In 1967 there was only Art Cologne. Widely considered the world’s first art fair, the event was launched by German dealers seeking to reinvigorate a stalling market for modern and contemporary art. Over the next 45 years, a diverse population of dealer consortiums, private companies, and individual promoters followed, mounting the hundreds of art fairs that now compete for the eyes and the wallets of the collecting public year-round.
“They are part of the business plan now,” says San Francisco dealer Anthony Meier of the fairs. Participating in any fewer than four such events a year, he says, “would be like not advertising or not having three phone lines. It’s critical to operating a business.” Preoccupied with chasing new revenue, however, galleries can sometimes miscalculate or overlook expenses that come with attending multiple art fairs each season. The increasingly event-driven marketplace has become both a professional obligation and a financial risk.
According to a 2011 study titled “The Role of Art & Antique Dealers: An Added Value,” dealers make approximately 28 percent of their total sales outside the primary country where their business is located. That figure, gathered from a survey of 45 members of CINOA, an international association of art and antiques dealers, includes sales to collectors overseas as well as participation in art fairs. But the two dozen galleries that provided detailed figures for this article painted an even more striking picture. Most reported that art fairs alone account for an average of 60 percent — and as much as 90 percent — of their total business.
Participation in art fairs doesn’t come cheap, however. A single booth at a premier event can cost more than $75,000, all of which must be paid up front. “If you have four fairs going on more or less at the same time, and each one costs between $40,000 and $50,000, you have a lot of money out there,” notes Richard Arregui, a director at Miami’s Fredric Snitzer Gallery.
Several established dealers report an annual fair budget of $300,000 to $400,000. “You could have quite a retail space for that amount of money,” says Sandra Hindman, owner of the medieval book specialist gallery Les Enluminures, which participates in TEFAF in Maastricht, Masterpiece in London, and New York’s Winter Antiques Show, among others. “The fact that dealers are shelling out so much for art fairs of course indicates that this is where they see the market going.”
Booth prices themselves can vary considerably. Fairs with convention-center-size venues, like Art Basel Miami Beach (ABMB), bill on the basis of booth size: That fair charged $590 per square meter in 2011, which comes to $48,970 for an 83-square-meter booth. Other fairs with less space offer tiered pricing: ADAA’s The Art Show, for example, which occupies the Park Avenue Armory in New York, charges $21,000 for a small booth and $26,000 for a large one.
Organizers say they consider the fair’s duration, the cost of renting the venue, and the cost of booth construction when determining what to charge dealers. “The pricing is really based on our costs, and the price of the venue is the most important factor,” says Paul Morris, former vice president of art fairs at MMPI, the real-estate consortium that oversees five art fairs including Volta in Basel and the Armory Show in Manhattan. “Surprisingly, it’s cheaper to do business in Basel, Switzerland, than in New York.”
According to longtime fair organizer Sanford Smith, production costs also play an important role; he would be able to charge 20 percent less for booths if he didn’t use union labor, he says. Still, he notes, “the union carpenters and electricians are highly skilled craftsmen” who were able to construct New York’s Pavilion of Art and Design fair in the Park Avenue Armory last year in a record 36 hours “with a quality that surpassed that of its London counterpart.”
Of course, the true cost for a gallery to exhibit at an art fair involves much more than the price of a booth. “They make you pay for everything,” complains one dealer. “If you add a light at Art Basel, they say, ‘Credit card, please.’” Most gallerists report spending an extra $10,000 at fairs like ABMB and the Armory Show to build extra walls, install proper lighting and extra outlets, and access Internet service.
Then there are the quirky or unanticipated costs. One San Francisco gallery spent $1,500 on a technology specialist to help install projectors in its booth at Frieze Art Fair in London. Renting furniture for a booth at Art Basel in Switzerland cost another American gallery $1,900 — a pittance compared with the $7,000 it spent on dining. According to several dealers, Maastricht requires first-time exhibitors to pay a $25,000 “initiation fee” to the European Fine Art Foundation, which organizes the fair. But who can say no? Notes Sperone Westwater’s David Leiber, “Financially, it is more expensive than the average visitor might imagine, but you feel very excluded if you don’t have the opportunity to participate.”
The most substantial ancillary cost, dealers say, is shipping, which can easily run into the tens of thousands of dollars. Dealers who work with artists abroad must pay not only to transport the artwork by air, but also to clear customs and get the work to and from the airport. And while business costs incurred in Europe are largely eligible for a VAT refund, that’s not always the case in emerging markets. Brazil charges a VAT of at least 17 percent, further elevating the cost of doing business there. For this reason, Hong Kong is a more popular venue for art fairs than the Chinese mainland, where import and export taxes are high.
That contemporary art galleries also find themselves commissioning pricey new works for art fairs is a testament to both the pressure they feel to display the freshest material and the sheer volume galleries need to bring to market today. One Los Angeles gallery spent nearly a third of its $60,000 budget for the Armory Show on the production of new works because, the owner said, she simply “ran out” of the artist’s work before the fair.
