When the city of Detroit declared bankruptcy last week, the iconic Detroit Institute of Arts was among the civic institutions whose fate came into jeopardy. Art world insiders feared that masterpieces by such greats as Picasso and Warhol could be raffled off in a fire sale, depriving Motown of a cultural legacy in a short-sighted drive for cash. Others pointed out that the pensions of Detroit's aging retirees could be saved for the price of a few canvasses.
But is the city really going to auction the DIA's collection to raise cash? How would that even work?
Experts consulted by HuffPost say Detroit likely has legal standing to deaccession the museum, as the process is called, despite an opinion to the contrary by the state attorney general. However, other, more creative options exist that could protect the threatened works while still bringing in cash to pay off the city's $18 billion debt.
"The DIA was started back when Detroit was flourishing in the '20s. The city had a lot of extra money, and so some of the art -- including, unfortunately, some of the most important pieces -- were purchased right out of the City of Detroit funds," said James J. White, a professor of bankruptcy law at the University of Michigan in Ann Arbor.
The city's potential claims to the collection -- a bonanza that includes a 16th-century Tintoretto, valued at $100 million in an independent assessment by the Detroit Free Press, and Matisse's "The Window," valued at $150 million -- would likely trump any state-levied protections in federal bankruptcy court, according to White. That means the charitable trust cited by Attorney General Bill Schuette in his recent 22-page opinion wouldn't necessarily keep the DIA's treasures off the auction block.
Deaccessioning is considered a last resort in the art world. While Detroit Emergency Manager Kevyn Orr hasn't officially indicated whether he intends to sell any works, he raised the antennae of art pundits earlier this summer when he asked the museum to supply an inventory of its stock. The 128-year-old institution represents considerable assets: The Free Press assessment found the bulk of the DIA collection to be worth some $3 billion -- or around the same value as the city's pension obligations.
Perhaps due to the coincidence of the figures, some see plundering the DIA as an alternative to gouging pensions -- which Orr notoriously listed as malleable city assets in last week's bankruptcy filing. The white marble museum, located in the city's flourishing Midtown area, is an easy target. "What is it that we're supposed to care about?" asked Tim Worstall in a recent Forbes piece supporting the sale of the collection. "A few pieces of canvas or real lives as they are actually lived?"
But stripping the museum's walls may not actually make economic sense.
"If the whole point is to maximize returns, you wouldn't dump $3 billion worth of art on the market," said Patty Gerstenblith, director of the Center for Art, Museum and Cultural Heritage Law at DePaul University. "It would be against the long-term interest of the City of Detroit, and you probably would not get top dollar.”
Not only would flooding the art market potentially reduce the value of the works for sale, but offloading the art would deprive the city of a vital source of native revenue. In 2011, the state of Michigan earned more than $2 billion in tourist dollars, due purely to cultural institutions, according to a study of government statistics by the nonprofit advocacy group Art Serve Michigan. Businesses are also more likely to set up shop in cities with compelling cultural draws, Gerstenblith points out.
She says a fire sale is far from the only option. One possible alternative is an agreement akin to holding joint custody of the works with another museum. As an example of a working "partial interest" plan, Gerstenblith points to the Fisk University Museum in Tennessee. Last summer, the museum offset some of its parent institutions' crushing debt by selling a 50 percent stake in its 101-piece collection of Renoirs, Picassos and Matisses -- all donated by Georgia O'Keeffe -- to Crystal Bridges, the ambitious private museum founded by Walmart heiress Alice Walton.
"The university was in big financial trouble," Gerstenblith said. "They went through a whole bunch of litigation, and in the end, the works are going to spend half their time in one museum, and half in the other."
Given the loss assumed by saturating the market, "the city might actually get more money" by limiting the nature of the sale in such a way, she added.
Then there is the option of striking a philanthropic deal with a buyer -- a dream scenario that happens to jive with the realities of the market.
"Collectors buying art in China tend to buy Chinese art, and European museums are not doing much purchasing right now," Gerstenblith said. "I think -- I hope -- it's much more likely they'd be purchased by a U.S. museum or a U.S. collector who would lend or donate them back. There are creative options that can avoid an outright sale."
This story appears in Issue 60 of our weekly iPad magazine, Huffington, in the iTunes App store, available Friday, August 2.