Art Accidents

Picture this: You're walking through a contemporary art exhibit, admiring the paintings and installations. Then, one particular canvas hanging from the marble wall catches your eye, and you stop to take a photo. Realizing you're too close as you view the image through the lens of your iPhone, you take a small step backwards, right into a stand that just so happens to be holding a $42,000 sculpture.

The bad news: You just destroyed an item worth tens of thousands of dollars.

The good news (relatively speaking, based on your situation): You're not the first person to find yourself in this predicament.

At the recent Art Wynwood fair in Miami, the heel of a collector inadvertently bumped into a pedestal holding a Jeff Koons sculpture titled Balloon Dog (Blue), littering the floor with shattered fragments of ceramic.

While that particular Koons sculpture carries an estimate of $42,000, the fair market value pales in comparison to other works that have been infamously destroyed.

Famous 'Accidents'

In 2006, hedge fund mogul and New York Mets owner Steve Cohen had agreed to purchase Pablo Picasso's Le Rêve from Steve Wynn of Las Vegas casino fame for $139 million. Before the sale was settled though, Wynn accidentally put his elbow through the painting - which led to a lengthy restoration process that concluded with Cohen finally purchasing it for $155 million in 2013. More on Mr. Wynn in a bit...

Speaking of expensive art accidents involving legendary figures, a 12-year-old tripped and tumbled into a $1.5 million painting from Paolo Porpora while touring a 2015 Leonardo da Vinci exhibit in Taiwan. The painting was covered by insurance and ultimately restored, but the unfortunate event raised questions surrounding the works' authenticity. In the aftermath of the costly trip, doubts emerged as experts believed the Porpora painting was actually a work by Mario Nuzzi, representing a difference that would drop the valuation below $50,000.

Careless and clumsy mistakes can be expected of casual collectors and museumgoers, but what happens when it's the auction house that damages a work? In 2010, art handlers at Sotheby's made a true Freudian slip when they left a six-figure painting by Lucian Freud inside a crate destined for an incinerator. And remember the aforementioned Steve Wynn? In 2018, Christie's was scheduled to sell an original Picasso titled Le Marin from Wynn's estate. On the eve of the event, Wynn withdrew the canvas, which was valued at $70 million, citing that it had been damaged while in possession of Christie's. After a flurry of lawsuits and legal disputes, it was determined that a company hired by Christie's to paint the auction galleries had punctured the work when a paint roller fell on top of it.

Closing

Accidents happen...and they present a unique risk associated with physical alternative asset investing. No, this isn't an ad campaign for an appraisal or insurance business, and before the DeFi/NFT crowd starts celebrating, we could point out the countless hacks and scams that have emptied wallets of all your favorite JPEG characters. The works of blue-chip artists worthy of investment consideration tend to find their way into the public sphere, whether at auction or gallery, and while catastrophes are rare, Murphy's Law enters the equation. The good news is there are entire industries built around properly valuing, protecting, and restoring damaged investment. And for a final optimistic point of view, those Balloon Dogs from Jeff Koons once had a population of 799. All it took to increase their rarity was a single swift, yet accidental, kick of a heel.

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