Art finance
Encyclopedia
Art finance and Art finance advisory are terms referring to a set of financial services provided by some auction houses, banks, and consulting firms, and marketed to such firms' clients who are art collectors or artists.
Firms offering such services differ in the range of services provided, but can include art purchase financing, art secured lending, art insurance, art appraisal, provenance
verification, market research, curatorial services, art investment advice, and personal shopping services.
s may be made for many reasons, some of which may include advances against art not yet produced (usually made to artists of some repute), advances against items to be auctioned or otherwise sold (known as a bridge loan to sale, a type of bridge loan
), to finance new purchases (known as acquisition financing and similar to a mortgage), and loans to assist dealers amass inventory (known as a working capital
line of credit
).
In the difficult economic climate of 2009, some banks previously offering such services discontinued them. UBS, the world’s biggest wealth manager and sponsor of Art Basel
, announced in April, 2009 that it would close its 11-year-old art advisory division. In contrast, some start-up art financiers have stepped into the vacuum created by the departing banks, such as former corporate raider Asher Edelman
, with unique and legally-untested methods of auction guarantees.
In September 2008 the Museum of American Finance
held a panel discussion on financing to support art acquisitions.
in the New York State Supreme Court for non-payment on a $24 million dollar loan, seeking damages through access to her home, negatives, and all her intellectual property rights in her photographs. In March, 2010, Colony Capital concluded a new financing and marketing agreement with Leibovitz, paying off Art Capital and removing or reducing the risks of Leibovitz losing her artistic and real estate assets.
Institute wrote "the art market's often covert and secretive buying and selling practices do encourage or at least permit high levels of criminal behavior."
Generally
Art finance can refer to both- acquiring art works by financing them rather than buying them outright, and
- collateralizing a loan with art works and related property.
Firms offering such services differ in the range of services provided, but can include art purchase financing, art secured lending, art insurance, art appraisal, provenance
Provenance
Provenance, from the French provenir, "to come from", refers to the chronology of the ownership or location of an historical object. The term was originally mostly used for works of art, but is now used in similar senses in a wide range of fields, including science and computing...
verification, market research, curatorial services, art investment advice, and personal shopping services.
Art loans
Art loanLoan
A loan is a type of debt. Like all debt instruments, a loan entails the redistribution of financial assets over time, between the lender and the borrower....
s may be made for many reasons, some of which may include advances against art not yet produced (usually made to artists of some repute), advances against items to be auctioned or otherwise sold (known as a bridge loan to sale, a type of bridge loan
Bridge loan
A bridge loan is a type of short-term loan, typically taken out for a period of 2 weeks to 3 years pending the arrangement of larger or longer-term financing.-Description:A bridge loan is interim financing for an individual or business until...
), to finance new purchases (known as acquisition financing and similar to a mortgage), and loans to assist dealers amass inventory (known as a working capital
Working capital
Working capital is a financial metric which represents operating liquidity available to a business, organization or other entity, including governmental entity. Along with fixed assets such as plant and equipment, working capital is considered a part of operating capital. Net working capital is...
line of credit
Line of credit
A line of credit is any credit source extended to a government, business or individual by a bank or other financial institution. A line of credit may take several forms, such as overdraft protection, demand loan, special purpose, export packing credit, term loan, discounting, purchase of...
).
In the difficult economic climate of 2009, some banks previously offering such services discontinued them. UBS, the world’s biggest wealth manager and sponsor of Art Basel
Art Basel
Art Basel is an international contemporary art fair held each June in Basel, Switzerland. Similar to the Venice Biennale, it has been called "the Olympics of the art world". Art Basel features nearly 300 leading galleries from North America, Latin America, Europe, Asia and Africa...
, announced in April, 2009 that it would close its 11-year-old art advisory division. In contrast, some start-up art financiers have stepped into the vacuum created by the departing banks, such as former corporate raider Asher Edelman
Asher Edelman
Asher Edelman began his career on Wall Street in 1961. In 1969 he formed Mack, Bushnell and Edelman where he was CEO. Edelman’s Wall Street businesses included Investment Banking, Money Management, and Derivatives Trading...
, with unique and legally-untested methods of auction guarantees.
In September 2008 the Museum of American Finance
Museum of American Finance
The Museum of American Finance, is an American financial-history museum, located in the Financial District of the Manhattan borough of New York City, New York....
held a panel discussion on financing to support art acquisitions.
High-profile art finance
In late July 2009, the New York Times reported that the art finance firm Art Capital Group sued photographer Annie LeibovitzAnnie Leibovitz
Anna-Lou "Annie" Leibovitz is an American portrait photographer.-Early life and education:Born in Waterbury, Connecticut, Leibovitz is the third of six children. She is a third-generation American whose great-grandparents were Jewish immigrants, from Central and Eastern Europe. Her father's...
in the New York State Supreme Court for non-payment on a $24 million dollar loan, seeking damages through access to her home, negatives, and all her intellectual property rights in her photographs. In March, 2010, Colony Capital concluded a new financing and marketing agreement with Leibovitz, paying off Art Capital and removing or reducing the risks of Leibovitz losing her artistic and real estate assets.
Criticism
It has been noted that art lending practices can contribute to and enable art crime by acting as a form of private banking for the art world and as such, suffer from a lack of transparency and encourage high risk borrowing behavior, as occurred with Leibovitz. Iain Robertson of Sotheby'sSotheby's
Sotheby's is the world's fourth oldest auction house in continuous operation.-History:The oldest auction house in operation is the Stockholms Auktionsverk founded in 1674, the second oldest is Göteborgs Auktionsverk founded in 1681 and third oldest being founded in 1731, all Swedish...
Institute wrote "the art market's often covert and secretive buying and selling practices do encourage or at least permit high levels of criminal behavior."
See also
- AppraiserAppraiserAn appraiser , is one who sets a value upon property, real or personal. In England the business of an appraiser is usually combined with that of an auctioneer, while the word itself has a similar meaning to that of "valuer." In the United States, the most common usage relates to real estate...
- Art dealerArt dealerAn art dealer is a person or company that buys and sells works of art. Art dealers' professional associations serve to set high standards for accreditation or membership and to support art exhibitions and shows.-Role:...
- Art market
- Art saleArt saleAn art auction is the sale of art works, in most cases in an auction house.In England this dates from the latter part of the 17th century, when in most cases the names of the auctioneers were suppressed...
- Art valuationArt valuationArt valuation, an art-specific subset of financial valuation, is the process of estimating the potential market value of works of art and as such is more of a financial rather than an aesthetic concern, however, subjective views of cultural value play a part as well...
- Art world economics
- Asher EdelmanAsher EdelmanAsher Edelman began his career on Wall Street in 1961. In 1969 he formed Mack, Bushnell and Edelman where he was CEO. Edelman’s Wall Street businesses included Investment Banking, Money Management, and Derivatives Trading...
- CuratorCuratorA curator is a manager or overseer. Traditionally, a curator or keeper of a cultural heritage institution is a content specialist responsible for an institution's collections and involved with the interpretation of heritage material...
- Blockage discountBlockage discountBlockage discount is an art-business-related and legal term of art for referring to the money discount assigned to a group of artworks by a single artist when that group of works is to be released to market as a group rather than individually...
- FinanceFinance"Finance" is often defined simply as the management of money or “funds” management Modern finance, however, is a family of business activity that includes the origination, marketing, and management of cash and money surrogates through a variety of capital accounts, instruments, and markets created...