« August 13, 2006 - August 19, 2006 | Main | August 27, 2006 - September 02, 2006 »
From the Financial Times Observer column:
Northwest Airlines has long had a fraught history of labour relations. The company - which filed for Chapter 11 bankruptcy protection last September - has recently cut jobs and slashed pay and benefits for some of its staff and now its flight attendants are threatening to strike as early as Friday.In an attempt to help cash-strapped employees, Northwest distributed a book entitled Coping with Job Loss, which offered a two-page list of 101 ways to save money. Among the tips: "Don't be shy about pulling something you like out of the trash." Other ideas: rent out a room or garage, search the internet for freebies, do your own nails and ask for hand-me-down clothes and toys.
Northwest says the tip sheet came from an external source and was part of a 165-page book sent to 60 ground-operations staff without management review. When employees complained, the pages were removed and the airline issued an apology.
Posted by dan at 10:37 AM
Charles Forelle and James Bandler continue their reporting on sleazy options backdating practices in the Wall Street Journal. Today the spotlight falls on Bruce Karaz, CEO of KB Home.
Several past stock-option grants to Bruce Karatz, the highly paid chief executive of KB Home, were dated at unusually low points in the home builder's stock price, and the company said it has commenced a review of the awards.Four grants to Mr. Karatz between 1998 and 2001 were propitiously timed. One was dated at the stock's lowest closing of the year, another at a quarterly low, and the remaining two at monthly lows. That pattern raises questions about whether the grants were made on the fortunate dates specified in company filings.
Mr. Karatz has reaped more than $100 million from cashing out many of the unusually timed options, according to regulatory filings.
Caroline Shaw, a spokeswoman for KB Home, said in a statement following inquiries from The Wall Street Journal that KB Home "has been reviewing these grants with the assistance of outside counsel. Because they are the subject of pending litigation, we will not comment on them."
Last month, a shareholder filed a lawsuit in Los Angeles County Superior Court against Mr. Karatz and other KB Home officers and directors, alleging that executive grants had been manipulated.
Posted by dan at 10:10 AM
Two excellent articles in the Wall Street Journal on the limits of public auctions. First, Jesse Eisinger writes about the phenomenon of publicly-held companies putting themselves up for sale, usually at the suggestion of callow hedge-fund managers.
Last week, Jones Apparel took itself off the block when private-equity firms wouldn't meet its price. This month has seen a spate of similarly failed auctions -- big-screener Imax, biotech ImClone Systems, auto-parts retailer Pep Boys-Manny, Moe & Jack and fitness-club chain Bally Total Fitness. . . .What is clear is that not every company can find a home, even when buyers are flush with green and supposed to be desperate for returns. Indeed, fund managers who specialize in trading around mergers know that public auctions often fail. . . .
Public auctions, however, often aren't the best exit path. A company that puts itself up for sale publicly often has already done so privately. The reality is that there are usually only a handful of competitors that are natural buyers of any company. And private-equity firms prefer to act in, well, private. Public auctions just make a target more expensive.
The auctions are also partly a product of the activism boomlet among hedge funds who bark loudly at companies to take strong actions to boost share prices. The recent failed auctions could dent that vogue, especially since some of the activists' targets and activists themselves are performing poorly. ImClone, which has been under Carl Icahn's watchful gaze, is down 30% since mid-May.
Or take the $1.7 billion clamorer Pirate Capital. Two of Pirate's four funds are down 2% each this year through Aug. 18, while one is flat and the other is up 3.2%, according to a letter the firm sent out to investors Monday. Pirate Capital didn't respond to requests for comment.
Got that? Pirate Capital, which does a great deal of huffing and puffing about enhancing sharehoolder value, is apparently underperforming CDs so far this year.
The second article,written by James Hagerty and Michael Corkery, deals with residential real estate.
