The Power of Fairs
The Power of Fairs
Asked what makes a successful art fair — say, Art Basel, which is generally regarded as the leading contemporary- and modern-art show — most people would say it’s the quality of the exhibitors. But there’s a less visible force contributing to Art Basel’s elite status: Messe Schweiz, the powerhouse Swiss company that owns it and its stateside sister event, Art Basel Miami Beach. By keeping the exhibitor list to under 300 despite an increase in applications, Messe Schweiz has foregone increases in revenue from additional booth fees to limit the event to top international galleries.
Attracted by their profit potential — especially during the contemporary-art boom — but also by the glamour they can add to portfolios of corporate trade events, other companies have taken Messe Schweiz as their model and snapped up fairs that originated as small dealer-run events; some have even launched their own. The Chicago-based Merchandise Mart Properties, Inc. (MMPI) owns eight fairs, half acquired through purchases and half through launches. Reed Exhibition France took over Fiore Internationale d’Art Contemporain (FIAC) and Paris Photo in 1994 and 2001, respectively.
The art fairs are "extremely important for us in terms of image," says Jean-Daniel Compain, of Reed Exhibition France. "We don’t want to be associated with only the business industry." He adds that fairs are a "tool for us in terms of PR concerning all of our big clients and big accounts. You can’t imagine how many very important people ask us for favors, just to be at the opening party of FIAC." Reed is the largest trade-fair company in the world, with 500 shows globally. Its parent company, Reed Elsevier, is a massive Anglo-Dutch publishing concern. The majority of Reed’s events are business-to-business shows. Compain’s division is the only part of the company devoted to business-to-consumer shows.
Compain explains that the culture-and-leisure market is a priority at the moment: "We want to be much more involved in that sector." In fact, Reed is looking to develop art fairs in markets outside France, including North and South America and Asia. Timing with such expansions is everything. "The question for companies like ours is always the same," says Compain. "We have to be there — not too soon, not too late."
The benefits of fair ownership flow both ways. For an event’s participants, a big parent can help with logistical complexities and lend support. In 2006, FIAC director Jennifer Flay wanted to move the fair from the Porte de Versailles to the Grand Palais — a more prestigious venue. But the building was still being renovated, so FIAC would lose a third of its exhibition space — along with some revenue. But Flay was able to convince Reed that the move was necessary to increase FIAC’s profile.
Other events, like London’s Frieze fair, begun in 2003 by Frieze magazine publishers Amanda Sharp and Matthew Slotover, have thrived without big corporate backing. Now there is speculation, which they would not confirm or deny, that Sharp and Slotover are considering launching a New York version of their enormously successful fair. With extensive space devoted to non-revenue generating but high-profile elements, such as commissioned artist projects and curated sections, Frieze is acknowledged to have reenergized and raised the bar for the art fair model.
Large trade companies acknowledge the appeal of curated project spaces — and argue that they can do it better. "You have to deliver services, quality, and have strong relationships with exhibitors," says Compain. "It’s an investment, and a small company cannot do that." A flush holding company can also provide needed capital. Although in theory fairs are cash-flow positive — dealers pay for their booths and the owners pay the venue — it doesn’t always work that way in practice, especially in an uncertain economy. Rent and wages for union employees, who typically work as setup crews on sites, may rise even as dealers’ incomes stagnate or fall. That makes it difficult to raise booth fees — the main source of fair revenue, accounting for some 60 to 80 percent, followed by sponsorship fees and admissions — without alienating exhibitors. It’s not surprising that fairs have tried to make up for the inability to increase fees by adding booths and new fairs.
MMPI has pursued expansion vigorously. The company, which is owned by New York-based Vornado, the equity real-estate investment trust, got into the art-fair business under unusual circumstances. In April 2006 it rescued the Art Chicago fair when then-owner Thomas Blackman’s financial troubles prevented him from securing his Grant Park venue. Sensing an opportunity, MMPI stepped in and offered its downtown building as a venue, then struck a deal with Blackman to buy the fair. In 2007 it bought New York’s Armory Show and Volta, an Art Basel satellite of which it launched a version in New York in 2008. That year marked the first edition of NEXT, an emerging-gallery satellite of Art Chicago, and in 2009, MMPI expanded the Armory by adding a pier on the Hudson River to house 68 modern dealers. This fall the company inaugurates Art Platform, in Los Angeles.
Corporate interests do not always line up with the art world’s unique needs. MMPI’s growth, some dealers say, has been at the expense of quality. This year’s edition of the Armory, opening March 3, will take place without such prominent longtime exhibitors as Pace and David Zwirner. Those who dropped out refused to speak for attribution, but they mentioned lackluster customer service; a dingy venue; the distraction from the competing Volta fair; a feeling that MMPI "wanted their money and wanted to get out"; and the company’s "tone deafness" to their concerns. There were rumors that dealers who tried to pull out last year were threatened with lawsuits. Nearly all these things are blamed on MMPI, not on director Katelijne de Backer or Paul Morris, MMPI’s vice president of art shows and one of the Armory’s founders.
MMPI senior vice president Mark Falanga stresses that contrary to what many believe, the company did not enter the art-fair business "prompted by a disastrous situation with the 2006 Chicago fair. It’s something we’d been involved in and looking at for many years." Falanga says he expects MMPI’s investment to grow. "We have a lot of great resources for getting into new markets and expanding in existing markets."
Asia is one market that is taking off. The four-year-old ArtHK: Hong Kong International Art Fair was started not by dealers but by an entrepreneur, Tim Etchells, who wanted to launch a trade event of some kind. Etchells had been involved in creating fairs in such sectors as fashion and food. He was partners in Art Sydney and Art Melbourne with fair organizer Will Ramsay, the founder and owner of the Affordable Art Fairs and the Pulse Fairs. Five years ago, Etchells was keen to start a new event and had his eye on Hong Kong, a hub for the Asian market. He brought in two other shareholders — Ramsay and Sandy Angus, who runs the company Montgomery Worldwide, which had expertise staging events in China — and the three formed the firm Asian Art Fairs.
A misconception about the business, say owners, is that the events make enormous profits. In fact, they’re risky, another reason adequate capital is required. The ArtHK partners invested $1 million in the first edition, in 2008, and lost the whole nut. "We weren’t expecting to make a profit," Etchells says. His business model has a three- to five-year horizon, because that’s how much time it takes to make back your investment and, with luck, start generating profits. With global fairs, he says, "you have to be one step ahead," particularly in Asia, where collectors aren’t as easy to identify as those in the U.S. and Europe.
It remains to be seen how the fair landscape will evolve. What seems certain is that fairs will remain a balancing act between profit and prestige, a push and pull between short-term revenue and an understanding of what creates long-term value. In the best cases, owners pick the right people to run the events and trust their judgment. "You can’t be greedy as an art fair organizer," says Ramsay. "I use the word greedy in the most general sense."
"The Power of Fairs" originally appeared in the March 2011 issue of Art+Auction. For a complete list of articles from this issue available on ARTINFO, see Art+Auction's March 2011 Table of Contents.