Sale of art would be 'devastating,' DIA official says
Detroit — A liquidation of the treasured Detroit Institute of Arts collection would be a "devastating blow" to the museum's reputation, donor base and future funding, a top-ranking DIA officer said Thursday.
Annmarie Erickson provided an impassioned account during her testimony in the city's historic bankruptcy case of the far-reaching impact of dismantling the nonprofit museum and its masterpieces.
Erickson, the DIA's executive vice president and chief operating officer, noted Oakland and Macomb counties have threatened that a tri-county millage that supplies the majority of the DIA's operational funding "would be stopped" if art is sold. The move would also have a "tremendously chilling" affect on its donor base.
"Without the millage or an infusion of a huge amount of cash, the museum could not survive," Erickson said, adding a sale would be a "devastating blow." "You can't untangle the museum and the collection, they are one in the same."
The museum's monetary and cultural value became the focus of testimony Thursday in Detroit's historic bankruptcy as attorneys and witnesses wrangled over the many hurdles the city would face if it tries to sell the artwork to satisfy its creditors.
The art assets have been the center of a contentious debate between the city creditors in the bankruptcy case who have argued its assets should be considered fair game for sale at a time when the city is asking others to take cuts. The city's debt-cutting plan outlines $816 million in funding pledged as part of a "grand bargain" from a coalition of foundations, the state and museum to bolster Detroit pensions and preserve the art collection.
U.S. Bankruptcy Judge Steven Rhodes had a series of questions of his own about the DIA's value to school children, adults, educators, the city and region.
Erickson told the judge that museum improves "cultural competency," is an "engaging" and a "very social place."
For the region, she went on, the museum has an even more substantial impact.
"We are part of the fabric of this neighborhood," she said, noting that without it, the thriving Midtown would be "much poorer."
Erickson also pointed to the symbolism attached to the tri-county millage approved by voters in 2012 that accounts for two-thirds of the DIA's annual operating budget.
"The passing of the millage was the first real tangible statement about regionalism," she told Rhodes. "We can and will continue that."
Earlier Thursday, Michael Plummer of New York's Artvest Partners kicked off the day's testimony by detailing methods used by his firm to put a value on the 66,000-piece collection.
Artvest concluded that the DIA works could be worth as much as $4.6 billion, but Plummer cautioned that only about 16 percent of its pieces would currently perform well in the art market.
Plummer's report showed the difficulties in raising money for the cash-poor city by hocking art from the DIA.
One problem is that piling a huge amount of art on the market would automatically depress prices. Another is that the make-up of the DIA's collection is heavily focused on genres of art that are now selling poorly, such as pre-1950s American artwork.
In addition, a large amount of the art —as much as 25 percent — would likely go unsold, since few art auctions sell out.
"It's just the nature of the beast," he testified. "Every item does not find a buyer in an auction."
Another factor working is the bias that many art buyers and collectors would hold against a forced sale of museum holdings to satisfy creditors, he said.
If the collection was sold to satisfy debt, the process wouldn't be held in a "celebratory fashion," he said.
"It would have to be sold in a discreet way and the aura around it would not be positive, it would be negative," he said.
Plummer also dismissed the idea for an immediate liquidation to a single buyer or a consortium of buyersbecause it would result in a significant discount — potentially 50 percent.
A liquidation would also be a lengthy process, potentially taking place over six to eight years, with the first few devoted to forming sales and marketing plans.
Most works would likely go to private buyers, since museum acquisition budgets are relatively small. That wouldresult in the removal the works from public view.
The museum, in turn, would experience a drop in attendance, "more or less fall off the map" in terms of international visitors and "most likely lose its donor base."
"Once you sell off art that has been gifted, donors stop giving to museums," he said. "They feel the trust has been broken…you end up with a much diminished institution."
On cross-examination, Ed Soto, an attorney for bond insurer Financial Guaranty Insurance Co., challenged Plummer's credentials and methodology.