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Appalled By Christie’s “Vulture” Behavior

When a company goes bankrupt, a certain kind of investor comes out of the woodwork trying to make a killing: if they buy assets at distressed prices, really cheap, they can often wait a few years and resell at a very big profit. They are called vulture investors.

detroit-institute-ofI’ve been thinking about the term ever since I read the article headlined Detroit’s Creditors Eye Its Art Collection in the July 20 New York Times, which of course is about the people who would like to sell the art collection of the Detroit Institute of Arts so they can collect on money owed to them by the city. I’ve been thinking about it, not just because of Detroit’s creditors, but rather because of Christie’s, the auction house. The article had this passage:

About a month ago, the institute’s officials were contacted by Christie’s auction house, which asked for an inventory of works and asked if appraisers could visit to assess the collection. It is unclear whether such a visit took place and whether it was creditors or someone else who enlisted Christie’s to begin an appraisal. (Mr. Nowling said that the emergency manager’s office did not do so, and Christie’s declined to comment.)

All I can think of is, shame on Christie’s. Sure, business is business, but let’s remember here that it is NOT the Detroit Institute of Arts that has mismanaged the city and led to the bankruptcy. As far as I can tell, the DIA has husbanded it resources very well and acted responsibly over the last several years.

Is Christie’s so hard up that it will take any business, no matter how reprehensible? That’s sad. Of course Christie’s is positioning itself for the sale, should it be ordered. But if I were a collector wanting to sell, I would not patronize Christie’s because of this. If wanting to buy, yes, I know collectors go with whoever has the “material.”

BTW, I applaud the behavior of the Detroit Institute during this crisis. It just keeps going about its business, trying not to get distracted, and head down. Yesterday, I received this in a press release:

The Detroit Institute of Arts (DIA) will examine and digitally photograph 13 full-scale drawings, known as cartoons, created by Diego Rivera in his preparation for painting the DIA’s internationally renowned Detroit Industry murals. The drawings have not been looked at in more than 30 years, and have never been digitally photographed. The project will take place from July 22 to Aug. 2 and is made possible by a grant from Bank of America’s Art Conservation Project. The grant will also fund any necessary conservation work on the delicate drawings.

ETC. Some of us are “liking’ the DIA on Facebook in a show of support. As of  now, it has 231,851 fans — versus 223,00 in mid-June.

BTW, tomorrow’s New York Times has an article about the closing of the Fresno Metropolitan Museum, which over-expanded and had to close in 2010 — offering it as a template for, or lessons relevant to, the situation at the Detroit Institute of Arts. I don’t think so. They are just not comparable.

Photo Credit: Courtesy of the DIA

 

 

Comments

  1. Dan Monroe says:

    Art as financial asset versus art as property held in trust for the public as an integral part of the soul of a city, state, and nation — that is a battle we may see emerge in Detroit with DIA centered in the crossfire. Creditors seldom care about soul or public benefits. Others who stand to make a buck out of this possible debacle, like Christies, will happily get in line. One might hope, given the amount of business they do with museums, that Christies would draw a line at participating in an effort to gut one of the nation’s finest museums– but that hope would clearly be naive. Should this potential battle become a reality it will be critical for all who care about museums and the value of art to civic life to do everything possible to support DIA.

  2. Another thing in the NYT article caught my eye. They reported that ‘experts’ valued the entire DIA collection at 2 billion dollars. That’s very low, considering that Van Gogh’s Postman Roulin and the Van Gogh Self-Portrait in the collection would sell for at least 100 million each on the current market. Brueghel’s Wedding Dance would also bring an extremely high price, as would Artemisia Gentileschi’s Judith with the Head of Holofernes, which if auctioned would surely set a new record for her work. Fuseli’s The Nightmare would blow past the current record for Fuseli because it’s the most famous thing he ever painted, an iconic image. There are 2 or 3 multi-million Cezannes, another Van Gogh, Picasso’s cubist portrait of Pellares, Titian’s Judith…and that’s just in the Euro painting galleries How do they get 2B for the entire collection when I can get 500 million from just a handful of paintings? It sounds like someone is envisioning a fire sale.