Joan Guth is one homeowner who was taken by surprise. Last September, she put her stately five-bedroom home in Herndon, Va., on the market for about $1.1 million. She was confident she would get something near that price, and planned to use the proceeds to buy a retirement home in Florida. But her home in the Washington suburbs attracted few serious lookers, and in March, she cut her asking price to $899,900. Still there were no takers. Finally, on the advice of her broker, she called in an auction firm, beginning a process that would eventually reveal to her just how weak the Northern Virginia market had become. . .Ms. Guth had based her initial $1.1 million asking price on a 2005 appraisal of her home, which now appeared far off the mark. She and her family decided they would accept the highest bid of at least $675,000.
Kristin Eddy, a 35-year-old pediatric occupational therapist living in a town home in Reston, Va., had noticed Ms. Guth's dark-green turreted home with its wraparound verandas while riding her bike along a nearby trail. . . .
On the morning of Aug. 5, the auctioneer, Stephen Karbelk, set up loudspeakers on Ms. Guth's side lawn. . .
Ms. Eddy figured her chances of winning were near zero. When the auction began, it became clear that there were only two serious bidders. Although Mr. Karbelk tried to stir excitement, the bidding petered out within minutes. Ms. Eddy was the high bidder, at $475,000.
Looking stricken, Ms. Guth and one of her sons huddled with their broker for a few minutes. Then they told the auctioneer they wouldn't accept the bid, which fell below the stipulated minimum that hadn't been revealed to bidders. The auction was over.
Ms. Guth said she would move and leave the house empty until she could sell it at a reasonable price. Late that afternoon, Ms. Eddy raised her offer to $525,000. The Guths wavered for two days before agreeing to accept about $530,000. Ms. Eddy is getting a home with five bedrooms, four full bathrooms, a half-acre lot and a three-car garage for about what some people had been paying until recently for town houses in the area.
Posted by dan at 10:01 AM
Border's reports a not-so-hot quarter: same-store sales were down 5.3 percent, and it projects same-store sales will fall in the third quarter as well.
Posted by dan at 09:51 AM
In California, a Republican governor is set to enact a raise in the minimum wage. Jennifer Steinhauer reports in the New York Times.
Gov. Arnold Schwarzenegger and California lawmakers said Tuesday that they had agreed to raise the state’s minimum wage to $8 an hour over the next two years, making it among the highest in the nation.The governor had vetoed previous minimum wage bills, and had hoped to nudge this wage increase to $7.75, just $1 more than the current $6.75-an-hour minimum, which was passed in 2002. But under pressure from labor unions and the Democratically controlled Legislature, and facing re-election in November, Mr. Schwarzenegger, a Republican, reconsidered.
Under the deal worked out between the governor and the state’s Democratic leaders, minimum-wage workers would receive a 75-cent increase on Jan. 1, and an additional 50 cents in 2008. The bill needs to be approved by the full Legislature, which lawmakers of both parties said would happen by the end of the month.
Posted by dan at 09:44 AM
Alan Cowell reports in the New York Times on the higher-than-expected flow of workers from Eastern Europe to the U.K.
The Home Office said that since the European Union embraced 10 more countries in 2004, some 427,000 workers, almost two-thirds of them from Poland, had applied formally to work in Britain. The figure is closer to 600,000 if self-employed workers, like those in the construction business, are included, said Tony McNulty, a Home Office minister. Those figures do not include illegal immigrants, whose number the government says it does not know.Initially, the government had predicted that no more than 15,000 Eastern Europeans would arrive each year after 2004. . . .
Posted by dan at 09:41 AM
My latest in Fortune, on the implications of a productivity slowdown.
Posted by dan at 05:04 PM
This may be the only time in history that Mike "Mad Dog" Russo and Albert Einstein have been mentioned in the same paragarph. John Fund of Opinionjournal.com obliges:
Everyone has long known the president is no Pericles. One of Mr. Bush's friends cheerfully admitted to me once that "every morning George gets up and arm-wrestles the English language all day. He often loses." Many bright people are inarticulate. Albert Einstein was dyslexic, and his lectures in both English and German were said to be full of malapropisms and gaffes. Christopher "Mad Dog" Russo, a host at sports radio station WFAN in New York, is famous for his synaptic misfirings, but his depth of sports knowledge is encyclopedic and he holds an audience with style and panache.
