S. Sources and Uses of Art Financing

The market for art has expanded greatly in recent years, with art increasingly being viewed as an asset class by collectors, lenders and financial market participants. In 2021, according to the Art Basel and UBS Global Market Report, reported sales by dealers and auction houses totaled $65.1 billion. After centuries of the art market functioning largely on handshakes, without much or any legal documentation, the market is changing. Art based transactions are now often documented and structured as capital market transactions. Participants at every level of the market realize the need for building transactions on a legal framework.

This class will explore the intersection of art, law and finance. The course will begin with a short history of the financing of art and collectibles. We will then look at art market participants - artists, collectors, dealers, museums, advisors and speculators - to consider their need for funds, followed by a review of the providers of funds - banks and lending institutions, auction houses, art investment funds and specialty art lenders - and the ways in which the funds are provided. We will consider how to evaluate and measure risks associated with art and collectibles.

The class will also work in groups to analyze proposals for different types of art based financings.