Art Market Monitor

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Michigan Governor Snyder Offers $350m to Save DIA Art

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Detail of Vincent van Gogh Self Portrait at DIA

Michigan’s governor, Rick Snyder, unveiled his plan to contribute $350m in state funds to Detroit’s pension funds to help save DIA’s art. The funds would overmatch $330m pledged from foundations to resolve the city ownership of some of DIA’s most famous works:

“This is a settlement; this is not a bailout,” Snyder said at a news conference.

The governor said the money would come from the state’s tobacco settlement funds and would be conditional on “independent fiduciary management” of Detroit pension funds. It also would have to be part of a settlement of the bankruptcy that ended court cases, he said.

And he said that by pledging it as part of an overall settlement, the state would head off what could be years of costly litigation.

“Let’s put this behind us so we don’t have ongoing lawsuits … so we all can focus on growing Detroit,” Snyder said.

The state money “will not make retirees whole but it will significantly reduce the burden they would otherwise face,” Snyder said, flanked by GOP legislative leaders.

Snyder: State would pledge $350M to save Detroit pensions, DIA artwork (Detroit Free Press)

Rhodes to Creditors: Get Off the Art!

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The Detroit Institute of Arts

Most of the hysteria surrounding the question of what role Detroit’s art plays in the city’s bankruptcy fails to take into account the fact that there are indeed grown-ups in charge of the process as was demonstrated today when Judge Rhodes denied creditors’ petition for a second appraisal of the DIA’s value. Here’s the Detroit Free Press recounting the exchange:

“Whether any of us like it, the art is in play,” said Vince Marriott, an attorney for several European banks.

Rhodes interjected: “I have to say that that is not altogether clear to me at all. It depends on what you mean by ‘in play.’”

Rhodes also said this afternoon that he he’s not sure DIA artwork can be sold to help resolve the city’s Chapter 9 bankruptcy.

The judge reiterated his previous statements that one-time fixes won’t fix the city’s finances. And he called Michigan Attorney General Bill Schuette’s opinion that the DIA property can’t be sold a “serious argument” that he would consider.

The politics of Detroit’s bankruptcy isn’t pretty but it is playing out with some measured sense of purpose. At the end, one hopes the city will possess its historical patrimony while still honoring its commitment to employees.

Rhodes rejects creditors’ request for independent valuation of DIA art (Detroit Free Press)

Critics Complain but Saving Detroit’s Art Has Been High Priority in Bankruptcy Debate

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Detroit_Institute_of_Arts_-_Rivera_Court_detail

We’re told that art needs to be more engaged with politics and yet our most sophisticated art critics seem to have no ear for politics, no ability to see their own victory. The situation in Detroit is a perfect example. Over the last several months we’ve heard repeated wails of outrage that Detroit’s art should become mixed up in the city’s bankruptcy. This latest example comes from the New Republic’s Jed Perl:

The hue and cry about the DIA, loud as it has been, is not loud enough. Detroit would be a much smaller place without its Bruegel—or its great Poussin or its great Matisse. If the future of the auto industry is a matter of national concern, then why isn’t the threat to the DIA regarded as a national scandal? For years our elected officials have been backing away from any serious engagement with the arts.

Michigan Governor Snyder is an elected official and as soon as a Federal Judge ruled Detroit’s bankruptcy could go through, thus putting DIA’s art in real jeopardy, Governor Snyder started floating the potential for a grand bargain. County officials—also elected—raised operating funds for DIA by taxing their residents. Both acts are “serious engagement with the arts.”

Detroit’s art should not be sold. But politics, as they say, isn’t beanbag. The process by which that city, state and region came to recognize the value of its art collection was not pretty nor was it dignified. But it did unequivocally make preserving DIA a paramount issue. That’s a victory for the arts and a victory for the people. Shouldn’t an art critic celebrate that?

Detroit Art Institute’s Masterworks Should Be Saved | New Republic.

