MUST I BE A SAINT?
MUST I BE A SAINT?
BY DANA WECHSLER LINDEN
This feature appeared in the 1990 Forbes 400 edition.
BILLY FARRELL/PMC/SIPA/NEWSCOM
EVEN AS HE HAWKED $5 POSTERS of kittens and seascapes on a sidewalk near UCLA in the mid-1970s, Larry Gagosian thought big. His poster supplier offered more expensive graphics; soon Gagosian was selling $100 limited edition museum posters signed by such prolific artists as Roy Lichtenstein and Picasso. About a year later he opened an art gallery and was selling $5,000 paintings to centimillionaire real estate developer Eli Broad and cold-calling dozens of other wealthy art collectors.
“Larry always had grandiose aspirations, even when he didn’t have two dimes to rub together,” recalls Los Angeles collector Ira Young, who occasionally lent money to Gagosian and later wound up taking legal action against him. “He talked about dealing in Picassos and Renoirs, and conquering the New York art world. He said art was just a commodity, like any other.”
Agrees Michele De Angelus, curator for Eli Broad: “Dealing used to be a gentlemanly pursuit. Larry unabashedly wanted to make money.”
Gagosian—known by friends and critics alike as “Go-Go”—does not deny that he is a quick-witted trader who rode the great 1980s bull market in art prices to the top of the art world. But he is quick to label as sour grapes the claims of many art dealers that his aggressive dealing tactics have somehow corrupted the art business. Asks Gagosian acidly: “Is it written somewhere that only Sotheby’s and Christie’s should profit from the resale of art, and that everyone else should be some kind of saint?”
Now 43, Gagosian resides on New York’s Upper East Side in his landmark carriage house, complete with first-floor lap pool; its former owner was Schlumberger heiress Christophe de Menil. He is chauffeured around the city in one of his two Mercedes. He confirms he is about to buy a posh oceanfront estate on Long Island’s South Fork built by Francois de Menil, valued by local real estate agents at upwards of $5 million.
Raised in modest circumstances in Los Angeles, Gagosian achieved all this by changing the rules of the modern art business. Traditionally, dealers in contemporary art were a combination of agent and principal. Dealers such as Leo Castelli, who discovered Jasper Johns, searched for young artists they thought would be the stars of their generation. The dealer/principals sponsored the young artists and promoted their work over the years. In this they were similar to the venture capitalists and Wall Street houses that underwrite young companies.
The traditional approach requires time, patience and capital, little of which Larry Gagosian had. But he did have prodigious energy, and he shrewdly grasped that the contemporary end of the art market lacked liquidity: If a collector wanted to sell a painting, he was at the mercy of the established dealers and auction houses. Likewise, if a collector wanted a particular painting, he had to wait until its owner decided to sell.
Sensing an opportunity, Gagosian became a middleman—or, in effect, a reseller. His specialty: aggressively locating salable artworks, prying them loose from their owners and reselling them to his growing network of collector clients. Depending on the circumstances, Gagosian sometimes acts simply as a broker, earning a commission of between 5% and 15%. Other times he purchases for his own account, but typically with an eye to a quick resale.
Los Angeles dealer Fred Hoffman, one of Gagosian’s longtime friends, recalls the time he mentioned to Gagosian that he had made an offer to buy three minimalist pieces by American sculptor Donald Judd from a collector. The collector had said no.
“How much did you offer?” asked Gagosian.
“Two hundred thousand,” Hoffman replied.
“We’ll go in together,” Gagosian said. “Offer $400,000.”
The owner still wasn’t interested. But Gagosian, says Hoffman, “is a perpetual motion machine. He calls the collector every day, upping the offer or just keeping in contact.”
Eventually Gagosian and Hoffman snared the sculptures—for $550,000. But Go-Go knew his market. The partners sold one sculpture within 30 days, the second within 60 days, the last within six months. When the checks cleared, Gagosian and Hoffman had more than doubled their half-million-dollar investment.
AFTER GAGOSIAN RAN his contemporary art gallery in a succession of ever larger spaces in Los Angeles in the late 1970s and early 1980s, it was time for him to take on New York’s art establishment. In 1985 Gagosian moved into a Soho loft he had bought some years earlier with $10,000 in cash and a Brice Marden painting then worth perhaps $30,000.