    • Brian Victor Ciupka says:

      perhaps the estimate applies only to works that are not protected as permanent collection . Although it wouldn’t be surprising if the entire place was emptied . Since when will justice or fairness ever come close to existing in opulence .

  3. Traditionalist says:

    An auction house would get a percentage of any transactions, yes. But if they are to be condemned for facilitating the sale of a museum’s collections, so must those who are looking to buy the works also be seen as vultures.

  4. James Maroney says:

    In Ms. Dobrzynski’s post, this sentence “the people who would like to sell the art collection of the Detroit Institute of Arts so they can collect on money owed to them by the city” is freighted with bias: “the people” are bond holders, pensioners and civil servants to whom duly elected city officials pledged their “full faith and credit,” which means that they stand behind their obligations. “Would like to sell” suggests that bond holders, pensioners and civil servants are somehow relishing the idea of taking the DIA down; where is there any evidence of that? “So they can collect on money owed to them” conjures up images of the covetous money lender. Detroit’s bond holders, pensioners and civil servants have a legitimate expectation of receiving the income in retirement they were promised or the returns on investment owed to any holder of municipal debt. “The art collection” comprises two elements: art and collection. Yes, art is the valuable asset that, if it comes to that, would be sold. But what is being taken down, if you will, is not the art, which will be sold intact and moved safely elsewhere. It is the collection, which the people of Detroit assembled when they believed they had sufficient wealth and power to provide for not only the necessities of life but an art collection, too. It is that conceit which is now come apart; it is that collection that stands behind the city’s “full faith and credit,” that stands behind the city’s promises to its bond holders, its pensioners and its retirees. Despising Christie’s because the armature around which Detroit wound its art collection is shooting the messenger. Look at it this way: Christie’s or Sotheby’s and those who buy the DIA’s art, if it comes to market, are giving the city one last opportunity to redeem its full faith and credit.

    • Of course my statement is “biased.” This is an opinion blog; you may read in that in “About Real Clear Arts.”

    • Part of the blame for pensioners looking at such a steep cut in benefit, lies with their own pension boards. With many decades of feckless investments behind them, it is almost impossible to say that pensioners would ever have received a fully realized portfolio of returns, and would still come up short. While the image of the covetous money lender is not necessarily true, neither is one of the intelligent investor working in good faith on behalf of the pensioners.

      http://deadlinedetroit.com/articles/5697/bankruptcy_detroit_pension_funds_lost_money_the_old-fashioned_way_they_blew_it

    • Traditionalist says:

      James Maroney, in this particular case, playing the the moral high ground card of honoring the promises to bond holders and pensioners is a bit disingenuous. There is also the moral issue of holding cultural materials in trust for future generations. Balancing a budget shouldn’t require dismantling civilization.

  5. Thanks for bringing up this issue. I am confident you will let us know what we can do to help. The people of Detroit, including some of my cousins, voted to tax themselves to keep DIA going. I am so proud of my birth city. This does not have to be the end, but a new beginning.

  6. How is the DIA incorporated?

  7. Bankruptcy is the mechanism by which financially distraught organizations re-organize themselves under the protection of court. In this instance, creditors include government employees, who believed that their pensions were “safe,” ensuring a stable financial future. Those responsible for development a plan to manage Detroit’s short- and long-term future need to be extraordinarily innovative to find solutions that do not include gutting DIA. Not to sentimentalize the cold, hard scenario faced by Detroit, but I don’t believe their problems will be alleviated in the long run by selling their cultural heritage. Doing so would make the city not only still hungry, but soul-less.

    Among other things, this scenario reminds me of the actions taken and not taken with respect to the Barnes Foundation, whose art collection was moved to Philadelphia from its nearby, low budget location on the city’s border in a Big City, whose financial planners have no imagination. Early on, Pew Charitable Trusts funded an “assessment” of the Barnes art collection. They then funded, along with the Annenberg Foundation, the legal activity necessary for the Big City Takeover. Pew’s President, Rebecca Rimel, is now known to Barnes Friends as a “Culture Vulture” for her role in the destruction of the historic Barnes Foundation. Meanwhile, the new facility, in a building about eight times larger than the original, is showing signs of financial disorder before its first birthday with admission price increases between 22% and 30%. It is interesting to note that despite false cries of financial anguish, the Barnes Board chose NOT declare itself bankrupt. That would have brought a different level of scrutiny, which those who wished to move the collection across to the City could not afford. I’m just saying that the obvious conflict between those with political strength and those with appreciation for our cultural heritage are not on a level playing field. That needs to change if decisions about valuable places like DIA are to have a fighting chance. Our society can’t mouth ideals about cultural heritage and then turn around and sell its soul when things get tough or when “opportunities” for a killing arise. The vultures need to be put in their place, with laws that bridle their arrogance, power, and greed. Sorry to go on, but this issue struck a nerve.

