“But right now I don’t want to mislead anyone: Cash is king. Until I have cash in hand, or a firm proposal or a definitive agreement everything is on the table.”
Even selling off the entire city-owned collection may not be enough. Christie’s has determined the fair market value of all the city-owned pieces is between $452 million to $866 million. Detroit’s two employee pension funds are short $3.5 billion, according to Orr.
Christie’s alternatives to selling the art include using it as collateral to secure loans or lines of credit and creating a partnership with another museum where the art would be leased out on a long-term basis.
The auction house also said the city could establish a trust from which U.S. museums “rent” the city-owned art. Minority interests would be sold to individual museums. Revenue from the sale of these shares would be paid to Detroit.
“They all seem like feasible alternatives to an outright sale, assuming of course that there are counterparties willing to engage in the outlined transaction and that the monetary return from the transaction is not so significantly less than the monetary return from an outright sale that all creditors rebel,” said John Monaghan, a partner in Boston’s Holland & Knight law firm.
Bruce Babiarz, a spokesman for Detroit’s Police and Fire Retirement System, said pensioners welcome any support from the private sector. That pension system has about 8,500 members and, along with the General Retirement System, has been in court-ordered mediation sessions with the city.
“The issues of monetizing the artwork of the DIA or selling elements of the collection outright are matters for the emergency manager to decide,” Babiarz said. “The pension funds are creditors of the city of Detroit and the city has not made its obligatory payments to the pension funds for more than a year because of the city’s insolvency.”
Schaap hopes Rosen’s appeal to foundations and others for donations does the trick in offsetting losses and helping retirees.
The DIA’s art and city retirees “are two kind of heart-rending issues,” he added. “Unfortunately they’ve sort of come together as a competition between the two.”
(AP Photo: In a photo from Tuesday, Dec. 10, 2013 at the Detroit Institute of Arts in Detroit, the Detroit Industry Murals by the Diego Rivera are seen in Rivera Court at the DIA.)