Museum of art that exhibits appetite for risk and innovation

A recent headline on Artnet proclaimed: “An unexpected player has begun providing auction guarantees.” The specialist art and auctions website highlighted the “unprecedented” decision by the Toledo Museum of Art (TMA) to purchase, in effect, call options on works of art coming up for sale at Sotheby’s and Christie’s. The nature of the transactions was straightforward: TMA was interested in buying two artworks that supported its collecting strategy and whose estimates were lower than expected. The museum offered a form of insurance – a minimum bid corresponding to what it believed was a fair price. In return, it received a share of the upside if the artwork sold above the floor price. TMA would either acquire the work for an affordable sum or get its money back. As it happens, the museum earned $500,000 profit.

Even readers not versed in finance will see that underwriting auction guarantees for artworks in which a museum has a legitimate interest and pricing expertise…