Got that? President Bush should be properly compared either to one of the greatest minds of the 20th century, or to a meathead who yells about the Mets for a few hours each day.
Posted by dan at 01:11 PM
Carlos Grande reports in the Financial Times on the impact of too many ads.
Television viewers worldwide saw an average of almost 70 commercials a day last year - 16 per cent more than in 2001 - prompting a warning from Initiative, the international media buyer, that consumers pay less attention to advertising on cluttered airwaves.The Initiative survey provides fresh evidence for those arguing that consumers feeling swamped will either recall fewer commercials or increasingly use technology to limit their exposure to marketing.
Louisa Marsh, senior research executive at Initiative Futures Worldwide, said: "Abundance of advertising is becoming detrimental across the board and consumers now have the power to set their own agenda." . . .
Despite oft-voiced fears about the impact of audience fragmentation, large advertisers in western markets have risked exacerbating the problem by increasing television spending.
As audiences for the bigger network channels in many countries have fallen, some advertisements have had to be shown more times to reach the same number of viewers. This can further add to clutter.
The US, Indonesia, Spain and Canada are the most cluttered television markets. But the 50-country Initiative survey found the fastest growth in average number of commercials seen was in South Africa and central and eastern Europe. Adults in Bulgaria see 19 more adverts a day than they did in 2001. . . .
But these clutter levels were still far less than in the US, where the typical viewer sees an estimated 789 commercials a week.
This means the average adult in the US is exposed to 62 per cent more TV advertising than the global average.
Posted by dan at 12:08 PM
Clay Risen has a good piece in the New Republic on the Bush administration's decidedly mixed record on the traditional Republican issue of free trade.
Meanwhile, Ralph Atkins reports in the Financial Times reports that the Eurozone now imports more stuff from China than it does from the U.S.
Eurozone imports from China have overtaken imports from the US, according to data on Monday, which highlighted the diminishing impact of foreign trade on eurozone growth.The data from Eurostat, the European Union's statistical unit, highlighted the rapid growth in Chinese imports, which has intensified the competitive challenge facing European companies. . .
In the first five months of this year, eurozone imports from China stood at €54bn ($70bn), 26 per cent higher than the same period a year before. Imports from the US rose by 8 per cent to €53bn. For the EU as a whole, imports from China were up by 25 per cent at €72bn, compared with an 11 per cent rise to €74bn in imports from the US. "By the end of the year it appears likely that imports from China will exceed those from the US for both the eurozone and EU," said Mr Ashley.
Posted by dan at 12:04 PM
Who says the government isn't doing anything about fuel efficiency? John Fialka reports in the Wall Street Journal.
After badgering American manufacturers to produce cleaner, more-fuel-efficient vehicles, the Environmental Protection Agency is about to see its first product hit the streets.The engineers at the EPA's National Vehicle and Fuel Emissions Laboratory here have built and tested many prototypes over the years, including a diesel-hydraulic passenger car that gets more than 80 miles per gallon. But the first EPA-influenced product to travel beyond the laboratory will be a garbage truck.
The garbage truck -- slated for rollout next year -- is a hybrid vehicle. Most hybrids use two power sources. In this case, the garbage truck will tap a diesel-burning engine and a hydraulic pump. . . .
The garbage truck, which stores and reuses energy normally lost in the braking process, will increase fuel-efficiency as much as 30%, Mr. Bohlmann predicts. Following the garbage truck may be a parade of yet more-efficient vehicles, starting with delivery trucks used by United Parcel Service Inc., which is testing two hydraulic-hybrid vehicles.
In the UPS trucks, the vehicle's entire mechanical-transmission system and drive shaft are replaced with a hydraulic system that delivers power from its diesel engine to pump motors that turn the rear wheels. Robert Hall, environmental manager for UPS, says the hydraulic hybrids may be less expensive and easier to maintain than hybrid gasoline-electric vehicles, which rely on batteries to store energy. UPS spends $2.1 billion a year on fuel, Mr. Hall says.