The loft was across West Broadway from the Castelli Gallery, owned by the dean of the contemporary art dealing scene, Leo Castelli, whom Gagosian had met while still a dealer in Los Angeles. He began dropping by the Castelli gallery regularly and courting its owner. Castelli, now 83, enjoyed the younger man’s flatteries. The two became close friends, and ultimately partners in a small gallery in Soho.
The friendship benefitted both men. The ambitious younger dealer showed Castelli how, in the bull art market of the 1980s, price didn’t matter. “When he wants a painting, he goes to any price to get it,” says Castelli of Gagosian. “He is always willing to pay more than anyone else.”
Castelli, meanwhile, offered Gagosian invaluable inside information. “I could give him a lot of information on where the paintings were because I sold most of them,” says Castelli matter-of-factly.
Also important to Gagosian were the contacts and respectability that accrued to him from the relationship with Castelli. Gagosian recalls strolling down Soho’s West Broadway with Castelli in 1983. A middle-aged man passed them and exchanged greetings with Castelli.
“Who was that?” asked Gagosian.
“Si Newhouse,” Castelli replied, referring to S.I. Newhouse Jr., head of the Condé Nast publishing empire and owner of one of New York’s best collections of contemporary art.
Gagosian, of course, asked to be immediately introduced and spun around with Castelli in tow. “Mr. Newhouse, hello,” said Gagosian.
Five years later, at Sotheby’s on the evening of Nov. 10, 1988, it was Larry Gagosian who successfully bid $17.1 million for Jasper Johns’ 1959 masterpiece “False Start,” on behalf of the client at his side, Si Newhouse. Other loyal Gagosian clients include British adman Charles Saatchi (who is slowly selling off his world-famous collection of 20th-century art through Gagosian), cosmetics heir Ronald Lauder and many others on The Forbes 400.
AS HE RACED to the top of his profession, Gagosian also cut some corners and made numerous enemies. One of them is Robert Feldman, a private art dealer and president of New York-based Parasol Press. In March of 1988 Feldman sold a Robert Ryman painting to Gagosian for $82,000. Feldman insisted on receiving a check before parting with the picture. “Everyone knows his [Gagosian’s] reputation,” says Feldman. “If you get money from him, make sure the ink is dry.”
According to Feldman, Gagosian gave him a check and took the Ryman picture. A few hours later, without warning, the picture was put back on Feldman’s doorstep. Feldman had already deposited the check, but it came back with a notice that Gagosian had stopped payment on it—hours after he had written it.
“It was sleazy,” says Feldman. “Obviously he had a client interested in buying a Ryman painting and knew I had one. Then his client didn’t like the picture, so he reneged.” Gagosian claims that Feldman misrepresented the picture to him.
Another incident led to a lawsuit by Gagosian’s onetime backer, Ira Young. Young claimed that he gave Gagosian 90 days in which to sell an Andy Warhol painting. Young heard nothing. Gagosian didn’t answer his calls. Then Young discovered the painting had been sold when he saw it being advertised by another New York dealer. He sued. Gagosian claims he had already paid Young for the Warhol, but he settled the case last year, giving Young artwork valued at some $150,000.
“I’ve had a very, very rapid climb in the art world, and obviously that makes some people uncomfortable,” snaps Gagosian when asked about such incidents. “But you don’t do as much business as I do by not following through on your commitments. Why don’t you write about that?”
In his current Gagosian Gallery, on upper Madison Avenue, Gagosian mounts exhibits of contemporary and modern art that have been hailed as museum-quality by critics and rival dealers alike. Shows of Jackson Pollock’s black enamel paintings, Roy Lichtenstein’s Picasso paintings or Constantin Brancusi’s sculptures in Romanian museums (opening in November) cost Gagosian up to $200,000 apiece.
ART PRICES HAVE NOW LEVELED OFF. In the contemporary art auctions at the major auction houses this spring, about one-third of the art went unsold. Gagosian is well aware of the market’s softening. He says he is keeping his capital investment in artworks to a minimum, and is doing more transactions strictly as a broker than before the slowdown—this would not be a good time to bet wrong on expensive inventory, Gagosian agrees. (A rival art dealer who bet the other way, William Acquavella, in partnership with Sotheby’s, invested $143 million in a collection of 20th-century art in May.)
