Does the De la Cruz collection sale mark the end of an era?

May is supposed to be when the international art market gathers momentum. Ideally, vigorous results at Sotheby’s, Christie’s and Phillips’s marquee auctions in New York—led by a blockbuster collection or two—reassure dealers and collectors that prices are on the way up. This creates a tailwind pushing wealthy buyers towards making even more acquisitions at Art Basel in Switzerland and all the other fairs, auctions and dealer offerings set up to entice them before they jet off for their summer breaks in the Caribbean, Provence, Tuscany or wherever.

Things went differently this time. Leaving aside the small matter of a cyberattack that compelled Christie’s to radically strip down its website days before the sales, the season was compromised by a noticeably short supply of prestigious single-owner collections. “The estates and their various advisers are concerned about the overall mood of the art market,” according to Marion Maneker, a New York-based commentator, whose email newsletter in early May described the forthcoming auction season as “stagnant” despite an improving US economy.

Christie’s was at least able to stage an evening sale of works from the estate of the prominent Miami collector Rosa de la Cruz as a headline act on 14 May. But even though presale financial guarantees ensured all 26 works would find buyers (one was withdrawn anyway), the mostly modest prices achieved raise awkward questions about contemporary art’s medium- and long-term returns on investment, particularly for works by fashionable names from top galleries.

‘It’s different now’

On paper, the De la Cruz evening auction sold adequately, making $28.1m ($34.4m with fees) against a pre-sale estimate of $25.8m to $37.9m. But just a few years ago, the hundreds of contemporary works acquired by De la Cruz and her husband, Carlos, had reputedly been valued at $100m, according to Artnet News. Christie’s evening pick of the collection, no doubt featuring its most sought-after works, generated less than one-third of that amount.

Individual results reinforced investors’ concerns. The second-priciest sale of the auction, Peter Doig’s Rainbow Wheel (1999), underperformed its $5m low estimate by around 33% before fees. Whereas large early spray paintings by Sterling Ruby frequently went for $800,000 to $1.8m at auction in the mid-2010s, De la Cruz’s was knocked down at $360,000 ($453,600 with fees). The monumental 2020 Christina Quarles canvas in the sale made $522,000 ($655,200 with fees), around half the $1.2m price for the large new paintings in her autumn 2022 solo show at Hauser & Wirth in New York. Quarles’s auction record—posted two years ago for a work of a similar scale, date and subject to De la Cruz’s—is $4.5m.

Market jolt

The accumulation and dispersal of private collections have been routine features of the art trade for centuries. But the abrupt shuttering, haircut valuation and sale of one of the US’s most prominent public-facing troves of on-trend contemporary works nonetheless has given today’s art world a jolt. The De la Cruzes’ popular, free-to-visit private museum in Miami’s Design District closed in March after 15 years, following Rosa’s death in February. By mid-May, most of its best works were gone, essentially at a discount. The sales of lower-value pieces from the collection, planned to continue until the end of 2024, should be an even more telling and sustained stress test for the notion of art as an investable asset.

Rosa de la Cruz had five children, 17 grandchildren and six great-grandchildren. Her husband told the Miami Herald that the collection was being sold because the taxes and operating costs incurred by the museum were a burden that the next generation should not be forced to bear. “The collection was her baby,” Carlos said in an interview this April. “She did a wonderful job of presenting it to the community. But it was hers. And it’s different now.”

Great wealth transfer

Over the next 20 years or so in the US, there is estimated to be an intergenerational transfer of as much as $84 trillion in assets to people born between 1965 and 2012—that is, mainly from the Baby Boomers to Generation X, the millennials and Gen Z, according to Cerulli Associates, a financial research and consultancy firm.

The art world has been hoping the “great wealth transfer” will not only make many esteemed private collections available, but that it will also give a new generation of buyers the riches to pay huge prices for art, just as their forebears did.

