors and those more interested in what he calls “art decor”–it’s appealing and it serves a purpose.

“Yes, millionaires buy art,” he said. “All kinds of art for all kinds of reasons. We have a client in Houston who is a major collector of art for his homes. He knows a lot about art, and he invests in originals and security systems. We also have many clients who buy art if they like it, and it’s an added bonus if it appreciates in value. I think they keep that in mind when buying pieces, but it’s not always the main thrust behind their decisions.”

The only ones, however, who can truly unlock the secrets to these sought-after buying patterns are the millionaires themselves. And here’s what they’re saying:

Sandy Shore, 36, president and owner, smoothjazz.com

I’ve admired art for years and looked forward to a time when acquiring art would be a part of my life. We started with furniture–functional art. Now, it’s time to look toward fine art for art’s sake, to travel to the Caribbean and ship home a piece of art because we like it and it meant something on that excursion. Because smoothjazz.com is a worldwide hub for the contemporary jazz lifestyle, we’ve included jazz art on the site–art that matches the music.

Donna Phillips, 33, managing partner, smoothjazz.com

As an artist, I always created my own art. If I wanted it, I painted it. I’ve just started considering buying art as an option. I’m at a place in my life where I’m trying to build something that gives me the means to buy what I like instead of just what I need. All our visual art came down when we remodeled our house. Now, we’re looking to invest in art that will matter to us, and we will hunt for it. I would not buy art for monetary investment. If that’s a byproduct, that’s great.

Paul Manca, 41, CFO, pets.com

I don’t think this generation collects art in a traditional sense. The idea of building a social fabric around it is not our bag. I quietly go around to the major galleries and look with appreciation at the art, but the work I have collected is from lesser-known artists. I’d be surprised if people have bought art for investment sake. I also would argue that people are less likely to need a Renoir and more likely to buy a “Bob Smith” because they think it’s good and they like it. We like to follow an artist, get into his work and collect it for the aesthetic value.

John Christian, 42, Attorney Tobin & Tobin, San Francisco

We like art and collectibles and antiques; anything silver, mahogany or in a gilded frame. In terms of paintings, we prefer European works. We built our house around 1820s English dining room furniture. We also like a touch of the modern. I doubt there’s a single type of art that appeals to the quintessential dot-com-er. We like what we like when we like it. We buy what’s pleasing to us. We’ve bought a lot of things and we’ve sold a lot of things. None of them were mistakes. We just in a position now where we’d like to do something else with that wall.

Al Shugart, 70, President, CEO, Al Shugart International, Inc.

I don’t think the dot-com rich are really in to art any more than anyone else is. Getting money all of a sudden doesn’t change one’s thoughts or cultural experiences. It does mean you can get a big house [where] you’re probably going to add some art. I don’t think there are that many eagle-art purchasers, ones who will buy art or the car or the yacht so they can show off. Anyone who’s going to spend significant money on it should look at the investment quality of art. I do. Actually, I’m more interested in what it looks like and how it looks in the room. But then, my wife is a painter, so we enjoy a lot of her work.

Tom McCormick, 43, CEO, eOutdoors.com

My impression of art–I know it when I see it. I can’t say whether it’s good or bad, but I know what I like. We buy art on three levels; modern-day impressionism, folk art and what we call “yard art,” metal sculptures and things we use to decorate the yard. They’re not terribly expensive, but they’re fun. We buy art for its appeal; it has nothing to do with investing. When my wife and I spend time together, we like to look at art; it gives us a chance to get caught up with each other. The result is the artwork we purchase. It has nothing to do with money; it could be something for $250 if it reminds us of whatever we’re doing together or it fits nicely in our home. Or maybe we just like it.

Richard MacDonald, 54, President, Richard MacDonald Studio, Inc.

I would prefer people looked at the aesthetic and educational value of art first. I do. Many are naive and also caught up with the age-old phenomenon of “what is art” and “how do I detect art.” Art is so vast in its base, spectrum and interpretation; people find it difficult to zero in on the right art to buy. Additionally, they don’t understand it. They see $8 million for a canvas with very little on it. They’re not sophisticated or interested enough to see how anyone could arrive at that value. I’m educating people to seek art that is in line with their own sensibilities and intuitive sense of it as they see it, where they don’t have to prove anything. They see it, they like it, it’s theirs.

COPYRIGHT 2000 Pfingsten Publishing, LLC

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