Eli Broad’s art model
I had a brief conversation with Eli Broad at the Milken Global Conference, and asked him about my idea that his foundation is well placed to be a home to many different art collections, not just his own.
Broad first explained his art-lending policy: if a museum wants any work of art in his collection, they can have it for as long as they like, so long as they have it on show. But if they take it down for any reason other than on-lending or restoration — if they feel like just putting it in storage for an indefinite amount of time — then Broad will ask for it back.
Would Broad accept a bequest of art from another collector? Yes: “If it’s worked that fit,” he said, “we’d love to have it, lend it, pay for the insurance” and generally add it to the collection. He has a staff doing all that already, and if collectors didn’t feel like reinventing the model themselves, they could outsource it to the Broad Foundation, just like Warren Buffett outsourced his philanthropy to the Gates Foundation.
As for the art market, Broad said that “a big bubble was created, and we’re in the midst of a major correction. It was up 500%, it’s now up 250%, it could fall further.” He seemed to think that the Old Master arbitrage made sense: “Why should Richard Prince sell for more than a great Old Master? Because people don’t want to have on Old Master on their walls.”
I’m sympathetic. But at the same time, Prince is an interesting example to use, since he’s so clearly bubblicious. Broad told me that a Nurse painting which sold for $8 million a year or so ago would be worth $2.5 million now, and I suspect that you can extrapolate that decline pretty much all the way to zero. People might not particularly want to have an Old Master on their walls, but there could easily come a time, in the none too distant future, when absolutely no one has any desire to have a massive joke painting on their walls, either: it would just look dated and embarrassing. Now’s a bad time to sell a Richard Prince, to be sure. But it might well be better, financially speaking, to sell the painting now, when it’s “merely” at parity with an Old Master, rather than to have any hope that it will soar to multiples of Old Master prices ever again. Because that, frankly, seems improbable.