Fire Sale at Detroit City Hall
The city of Detroit struggles to escape bankruptcy, while sitting on an art collection worth up to a billion dollars.
The Detroit institute of the Arts houses over 60,000 works of art, of which some 2,800 of these pieces were purchased using city funds in the 1920’s, and are now estimated by Christie’s auction house to be worth from ½ to 1 billion dollars, were they to be sold. The institute is unique in that it is wholly owned by the city, and thus, vulnerable to the ongoing claims from city pensions, outside creditors, etc.. that first drove the city into bankruptcy.
Were these works to be sold, it would be unprecedented. At the end of the twentieth century, some cities realized that they could utilize both their tangible property to generate funds, such as landmarks and public buildings, and also that they owned valuable intellectual property that could be monetized as well. The city of New York, for example, has struck exclusive sponsorship and marketing agreements with companies for beverage pouring rights and signage on city vehicles, to licensing products that bear the “ I (Heart) NY” logo. The city of Hollywood, CA has undertaken similar licensing programs featuring the famous “Hollywood” sign.
But, a sale of a city’s fine art collection, one that includes paintings by Van Gogh, Matisse, and Rembrandt among others, has not occurred in this country to this level. However, options such as using the artwork as collateral for loans or renting part of the collection to wealthy donors, don’t seem capable of providing near enough funds to serve as a viable alternative.
The city’s emergency manager, the only person who can order such a sale as neither the judge nor the creditors can force such a move in bankruptcy proceedings, is faced with the decision to remove such a unique asset that can never be recovered, or fund such a ready source of capital in the bankrupt city to cover upcoming pension payments and ongoing city obligations. A rock and a hard place to be sure.