CORRECTED-UPDATE 3-A drop in the bucket? Christie's appraises Detroit's art
(In Dec. 4 story, removes reference to law professor Michael Bennett also being a bankruptcy expert, paragraph 7)
By Joseph Lichterman
DETROIT Dec 4 (Reuters) - The auction house Christie's put a price tag on one of Detroit's highest-profile assets - the city's share of the Detroit Institute of Arts collection - but the masterworks might not be worth enough to help the city out of its financial crisis.
Christie's said on Wednesday that nearly 3,000 works controlled by the city are worth between $452 million and $866 million. The appraisal surprised some experts who thought the works, which include masterpieces by van Gogh and Matisse, might be worth more.
The finding by Christie's, hired to place a value on art treasures that have become a point of heated debate over the past few months in the city and its suburbs, could become a contested element of the Detroit bankruptcy if the city tries to "monetize" its masterpieces. The report puts a range of value on 2,781 works owned or partially owned by the city.
Christie's also proposed five alternatives to an outright sale of the art, including using the collection as collateral for a loan to the city.
The holdings represent only about 5 percent of the total number of art pieces in DIA's collection. But Christie's, which sought to appraise the most valuable pieces in the city-owned collection, stated that 11 of those pieces account for 75 percent of the total value of all appraised pieces.
With the finding Tuesday that Detroit is bankrupt under Chapter 9 of the federal bankruptcy code, it is possible the city may seek to monetize some of the artwork. With debts totaling $18.5 billion, Detroit may need to sell all or part of the DIA collection as part of its plan to emerge from bankruptcy.
But the relatively low price range Christie's assigned to the collection could make the art a less vital asset than some observers had expected, said Michael Bennett, a law professor at Northeastern University who has written about the plight of the DIA.
"If Christie's is saying that we'd be looking at something less than $1 billion, and perhaps something significantly less than $1 billion, in proceeds from a sale, clearly that's not even a drop in the bucket if you bear in mind the magnitude of the financial deficit of the city," Bennett said.
Christie's report did not specify the works that were appraised, but some of the most best-known works owned by the city include an 1887 self-portrait by Vincent van Gogh and Henri Matisse's "The Window," an oil painting of a turqouise-shaded drawing room.
Another highlight: a rare 1566 painting, "The Wedding Dance," by Flemish painter Pieter Bruegel the Elder, that depicts a joyous wedding party.
In its report to the city, Christie's proposed five potential approaches to monetize the collection without having to sell it. Options including use of city-owned works as collateral; long-term leases; and sales to philanthropists who might loan pieces back to the city could be used in combination to raise funds for the cash-strapped city, the auction house said.
"The current robust global art market coupled with the fact that the city-owned collection contains some high-quality and valuable works, suggest this could be an effective financing arrangement," Christie's America President Doug Woodham said about the proposed use of the collection as collateral for a line of credit.
The city could raise money from a traveling exhibition of select DIA pieces and might create a "masterpiece trust," selling shares in city-owned works to other museums, Christie's said.
The DIA declined to comment on the appraisal but said in a statement that it "continues to maintain its position that the museum collection is a cultural resource, not a municipal asset." The museum also said that if the collection were threatened, it would be "committed to taking appropriate action to preserve this cultural birthright for future generations.
Bill Nowling, a spokesman for Emergency Manager Kevyn Orr, did not immediately respond to a request for comment.
With Wednesday's report, Christie's has completed two of three phases of appraisal assigned to it when Orr retained the auction house in August: valuing 319 city-owned works on view in the museum's galleries, then appraising pieces in storage estimated to be worth more than $50,000.
The third phase involves lesser works in storage and should be completed later this month.
Christie's sought to appraise the DIA art at fair market value, the price at which a piece would be sold in an appropriate market.
The market for fine art has sizzled this year. Francis Bacon's "Three Studies of Lucian Freud" fetched a record-breaking $142 million in a Christie's sale last month. The Nov. 13 auction in New York brought in $691 million, the highest in art market history, and prompted talk of a bubble.
'DELAYS THE INEVITABLE'
Detroit's options for the DIA could be limited by resistance from surrounding suburbs. In 2012, voters in Detroit and the three suburban counties voted to increase property taxes to help cover the DIA's operating expenses, and suburban officials have threatened to quit sending tax proceeds, which provide about two-thirds of the museum's budget of about $35 million, if DIA art is sold.
But Orr has maintained that the city must value all of the city's assets, including the art. He also has said the city is looking at other assets to monetize, including the Detroit Water and Sewerage Department, Coleman A. Young International Airport or other city-owned parking lots or land.
U.S. Bankruptcy Judge Steven Rhodes in his ruling Tuesday warned that asset sales will not provide a solution to Detroit's long-term financial problems.
"A one-time infusion of cash, whether from an asset sale or borrowing, delays the inevitable," he said.
A group of the city's largest creditors last month asked Rhodes to approve an independent valuation of the DIA's collection. Also last month, a federal judge acting as chief mediator in the bankruptcy case put forward a proposal that a group of non-profit foundations could create a fund to protect the DIA's city-owned art.
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