Premier Art Finance Artemundi Group / 2019 Premier Art Finance Artemundi Group : 201 | Page 36

N ew York · Lon d on · Mexi co City · M a d rid
ARTEMUNDI VS INDEPENDENT DEALERS .
CHALLENGE
FINANCING
INVENTORY
CLIENT QUALITY
COMPETITIVENESS
SALES CHANNELS
GALLERIES DEALERS ARTEMUNDI
The financing of Galleries is
not transparent in most cases.
Furthermore, studies indicate
that the cost structure of galleries
is reasonably fixed and does not
increase in line with revenue. In
practical terms, this means that
galleries profit from a better use
of their resources. Operational
expenditure stays the same
whether one or three works
are sold at an opening; if costs
remain stable and revenue goes
up, profitability increases. Independent
dealers
are
constantly managing limited cash
flow and have limited access to
financing. The most recent TEFAF
report indicates that only 3% of
dealers report selling one work
each month. This slow sale pace
places pressure on independent
intermediaries to finance new
purchases to keep their pipeline
full. Artemundi is well capitalized with
immediate access to liquidity
allowing us to engage the best
potential sellers who consider us
their first choice when privately
selling an artwork. Thanks to our
strict confidentiality procedures
and discreet transactions, we
continuously
receive
broad
offerings
of
high-quality
artworks.
The most frequent visitors to a
gallery are Art Enthusiasts, who
come to see the works of art,
or the Opening Crowd, who
attend a new exhibition for social
reasons. Neither group buys. Dealers’ client-databases are
being eroded by the reduction
of middle-class buyers with ever-
changing discretionary income.
These buyers are unpredictable
with unstable purchasing power
and objectives. Artemundi buyer profile targets
UHNWIs and institutions with
long-term investment horizons.
This allows us to keep a stable
database and maintain a
fluctuating spectrum of collectors
and investors.
Vast Majority of Galleries
engages in the sale of non-blue
chip contemporary artists. While
no other segment has as much
competitors as contemporary
art. Most dealers fear the growing
power of auction houses’ interest
in private sales encroaching on
their business and reducing
the availability of high-quality
inventory. In addition, many
dealers note the rise in art
consultants, many of who have
little or no experience in the
field.
The considerable increase in
cost to participate in art fairs
and brick and mortar exhibition
spaces have further increased
the difficulty to make a profit in
the dealer sector. Artemundi’s
flexibility,
low
overhead, economies of scale,
and liquidity is a huge advantage
over dealers. Furthermore, as
investors ourselves, we have “skin
in the game” which differentiates
us from public entities that
would only take works under
consignment.
Art fairs are vital for galleries.
More than a quarter of all
galleries generate 20% or more
of their yearly revenue at art fairs.
Hence, every second gallery
participates in at least one fair a
year. While art fairs make up the
largest expenditure for galleries
besides salaries and rent.
By controlling the sales channels
though our strong network of
buyers and sellers, we are able to
manage the exit strategy, achieve
substantial
tax
efficiencies,
and keep management and
transactional costs low.
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