As featured in The Wall Street Journal, Money Magazine, and more!

Breaking an Art Sale Record With $104.3 Million for Running Man I

This article was written by in Investing. 8 comments.

This past weekend, a sculpture by Alberto Giacometti broke the previous record for most expensive piece of art sold at auction. An anonymous bidder purchased “L’Homme Qui Marche I” for $104.3 million, up to five times more than the expected price. This may be a good sign for the art world in need of a recovery from a bubble and crash. Only a few months ago, Lehman Brothers was selling off art within the company’s possession at any price possible in order to pay back their creditors.

The winner of the auction is remaining anonymous, and that’s probably a good idea. Many owners of high-priced art are investment banks. Consumers are still angry about taxpayer money used for bailouts and executive bonuses, so from a public relations perspective, no one would want to be seen spending this much money on one piece of art. In addition, storage, security, and insurance for this valuable sculpture is sure to be a significant expense, as well.

However, well-chosen art could provide to be an excellent investment. There are drawbacks. With the expenses mentioned, art as an investment is cash flow negative. Unless you are able to lend the works to a gallery, they will not produce income for the owner. The only chance to come out ahead is to sell the art for a higher price than the purchase price, and this is a very risky proposition. Art prices fluctuate and tastes change.

While small-time investors may be used to transaction fees no larger than $10 a trade, the art market isn’t as modest. Not only does the selling price need to be higher, but exorbitant transaction fees must be factored in. Even if you sell a work of art for 20% more than you paid for it, everyone involved in the sale, from the auction house to the banks that facilitate the purchase will find a way to eat into your profit margin.

From one perspective, $104.3 million seems to be a large amount to spend on a work of art when people are suffering throughout the world. The money could save lives. But art is an essential component of culture, and if this purchase broadens awareness and appreciation, the world may be better off.

Do you feel a work of art is a good choice for spending $104.3 million right now?

Published or updated February 5, 2010.

Email Email Print Print
About the author

Luke Landes is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about Luke Landes and follow him on Twitter. View all articles by .

{ 4 comments… read them below or add one }

avatar 1 Anonymous

Suppose…just suppose you’ve received the following response:

Hey Flexo, don’t dis my art, man. This particular “Running Man” represents my fleeing those European Union Regulators and adds beauty and release to my otherwise dull retirement life.
Bill G.

Would you question his charitable giving? Would you call him a spendthrift for paying all those fees and insurance bills? Just suppose… Of course if the check bounces, that’s another story ;-)

Sorry, I had to do it: After the last couple of stock markets days, humor is in short supply.

Reply to this comment

avatar 2 Luke Landes

Heh, I appreciate the humor. I’m not out to judge. I think any attention given to art is a good thing. The sculptor in this case doesn’t earn any more money when his art is sold for ever-increasing amounts, but I suppode his prestige as an artist increases. And hey, if Bill Gates is the buyer then no one can fault him. His foundation attempts to do much to improve the quality of life for millions around the world, and I’m not talking about Windows 7. He deserves to enjoy some art. But I’m willinjg to bet he’s not the anonymous buyer.

Reply to this comment

avatar 3 Anonymous

Just a note…I was working with a client, who I couldn’t convince, no matter how hard I tried – Art is included in your taxable estate (if you have one) and is subject to tax on any gains.

Do you feel a work of art is a good choice for spending $104.3 million right now?
Without knowing the person/corporation, how can this question be answered. Its like asking with all the suffering should anyone buy a benz at $50K when they could buy a honda for $15K and donate the rest. If everyone did this, I bet it would raise a lot more than $104.3 million PER YEAR.

Reply to this comment

avatar 4 Anonymous

I’m not sure I agree with the comments that the money should have been donated. It’s not like buying art is burning money – you’re not creating wealth, but you’re not destroying it either – you’re just transferring it. Who ever is selling it now has the money and they can donate it to the poor or whatever you guys think is more ethical.

Reply to this comment

Leave a Comment

Note: Use your name or a unique handle, not the name of a website or business. No deep links or business URLs are allowed. Spam, including promotional linking to a company website, will be deleted. By submitting your comment you are agreeing to these terms and conditions.