Creative investment

Can art galleries be profitable? A tour of the country’s leading exhibition spaces was not encouraging

Moshe Gershuni Art521 (photo credit: Courtesy)
Moshe Gershuni Art521
(photo credit: Courtesy)
GIVON ART GALLERY Owners: Noemi Givon and Nurit Wolf Location: Gordon Street, Tel Aviv In business: 39 years Art specialization: Classic modernism with an emphasis on new horizons.
“Esser plus” group and Bezalel Academy of Arts and Design.
Works by Moshe Gershuni, Moshe Kupferman, Raffi Lavie, Nurit David, Ran Slavin, Erez Israeli, Gabriel Klasmer, Sigalit Landau, Anan Tzukerman, Gil Marco Shani, Micha Ullman, and others.
Prices range between $75,000 and $150,000 for works by Gershuni or Landau and up to $2,000 or $5,000 for sketches and small photographs by Kupferman and Marco Shani.
A year ago, Noemi Givon gave an interview to an economics journal in which she said, “A gallery needs to bring in revenue of at least NIS 100,000 a month in order to stay in business – and three times that amount to actually make a profit.”
According to Givon, it is still an accurate number today, and “costs have actually risen.”
Givon says that economic downturns don’t affect profitability, since economic success is measured over a number of years. “Since we purchase the artists’ works outright, we see a relatively high amount of profit from each sale. On the other hand, we charge lower fees. Over the years, we have purchased a large number of pieces, and we are still buying.
This is how we support our artists. Some galleries only work on commission; their marketing has to be much more aggressive, and they need to sell more paintings to turn a profit.”
The Givon Art Gallery does not offer works by young artists who’ve just finished art school. “There are other galleries that sell works by young artists, and others that work with more experienced artists. Not all the works sold at Givon cost thousands of dollars. Some students who’ve just finished school and have not yet made a name for themselves are selling their works for similar amounts to works created by more experienced and well-known artists. I have not found that young artists charge less. A Gershuni drawing usually sells for $2,000, and this is about the same amount that new artists are also charging.”
Givon invests most of its sales efforts in overseas clients, and sales data prove this since 60 percent of sales are from foreign collectors. “We mostly work out of our gallery in Israel. In the past, we participated in exhibitions, but sales were weak.
We are continually searching for foreign galleries interested in showing Israeli art.
Public relations in the classical sense has no value for us. Instead, we invest our energy in formulating personal relationships with art collectors around the globe.
Interest from museums abroad and participation in important international exhibitions affect sales to foreign collectors, as well as the value of Israeli artists’ works.”
FEINBERG PROJECTS Owner: Ori Feinberg Location: 3 Hamifal Street, Tel Aviv In business: A little over a year Art specialization: As part of the gallery’s trial run and formulation of its art line, Feinberg Projects is currently showing (non-exclusively) the works of Liat Elbling, Olaf Kuhnemann, Kobi Assaf, Yanai Segal, Elad Kopler, Tamar Karavan, Ido Marcus and others.
The gallery focuses on art that is based on universal ideas and has a strong visual impact. The average selling price is $3,000.
Ori Feinberg is a graduate of the Beit Berl College of Art and has a master’s in art business from Sotheby’s in New York.
He gained experience managing and curating at famous New York galleries such as the Luhring Augustine Gallery and the Michael Werner Gallery. “I returned to Israel with a desire to give exposure to Israeli artists in the international arena. My mission was to offer artworks that meet international standards.”
Feinberg puts the cost of opening and operating a large gallery at NIS 1 million a year, “including standard marketing costs, but not expensive exhibitions abroad. Veteran galleries have an easier time – they own works that they can always sell if they need cash. They can also easily formulate a list of collectors. It usually takes three or four years until a gallery becomes profitable.”
Feinberg strives to show contemporary works in his gallery by Israeli and international artists, some of whom are veterans and some who are fresh out of school, in an effort to attract well-known Israeli and foreign collectors. As opposed to veteran galleries, new galleries are extremely sensitive to the vicissitudes of the marketplace.
“Nothing is simple these days. Every few months another gallery closes – even ones that were considered stable,” he says. “The market is problematic – there is a dearth of Israeli collectors and the middle class cannot afford the high prices. For people who are just trying to survive until their next paycheck, art is a luxury.”
Feinberg also addresses another phenomenon that is uniquely Israeli: “Israeli collectors who are interested in purchasing a work of art contact artists directly in an effort to bypass gallery fees. This never happens abroad, and it’s still hard for me to understand it.”
Feinberg understands the importance of location, as well as the fact that many galleries such as his own choose to include works of art by unknown artists.
He says that high tax rates are another obstacle to success.
“Galleries are taxed at the highest rate possible, similar to clothing stores or other retail businesses. There is a fundamental difference, though, between these types of businesses and art galleries: 99% of the people who walk into an art gallery do not buy anything. They’re not customers. We are contributing to the city’s image, and yet the tax authorities don’t take this into consideration.”
Of course, Feinberg would never consider leaving Tel Aviv. “Tel Aviv is a brand. This area is being developed and will soon be turned into a vibrant artists’ quarter. If it’s difficult to draw collectors to this area, I don’t think anyone would come if we relocated to a city far from the center of the country.”
Marketing strategy: “Intensive Internet marketing, exhibitions and locating foreign markets. We spend about $50,000 on marketing each year. The more the business grows, the higher our expenses rise,” says Feinberg.
The more famous the artist, the higher the insurance, transportation and catalogue expenses rise. “Since we are a new gallery, our marketing expenses are relatively low. We ended this year in good shape. I hope next year will also be profitable.”