Dealers acknowledge that such high demand can lead an artist’s work to suffer. An artist with a museum show on the calendar who is represented by three galleries that may have simultaneous fairs to attend must now produce an unprecedented amount of art to satisfy interest from all corners. Danielle Horn, co-owner of the London gallery Nettie Horn, estimates dealers must have a roster of at least 16 artists to comfortably supply a year-round exhibition program and several fairs annually. “In some cases, I have seen a decline in the quality of the work,” admits Arregui of Snitzer. “It happens. We’re not making widgets here—you have to be able to sit back and reflect on what you’re doing.”
In a similar vein, secondary-market dealers feel pressure to constantly display new and better inventory at art fairs, which makes it “obligatory to continuously buy things,” says Edmondo di Robilant, of London’s Robilant + Voena. He acknowledges, however, that “people pay less attention than one imagines,” so bringing a few familiar items won’t destroy a gallery’s reputation.
In fact, concerns about reputation can be as integral to a gallery’s art fair strategy as concerns about business. Art fairs now play a large role in building a gallery’s status, and participation in the wrong fair might be hard to live down. “You can get typecast for the fair you’re in,” adds one New York dealer, who cautions, “People start to think, ‘Once a Scope gallery, always a Scope gallery.’” “You end up doing these things to raise your profile, but at the same time you have to make sure it’s not counterproductive,” says Horn.
If a sullied reputation and financial loss are the worst possible outcomes of an art fair, success is more difficult to determine. “Everything about this business is cumulative,” says Meier, explaining why it is difficult to quantify precisely what percentage of his revenue comes from art fairs. “If you meet a new client who likes the program, you may get six or 10 sales from him over the next five years. Do you count that in the calculation? What if that client introduces you to his cousin?”
There is also a need to balance the cost of participating in art fairs with their value, dealers say. A booth at Art Berlin Contemporary costs $4,876, less than a tenth the cost of a booth at Art Basel. “Is it better to be the best in a lesser-known fair or to be good, but not the best, in a great fair? I don’t know,” says di Robilant. Dealers today must decide whether to participate in a satellite fair like Pulse or NADA in Miami or to strike out for a smaller but less saturated market by participating in a regional fair like ARCO Madrid or Art Platform—Los Angeles. Asked which fair he would do if he could pick only one, di Robilant named Maastricht, the premier fair for Old Master paintings where booths cost up to $75,000.
Justifying his choice, di Robilant says, “The market revolves around the main fairs like TEFAF.” The event has become a venue for him to meet with museum curators and institutional figures who no longer visit the gallery. “When I first started, we received 10 to 12 visits from museums a week. Now it’s maybe two or three a month. But every museum sends curators to Maastricht,” he says. “At least that way we see them once a year.”
The size of a gallery is the most important factor in determining its art fair strategy. Large galleries like David Zwirner, White Cube, and Thaddaeus Ropac supplement their inventory at fairs with secondary-market material, which makes up a substantial portion of their business but rarely gets a public platform in their permanent exhibition spaces.
For medium-size businesses, like that of Anthony Meier, art fairs are a way to gain a foothold in a region without making the long-term commitment of opening a remote office or secondary space. “Galleries, especially those in New York, now want and demand a presence in multiple cities,” Meier says.
For smaller galleries, the benefit is largely exposure and access to new clients. For CANADA, a gallery on New York’s Lower East Side, fairs were integral to building its profile despite an out-of-the-way location. “We didn’t have the capital to grant us a prize piece of real estate,” says cofounder Phil Grauer. He credits the NADA fair in Miami for “getting lazy collectors and lazy curators to finally take note of our program.”
Some galleries that have been in business for more than a few years, however, say they struggle to find their place in the fair landscape. They have been around too long to qualify for specialized programs like Frieze’s “Frame” section, which costs an affordable $8,000 but is open only to galleries in their first six years of existence. Yet they may be insufficiently established or financially solvent to gain entry to marquee fairs. “That’s the problem we’re coming up against,” says Horn. Furthermore, certain art fairs offer premier dealers discounts on stands to encourage them to participate, a tactic that swells their ranks but also serves to widen the gap between the very top galleries and the rest of the art business.
In perhaps the most striking development, a few dealers are fully subsisting on the revenue from art fairs. They acknowledge, however, that the system isn’t built for such nomadic enterprise. Simon Christopher, founder of Christopher Crescent gallery, which has been between spaces for most of 2012, plans to settle into a permanent space this fall. In the meantime, he has been living off income from fairs like NADA New York. “The fairs are important, but fairs only let you in if you have a space anyway,” he says. “Unless down the line Art Basel admits a dealer with no permanent space, and that sets some kind of precedent, things won’t change.”
For all but the most elite dealers—who have ample resources to focus on individual art fairs while overseeing their permanent spaces—the importance of these events may result from self-fulfilling prophecy. “There’s no doubt a dealer cannot devote the same amount of attention to a show in the gallery when he or she is preparing for and then participating in an art fair,” says gallerist Ed Winkelman, who also organizes the Moving Image fairs in New York and London and co-organizes Seven in Miami. “I wonder if we’re not making it even more difficult to sell out of the gallery by not being there enough, thereby making the fairs all the more important.”
To see a list of the average booth prices for 13 art fairs, as well as one gallery's list of expenses for Art Basel, click here. This article appeared in the September 2012 issue of Art+Auction.