Art Capital’s Leibovitz loan: Numbers emerge

By Felix Salmon
August 18, 2009
story on the relationship between Goldman Sachs and Annie Leibovitz today which adds very little to (and fails to credit the reporting of) the New York magazine story by Andrew Goldman. Given that Goldman got there first and got much more detail, it would have been nice to see Bloomberg give him some credit here.


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Bloomberg’s Katya Kazakina has a story on the relationship between Goldman Sachs and Annie Leibovitz today which adds very little to (and fails to credit the reporting of) the New York magazine story by Andrew Goldman. Given that Goldman got there first and got much more detail, it would have been nice to see Bloomberg give him some credit here.

Still, Bloomberg has succeeded where both Goldman and Gawker’s John Cook had failed, and got actual numbers out of Art Capital spokesman Montieth Illingworth as regards the commission Leibovitz has to pay them whenever any of her work is sold:

If Leibovitz doesn’t default, Art Capital would receive a 10 percent commission on copyright and real estate sales, Illingworth said. If she does, the commission would increase to 25 percent of the sale of the collateral (the higher rate includes 11 percent to 13 percent in legal, real estate and other fees, Illingworth said.)

“We have interest in the loan agreement and we have interest in the sales agreement,” Illingworth said, referring to the contracts related to the $24 million loan. “They would have to make an offer to buy out both.”

“They”, here, is Goldman Sachs, which has expressed an interest in buying the Leibovitz lien. And this story seems to confirm what I said yesterday, which is that Art Capital is valuing its loan at much more than $24 million: there’s the pure debt part of the deal, and then there’s the sales agreement on top, which is worth millions more to Art Capital. Art Capital values Leibovitz’s copyright at $50 million: even if they sold it for only $32 million after September 8, that would give them an extra $8 million in commission income, over and above everything which Leibovitz owes them on the loan. And the loan alone carries a 12% interest rate.

So my guess is that if Goldman wanted to buy Art Capital out of this deal, it would have to pay the best part of $30 million to do so. And then they would be owed $30 million by Annie Leibovitz, a woman whose decades-long history of repaying debts is uniformly atrocious. Somehow, with the best will in the world, I don’t see this deal happening. And the one thing you can be sure of, when it comes to Leibovitz and Art Capital, is that there’s no good will at all. Which means that Leibovitz is probably stuck with Art Capital for the foreseeable future, and Goldman Sachs is not going to be able to work out a white-knight deal.

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Comments
2 comments so far

The missing part I’d love to know is how all this publicity effects Art Capitals business model plans. Obviously this stuff isn’t exactly helping their reputation among artists, which potential damages their whole business model. Seems like there is a case to be made that Art Capital stands a lot to gain by smoothing things over with Leibovitz, but clearly they’ve decided it’s not the route to go. Could be that as essentially a loan shark, they don’t care cause they expect their customers to be too hard up to care about their bad rep. Or perhaps they don’t care about the long term, and figure that with Leibovitz they’ve reeled in their big sucker and now they are going to milk it for all its worth. Be interesting to see how it plays out…

I was recently telling someone that the real sign of India’s “arrival” would be that currency exchange kiosks abroad would start accepting rupees That day is still quite far, but a rupee-denominated loan is the kind of thing I would assume the first steps to be like.

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