James Tarmy’s epic story of one painting and the Contemporary art market in Businessweek reveals some very interesting details about art as an asset for those with 10- and 11-figure net worths. (Worth noting, David Geffen, above, was significant seller of art even before the dramatic run up in prices during this last decade):
At these levels, art has become a significant slice of the net worth of some of the planet’s richest inhabitants, a portfolio-diversifying store of value for anyone who already has enough homes, bonds, stocks, or airplanes. Financier Ronald Perelman’s fortune includes $3 billion in art—more than a fifth of his $14.8 billion total—according to the Bloomberg Billionaires Index. Artwork valued at $2.3 billion is the single biggest chunk of music mogul David Geffen’s total $6.6 billion, and Los Angeles philanthropist Eli Broad’s $7 billion includes $2.2 billion of art. The Bloomberg index counts $1 billion of art each in the fortunes of hedge fund manager Steven Cohen, publishing baron Si Newhouse, and Pinault, who owns Christie’s.
Of course, holding art doesn’t require the owner to be illiquid as these details about David Ganek reveal:
In the same way a homeowner can take out a home-equity loan, a collector can borrow against a painting, and in 2006,Apocalypse Now became collateral with Bank of America, and then, a year later, with JPMorgan. According to loan documents, the painting was pledged to JPMorgan for almost the entire time Ganek and his wife owned it.
While the collateral documents filed with the state of New York don’t give loan amounts, they detail the breadth of the Ganeks’ collecting and borrowing. From 2007 through 2014 they list loans against 26 works by contemporary artists: paintings by Richard Prince, Cy Twombly, and Takashi Murakami; sculptures by Damien Hirst, Jeff Koons, and Maurizio Cattelan. A filing dated April 1, 2010, shows an additional 18 Ganek pieces—including an untitled 1997 Wool and a Koons comprising two Spalding basketballs floating in a glass tank—became collateral with Sotheby’s Financial Services.