Gagosian insists that the art market’s current weakness is actually good for his business. “I’m getting far more calls,” he avers. “The auction houses are less appealing because so much didn’t sell last season. The dealer has become the stronger option.”
Indeed, one of Gagosian’s biggest sales last year was a Jackson Pollock “drip” painting, one of the last remaining in private hands. Gagosian saw a reproduction of the work in an art book, found out who owned it and called the owner. Gagosian talked him into parting with the Pollock and almost immediately resold it to a private collector for a price believed to exceed $10 million.
“The pie is smaller, so it’s important to get more aggressive,” says Gagosian, sounding like a salesman of cars, condominiums or any other hard-to-move commodity. “I’m working my butt off.” That, at least, isn’t new. F
David A. Beckerman
Starter Corp. Woodbridge, Conn. 50. Divorced, remarried; 5 children (2 from first marriage). U. of New Haven, 1963. Father electrician, mother bakery worker. First job 1962: sold windbreakers to golf pro shops. By 1969 executive VP, left to fulfill dream of starting own business, bought local plastics fabricator for $75,000. Grew bored, missed sports apparel; formed Starter 1971. Postponed wedding to set up first distribution deal. Slow start. Landed deal with Major League Baseball 1976 to make team jackets. Team owners thought jackets were just for kids; he didn’t: “Some kids never grow up.” Helped teams redesign jackets for fan appeal; sales took off. Went public April; his stock, cash pullout recently worth at least $420 million.
From the Forbes 400 1993 Issue
Michael Bloomberg
$2 billion. Financial news. New York City. 56. Divorced, 2 daughters. Eponymous computer terminals a fixture on Wall Street, supplying news stories, bond yields, SEC filings, sumo wrestling scores. Competitors are getting frustrated: Reuters accused of hiring consulting firm to break into Bloomberg computer systems and steal proprietary data. Grew up in blue-collar Medford, Mass. Degrees from Johns Hopkins and Harvard Business School. Hitched on with Salomon Brothers as processing clerk. Left Salomon with $20 million severance package; started computerized data service for Treasury bond traders. Terminal count at 101,257 and climbing. Launched news division 1990; 24-hour cable TV and radio followed. Fixture on the London and New York social circuits. Advice on marriage: “Stay single.” Denies rumor that he will be New York City mayoral candidate: “I suppose everyone would like to be mayor.” Member since 1992.
From the Forbes 400 1998 Issue
Sergey Brin
$15.3 billion. Google. Palo Alto, Calif. 36.
Larry Page
$15.3 billion. Google. San Francisco. 36.
Tech darlings relatively unscathed in past year; Google fortunes down a combined $1.1 billion in 12 months. Shares of search giant up about 80% since November lows. Announced debut of Chrome operating system in July; rival to Windows will be available to consumers late next year. Brin emigrated from Russia, Page raised in Michigan. Duo dropped out of Stanford computer science Ph.D. program in 1998. Started Google in friend’s garage. K. Ram Shriram, Andy von Bechtolsheim, professor David Cheriton provided initial financing; venture capital firms Kleiner Perkins Caulfield & Byers and Sequoia Capital soon injected another $25 million. Public 2004. Sales: $21.8 billion. Recently introduced goats to Google campus lawn; animals less harmful to the environment than lawn mower.
From the Forbes 400 2009 Issue
PAUL SAKUMA/AP
August A. Busch, Jr.
Anheuser-Busch. St. Louis. 84. 4 wives, once widowed, twice divorced; 11 children, 1 deceased. Family company made corn syrup, yeast during Prohibition; Budweiser before and after. First post-Prohibition case sent to FDR, second to New York Governor Al Smith. Has 6.2 million Anheuser-Busch shares; French Renaissance chateau in St. Louis County, where he rode to hounds in younger days. Pet cause: has built several animal sanctuaries. Son August A. III, 46, runs company. Minimum net worth: $400 million.
From the Forbes 400 1983 Issue