The month of March inaugurates the spring art fair season, a combination of commerce, parties and culture that attendees love to pretend to hate. Even though the fairs are explicitly designed for galleries to sell art, dealers complain about them whenever they get a chance. For everyone else, the phenomenon can be a bit of a mystery. These art fairs often occupy prime real estate in the hearts of cities, yet usually have entry fees so high that most locals can’t attend.

Many of today’s biggest fairs were started in the 1970s: Art Basel, which runs from March 29-31 in Hong Kong, mostly sells 20th-century and contemporary art; TEFAF, operating May 4-8 in New York, is better known for its antiques and old masters.

But it was only in the early 2000s that the fairs really took off. “The reason that art fairs have become so important has to do with the shifting demographics of wealth,” says Marc Spiegler, the global director of Art Basel. “Wealth is more and more in the hands of people who are working, rather than those who’ve inherited it.”

While previous generations might have had the time to travel the world looking for choice paintings and objets, current collectors “are actively building their fortunes,” Spiegler says. An art fair, with hundreds of galleries in a single space that’s in, or close to, collectors’ homes “allows patrons today to discover a lot of galleries and artists in a concentrated way.”

While some art fairs have become destinations — most collectors at Art Basel Miami Beach don’t live in Miami — the fair, in its essence, is a venue for dealers to travel to customers.

As a general rule, most art fairs don’t own their venues. Renting space is the fairs’ primary cost, followed, for many, by production expenses. “Rent plays a big part in our expenditures,” says Adam Abdalla, a board member and spokesperson of New Art Dealers Alliance (NADA),which runs two fairs a year. “But there’s also the overall production: building the walls, on-site installation of lights, and design.”

There’s also the cost of labor, both to run the art fair (carpenters, art handlers, security guards, vendors), and to organize it year-round. Some fairs make do with a skeleton crew of administrators; others, such as Art Basel, have a large team, including personnel dedicated to maintaining relationships with galleries and collectors. “It’s pretty much what you see is what you get,” says Spiegel, of art fair costs. “Except that you don’t see the team of people who’s working, both internally and externally, to make it happen.”

Art Basel is owned by the Swiss MCH Group AG, which owns art fairs, watch fairs, conferences, exhibition venues and other subsidiaries, including event companies.

While Art Basel’s costs are bundled into MCH’s annual reports, you can at least get a sense of the company’s scale: In 2016, for instance, MCH employed 588 full-time staff, and operating expenses, including administration, maintenance, furnishing expenses, advertising and public relations, and staff salary, totaled almost $425 million.

Booth rental fees, paid by galleries, constitute the largest revenue stream for almost every art fair. Many charge by the square foot or square meter. NADA’s New York fair charges about $3,000 for its smallest booths and up to $15,000 for the largest.

Art Basel’s fair in Basel, Switzerland (June 14-17), generally considered the highest-stakes fair of the season in terms of the quality and cost of the material on offer, charges from $425 per square meter for its subsidized “Statements” section, to $833 per square meter for its “Galleries” and “Feature” sections. A 60-square-meter booth would cost about $53,000; a 100-square-meter booth could cost more than $88,000.

“And then you have additional services,” Spiegler says. “Let’s say you’re selling a sculpture by Anish Kapoor: You’re going to need a reinforced wall. Or if you’re selling old masters, you’re going to want to have a stand with special lighting — or perhaps, carpeting.”

Sometimes, a space’s constraints necessitate a different pricing model. “We always use unique spaces that are already built,” says Touria El Glaoui, the founder of 1-54 Contemporary African Art Fair, which holds its London fair in the rooms of Somerset House and its New York fair (May 4-6) at Pioneer Works in Red Hook, Brooklyn. “So we don’t charge by square meter, but by the size of a room,” she says.

A small room at 1-54 costs, at minimum, $9,000)El Glaoui says, while a medium room costs $16,646 and large rooms cost $19,424. Extra-large rooms, of which there are few, cost almost $25,000.

Ticket sales are an additional revenue stream. To boost attendance, some fairs keep ticket prices low, even free. NADA New York’s ticket price is $20; 1-54 charges about $20 for its London fair “and about $18 dollars for New York,” El Glaoui says.

Finally, art fairs do their best to get corporate sponsorship. NADA, a nonprofit organization, has sponsors “and we put it back into the fair,” says Abdalla. “We use it to help enhance the fair experience” through special projects and installations.

For a fair of Art Basel’s size, sponsorships are more lavish. Art Basel Hong Kong lists UBS AG as a “lead partner” and MGM Resorts International and watchmaker Audemars Piguet Holding SA as “associate partners.”

“For the first 25 years of its existence, Art Basel had no corporate partnerships,” says Spiegler. “But it would be a very different show without these sponsorships.” The fair’s talks program, its subsidized section for smaller galleries and its “Parcours” outdoor performance night in Basel “would be very hard to pull off without the corporate partnerships,” he says.

While the nonprofit fairs don’t make money, the ADAA says it raised about $1.2 million this year for New York’s social service agency Henry Street Settlement. El Glaoui says the New York and Marrakesh, Morocco branches of her fair “break even,” while her London fair makes a modest profit.

Frieze, which considers itself a “media and events company,” was founded by Amanda Sharp and Matthew Slotover in 1991. In 2016, the company, which hosts fairs in New York and London (and soon, Los Angeles), formed a “strategic partnership” with the Hollywood agency WME-IMG, run by Ari Emanuel.

Because Art Basel is part of a much larger conglomerate, it’s difficult to determine its profitability. Overall, though, MCH had a poor 2017. While its sales increased 12 percent, to $525 million thanks largely to its acquisition of the American “live marketing company” MC2, MCH had a net loss of $10.5 million, a company statement says.

The loss was the result of “special depreciations and special provisions” caused mostly by the scaling down of Baselworld, a watch and jewelry expo. If you ignore those depreciations and provisions, the company noted, its expected group profit for 2017 is approximately $10.6 million —just enough, perhaps, to buy one of the Gerhard Richter paintings on offer at the fair.

“At a more fundamental level, the art fair has always been an optimistic gesture on the part of galleries,” Spiegler says. “It’s the notion,” he continues, that “they will gain more by sharing their collectors with other galleries than they’ll lose.”

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