Jeff Koons.

Schneider, Daniel B.

WHEN TWO MAJOR PIECES from Jeff Koons's "Celebration" series, 1994-, came up for auction for the first time last November, a breach was torn in the fabric of the Koons market, not to mention the cultural cosmos. Diamond (Blue), 1994-2005, sold at Christie's for $11.8 million, more than doubling the highest price ever paid for a Koons work at auction; the following night, Hanging Heart (Magenta/Gold), 1994-2006, sold at Sotheby's for $23.6 million, making it (as headlines trumpeted) the most expensive piece by a living artist ever auctioned.

Recent private trades for key pieces from "Celebration"--sixteen hyperrealist paintings and twenty oversize sculptures of inflatable animals, childhood toys, and the garish flotsam of holiday revelry--were already known, with a Balloon Dog, 1994-2000, said to have sold for more than $15 million. And though the actual buyers weren't named, both Diamond (Blue) and Hanging Heart (Magenta/Gold) were purchased by dealer Larry Gagosian, who had been instrumental in seeing that the "Celebration" pieces were fabricated and brought to market. From one standpoint, the moment was of a piece with the rest of Koons's now-you-see-it, now-you-see-it-again career--a small, dedicated circle of Olympian dealers and collectors providing support amid a simmering market, with prices ready to climb to astonishing new levels. Nonetheless, for "Celebration," it represented the decisive step in a dramatic, if not entirely unforeseen, change of fortune.

In 1993, Koons rented a loft on lower Broadway in Manhattan and began hiring dozens of assistants for the project. With Koons's approval, Jeffrey Deitch formed a partnership with fellow dealers Anthony d'Offay in London and Max Hetzler in Cologne to finance the series, with an initial investment of approximately $3 million. However, the project's staff soon rose to more than seventy, and according to some reports, Koons, within a few years, was spending more than half a million dollars annually on salaries and overhead alone.

The technical challenges--now legendary--involved in fabricating the bulbous, reflective stainless steel sculptures turned out to be far more complex and time-consuming than imagined, and Koons, true to his reputation, insisted on flawless execution. His acrimonious custody battle with his ex-wife led to long absences from the studio. Time was mismanaged, mock-ups built and rebuilt. Within two years, funds from the initial investment were running out, and the Pennsylvania foundry Koons had contracted proved unable to make the sculptures to his specifications; when Koons sued, it went bankrupt.

In a vaguely Borgesian turn, Deitch persuaded a group of Medici-like collectors, including Eli Broad and Dakis Joannou, to buy unrealized works like Moon, 1994-2000, Cat on a Clothesline, 1994-2001, and Balloon Dog in advance, for a million dollars each. "No one knew what they were getting into," recalled James Cohan, who visited the studio frequently while working with d'Offay. "There were no models, just full-scale sculpted-foam and clay maquettes that simply weren't fully realized. There was a fantastic amount of tap dancing."

"These works weren't individualized for certain clients. They were going to be exactly as Jeff wanted them," said Amy Cappellazzo, international cohead of postwar and contemporary art at Christie's. "But like commissions, these things cost a lot of money to create, so he basically took orders in advance. These are big things that are ungainly and expensive to move around. He knew what he was doing."

Despite the artist's having located a new fabrication firm, delivery dates were repeatedly postponed. When production costs for each piece rose beyond the purchase price, Broad and the other buyers were forced to renegotiate their deals for the still-unmade pieces. It was hoped that the sixteen large-scale photo-realist paintings in the "Celebration" series, which would be priced at $200,000 each, would help continue to fund the sprawling operation, but the same pattern of dysfunction held: Months were spent mixing colors and designing application strategies, which were then cast aside when Koons deemed them inadequate. The production of the paintings, like that of the sculptures, continued to siphon off funds, time, and patience.

By the time funding for "Celebration" dried up in the late 1990s, Deitch had been forced to sell a half interest in Deitch Projects to Sotheby's to help cover production costs, and Koons faced a $3 million lien for back income taxes. The studio staff was reduced to two. When the deus ex machina finally appeared, it was in the form of the public market itself. Throughout the "Celebration" debacle, Koons's prices at auction had remained consistently high, but after his porcelain Pink Panther, 1988, sold for $1.8 million in 1999, prices began to surge routinely past previous records, often into the millions. His numbers apparently secure, Koons returned to the Sonnabend Gallery (which had represented him before he went to Deitch) that year, and Gagosian agreed to fund the unfinished "Celebration" works in return for the right to sell them.

It is tempting to conclude that Koons and Deitch were all along indulging themselves in some sort of poorly conceived transaction art or playing the angles in an expectant marketplace. To do so might be to misunderstand both. "I was trying several creative strategies to keep the project funded, because I totally believed in it," said Deitch. "At the same time, I was working the other side of the market, trying to place key works with collectors, encouraging people to bid at auction on certain things, so we could, in a serious way, from critical consensus to art-market consensus, raise the value of Jeff's work." It should come as no surprise that pieces from "Celebration" are, in fact, still being fabricated, even as their potential value soars.

And if the total price of the "Celebration" pieces has finally exceeded the production costs, Koons himself, who has referred to his obsessive attention to craftsmanship as "a form of value that people can believe in," probably deserves a share of the credit.

"Against all odds, he dug his heels in, believed in the work, and wasn't going to see it suffer. It was extraordinary," said Cohan, who now runs the James Cohan Gallery. "If you spoke to an accountant or a tax expert or a legal expert, they had this guy pinned to the wall. But he didn't bend."

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DANIEL B. SCHNEIDER IS A NEW YORK-BASED WRITER.