The year 2007 was a significant one for the financial world. As most of us are well aware, it was the year before the bust of the Big Bubble in 2008. In the art world, 2007 saw amazing sales at all levels of the market: from galleries to auction houses to secondary purveyors, and even new online selling platforms. While 2008 to 2010 were sort of hunkering-down and stick with the blue chips years, the return of robust sales in 2011 indicate that the health of the art market is not precarious and new growth awaits. In developing our Collector's Catalogue series, we thought basic information on the size, number and profitability of galleries/art dealers would be of interest to artists as well as collectors. Based on the US Census Bureau, 2007 Economic Census, we have culled some strategic factoids regarding the art market during that fateful year:
Art Dealers - Employees and Sales
As graphed above, the Economic Census for 2007 indicates that 3/4 of the establishments reporting themselves under the "Art Dealer" category (which includes galleries and establishments selling art as a retail business) have no employees. By comparison, the vast majority of annual art sales were made by those Art Dealers who have employees. Not good news for the solo flyer.
Art Dealers with Payroll - Firm Size and Total Sales
Of the Art Dealers reporting at least one employee on their payroll, the significant number have reported annual revenue of less than $100,000 per year (907 firms), and the vast majority are making from $100,000 - $5 million per year (3379 + 974 = 4353). Only a tiny number of reporting firms nationwide are making over $10 million per year (78 + 45 = 123).
Notice that the total sales being reported in each category above are in millions (and remember that approximately 40-50% of sales flow back to the artists). Therefore, the 907 firms making less than $100K per year have only reported a total combined sales revenue of $51,327,000; and the 45 firms at the other end of the spectrum are reporting a total combined sales revenue of $3,188,056,000.
Of the 5383 Art Dealers with payroll reporting in the 2007 US Economic Census, the total combined revenue is $8,188,698,000.
While this certainly indicates that a lifestyle business is within reach to the smaller dealers, the likelihood that they will grow to a high yield business is very slim.
And while these figures do not indicate the number of artists that are profiting from these sales, one has to assume that every dealer is representing on average 10-15 artists (?), and with auction/secondary sales included that ratio goes up. Therefore, the flow of revenue from sales to artists is significantly smaller.
Art Dealers - Percentages of Sales
Looking at the sales and number of dealers reporting in 2007, it becomes very obvious that the bulk of the revenue going to art dealers/galleries is concentrated in a handful of large establishments (employing more than 8 employees). In fact, of total sales in 2007, 39% were attributable to only 1% of the reporting Art Dealers. Assumption: There are a few big dealers making a whole lotta sales (but we knew that already, didn't we?).
A couple of conclusions seem to come to mind: it is not easy to grow these businesses, and most galleries remain quite small both in terms of employees and revenues.
Power to the powerful.