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.