Other big truck buyers, including the Army and the Postal Service, are interested. And the Chinese government has been in touch with the EPA about using the technology to power a fleet of hydraulic-hybrid buses for the 2008 Olympics.. . .
Posted by dan at 09:39 AM
Gary McWiliams and Evan Ramstad have an excellent article in today's Wall Street Journal about the track record of Chinese firms that have bought U.S. and European companies. It's not very good.
Many of China's low-cost manufacturers, seeking greater exposure and fatter profit margins, are hungry to buy established global brands. But some of the first to gobble up well-known businesses in the West are suffering indigestion.TCL Corp., the consumer-electronics maker, is piling up big losses on the RCA and Thomson television brands it bought in 2003. Lenovo Group, which acquired International Business Machines Corp.'s personal-computer division for $1.25 billion last year, becoming the world's third-largest PC maker, has seen its global market share shrink amid strategic missteps.
On a smaller scale, South Mountain Technologies Ltd., a venture set up by TCL and InFocus Corp. of the U.S., is cutting back its operations in the U.S. and Norway after failing to land a single contract for its TV components. Wanxiang Group, China's largest independent auto-parts maker, acquired a 21% stake in struggling Chicago-area parts maker Universal Automotive Industries Inc. only to see it liquidated in bankruptcy court last year. . .
Posted by dan at 09:19 AM
Lingling Wei reports in the Wall Street Journal on the prevalence of 'stated income' mortgages.
Industry experts say loans with reduced documentation now account for about 40% of the entire mortgage pool. In some cases, to compensate for the increased credit risk, lenders charge more for stated-income loans, with rates typically an eighth- to a quarter-point higher than those on a loan with full underwriting requirements.Loans requiring no income check have been around for many years, and were originally intended to offer convenience, time savings and financial privacy to self-employed borrowers with high credit quality and large down payments. A qualifying borrower may need to submit only his or her business license, a signed letter from his or her accountant confirming a two-year history of the business, and an Internal Revenue Service form verifying the income source -- not the amount.
But greater competition and the desire to simplify and quicken the loan-origination process has led more lenders to extend stated-income loans to borrowers with lower credit scores, higher loan-to-value and debt-to-income ratios than traditionally allowed.
"The industry is trading risk for convenience," says Larry Goldstone, president and chief operating officer at Thornburg Mortgage Inc. in Santa Fe, N.M.
Banking regulators say that lenders are increasingly relying on unverified income to qualify borrowers for so-called nontraditional mortgage loans. Those products -- such as pay-option adjustable-rate mortgages and interest-only loans -- allow borrowers to defer payment of principal and sometimes interest. Many analysts see such a combination of nontraditional products and nontraditional underwriting processes as presenting another layer of risk to those who could be hurt by defaults, including consumers, shareholders in mortgage lenders and investors in securities backed by mortgage loans.
Posted by dan at 09:16 AM
An old line used to describe an old person goes: 'he'd be a very sick man if he were alive today.' One might well say the same about 1990s high-flyer Gateway, still muddling along after all these years and enjoying a $500-million-plus market cap. Donna Fuscaldo reports in the Wall Street Journal.
An investor group including Harbert Management Corp. reported a 10.2% stake in Gateway Inc. and said it sent a letter to the computer company offering assistance in enhancing shareholder value.The move comes as Gateway, an Irvine, Calif., maker and marketer of personal computers and related software, has battled fierce competition and a lethargic stock price. Once a computer highflier known for its use of distinctive boxes spotted with cow markings, Gateway has a market capitalization of $543 million. . . .
Gateway said it has held "preliminary conversations" with the investor group, and company spokesman David Hallisey added that Gateway looks forward to continuing conversations. Although Gateway Chairman Rick Snyder said in a recent interview that a sale remains off the radar screen, investors who are frustrated by Gateway's results could be more open to a sale of the company.
Rochdale Research analyst Daan Coster said Gateway, which has seen its shares slip to about $1.45 from around $2 during the past month, could "easily" fetch $3 a share in a sale. In a recent research report, he named Dell Inc. as a potential acquirer, along with Asian PC makers, arguing Dell needs a larger consumer footprint. A Dell spokesman declined to comment.
