Asher Edelman Plans To Guarantee Art Headed To Auction

by Art Fag City on January 29, 2010 · 6 comments Newswire

POST BY PADDY JOHNSON

Picture This: Art Prices Fall, CNN, Video screen capture: AFC

Anyone else remember last year’s  CNN’s interview with Asher Edelman about the recession? You know, the one where Edelman includes himself amongst the art dealers who might go out of business? Well, according to Kelly Crow at The Wall Street Journal, that probably won’t happen within the next year. The unconventional dealer has raised over 12 million in venture capital to fund his latest business scheme — guaranteeing the sale of art headed to auction — and is working to raise more. The practice is, essentially, betting. Here’s how it works:

When a seller consigns a work to auction, Mr. Edelman’s firm, Art Assure, will pledge to buy the piece if it doesn’t sell for an agreed-upon minimum price. In exchange, the seller will pay the firm a fee of about 5% to 10% of the work’s guaranteed price.

The concern here is that Edelman won’t disclose the art he’s backing and will bid it up at auction. It’s unclear how the auction houses will enforce this, and though Edelman promises he won’t bid on these works, the dealer doesn’t have a history of actually doing so. As Crow points out, Edelman was charged with insider trading in 1987 and only one year later paid out around $484,000 to the Securities and Exchange Commission, when they claimed he hadn’t divulged his stake in company called Datapoint. In both cases he admitted no wrong doing.

  • http://www.matthewlangley.com matthew langley

    This makes me a little queasy.

  • http://www.matthewlangley.com matthew langley

    This makes me a little queasy.

  • Adam

    What Edelman is doing is basically what major collectors have done on behalf of auction houses for years. Putting guarantees on works – if don’t sell, they get them at a discount – if they do sell, they get a percentage of the profit over a certain amount.

    It’s betting yes, but Edelman is smart and is basically incorporating the process in which Auction houses cover their asses. If you have enough venture capital, its a brilliant scam because more often that not these pieces are going to sell.

  • Adam

    What Edelman is doing is basically what major collectors have done on behalf of auction houses for years. Putting guarantees on works – if don’t sell, they get them at a discount – if they do sell, they get a percentage of the profit over a certain amount.

    It’s betting yes, but Edelman is smart and is basically incorporating the process in which Auction houses cover their asses. If you have enough venture capital, its a brilliant scam because more often that not these pieces are going to sell.

  • http://www.jennycraig.com m

    option traders sometimes do something similar to cover both ends… buying puts and calls and hope the move is great enough to offset both costs and leave profit… which makes sense since if he did “options conversions tables as a kid.” I can’t wait until I can buy art on margin through my tiny ameritrade account.

  • http://www.jennycraig.com m

    option traders sometimes do something similar to cover both ends… buying puts and calls and hope the move is great enough to offset both costs and leave profit… which makes sense since if he did “options conversions tables as a kid.” I can’t wait until I can buy art on margin through my tiny ameritrade account.

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