Art & Finance Newsletter #4
Before we get to the newsletter I'd like to thank the Association of Family Offices in Asia (AFO) for inviting me to speak on a panel at the 3rd Global Asset Allocation Focus conference about family office co-investment in alternative assets. Great crowd of family office managers, private bankers and independent operators from around Mainland China.
As expected, many exciting things happened in the art market over the past two weeks. Why is that? I'll tell you, the art market like most markets is seasonal. Broadly speaking the art market has two peaks throughout the year. Spring/fall are extremely busy times and summer/winter tend to be slower.
Learning something new every newsletter I hope!
On to the art market...
Introducing Bill H.R. 5886
As mentioned in the previous newsletter changes in the art business regulations are on the horizon in the United States. The bill entitled the “H.R. 5886 Illicit Art and Antiquities Trafficking Protection Act,” was introduced by Representative Luke Messer (R-IN) last week.
A key component of money laundering and banking regulation is the obligation to report suspicious activities. For example, cash transactions greater than USD 10,000 must be reported to the Treasury department. This bill proposes to add “dealers in art or antiquities” to the list of persons obliged to follow those reporting requirements.
The slow moving gears of government give us time to prepare for such a regulation change and I will keep you updated as this bill proceeds through due process.
M&A in the Art Market
The privately owned British auction house Bonhams, a 225-year old auction house, is set to go on the market. Bonhams is controlled by chairman Robert Brooks, a former motor racing driver, and the Dutch Louwmans family, one of the largest automotive distributors in Europe.
Bonams has undergone a series of mergers, acquisitions and takeovers and now includes nine salesrooms in London, New York, Hong Kong, Edinburgh and Sydney among other places. In 2013, the auction house's London headquarters underwent a £30m revamp.
The financial advisory group NM Rothschild has reportedly been drafted in to oversee the possible sale.
The Art Newspaper - Is Bonhams for sale?
Why you should ALWAYS insure art
In an unfortunate (and preventable) accident, a paint roller attached to an extension pole used by a contractor was leaning against a wall before gravity took over and it fell, puncturing the lower right of a painting.
The painting - a self-portrait by Pablo Picasso titled 'Le Marin', owned by casino magnate Steve Wynn. Mr. Wynn had consigned the painting to Christies NYC for the spring Modern & Contemporary sale with a high estimate of USD 70 million.
I could discuss what happened after the accident in regards to the sale at Christies...but I'll save that for another newsletter.
Instead I want to focus on one simple point: You or your clients should always insure artworks...no if's, and's or but's.
Bloomberg - Steven Wynn's Picasso Damaged...Again
In the recent weeks there has been a lot of discussion in the art market media regarding the use of third-party guarantees at auctions. I decided not to touch on the topic in this edition...but rest assured we will dive headfirst into the hotly debated practice in the upcoming edition.
Don't forget to tell your associates and colleagues about this newsletter!
Until next time,
Blake