Financial Considerations for Collectors of Art, Antiques and the Esoterica
View the original article here
NEW YORK TIMES, November 28, 2015--
Looking back on some of the most popular antiques he has sold, Bill Rau, chief executive of M.S. Rau Antiques in New Orleans, said two truly stood out for both their value and scarcity.
The first was an Enigma machine, which was used by the British to decode German military messages during World War II.
“They’re exceptionally rare,” Mr. Rau, a third-generation antiques dealer, said. “Up to 1990 they didn’t exist outside of intelligence circles. Forty-five years after the war, they were declassified. As recently as two years ago, we sold them for $100,000.”
At a Bonhams auction in March, one sold for $269,000. The auction house sold another one in October for $365,000. Mr. Rau said he has bought and sold five Enigma machines over the years, and their rarity has translated into healthy appreciations in value. He had an Enigma machine for sale at the New York Art, Antique & Jewelry Show, which ended on Tuesday, priced at $198,500.
Yet in the annals of memorable, rare and expensive antiques, none stand out as much as the so-called sex chair that Prince Edward had fabricated in the 1880s — while he was waiting to become King Edward VII — to support his weight during his visits to a bordello in France.
“We sold it 14 years ago, and people still come in and talk about it,” Mr. Rau said. “It was one of those things that everyone who was past a certain age was intrigued by it. Even the most conservative people said, ‘Wow.’”
He wouldn’t disclose the price a collector paid for it, but said it was an object that commands whatever someone will pay. “You could ask $100,000, $1 million or $5 million, and no one could tell you that you’re crazy,” he said.
Price is just one of the variables that collectors of art and antiques need to bear in mind as the auction and private-sale markets this fall have been hot and cold. Big prices were paid for top pieces, but overall numbers for the major fall sales, which ended last week, did not always meet expectations.
A rare and exotic object commands more money, but it also has fewer buyers. There are more people able and willing to pay for a code-breaking machine than a crown prince’s bordello throne. The recent purchase of “Nu Couché” by Modigliani for $170.4 million by the Chinese billionaire Liu Yiqian qualifies as one such piece that gets much attention but has few buyers.
“Art has become a separate asset class, but it’s a thinly traded market, particularly at the high end of the market,” said Michael Kosnitzky, a partner at Boies, Schiller & Flexner, who works on tax issues for wealthy families. “And because the market is thin, there is greater risk. Anything that goes up could go down. People have to hold for the long term.”
And if the collection goes up, there are tax considerations as well as insurance and display questions. And then there is the quandary a collection presents to heirs: What exactly do you do with a nine-foot-tall Siberian bear skeleton worth just under $100,000? (In this case, the owner moved from his sprawling Montana ranch and sold it.)
Some collectors see what they amass as a store of value. That may be more true in some cases than in others.
John Carona, who served 24 years in the Texas Senate and House, has collected some 200 canes over the last two decades. Some are distinguished by their carving, like the wooden one with a gold handle that belonged to Daniel Webster, the 19th-century congressman and secretary of state.
Mr. Carona also collects so-called system canes, which contain something else inside them, like a rifle or an entire set of dental tools, including a drill. He said he had one cane that could be reconfigured into a violin.
The canes cost several thousand dollars apiece, with a few reaching into five figures. But he said he saw them as an investment. He tracks the fairly active auction market for canes, and believes canes appreciate as much as 20 percent in some years.
“Being a collector, it never really cost you anything,” Mr. Carona said, who sees his canes as an asset class and not a hobby that consumes money.
Canes are easier to store and transport for sale than one of Mr. Carona’s other collections: wood-carved barber chairs. He has nine of them and admits that their value is probably not increasing at the same clip as his canes. He plans to leave the chairs to his sons.
That was what Andreas Bechtler’s parents did for him and his sister, though their patrimony was a collection of several thousand works of art by artists including Giacometti, Miró, Picasso and Calder.
With his collection worth tens of millions of dollars, Mr. Bechtler took the 1,200 works he inherited from his parents, plus 300 from his own collection, and opened a museum in his adopted hometown, Charlotte, N.C.
“The realization that there was this collection in my hands gave me the feeling of a real caretaker,” he said. “All of a sudden I realized, yes, wouldn’t that be fantastic if we could keep it together.”...
By Paul Sullivan
A version of this article appears in print on November 28, 2015, on page B5 of the New York edition with the headline: Financial Considerations for Collectors of Art, Antiques and Esoterica.