Art dealers across the US struggling to survive as new report projects...

Art dealers across the US struggling to survive as new report projects a 73% loss in revenue

Mandatory Credit: Photo by Erik Pendzich/Shutterstock (10605522ap) Workers board up the windows of the Eden Fine Art Gallery in the SoHo neighborhood of New York. Coronavirus outbreak, New York, USA - 07 Apr 2020

As numerous organisations attempt to measure the still untold and unfolding financial fallout of coronavirus (Covid-19) within the art world, the Art Dealers Association of America (ADAA) has today released its latest findings, revealing that art galleries across the US project a 73% loss in revenue for the second fiscal quarter.

Moreover, there may be little recourse to recovery for these businesses and even few inroads to financial relief for their artists and staff in the near term. Of the galleries polled, 76% applied for the US Small Business Administration (SBA) Paycheck Protection Program (PPP) Loan, launched in March by the Trump administration as a financial relief measure; only 28% galleries were confirmed for the forgivable loan to help cover staffing and operation costs and nearly a quarter of applicants have yet to receive any response. Around 40% of respondents to the poll had also applied for the Economic Injury Disaster Loan (EIDL), of which only 11% were approved.

The ADAA worked with other national gallery associations like the New Art Dealers Alliance (Nada), as well as those in major cities across the US, including Los Angeles, San Francisco, Houston and Portland, Oregon to poll more than 160 leading galleries over the last fortnight, while many businesses remain closed under state lockdown orders.

“The survey results underscore the enormous role that galleries play in the well-being of the arts and culture economy and landscape in our country, not unlike the role of small businesses across every industry,” Andrew Schoelkopf, president of the ADAA and founder of Menconi + Schoelkopf, and Maureen Bray, the executive director of the ADAA, say in a joint statement. “Such immediate and devastating revenue losses will undoubtedly have a ripple effect on these small businesses and the broader arts community for the next 12 to 18 months if not longer, and it is still uncertain how long such losses may continue.”

Indeed, around half of all respondents are drastically reducing or foregoing participation in art fairs, which represented nearly 50% of galleries’ annual sales in 2019, according to The Art Market 2020 report by Art Basel and UBS. More than a quarter of dealers say they do not plan to do any art fairs for the rest of the year.

Most dealers have already had to reduce their staff numbers as well. Although the ADAA’s report finds that 85% of full-time gallery staff have retained their positions and most reported no reduction in wages, it should be noted that most galleries only have a handful of full-time staff members even under the best of economic circumstances. The survey finds that the average gallery had around nine employees, including both full-time and contract labourers. In most cases they relied on freelance or contract labour (accounting for more than 1,500 jobs) and the vast majority (74%) of the polled galleries’ contract workers have been laid off. Around 10% of the responding galleries expect making more layoffs within the next three months.

In addition to the revenue and staff losses that have already occurred and are projected for the rest of the quarter, the most pressing concern for galleries is the overhead for their physical spaces: an overwhelming majority (80%) of respondents rent their spaces and around half of these dealers had received rent payment deductions or delayed payments from landlords.

In terms of policy solutions, the ADAA and its members have been working with other organisations, like Nada, to advocate for the New York State Senate to pass Senator Michael Gianaris’ proposed Senate Bill S8125A that would provide rent and mortgage relief to galleries, as well as artists, freelancers and contractors.

“It is essential that federal, state and local governments take further action to ensure that the small business community, including art galleries, have access to the critical support that is needed if they are to sustain their businesses for the long-term and continue their essential contributions to the nation’s vibrant arts and culture landscape,” Schoelkopf and Bray say.

The ADAA’s report echoes a survey recently conducted by The Art Newspaper and the economist Rachel Pownall, a professor of finance at the University of Maastricht, which found that galleries around the world are expecting to lose an average of 72% of their annual revenue due to the Covid-19 pandemic. Around a third of galleries globally (33.9%) do not expect to survive the crisis and dealerships with five to nine employees reported the lowest likely chance of survival (62%), while larger galleries with more than ten employees were more optimistic, with three-quarters expecting to weather the crisis.