Gateway's managers seem to be banking on the company's brand name to carry it. Founded in an Iowa farmhouse in 1985, Gateway has been a mainstay among consumer buyers of PCs. Its consumer reputation hasn't helped it in the corporate market, where margins are higher.
Gateway's leaders say they are optimistic. Even as Gateway posted a second-quarter loss Aug. 3, the company said it is making progress on its turnaround. Revenue, while short of expectations, rose 5.3% to $919 million in the second quarter. The company, citing market-research firm IDC, said it was the fastest-growing PC company in the U.S. by revenue and had market share of 6.5% in the second quarter, up from 6% last year.
Posted by dan at 09:13 AM
Andrew Taylor reports in the Financial Times on the desire of Europeans to work more:
Some 65 per cent of Germans and 52 per cent of French oppose government controls on working hours, according to a Financial Times/Harris poll that interviewed almost 10,000 people over 16 in Britain, France, Germany, Italy and Spain.Working hours are controlled under an EU directive limiting the maximum time employees can work to no more than an average of 48 hours a week spread over a 17 week period.
Some 52 per cent of Britons – many of whom already have the right to opt out of the EU directive under a waiver negotiated by the British government – also opposed government control over working hours, according to the survey. Only Spain was out of step, with some 72 per cent of adults supporting government curbs. Italians were evenly split, with 43 per cent opposing curbs on hours and 37 per cent in favour.
Posted by dan at 11:29 AM
Quick, to the Friedman phone!! Amy Yee and Ellen Kelleher report a new ironic data point in the Financial Times:
In a seeming reversal of roles, Indian outsourcing company ICICI OneSource will launch its second call centre in Northern Ireland later this year and hire 1,000 people in the UK as it seeks to establish a global presence outside India.ICICI OneSource also aims to open centres in two other undisclosed countries in addition to plans to build facilities in Belfast and Londonderry
In their efforts to become global players, Indian outsourcing companies are expanding their “onshore” centres requiring local knowledge and skills.
Many – including India’s largest IT outsourcing group Tata Consultancy Services, which this spring formed Diligenta, a UK subsidiary – are carrying out this strategy to target the life assurance industry.
India is the third-largest investor in the UK behind the US and Japan. ICICI has three other onshore facilities all in the US, in New York, Nevada and New Jersey – a small number compared with larger rivals, which have opened dozens of centres in Europe, North America, Latin America and China.
Half of ICICI OnceSource’s customers, including banks, credit card and heatlhcare companies, are based in the UK. Opening call centres in Northern Ireland was the company’s response to a client request for debt collection work, which requires finer skills and local judgment.
ICICI OneSource will keep a percentage of delinquent loans that are successfully collected.
I love it. British credit card companies hire Indian managers to hire Irish workers to dun British debtors.
Posted by dan at 11:25 AM
Earlier this month, I wrote in Slate about the rising cost of living well, and last month I wrote, also in Slate, about how high gas prices may be hurting the power-boat industry.
Today, Justin Lahart and Amy Merrick cite a bunch of the same examples as they write on the front page of the Wall Street Journal on how rising gas prices and the housing slowdown are taking a bite out of high-end consumption.
The high price of gasoline and slowdown in housing are taking a toll on one of the most striking economic trends of recent years: Consumers' widening taste for more upscale purchases.Amid the broader prosperity of the past decade, Americans grew far more willing to shell out for $4 cups of coffee and $400 handbags. Retailers such as Starbucks Corp., Whole Foods Market Inc. and Williams-Sonoma Inc. -- operator of Pottery Barn and its own kitchen stores -- expanded by appealing to the aspirations of middle-class shoppers.
Now, many of those retailers are feeling pinched. In recent weeks, Starbucks, Whole Foods and Williams-Sonoma -- along with others such as boat maker Brunswick Corp. and specialty-sandwich chain Panera Bread Co. -- have reported disappointing sales that sent their share prices lower. Restaurants catering to middle-income consumers are seeing a sales slump too.
