Appraisers assign a value to a work of art by looking at multiple factors: comparable art, condition of the piece, size, rarity, genre, medium, and provenance to name a few. Their goal is to arrive at a valuation that supports the price an art work will realize if it is put to auction, donated, insured or gifted. But as collectors, we also place value on art based on intangible factors, such as the effect the art has on us emotionally when we view it. Sometimes that is based on the composition of the piece, its form or shape, the colors, the style, the message it seems to convey to us. If we are lucky, we find the piece that we love combines both the quantitative measures of worth with the intangibles that compel us to purchase it to begin with. This is true particularly if the art work appreciates in value over the time it is held by us, or our family. Then we feel satisfied emotionally, plus very proud of ourselves for making such a savvy investment.
Of course, as we all know, art doesn’t not always increase in value over time. Like any other asset, different artists and genres cycle in and out of popularity, based upon cultural trends, global marketplaces, the economic outlook in a particular market, and supply and demand characteristics for that particular artist or style. Even so, most of us stand behind the art that we cherish, unmoved by market conditions, because we have placed an emotional value on that art, and can withstand fluctuations in the market.
The concepts of worth, value and valuation, were driven home to me by the recent auction by Christie’s of Leonardo da Vinci’s masterpiece painting Salvator Mundi for $450 million. Rumors swirled around this transaction as bits of information made its way to the public over a period of weeks. The price tag that the painting was ultimately sold for was way beyond its estimated value before the auction, especially given the uncertain nature of its provenance, including questions around its authenticity and condition. But that didn’t matter to the ultimate buyer, which appears to be the Abu Dhabi Department of Culture and Tourism. It has been reported that its new home will be the Louvre Abu Dhabi. Given the premium paid for the painting, it also didn’t seem to matter that the acquirer probably wouldn’t be able to recoup that price should the work of art make its way to the market again at some point in the future. To this buyer, It was WORTH IT, no matter what the cost, to obtain this rare, newly re-discovered work of art by a master artist.
That’s an extreme example that goes way beyond the normal transaction experienced by most collectors, both in terms of the dollars paid and in terms of complexity of ownership. But it is still a worthy one (so to speak). What a buyer is willing to pay for a work of art can appear to border on the seemingly irrational, emotional, or intangible, such as a spiritual connection or being compelled by its visual beauty or even having an affinity for the works of a particular artist. Such as having the desire to own a heretofore lost masterpiece by one of the most renowned artists in history. It may turn out to be the most savvy decision ever made despite the price paid. Or it may not. But clearly price was not the issue here. As with so many collectors, the motivation to purchase art encompasses a great many things, some of which can be quantified, and some not. At the end of the day, after you’ve done your due diligence, your sense of its intrinsic worth to you, what it means for you to own that piece of art regardless of price, is the key question. Ideally, over time, the decision to buy the artwork will be supported by both the fundamental, quantifiable virtues of the piece, as well as the intangibles that caught your eye and heart to begin with.
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