NY Metropolitan Opera to Borrow Against Chagalls

Erica Orden of New York Magazine is reporting that the Metropolitan Opera is now using the giant lobby Chagalls as collateral for loans. I had just recently posted to the AW Blog about art being used as collatera for loans and how it was now considered a segment of lending that was growing. Lending based collaterlized by art is funded, both in the normal lending sense and also as in pawn brokering. The Metropolitan Opera is an example where the art is being used to coolateralize and secure loans in order to aid cash flow. The value of the two Chagalls in the lobby of the Met are said to be valued at $20 million.

Orden reports Titled The Triumph of Music and The Sources of Music, they were commissioned for Lincoln Center when it was new. Now they’re sources of cash. General manager Peter Gelb, already forced to scale back his 2009–10 season, first disclosed the intention to collateralize the paintings so as “to deal with a cash-flow situation” n January, according to a source at the meeting. Met spokesman Peter Clark confirmed the news, saying that “the Met has had a long-term loan for a number of years which relied on cash holdings as collateral. The Chagalls are now being used as partial replacement collateral in order to free up some of the use of the cash.” (A source says the Chagalls were appraised at $20 million.) “If you have some great art sitting on the wall, why not use it as collateral?,” noted former Met CFO Marvin Suchoff. “

The article is short and quick read, but interesting. To read the NY Magazine article, click HERE.