Growing evidence suggests the chief culprit is gasoline prices in the $3-a-gallon range -- up 71 cents from six months ago, according to federal data. Buyers "are spending a lot of money on gas," says Brunswick Chief Executive Dustan McCoy. "The sort of people who boat don't drive around in compact cars. They drive around in big cars or fast cars."
But Wendy Liebmann, president of consulting firm WSL Strategic Retail in New York, finds evidence in a recent survey of 1,500 consumers of a broader shift in consumer behavior after almost a decade in which most were "trading up" for high-end items. Many are now cutting back, she says, with low-income households becoming more likely to stick to dollar stores and supercenters and middle-income families visiting more mass merchants and grocery stores than specialty outlets.
Especially surprising, Ms. Liebmann says, is evidence that households earning as much as $75,000 a year are changing their habits. Survey responses among this group were more similar to those of low-income households than those of wealthy families, she says. The types of spending most likely to be chopped: fashion accessories, clothing, home décor, electronics and entertainment.
Posted by dan at 10:53 AM
Ann Zimmerman reports in the Wall Street Journal on Wal-Mart's conservation efforts:
Last November, Wal-Mart Chief Executive Lee Scott pledged $500 million in spending to reduce the retailer's "carbon footprint" -- its energy consumption, greenhouse-gas emissions and production of solid waste. However, for the green initiatives to succeed, they had to be embraced by executives far below Mr. Scott who also had spent their careers slashing costs, not pursuing social goals.David Redfield, vice president of marketing integration at the company's Sam's Club division, wasn't initially enthusiastic about the giant discounter's interest in trying to save the planet. "At first we thought this was about saving the whales and the trees," he says. "Then we started looking seriously at what the waste was made of, what it cost us and what we could save, and this thing took on a life of its own."
Mr. Redfield is in charge of the solid-waste-reduction program, and he expects to meet the goal of cutting volume by one quarter in three years ahead of the original deadline. Eventually, the goal is for the stores to dump zero waste into landfills. Currently, they produce in excess of three billion pounds a year.
Mr. Redfield and his team are trying to go beyond recycling programs that bundle waste for sale to recycling centers. Wal-Mart is attempting to turn its waste into a raw-material stream for the suppliers of its merchandise, a process known as closed-looped recycling.
For example, it is currently selling collected waste paper to packaged-goods company Georgia-Pacific Corp. A week or two later, the "waste" paper comes back to Wal-Mart stores as private-label paper towels and tissues. First tested at 21 Wal-Marts in Tulsa, Okla., the program should be in place at all of its stores within the year, according to Mr. Redfield. The company also is close to figuring out a similar "high-profit" solution for the hundreds of pounds of plastic hangers that the company's stores throw out each week. . . .
Wal-Mart's recycling initiatives thus far aren't close to recouping the company's $500 million investment, but a number are profitable on an individual basis. For instance, in the past few months, the company installed a contraption called a sandwich baler in its retail stores and distribution centers to collect and recycle the plastic used in shrink wrap and shopping bags that up to now was thrown out and hauled away. Now Wal-Mart sells it to recyclers. The company expects the program to add $28 million to the company's bottom line, from saving on removal and landfill costs and from the money it gets for selling the plastic. From February through June, the company recycled more than 16 million pounds of plastic.
Posted by dan at 10:49 AM
From my home-town paper, the Westport News:
Home sales to date, 2006: 258
Home sales to date, 2005: 331
Average market time of house sold, 2006: 193
Average market time of house sold, 2005: 78
Number of houses on the market: 369
Posted by dan at 10:00 AM
Chicken-flicker Pilgrim's Pride, seeking to take advantage of the depressed price of fellow protein-glut vicitm Gold Kist, makes a hostile offer. Reducing production capacity is one way to improve profits in a period of glut.
