Online Rebellion Dealer Tries to Liberate Art from the Elite
Part 3: Times of Boom and Bust
The economic boom shifted toward Japan, and Neuendorf seemed to have been proven correct. The banks, which had refused to lend money to art dealers in the past, were now calling him, anxious not to miss out on the wave. Neuendorf bought the entire estate of the French painter Francis Picabia, and he also made a large investment in Italian artist Lucio Fontana.
Neuendorf had done everything right -- or so he thought. But then the boom in Japan trickled away, Neuendorf could no longer make payments on his loans, and he was forced to sell his treasures for less than they were worth. "In that manner," Neuendorf says today, "I was forced to destroy a large portion of my assets."
The man who mediated between Neuendorf and the banks was Rudolf Zwirner. Today, Zwirner lives in a white villa in Berlin's Grunewald district. He used to be Neuendorf's business partner, and both men were among the organizers of the first Cologne Art Market in 1967, the event that would later turn into Art Cologne and serve as the inspiration for modern art fairs like Art Basel. Both men wanted to spur growth, to enlarge the art market.
Zwirner says that money has always fascinated Neuendorf more than art. Neuendorf would size up customers, he says, appraising their shoes, handbags and watches. And when he liked what he saw, he stepped on the gas.
"He had this thing about big money," says Zwirner says. Neuendorf rented a villa for the equivalent of 9,200 a month, and his wife took regular flights to Paris to have her hair done. But after his business failed in Frankfurt, Neuendorf realized it was time to make some changes.
Victim of the Internet Bubble
In the early 1990s, Neuendorf seized upon an idea that a collector named Pierre Sernet had explained to him at an art fair in Paris. Sernet had developed ways to electronically publish images of artworks and the corresponding prices.
The Internet didn't exist yet in its present form, and Sernet's company sent customers CDs containing software that was supposed to enable them to access the images and prices through their telephone lines.
This system was complicated and didn't work very well, but Neuendorf believed in the idea and invested millions. When the Internet revolution took off in the mid-1990s, he already owned 85 percent of the company. Still, Artnet couldn't seem to turn a profit. "My share was constantly being watered down through new increases in share capital," Neuendorf says, "and I still had to sell off art from my warehouse to compensate for the attrition."
But it still wasn't enough, so he eventually raised even more money by taking Artnet public. The stock was initially priced at 46 a share, and Neuendorf owned 1.6 million shares. He sold 9 percent of his shares for 6,624,000. It was a lot of money, and the first thing he did with it was to pay off the debts he had accumulated with his expensive lifestyle, which included sending his four children to private schools and owning a townhouse in Manhattan's upscale Upper East Side neighborhood.
The IPO had also made 26 million for the company. Neuendorf invested in new office space, new employees, a big marketing campaign and online auctions, which he hoped would enable him to compete with Sotheby's and Christie's. The motto of the day was to increase sales and secure market share -- and worry about the costs later. Within two years, the 26 million had been spent. Artnet also lost a dramatic share of its value after the collapse of Germany's Neuer Markt ("New Market") index for hi-tech stocks. In 2003, the stock was trading at only 25 cents a share.
Other Internet adventurers beat a retreat, landed in prison or immersed themselves in new companies. But Neuendorf stuck with his company, held onto his remaining 1,456,000 shares and hoped things would get better.
The share was priced at 3.50 four weeks ago and is now trading at 4.30. Things are going uphill, but slowly. Neuendorf still occasionally has to fall back on his collection to pay for his high living expenses.
"The inventory has been seriously decimated by now," he says.
An Undying Faith in the Future
Neuendorf is standing in a 3,000-square-meter (about 32,000-square-foot) gallery on W.19th Street, in Manhattan's Chelsea neighborhood. The gallery is owned by David Zwirner, the son of Rudolf Zwirner, the man who doesn't have very good things to say about Neuendorf. Since friendships in the world of art dealers are usually destroyed in the competition over hot artists, it makes sense that new generations are constantly on the rise. They keep business going, as is the case on this day in New York. Despite the animosity between his father and Neuendorf, David Zwirner believes the latter is one of the great pioneers of the German art trade.
Zwirner came to New York 20 years ago. He had learned to be a jazz drummer in Germany, but now, according to the magazine Art Review, he ranks ninth among the 100 most powerful people in the global art trade. Zwirner is seen as a tough negotiator, partly because he is familiar with the prices from Neuendorf's database. But, on this day, he is conspicuously charming because Neuendorf is exhibiting sculptures in his gallery by Robert Graham, the man Neuendorf bought a black Porsche for in the 1960s. In today's hot art market, the two men believe that they can even make money with a hard-to-sell artist like Graham.
Graham's sculptures are in small glass cases spread out across the concrete floor. He fashioned beeswax into tiny female figures -- lying in bed, riding potatoes, sunbathing on the beach, seemingly hovering in an endlessly idle world of drugs, Pacific surf and money. Each doll box costs about $200,000.
The Hollywood actress and Oscar winner Angelica Huston is standing next to a sculpture of a bare-breasted woman wearing a silver slip, pulling a potato behind her on a leash. She was married to Graham until his death in 2008. It was a happy time, she says, compared with the wild years she spent with fellow actor Jack Nicholson.
When Huston sees Neuendorf, she hugs him like an old friend. Forty years ago, the art speculator bought the beeswax sculptures from her husband for a few thousand dollars each; now he is selling them for a hundred times as much.
When Neuendorf disappears into a crowd of new arrivals, Huston says: "Robert didn't like a lot of people, but he loved Hans. He always felt he was like a baby brimming with confidence."
Neuendorf apparently hasn't changed much since then. The evening is filled with the lightheartedness of the 1960s, and he starts to believe in something again. He believes that his time will come, just as it has somehow always come. He believes that the Internet -- now that it's conquered the entire world -- will also take hold of the art market. And he believes that, when that happens, he will finally be rich -- really rich.
Translated from the German by Christopher Sultan
- Part 1: Dealer Tries to Liberate Art from the Elite
- Part 2: The Art World Meets Walmart
- Part 3: Times of Boom and Bust