What does the TEFAF report reveal about how galleries work?

On 01 June 2018, by Pierre Naquin
Photo: Kirsten Chilstrom. Courtesy of TEFAF

Carried out by Anders Petterson of ArtTactic on a very small sample of 142 people, the new TEFAF report, now focused on market segments, investigates a fascinating subject: art dealers' economics and borrowing capacity. The main information, which will surprise nobody, is that galleries only marginally finance their inventories through borrowing (5% to 8% of the value of stock): a very different situation from the norm with other industries, where this figure is more like 50% to 70%. Problematic aspects are the considerable difficulty of estimating the real value of stock, and the lack of liquidity characteristic of an "art" asset.  90% of dealers say they use the results of previous sales to finance their activity, investments and stock. Another option is to call on private third parties: co-investors (63%) and banks (only 29%). To conclude: galleries, even the largest, have very little debt– which is both good news and a sign of overall lack of confidence.

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