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.
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 () is the chronology of the ownership, custody or location of a historical object. The term was originally mostly used in relation to works of art, but is now used in similar senses in a wide range of fields, including archaeology, p ...
verification, market research, curatorial services, art investment advice, and personal shopping services.
Art loans
Art
loan
In finance, a loan is the tender of money by one party to another with an agreement to pay it back. The recipient, or borrower, incurs a debt and is usually required to pay interest for the use of the money.
The document evidencing the deb ...
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
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. It is usually called a bridging loan in the United Kingdom, also known as a "caveat loan ...
), to finance new purchases (known as acquisition
financing
Funding is the act of providing resources to finance a need, program, or project. While this is usually in the form of money, it can also take the form of effort or time from an organization or company. Generally, this word is used when a firm use ...
and similar to a mortgage), and loans to assist dealers amass inventory (known as a
working capital
Working capital (WC) is a financial metric which represents operating liquidity available to a business, organisation, or other entity, including governmental entities. Along with fixed assets such as plant and equipment, working capital is consi ...
line of credit
A line of credit is a credit facility extended by a bank or other financial institution to a government, business or individual customer that enables the customer to draw on the facility when the customer needs funds. A financial institution ...
).
In the difficult economic climate of 2009, some banks previously offering such services discontinued them.
UBS
UBS Group AG (stylized simply as UBS) is a multinational investment bank and financial services firm founded and based in Switzerland, with headquarters in both Zurich and Basel. It holds a strong foothold in all major financial centres as the ...
, the world’s biggest wealth manager and sponsor of
Art Basel
Art Basel is a for-profit, privately owned and managed, international art fair staged annually in Basel (Switzerland), Miami Beach (US), Hong Kong and Paris. Art Basel provides a platform for galleries to show and sell their work to buyers, an ...
, 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 raid
In business, a corporate raid is the process of buying a large stake in a corporation and then using shareholder voting rights to require the company to undertake novel measures designed to increase the share value, generally in opposition to t ...
er
Asher Edelman
Asher Barry Edelman (born November 26, 1939) is an American financier.
Biography
Edelman was the son of New York real estate investor, Richard M. Edelman. He graduated from Bard College and in 1961, he went to work for Halle and Stieglitz wh ...
, who founded
ArtAssure Ltd. in 2010 to provide liquidity to the art market in the form of non-recourse art loans and 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 April 2012, the art lending market was roughly US $7 billion.
High-profile art finance
In late July 2009, ''
The New York Times
''The New York Times'' (''NYT'') is an American daily newspaper based in New York City. ''The New York Times'' covers domestic, national, and international news, and publishes opinion pieces, investigative reports, and reviews. As one of ...
'' reported that the art finance firm Art Capital Group sued photographer
Annie Leibovitz
Anna-Lou Leibovitz ( ; born October 2, 1949) is an American Portrait photography, portrait photographer best known for her portraits, particularly of celebrities, which often feature subjects in intimate settings and poses. Leibovitz's Polaroid ...
in the
New York State Supreme Court
The Supreme Court of the State of New York is the superior court in the Judiciary of New York. It is vested with unlimited civil and criminal jurisdiction, although in many counties outside New York City it acts primarily as a court of civil ju ...
for non-payment on a $24 million loan, seeking damages through access to her home, negatives, and all her intellectual property rights in her photographs. In March, 2010,
Colony Capital
DigitalBridge Group, Inc. is a global digital infrastructure investment firm. The company owns, invests in and operates businesses such as cell towers, data centers, fiber, small cells, and edge infrastructure. Headquartered in Boca Raton, Digita ...
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's
Sotheby's ( ) is a British-founded multinational corporation with headquarters in New York City. It is one of the world's largest brokers of fine art, fine and decorative art, jewellery, and collectibles. It has 80 locations in 40 countries, an ...
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."
[Robertson, Iain, The Art Business, Routledge, 2008, ; and Robertson, Iain, Understanding International Art Markets and Management, Routledge, 2005, .]
See also
*
Art market
The art market is the marketplace of buyers and sellers trading commodities, services, and works of art.
The art market follows an economic model that considers more than supply and demand; it is a market where art is bought and sold for values ...
*
Art sale
An art auction or fine art auction is the sale of Work of art, 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. In Ju ...
*
Art valuation
Art valuation, an art-specific subset of Valuation (finance), financial valuation, is the process of estimating the market value of Work of art, works of art. As such, it is more of a financial rather than an aesthetics, aesthetic concern, ...
*
Art world economics
Art is a diverse range of cultural activity centered around ''works'' utilizing creative or imaginative talents, which are expected to evoke a worthwhile experience, generally through an expression of emotional power, conceptual ideas, tec ...
*
Curator
A curator (from , meaning 'to take care') is a manager or overseer. When working with cultural organizations, a curator is typically a "collections curator" or an "exhibitions curator", and has multifaceted tasks dependent on the particular ins ...
*
Blockage discount Blockage 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. A bl ...
*
Finance
Finance refers to monetary resources and to the study and Academic discipline, discipline of money, currency, assets and Liability (financial accounting), liabilities. As a subject of study, is a field of Business administration, Business Admin ...
References
{{DEFAULTSORT:Art Finance
Art business