    • Thanks for your comment, Evelyn — I want to continue to point out a distinction in this case: the DIA is not financially distraught. It did not go into bankruptcy, and had nothing to do with the municipal policies and corruption that led to Detroit’s current state. Why should it pay for them?

      • Indeed, Judy. Now see how my comment could confuse. Municipal management failed; DIA is not a suitable or even ethical source of gov’t funds to remedy that failure.

      • Judith, DIA is part of Detroit. It does not matter that the DIA is not financially distraught and did not go into bankruptcy. It is part of a city that has to have a solution for people to live. Bad policies and corruption led to this for the city of Detroit as a whole.

        Sure, save the work at DIA. How about eliminating the bus system, close the police and fire stations. Just shut down all other city services to keep the DIA going strong. Does that really make sense to you and you art folks?

        Just like people don’t want bus routes canceled, people dont’ want art at the DIA sold. Everyone wants someone else to take the hit. The city is dead. Everyone has to give up what is valuable to save the LIFE of humans. I’m sure you art folks rather save oil and chalk though :(

        • Selling the DIA’s art will not go far toward “saving” humans. For one thing, it’s not enough, especially when split among everyone. For another, the creditors and the lawyers will take a huge bite of it, leaving the people of Detroit with nothing. Of course, some unions are creditors — tell me they are not part of the problem.

          • I see you didn’t quite understand the “saving humans” part. Daily living in Detroit is not comfortable, so, “saving humans” in the sense of allowing Detroiters to live a life further away from a third world country they live in today. When you cross the city line into Detroit you can immediately SEE and FEEL a different type of living. It aint pretty nor comfortable. Again, I grew up in Detroit and just moved in 2009. The house I owned was built by my grandparents. I graduated from Osborn high school on the east side. I took bike rides to all corners of the city as a teenager. I…….I wanted out because my once beautiful neighborhood in Conant Gardens was decaying. There was no way I wanted my daughter to be raised in hell.

            Yes, creditors and lawyers will take a huge chunk. It doesn’t matter because that chunck will be there whether DIA sells/auctions off works of art or not. What are they going to bite into? At least there can be money from art as opposed to taking money from services. Yeah, I know what Kevyn Orr says about continuted services, but how will those services get paid when attorneys and creditors take their share? Its already tough to catch a bus that may or may not show up.

            I completely agree about the unions. I’m not a fan of them. They had a significant place in our society. Not so much now. This doesn’t mean they should be gone completely, but they sure don’t help the art of negotiating for everyone today like they did in the past.

            Art is a pleasure. An important emotion. We love it. But we need to make a new plan for the future. The DIA is only part of what it may take to help. Christies did what they were asked to do JUST IN CASE it came to that.

          • Joe Donovan says:

            In Michigan, art institutions (of which, the DIA is the crown jewel) bring enjoyment to millions and employment to tens of thousands. They are important to our state’s tourism, to our ability to attract business, to our competitive standing in our nation and in the world. People who enjoy the arts pour millions of dollars into our economy and our state treasury through sales taxes.
            (http://blogs.tnr.com/article/113979/detroits-art-worth-more-museum-out)

            The DIA offers exceptional arts education programs free to all schools in the tri-county are staffed by professional artists; the DIA even buses students into the museum on their own dime. There will always be a public responsibility to encourage and support the arts and arts education. We need to proclaim that message loudly and clearly. We know that when there is a regular program of arts education, a young person’s life can be opened to the beauty of music or painting or dance or poetry, and turned away from a lifetime sentence of despair, crime, and drugs.
            (http://www.americansforthearts.org/NAPD/files/9209/Arts%20Programs%20for%20Youth%20At-Risk_Pamphlet.pdf)

            There is more power and meaning in a Beethoven symphony conducted by Leonard Slatkin, a trumpet solo by Wynton Marsalis, a work of art by Tyree Guyton, or an aria performed at the Detroit Opera House, than there is in all the arguments of those who seek to persuade us that we should sacrifice the DIA.