Posted by dan at 09:52 AM
Just as long as they don't beat us in basketball. Martin Arnold and Ralph Atkins report in the Financial Times on a shocking development:
A rebound in France’s economy is creating jobs at the fastest rate in five years, giving a fillip to the government’s push to cut the country’s crippling unemployment rate before next year’s elections.The upbeat French employment data followed gross domestic product figures earlier this week showing that the 12-country eurozone grew by 0.9 per cent in the second quarter of this year – faster than the US. They showed that “the eurozone is now creating jobs at a faster rate than in the US,” according Holger Schmieding, economist at Bank of America.
Strong employment growth in the services, financial and construction sectors in France more than offset a drop in industrial jobs. This resulted in the creation of 51,900 jobs in the second quarter, almost as many as were created all of last year, according to figures published on Friday by Insee, the national statistics office.
Posted by dan at 09:44 AM
A brilliant move from Time. Instead of publishing on Monday, the increasingly thin and shrinking magazine will come out on Friday. Sarah Ellison reports in the Wall Street Journal:
"By hitting newstands before the weekend, rather than at the start of teh workweek, Tiome's publishser Time Inc. hoeps to make the magazine more appealing to busy readers."
Sounds like shuffling deck chairs on a certain sea-going vessel to me. Look, Time isn't dead and it's not in danger of dying any time soon. There are still a couple million people out there who find value in subscribing to the magazine. Granted, they're mostly older. But today's elderly will live for a long time. As long as it manages expenses, keeps a lid on salaries, and doesn't get too ambitious, Time can probably go on ticking profitably for another couple of decades. Whether it will be a pleasant, rewarding or interesting place to work in the midst of these dynamics is a separate question.
Posted by dan at 09:26 AM
If you can't afford good taste, you can rent it. Kelly Crow reports in the Wall Street Journal on the growing phenomenon of art rental.
For years, the Seattle Art Museum has let its most generous supporters rent original artworks from its auxiliary gallery, charging $40 to $600 a month so patrons could create temporary exhibitions in their homes. But now the museum has a burgeoning new market for its highbrow rentals -- home sellers in search of an artistic edge.Museum officials say they've seen a spike in their art-rental business thanks in part to home stagers, who redecorate houses in hopes of boosting their sales prices and increasing the odds of selling. One Seattle artist popular with this set: abstract expressionist Drake Deknatel, whose paintings have been used in some 200 homes, according to gallery records and one of the city's largest staging companies. "It's amazing how it's taken off," says SAM Gallery director Barbara Shaiman.
As home sales slow in many areas and more houses linger on the market, some sellers are going to greater lengths to catch the buyer's eye -- by installing splatter paintings by emerging artists, 7-foot-tall metal sculptures, even works by Calder and Dali. It's a pronounced shift in the strategy of staging, which traditionally held that the fastest way to sell homes, and get the highest price, was to give them a toned-down, hotel-style makeover. Now, rather than merely boxing up family knick-knacks, adding a new couch or repainting the bedroom in jewel tones, stagers are experimenting with a riskier approach.
The new practice is boosting business for art institutions. At the SAM Gallery, revenue has more than doubled in four years, to $1 million, says Ms. Shaiman. Sales have doubled since 2001 over at the Larsen Gallery in Scottsdale, Ariz., in part because of bigger orders for contemporary art from homeowners and sellers of the area's new, loft-like buildings. At New York City's Agora Gallery, director Angela Di Bello says she fields at least five calls and emails a day from inquiring real-estate agents, up from "none" a few years before. "I've been in this business 25 years, and I've never seen anything like it," she says.
Posted by dan at 09:19 AM
The huge Xanadu mall complex proposed for the Meadowlands is in New Jersey, as Laura Mansnerus reports in the New York Times. Gee, who would have thought that a development named after: (1) a mythic symbol of monarchical excess; (2) Citizen Kane's folly; and (3) a really bad movie; would end in tears?
Posted by dan at 09:15 AM
Who says the IRS isn't cracking down on high-income tax cheats? Sharon Waxman reports in the New York Times that celebrities will now receive 1099s with the fancy goody-bags they receive at those interminable award ceremonies.
Posted by dan at 09:13 AM