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InsiderOnline Blog: April 2014

Sometimes You’ve Got to Sell Your Van Gogh to Pay the Bills

Detroit’s taxpayers have been subsidizing the Detroit Institute of Arts for decades. In fact, note Andrew Moylan and Alan Smith, the city owns a vast art collection, which, if monetized, could help repay Detroit’s creditors:

In total, the DIA has in its possession some 66,000 art treasures collected over nearly 130 years, including works by Van Gogh, Rembrandt, Matisse and the amazing “Detroit Industry” murals painted in 1932 by Diego Rivera. Monetizing the art, even on a small scale, could prove enormously helpful in minimizing harm done to the interests of employees and creditors. […]

The precise value of the collection isn’t known, but an evaluation of just 38 of the DIA’s most famous pieces done last June at the behest of the Detroit Free Press yielded an estimate of $2.5 billion. In December, the famous auction house Christie’s released an appraisal of nearly 2,800 works (just 5 percent of the institute’s total holdings) purchased directly by the city, saying they were worth as much as $867 million, a figure disputed by many experts as artificially low. [Internal citations omitted.][“Artfully Resolving Detroit’s Bankruptcy,” by Andrew Moylan and Alan Smith, R Street Institute, March 2014]

As Moylan and Smith go on note, realizing the value of the art will not be as simple as putting on a yard sale at the DIA. For one thing, some of DIA’s art appears to have been obtained with conditions against resale. Also, there is always a danger that the city will end up selling its art at fire-sale prices; and city officials themselves are probably understating the value of the art in order to minimize the political pressure to sell it. Still, for those works that cannot be sold, there are ways to monetize the value without actually selling it, such as leasing it to other exhibitions. Fairness to the city’s creditors requires exploring all options to pay the city’s $18.5 billion debt.

Posted on 04/03/14 12:20 PM by Alex Adrianson

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