Nine Foundations Pledge $330m to Advance Detroit Grand Bargain to Save DIA and Fill Pension Gap

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The Detroit Institute of Arts

The Detroit Free Press reports that the mediator has gotten a commitment from nine foundations to pay $330 million as part of a larger deal to protect DIA’s art and help cover the city’s $3.5bn pension shortfall:

U.S. Chief District Judge Gerald Rosen’s statement made clear that the pledges do not by themselves mean that pensions and DIA art are now beyond the reach of creditors. Rather, the commitments are intended and expected to play a part in what Rosen’s statement called “an overall balanced settlement of disputes in the bankruptcy.”

In other words, there is no deal until all the various claims in the broader bankruptcy case have been settled. And the foundations’ support is contingent upon all their money going to support the twin goals of helping fill the unfunded gap in Detroit’s municipal pension obligations and protecting the DIA art collection from possible sale to pay the city’s creditors.

$330 million pledged to save pensions, DIA artwork from Detroit bankruptcy (Detroit Free Press)

Foundations Moving Toward DIA Deal, Possibly Today

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The Detroit Institute of Arts

The Detroit Free Press reports that a deal to take DIA’s art off the table in Detroit’s bankruptcy is imminent and could be announced as early as today:

One source, who spoke on the condition of anonymity, said talks are at a delicate stage and there are “a number of moving parts,” including what role the state would play in any deal.

But there’s a 50/50 chance the “grand bargain” will be announced today, the source said, in part because of concerns about inaccurate speculation.

The foundations, which range from nationals such as Ford and Kellogg to local institutions such as Skillman and the Community Foundation for Southeast Michigan, were preparing Sunday to make a joint statement that reflects their enthusiasm at being involved in efforts to help the city get back on its feet.

Darren Walker, CEO of the Ford Foundation in New York, has reportedly taken a lead role in structuring the deal and bringing other foundations into it.

Deal could come as early as today to protect DIA art, Detroit pensioners (Detroit Free Press)

Detroit’s Top Ten Works as Christie’s Appraised Them

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Rembrandt, The Visitation

Christie’s values the top ten works held by DIA at $323 – $ 635m

1.) Pieter Bruegel the Elder “The Wedding Dance” $100 – $200m

2.) Vincent van Gogh“Self Portrait with Straw Hat” $80 – $150m

3.) Rembrandt “The Visitation” $50 – $90m

4.) Henri Matisse “Le Gueridon” $40 – $80m

5.) Edgar Degas “Danseuses au foyer (La Contrebasse)” $20 – $40m

6.) Claude Monet “Gladioli” $12 – $20m

7.) Michelangelo  “Scheme for the decoration of the ceiling of the Sistine Chapel (recto and verso)” $12 – $20m

8.) Neri di Bicci “The Palla Altarpiece: Tobias and Three Archangels” $8 – $15m

9.) Frans Hals  “Portrait of Hendrik Swalmius” $6 – $10m

10.) Giovanni Bellini and Workshop “Madonna and Child” $4 – $10m

‘You Can’t Pretend the Art Doesn’t Have Value’

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The Detroit Institute of Arts

The Detroit Free Press reviews some of the ideas that have been batted around concerning the Detroit Institute for Arts’s collection and its ability to provide value to the city’s creditors. At the end of the piece, once most of the fancy ideas have been shown to be impractical, we return to the three-way battle between the city, surrounding counties and state.

Who will pay up to take the art paid for by the city and donate it to DIA as it should have been done a long time ago? And what will that cost?

How much money does Orr want? The emergency manager’s deputies have repeatedly told DIA leaders that he needs $400 million-$500 million from them to create a revenue stream for perhaps 20 years. But Orr spokesman Bill Nowling said last week that Orr had not settled on a specific number or strategy.

But make no mistake: Orr believes that forging a settlement with creditors and gaining Judge Steven Rhodes’ approval for a restructuring plan hinges on monetizing the art in some way, said Nowling. “We can’t start creating most-favored nation status for different assets,” he said.

Neither the judge nor creditors can force the sale of any asset in municipal bankruptcy, but Orr is under pressure from creditors, Wall Street bankers and union pensioners, among others, to put the art on the table. Rhodes could deny any plan that doesn’t include some contribution from the art, if he thinks the city is hiding assets.

