Commercial galleries Market USA

Grow, grow, Gagosian…

Temporary space in Rio de Janeiro means the gallery’s total space is greater than Tate Modern

Big and bigger… Larry Gagosian with Richard Serra (Photo: Billy Farrell/PatrickMcMullan.com)

This month, Gagosian Gallery announced plans to open a temporary exhibition space in Rio de Janeiro, Brazil. Next month, it inaugurates a Jean Nouvel-designed space at Le Bourget, the airport for private jets near Paris. These will be the 12th and 13th galleries of an empire that crosses four continents, in what is an unprecedented business model. It is an astounding development for a company that began selling posters from a patio in Los Angeles in 1975. “We have opened galleries around the world because it better serves our artists,” says Larry Gagosian, the founder of the gallery.

“Clearly the art market has become much more global in the past few years,” Gagosian says. “We see evidence of this in the expansion of museums and art fairs internationally. There is no reason why galleries such as ours can’t benefit from this trend.”

The Art Newspaper calculates that Gagosian’s permanent gallery spaces total more than 153,047 sq. ft (14,200 sq. m) spread across eight cities: Los Angeles, New York, London, Rome, Athens, Paris, Geneva and Hong Kong (excluding its previous temporary space in Moscow, and now Rio). This is more than the entire 145,313 sq. ft (13,500 sq. m) exhibition space of Tate Modern, including its new extension and the Tanks. The sheer scale of the Gagosian enterprise suggests that, despite reports that the traditional gallery model is in decline, the art trade still relies on bricks and mortar, and that clients still like the personal touch.

How much is the real estate costing the business? The gallery owns its 25,000 sq. ft property on New York’s West 24th Street, for which it paid a reported $5.75m in 1999. Property experts estimate that it could now be worth around $65m. On the other hand, the total rental cost of the other 11 spaces Gagosian occupies could be at least $11.4m a year, although calculations are based on media research and the opinions of a range of international property agents, and do not take into account Larry Gagosian’s negotiating skills (our estimates are “between 30% and 50% too high”, he says).

The economist Don Thompson, author of The $12m Stuffed Shark, estimates that Gagosian employs more than 150 staff worldwide and that the gallery makes annual sales of around $1.1bn, or $20m a week. So in one rough estimate, other overheads and commissions notwithstanding, Gagosian Gallery earns in a week almost double its annual property costs.

In Rio, the gallery is taking over a warehouse, where it will mount a sculpture show to coincide with ArtRio (12-16 September). The proliferation of art fairs has been a major factor in the gallery’s expansion; there were only three important fairs in 1970, 68 in 2005 and 189 in 2011. “A number of galleries are now getting 60% to 70% of their annual sales through art fairs, and that requires size and scale: you need more people, more artists, more money,” Thompson says.

Gagosian lists 108 artists on its website and directly represents 77 artists and estates. Larry Gagosian has a reputation for aggressively poaching artists from rivals rather than incubating young talent. However, “it is usually the artist’s initiative that instigates a move to a new gallery”, Gagosian says. “He’s the person who’s forcing the changes in the art world,” says the art adviser Lisa Schiff. “He has been as influential as the internet in the globalisation of the art world.”

The costs of running the empire could lead to a highly pressurised sales environment, Schiff says, questioning the impact on art production. But Gagosian says: “I can’t imagine that any serious gallery would demand that artists produce more work to cover the gallery’s overhead[s]. We certainly do not. The gallery’s profitability has more than kept pace with our expansion.”

How to start a global network from scratch

There have been four major phases in the growth of Gagosian Gallery:

1) North America: the first proper gallery opened in 1981 in Los Angeles, mainly selling works by East Coast artists such as Richard Serra and Eric Fischl to West Coast collectors. A New York outpost opened four years later—Gagosian was one of the first dealers in Chelsea, although he left the area for SoHo in 1988. He opened an uptown gallery in Sotheby’s former Madison Avenue space the following year, and bought the West 24th Street property in 1999.

2) London: a major contemporary art centre from the late 1990s, thanks to the YBA phenomenon and the opening of Tate Modern in 2000. That year, Gagosian opened a small space on Heddon Street. This was replaced by the 14,000 sq. ft Britannia Street space in 2004 (when he also opened a third space in Manhattan). Gagosian consolidated his London presence in 2005 with a small gallery in Mayfair.

3) Europe: Gagosian opened a string of smaller spaces in niche European markets between 2007 and 2010. The plan appears to have been to dominate these local markets through proximity to major collectors (such as Dakis Joannou in Athens), to cement relationships with valuable artists (for example, Cy Twombly, whose studio was near Rome) and to mine old European collections for major secondary-market material.

4) The most recent phase is expansion into emerging markets, with the opening of the first non-Western gallery in Hong Kong last year, and consolidation in the more traditional ones: Gagosian is scheduled to open a larger space outside Paris this year and is said to be considering a third, larger space in London.



Larry’s world: how the Gagosian empire adds up. To enlarge the image, click here

Additional research by Edward Frankel

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Comments

25 Sep 12
15:10 CET

JAN KRASNAN, PRAGUE

I am just wondering if another "Larry" replaces this one when he is gone... Not that I wouldn't wish him many more successful years to come but no-one is immortal and I can't possibly think about another art dealer who would combine strong business acumen, access to financial resources, ability to juggle so many galleries at the same time and willing to take the risk to enter a new market without pulling back after a few years. Do you have any champions or will I be telling my kids stories about Larry, which won't have comparison in the future? Please enlighten me! Jan

18 Sep 12
14:51 CET

HERA KOUTOUDI, ATHENS

Larry is a legend !

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