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 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, ...

provenance Provenance (from the French ''provenir'', 'to come from/forth') 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 i ...

verification, market research, curatorial services, art investment advice, and personal shopping services.

Art loans

Art

loan In finance, a loan is the lending of money by one or more individuals, organizations, or other entities to other individuals, organizations, etc. The recipient (i.e., the borrower) incurs a debt and is usually liable to pay interest on that d ...

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 uses ...

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 line of credit takes se ...

). In the difficult economic climate of 2009, some banks previously offering such services discontinued them.

UBS UBS Group AG is a multinational Investment banking, investment bank and financial services company founded and based in Switzerland. Co-headquartered in the cities of Zürich and Basel, it maintains a presence in all major financial centres ...

, 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; Hong Kong and from 2022, Paris. Art Basel works in collaboration with the host city's local institutions to help ...

, 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 ...

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 whe ...

, 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 The Museum of American Finance is the United States's only independent public museum dedicated to preserving, exhibiting and teaching about American finance and financial history. Located in the Financial District in Manhattan, New York City, it ...

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'' (''the Times'', ''NYT'', or the Gray Lady) is a daily newspaper based in New York City with a worldwide readership reported in 2020 to comprise a declining 840,000 paid print subscribers, and a growing 6 million paid ...

'' reported that the art finance firm Art Capital Group sued photographer

Annie Leibovitz Anna-Lou Leibovitz ( ; born October 2, 1949) is an American portrait photographer best known for her engaging portraits, particularly of celebrities, which often feature subjects in intimate settings and poses. Leibovitz's Polaroid photo of Jo ...

in the

New York State Supreme Court The Supreme Court of the State of New York is the trial-level court of general jurisdiction in the New York State Unified Court System. (Its Appellate Division is also the highest intermediate appellate court.) It is vested with unlimited civ ...

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 American multinational corporation with headquarters in New York City. It is one of the world's largest brokers of fine and decorative art, jewellery, and collectibles. It has 80 locations in 40 countries, and ...

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, .

References

{{DEFAULTSORT:Art Finance Art business

Generally

Art loans

High-profile art finance

Criticism

See also

References