          • James Maroney says:

            Joe: All of what you say is true and we all enjoy the arts. But the time when such sentiments stood above the quotidian cares of life has passed. The art is an asset of the city, the city pledged its assets to bolster its full faith and credit. It borrowed money from its bondholders and made promises to its pensioners. The city has defaulted on its obligations and it has now declared bankruptcy. It is like the final buzzer in the last game of the series: the game is up and we do not renegotiate the rules of the game or cry foul after the final buzzer. All of what you say was subordinated to the city’s need for cash with which to maintain services in the face of fifty years of dwindling revenues. The city in essence cashiered its art collection fifty years ago. There is a way out: Google Mark White’s Co-Accession.

          • Co-accession is ridiculous.

          • James Maroney says:

            BobG: I may not have made this point with sufficient emphasis: The art is an asset of the city, the city pledged its assets to bolster its full faith and credit. It borrowed money from its bondholders and made promises to its pensioners. I understand your reluctance to “sell” art, but the time to fret about that or assert higher values such as you and Joe are doing has now passed. The city has defaulted on its obligations and it has now declared bankruptcy.

          • Joe Donovan says:

            The notion of art as an asset is foolish and counterproductive to the city of Detroit. A bonfire of the vanities would not fetch anywhere near the value of the art work on paper. It would flood the global market and depress prices. Selling art is not the solution.

            Moreover, selling even a limited amount of art work would devastate the museum. It would mean the end of the tri-county millage. It would create a chilling effect on giving. The museum would close its doors forever.

            It is also unethical. Museums are stewards of our cultural heritage. Have you been to the DIA? Have you seen the Detroit Industry murals by Diego Rivera? That is who we are. You do not sell that to pay a bill.

            I am puzzled why the first thing everyone wants to talk about is selling art. When General Motors entered bankruptcy, it liquidated assets in order to meet financial obligations. It did not, however, chop off its tech center; it’s too important to their future moving forward. Similarly, when I won the “art good” argument, both in an economic and social sense, I won the “don’t sell” argument. The DIA is far too important to the city, to the region, and to the state to liquidate.

    • James Maroney says:

      Eveleyn: Yes, this scenario brings to mind the
      Barnes Foundation, with important differences, namely that the
      Barnes trustees brought ruin upon themselves and their insolvency threatened no pensioners. You might find my solution, filed as amicus curiae in that case, interesting. http://jamesmaroney.com/art/museum-plan/Barnes_Brief.pdf

      • I’m glad you posted that brief, Jim. I think it’s relevant that you have advocated a form of deaccessioning in other cases.

        • James Maroney says:

          My Barnes solution or Mark White’s Co-Accession plan might work for Detroit. Except in this case, the DIA is not called upon to take any action and it is not deaccessioning we are talking about: the city has defaulted on its promises, the City has filed for bankruptcy and the City pledged its assets among which, like it or not, is the art collection at the DIA.

  8. I think Joe Donovan makes a really important point that’s not getting much attention: The Detroit museum is not just a valuable property in Detroit; it is a valuable property for the entire state of Michigan (not to mention the rest of the mid-West). Surely the state and the entire citizenship of the state has a stake (and a responsibility) in maintaining a public treasure like the DIA. Also, it seems to me that in today’s market, if pictures like the Brueghel ever did go to auction, they would end up outside the United States–hence a loss to the nation. Everyone has a stake in saving the DIA.

    • Joe Donovan says:

      I would imagine a great deal of the art would end up in the Middle East and China.

  9. Joe Donovan says:

    Update:

    Christie’s issued a statement posted on its website August 5 that Detroit’s Emergency Financial Manager Kevyn Orr contracted the auction house for appraisal services.

    http://www.christies.com/about/press-center/releases/pressrelease.aspx?pressreleaseid=6587

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