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Levy plans to stay long term but must consider takeover bids

Lilbaz

Just call me Baz
Apr 1, 2005
41,363
74,893
That is based on the idea that a painting has an intrinsic value (your £10m "starting" price) which it doesn't.

Things are only worth what people are willing to pay for them. That's the definition of market value. If somebody is willing to pay £35m for Andy Carroll it doesn't mean that he has magically got really good at football - it's just the market conditions at the time defining the value. The market at the time was willing to pay that amount so that's his value at the time.

Art is weird because it generally appreciates with age without an expiry date (unlike a footballer, or much else) and because it's so dependent on fashion it means the price can sky rocket for weird reasons. It's not a bunch of art owners flogging stuff to each other at increasing prices in order to fraud borrowing.

In your scenario, the people have not really increased their wealth because those sales are false and do not reflect the true market value. If you used the painting as leverage, the lender would want it appraised according to the public market where it's value of £10m would become apparent. That value would be based upon similar sales etc. and not just what your mate says he would buy it for. That's the boring truth unfortunately.

But we should ignore that and think of it this way... Joe Lewis used to own a big piece of paper that was worth twice as much as Andy Carroll ever was!

They are setting the prices as 4 of them had been sold at that price. Yes it might be artificially inflated but most markets are and there is a risk of the bubble bursting. A great example was the tulips in the netherlands. Nothing can naturally gain in value because as you've said it all depends on what people are willing to pay for it.
 

vegassd

The ghost of Johnny Cash
Aug 5, 2006
3,356
3,330
They are setting the prices as 4 of them had been sold at that price. Yes it might be artificially inflated but most markets are and there is a risk of the bubble bursting. A great example was the tulips in the netherlands. Nothing can naturally gain in value because as you've said it all depends on what people are willing to pay for it.

Yep, they sold at that price but only within a very small group of buyers. If nobody else in the world was willing to pay that price then the public market value is still £10m. If the idea is to inflate the value of something to use a leverage against borrowing it wouldn't work. The lender would appraise the asset (as best they can) against the public market, so whilst your mate was willing to pay £20m nobody else would. The lender would value the asset at what they believe they could go and sell it for if they had to repossess it.

If I sold you my Ford Fiesta for £20m it doesn't really mean that you own a £20m car... at least not in terms of getting it publicly appraised to use as leverage. Even if you had a few mates who didn't mind buying the car from each other, the minute it goes public again it's worth bugger all.

Not that the art world is logical at all - that Banksy shredder thing was possibly one of the most dodgy things going. Talk about artificially inflating the value of something! Whoever bought that painting will have seen it increase in "value" massively because it's now a one-off with huge public exposure. So ironic considering that if anything, it should be worthless.

PS. You don't know anyone looking to buy a Fiesta do you?! ;-)
 

jurgen

Busy ****
Jul 5, 2008
6,710
17,167
More than that it's a con. Say i have 4 van yankspurs worth £10m each. Person b has 4, person c has 4 and person d has 4. I sell one to person b for £20m he sells one to person c for £20m person c sells one to person d for £20m and i buy one from person d for £20m. Now a yankspur is worth £20m, nobody has really spent a penny but we've just doubled our wealth. Now we can use the paintings as security in borrowing money etc...

Well Van Yankspur’s famous series of observational paintings of nineteenth century canines playing parlour games are some of the most important works in history.
 

yankspurs

Enic Out
Aug 22, 2013
41,883
71,187
More than that it's a con. Say i have 4 van yankspurs worth £10m each. Person b has 4, person c has 4 and person d has 4. I sell one to person b for £20m he sells one to person c for £20m person c sells one to person d for £20m and i buy one from person d for £20m. Now a yankspur is worth £20m, nobody has really spent a penny but we've just doubled our wealth. Now we can use the paintings as security in borrowing money etc...
You rang?
 
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