Detroit sell-off likely?
December 4 2013
Video: WXYZ
It's not looking good for Detroit. Yesterday a US judge ruled that the city is eligible for bankruptcy, which means that asset sales can go ahead. One of the city's most valluable assets is its art collection in the DIA. Until now, there hasn't been a blatant pitch to sell the works, only a 'discrete' valuation by Christie's (at a cost of $200,000). The judge made it clear that in his opinion it wouldn't be wise to sell the art, but that was just his philosophical view, not a ruling. In fact, the man in charge of the city's bankruptcy proceedings, Kevin Orr, made it clear yesterday that the art collection is very much 'on the table'. The total value of the saleable works so far is thought to be about $2 billion, which is less than some believed.
Many of the city's creditors have filed motions to allow them to 'monetise' the DIA collection, and also get a second opinion on the valuation, which Orr has ruled out (oddly). There will be much discussion ahead of whether the DIA should sell its art, and obviously one hopes that they don't. But this will come down to a matter of law, and the fact is that the city, which owes money and will have to sell assets to pay it back, owns much of the DIA's easily disposable art collection. Roll up folks...
Update - a reader writes:
Clearly the need in Detroit is to pay unfunded pensions which involve a stream of payments over decades rather than an immediate capital payment.
Therefore it makes more sense to rent the art on long leases to museums particularly in newly funded ones rather than sell the stuff. Think of London ground leases which include an initial capital payment and an annual rental.
Qatar, the Getty, and Crystal Bridges could all help and simultaneously fill their museums without inflating the art market at auction.
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