Detroit Art Collection Valued at $4.6 Billion
Detroit, once one of America’s great manufacturing hubs, has major problems. The city has cut off water access to more than 15,000 of its own residents. City services like policemen, firefighters and even park cleanup workers have been cut drastically. City workers are about to vote on a plan that would save their pensions — by nearly drying them up. Wide swaths of residential land have been abandoned; one can buy a house in Detroit for as little as $500. The city itself declared bankruptcy back in July 2013, citing debts worth as much as $20 million.
Ironically, the city’s one major asset and the one thing that could be the city’s saving grace, could be the one thing Detroit can least afford to lose.
The latest appraisal of the collection at the Detroit Institute of Art (DIA) values the collection at between 2.8 and a whopping 4.6 billion dollars. However, a closer look at the appraisal delivers a whammy that Detroit’s citizens have come to know all too well. If the city attempts to sell its art collection to satisfy its debt, the collection would only bring in as much as $1.8 billion — which probably wouldn’t put much of a dent in Detroit’s massive IOU.
As Artvest Partners’ Michael Plummer, the writer of the appraisal, put it, “an immediate liquidation of the art collection will result in selling the DIA collection at a fraction of its fair market value, passing the returns and the ultimate value to third parties who would be capable of providing a large block of capital for the art on relatively short notice and selling the objects in a less urgent, strategic fashion over a multi-year time frame.” In plain English, a quick sale wouldn’t put much of the proceeds in the city’s pockets; the art’s buyers would gain the most from these transactions because they would then have time to sell to anyone who can pay their price.
How’s this for more irony? As Mlive.com reports, a pledge to help pump money into the city’s pension plan depends on keeping that art in the city. If that wasn’t enough, Plummer warns that selling off the DIA’s art collection could cost the city one of its biggest attractions — the DIA itself.
“Selling the most valuable works in the DIA collection would deprive the museum of its core attraction, drastically reduce attendance and related revenues, drive away potential donors of future gifts and endowments, and in all likelihood, ultimately force the closure of the DIA due to a loss of economic sustainability, resulting in a full liquidation,” he wrote.
Although Detroit’s bankruptcy filing has been winding its way through the courts for a year, the trial that determines the fate of the city’s debt reconstruction plan — which includes the DIA short-sale — won’t begin until August. Stay tuned.