City Research Online

Abstract

Given the growing understanding in cultural economics of artists as entrepreneurs, we consider whether art collectors can be modeled as fellow risk-takers, that is, analogous to venture-stage investors. Employing a unique dataset of the collection of twentieth-century United States-based collectors Burton and Emily Hall Tremaine, we build a conceptual framework of criteria for collectors as venture-stage investors. We consider risk (how early in an artist’s career they are collecting), reputation (collectors’ museum-related strategy), and rebalancing (donation and sales). Regarding risk, we find that 69% of works in our study were purchased within a year of when the works were made indicating venture-stage risk-taking, though with notably longer holding periods than within a traditional venture “exit” strategy. Regarding reputation, we consider the market impact of the 1984 Twentieth Century Masters show of the Tremaine collection and find the value of the artworks rose fivefold from the museum exhibition to the auction four years later. We build an index of artists whose works were in the 1988 and 1991 Tremaine auctions and also find strong indications of the importance of the timing of those sales to the returns achieved. Regarding rebalancing, we look at museum donation strategy as part of investment analysis, and find substantially different patterns of annualized ROI and holding period for auctioned and donated works. This study contributes to our understanding of art collectors as risk-takers and to the portfolio management of art collections.

Publication Type:	Article
Additional Information:	This version of the article has been accepted for publication, after peer review (when applicable) and is subject to Springer Nature’s AM terms of use, but is not the Version of Record and does not reflect post-acceptance improvements, or any corrections. The Version of Record is available online at: https://doi.org/10.1007/s10824-024-09528-8
Publisher Keywords:	Art investment, Artists, Museums, Venture capital, Venture-stage investing, Portfolio management, Tax-deductible donation
Subjects:	H Social Sciences > HB Economic Theory H Social Sciences > HG Finance N Fine Arts
Departments:	Bayes Business School Bayes Business School > Finance
SWORD Depositor:	Symplectic Administrator

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