But this win-win scenario also assumes an intergenerational transfer of cultural values. The sobering fate of the Rosa de la Cruz collection, one of the hundreds of market-sustaining private museums of contemporary art owned by wealthy, art-loving oldsters around the world (the latest BMW Art Guide lists 304 such institutions), suggests this might not necessarily be the case.

‘The wild card question’

“Every private museum has its own identity and purpose,” says Howard Rachofsky, who, with his wife Cindy, has formed one of the most admired of the several high-quality private collections of contemporary art in Dallas, Texas. The bulk of the couple’s trove, with their outstanding holdings of post-war Italian and Japanese art, has been promised to the Dallas Museum of Art.

Yet the Rachofskys are also planning to partner with an as-yet-unnamed collector of a more recent generation to secure the long-term future of their ultra-contemporary Warehouse space in the city. “There is a significant number of younger collectors who want their collections exposed to a wider audience,” Rachofsky adds.

What does the Instagram generation want from culture?

But will younger generations in general have the same passion for owning and displaying contemporary art that older generations had? “That’s the wild card question,” says Rachofsky. “What does the Instagram generation want from culture?”

What indeed? Fatoş Üstek, the independent curator of Frieze Sculpture and the former director of the British collector David Roberts’s private art foundation, argues in her recently published book, The Art Institution of Tomorrow: Reinventing the Model, that museums have been slow to adapt to what audiences now take from culture in today’s “experience economy”.

“Contemporary art has expanded its outreach incredibly over the last 10 to 20 years,” says Üstek, who thinks such work has become a “fashionable consumption asset”. By taking a photo or selfie in a gallery and posting it on a social media platform like Instagram, “you’re gaining status through being cultured”, she adds. The challenge for museums is how to turn millions of such click-and-run micro experiences into more meaningful engagements with art.

It’s less about the name

“There’s definitely a mindset shift,” says Üstek, who is sceptical that the model of the prestige-conferring private museum will have much intergenerational appeal. “The younger generation isn’t so interested in social status,” she adds. “It’s less about the name.”

Echoing this view is the Brussels-based collector Alain Servais, who mainly sees private museums as a symptom of “the concentration of wealth among the 0.01% in the last 15 years”.

Too many of these elite collectors have “the arrogance to believe that their tastes are good enough to justify an audience”, Servais says. ”Most of them will disappear,” he adds. “Core costs and revenues will never balance.”

Experiences over possessions

The lavishly endowed private museums founded by François Pinault, Bernard Arnault and Eli Broad offer models of longevity. Yet several others have tried and failed to replicate their success as standalone institutions, including the Main Museum in Los Angeles, the Cass Sculpture Foundation in Sussex, the Essl Collection in Austria and the Rosenblum Collection in Paris.

Younger generations’ preference for amassing experiences rather than physical possessions like art has become a commonplace of recent consumer and sociological research. A much-quoted (if self-promoting) 2014 survey by the events manager Eventbrite found that 78% of millennials would rather spend money on an experience than a tangible item, pointing to a mass “move away from materialism”, according to the survey’s authors.

Nowadays the young collect moments, not physical objects

Flatlining global sales in the art market since 2014 and a record 4.35 million tickets sold for the 2022-23 dates of Taylor Swift’s “Eras” live tour, as well as the rise of social-media-fuelled international “overtourism”, would seem to confirm such analysis. Nowadays the young collect moments, not physical objects, and there is no need to spend millions on bricks-and-mortar buildings to display them. They have MoMA-sized galleries holding hundreds of these digitised experiences nestling in the palms of their hands.

It is far too early to tell what long-term effect this “great culture shift” will have on the business of art. For now, the professionals involved are more concerned about the drag on sales stemming from the slowing economies of Europe and China, the ongoing wars in Ukraine and the Middle East and the looming presidential election in the US. “The market is in the middle of a recalibration,” says the New York-based art adviser Wendy Cromwell. “The US economy is strong, the dollar is strong, but the mood is cautious.”

As Carlos de la Cruz said, “It’s different now.” The art world is gradually finding out how big that difference is.