Owners: Shai and Erez Zemack Location: Hamedina Square, Tel Aviv In business: Two years Art specialization: Israeli and international contemporary and realistic art.
Prices range from $3,000 to $300,000, with most falling into the $20,000 to $50,000 range.
The Zemack Gallery is currently showing two works of art worth $280,000 each, by the artist Philippe Pasqua. Other famous artists who are represented in the gallery are Ofer Lellouche, Yigal Ozeri, Jan Rauchwerger and Eran Shakine.
Lior Yahel Ohad, one of Zemack Gallery’s founders and directors, says the owners were involved in the art collection industry.
“The gallery was founded with an initial investment, and it is currently profitable. However, this is possible only because Zemack has succeeded in finding a fragile formula that can be affected by the sale (or lack thereof) of one or two pieces.
An art gallery is a long-term investment and requires a significant amount of patience until it becomes profitable. Relationships take a long time to build, and a reputation cannot be bought overnight. But it can be a profitable business in the long run.”
Ohad believes that the fact that the gallery is located in the midst of a luxury shopping area instead of in an artists’ quarter has not had any effect on its success.
“When they decided to open an art gallery, the question of location arose.
We were aware of the cynicism and skepticism that this choice would generate, but we decided to push forward anyway since it was a convenient location and the space was beautiful.
We were the first ones to open a gallery in such an area, and we were excited about being pioneers. I spend a lot of time at exhibition and gallery openings, and the same people who go to them also come to our gallery.”
Zemack spends quite a lot on promotion of its artwork.
“Our annual business plan includes five or six solo exhibitions, two or three group exhibitions, special events for collectors, evenings for architects, as well as participating in four or five exhibitions a year overseas. We create and nurture contacts with curators from museums to promote our artists. We also collaborate with art auction houses and urge our artists to donate paintings to nonprofit organizations and social enterprises.
We invest a negligible amount in more traditional media.”
A gallery’s success, according to Ohad, directly depends on the quality of the works it offers. “People don’t buy art because they need it like food and a roof over their head. They buy artwork because they fall in love with it and are drawn to quality creations. Therefore, there is no room for compromises. A quality gallery needs to be loyal to its artistic line and to display its works in the best way possible.”
TAL ART GALLERY Owner: Greenfeld Family Location: Kfar Vradim In business: 11 years Art specialization: Tal Gallery shows works by artists from Kfar Vradim and the Galilee, especially young artists.
Artists such as Ephraim Moshe Lilien, Shmuel Katz, Aaron Giladi, Hava Mehutan, Varda Yatom, Dalia Meiri, Oded Feingersh, Ahmad Canaan and others have all shown their work there.
Currently, the gallery is featuring an exhibition of David Messer’s works. Prices range from $2,000 to $10,000.
Ady Greenfeld, an economist by training, opened the gallery in a private home in Kfar Vradim in memory of her late son, Tal, who was a young artist. “It began as an exhibition. The thought of starting a business hadn’t even occurred to us,” Greenfeld says. “Only later on did I take the time to learn curatorship, since I did not want the gallery to be only commemorative.
I wanted to create something dynamic – an active gallery.”
Greenfeld holds three or four exhibitions a year. However, after gaining a little experience in the field combined with her economic background, in 2005 she decided to give up her goal of becoming profitable and instead decided to turn the project into a nonprofit. “I researched all of the alternatives, and realized that if I chose to aim for profitability, I would have to compromise artistically.”
As an example of this dilemma, Greenfeld tells about an exhibition by Varda Yatom, whose works deal with the Holocaust. She creates statues and other artwork that from a visual point of view that can seem grotesque. “I knew that if I held an exhibition of her work, I wouldn’t sell a single piece. It’s a paradox. I wanted to display art for art’s sake – not in order to sell it.”
According to Greenfeld, the gallery is not making money, but it is also not losing money.
“Currently, our artwork is being shown in a house, which is an alternative style. A family is covering exhibition costs, whose small budget will just cover expenses.
Variable expenses such as printing catalogues and publicity are covered by artists who are showing their artwork. Every once in a while we collaborate with large institutions and sometimes I offer financial help to young artists. I build an economic model for each artist and sometimes I even sell one of their paintings.
Figuring out how much to sell an artwork for is tricky. It depends on who the artist is, what their technique is, as well as market size and trends.”
Greenfeld is proud that she spends very little money on advertising, since the gallery has developed quite a reputation.
“I don’t even have a budget for public relations; my advertising budget is only a few hundred shekels, and yet my exhibitions appear in Haaretz next to top Tel Aviv galleries. Paintings by young artists who received exposure from showing their works in our gallery many times find their way to museums and other successful galleries.”
Greenfeld, who studied curatorship at Tel Aviv University and did her internship at the Tel Aviv Museum of Art, is aware of the importance of a gallery’s location, and therefore makes time to preserve relationships she’s created with key people in the city’s art world. She relies heavily on personal contacts for marketing purposes. “I considered opening another branch of my gallery in Tel Aviv,” she admits. “My style and outlook would not have changed, but my rent, arnona [property tax] and other expenses would have skyrocketed. I think that if I had moved the gallery to Tel Aviv, it would not have been more profitable, since I would have needed to invest so much more money. There’s also more competition there.”
According to Greenfeld, there are numerous advantages to the gallery being in Kfar Vradim. “People love the idea and come all the way from Tel Aviv to see exhibitions. Sometimes they even make a mini-vacation out of the trip and stay at a guest house in the area. Some people come especially for the art, but most of our visitors are from Kfar Vradim and northern Israel. I also benefit from our proximity to the Tefen Industrial Park and the Open Museum.”
Translated by Hannah Hochner.