an blog | AJBlog Central | Contact me | Advertise

Detroit Creditors Stir Up More Trouble

Just when things were looking good for the Detroit Institute of Arts, what with pensioners approving the “grand bargain” that allows the DIA to buy its freedom from the city, and with the DIA getting close to its goal of raising $100 million for the grand bargain to work, another creditor has come along to rock the boat.

The Financial Guaranty Insurance Company hired Victor Weiner Associates to assess the value of the collection and, in a rush job, VWA put a total value on it of $8.5 billion. You may recall that another “complete collection estimate” by Artvest of New York was between $2.76 billion and $4.6 billion.

20140709132757_CircumcisionAs the Detroit News, which had the account of the VWA estimate, noted in an article published on Sunday,

The dueling estimates set the stage for a lively battle of experts when the bankruptcy trial before U.S. Bankruptcy Judge Steven Rhodes gets underway Aug. 14.

VMA made a different assumption in its valuation:

The VWA appraisal, conducted with the help of 11 experts in various fields, anticipates that the collection would be used as collateral for a loan to the city, not sold.

This echoes one of five proposals for “monetizing” the collection put forward by Christie’s Appraisals when it issued its report in December. That assessment, which only looked at 2,800 works, or about five percent of the museum’s collection, put the value between $454 million and $867 million.

Artvest assumed a sale, taking into consideration that only so many works could be absorbed by the market at top prices.

One trouble with this estimate, though, is that it was VWA completed it in two weeks, relying on other estimate and not seeing the works in person, for the most part. It also apparently accepted insurance valuations as the correct value for a sale, and the two are not always comparable.

Nonetheless, that big number makes headlines and stirs up trouble for the DIA, both with some segments of the public and probably for its legal team, which may have contend with the number in court.

Photo Credit: Parmigianino’s Circumcision (worth $25 million according to the new report), courtesy of the DIA via the Detroit News

Comments

  1. There are many different kinds of appraisals. This latest one sounds like it is based on replacement value which is what many insurance appraisals are based on. It counts on the fact that one can wait ad infinitum to make a sale.

    In order to raise funds, however, one ends up at auction where it depends if there are not one but two willing buyers ready to compete. What would probably happen is that the true masterpieces would bring top prices but everything else would bring middling prices or not sell at all.

    Then what happens to the 25 to 35% of what is left unsold. You end up with not enough funds to pay the debtors and a museum with some very mediocre pieces which would serve as an embarrassment to the City and even less people would want to live there.

an ArtsJournal blog