“You can’t pretend the art doesn’t have value,” said Craig Barbarosh, a municipal bankruptcy expert with Katten Muchin Rosenman in Costa Mesa, Calif.

The art of the DIA deal: Orr must get cash out of collection without selling it (Detroit Free Press)

Detroit Institute for Art Makes Move to Engage State to Acquire Its Art

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The Detroit Institute of Arts

The New York Times’s Randy Kennedy finally provides an inkling of the real story beneath the struggle over the Detroit Institute of Arts’s collection. To recap, the city bought much of the art contained within the museum. The region is eager to keep a world class museum. The surrounding counties have responded with alacrity by footing the museum’s operating costs with local taxes.

The only remaining issue has been how to help the City of Detroit realize the gain in value from the art it purchased without actually selling the art. This, not a philistine distaste for art as so many critics have leapt to assume, has been the real issue. Although it is never ideal for a museum’s collection to be treated as financial asset, the situation was created long ago.

Now the Detroit Institute of Arts is putting the issue squarely on the table by appealing to the state of Michigan directly to save the museum’s art. If the proposal moves further, it will be a political victory for Emergency Manager Kevyn Orr who has been playing some very high level chess:

The new proposal would ask the state to begin providing substantial funding to the museum that would allow the museum to provide money to the city that might otherwise be found only by selling art. At a business luncheon on Thursday in Detroit, Mr. Orr said that the museum might consider long-term leases of art works as another way of avoiding any sale. “I’m deferring to them to save themselves,” he told business leaders, referring to the institute.

The museum’s proposal for state help was described as a political long shot by many leaders interviewed by the Detroit Free Press, who mentioned the competing demands for state money and the sensitivities over a city institution changing hands. “At first blush it sounds like it satisfies Kevyn Orr’s bottom line,” said Bert Johnson, a Democratic state senator, “but the continued divestiture of Detroit’s assets itself is implausible for me.”

Detroit Institute of Arts Mulls Transfer to State (Artsbeat/NYTimes)

Detroit’s Suburbs to City: We Want Your Art But We Won’t Help You

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The Detroit Institute of Arts

A brief story in the Detroit News acknowledging the return of appraisers from Christie’s to value artwork purchased by the City of Detroit for the Emergency Manager contains an unambiguous quote from nearby Macomb County’s leadership that makes clear what’s at stake. The debate is not, as so many have tried to make it out to be, about  whether art is important to Detroit’s civic culture or its future.

The question is simply who pays for the art and whether the surrounding counties want to have access to Detroit’s art without having to help pay for it. Macomb County’s executive. Mark A. Hackel, went out of his way to reassure his constituents that the additional taxes residents were paying to fund DIA’s operating costs would cease if any of the art the City had bought is sold.

“The intent of Macomb County voters was to support the Detroit Institute of Arts and its assets,” said Macomb assistant county executive Melissa Roy, “not to contribute to the financial solvency of Detroit.”

The cancellation clause was written into the language of the contract between the Macomb County Arts Authority and the DIA after the millage passed. The authority is the liaison between the museum and the county.

After the Oakland County Art Institute Authority unanimously passed a resolution Aug. 20 that would invalidate their millage if any art is sold, Hackel wanted to assure Macomb residents that safeguards were already in place, Roy said.

Christie’s returns to Detroit to plan appraisal of DIA art (Detroit News)

Detroit’s Emergency Manager’s Plan for DIA Explained … 3 Months Ago

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Detroit's Bill Nowling

A reader pointed to this video from May of 2013 where Bill Nowling references the Emergency Manager’s mysterious plan to sell “covenants” on the art in DIA that would allow the art to stay in place while earning the City money. Combined with Nowling’s hints that Christie’s is working on a plan that will allow the DIA’s art to earn money without being sold, there may be more twists coming in this tale.

Emergency Manager Kevyn Orr wants appraisal of collection at Detroit Institute of Arts

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