What do van Gogh’s “Verger avec cyprès” and the Seattle Seahawks have in common?
They were both owned by Paul Allen, the multi billionaire co-founder of Microsoft.
What is a principal difference between the sports team and the art?
The sports team’s major focus is on fanbase engagement to drive asset value, which doesn’t detract from performance on the field, it enhances it. On the other hand, the art was displayed for minimal periods in museums, and outside those periods had no fan engagement at all.
I cite these two examples because each has an identifiable fan base of over 6m people.
The Seattle Seahawks have 6.2 million followers on Facebook and 'X' (Twitter). The touring Immersive van Gogh Exhibit has had over 6m visitors in various cities globally.
The key here is that the Seahawks experience has price points from $70 for a nosebleed seat, up to multiple millions for stadium naming rights, with a great many price points in between. The art can be enjoyed with the purchase of a $25 ticket to an immersive experience, or by an outlay of many millions by a single owner, with nothing in between.
How can the art market fill the gap between these extremes?
An enthusiastic fan with some investable capital (say $10,000) has multiple options to engage:
- Go to the immersive experience on a VIP ticket
- Travel to museums that have Van Gogh paintings on display
- Decide to support the Seahawks instead
Enter a 4th option, fractional ownership.
Fractional ownership of an SEC regulated security that owns the artwork effectively allows entry points for enthusiastic followers (fans) at every price level from perhaps $2,000 up to a majority ownership.
There are three SEC regulated models in the US for fractional ownership:
- An asset manager buys the art and then sells fractions to its investors, (à la Masterworks). From the investors perspective there are multiple problems with this model, as laid out in this nerdwallet article. Auctioneers may be left out in the cold in this model with acquisitions and dispositions largely through private sales.
- A DAO (Decentralized Autonomous Organization) can consolidate funds to bid in an auction, as happened in the Sotheby’s auction for the US constitution in 2021, but see this Cointelegraph article regarding governance issues with DAO’s.
- The third, and most friendly method for both investors and auction houses, is to allow fractional bidding for high value consignments, where fractional winners become shareholders without an expensive intermediary asset manager. Still SEC regulated, but giving investors control over how much they pay for an asset (market-based pricing vs. an intermediary’s assertion) and voting rights over disposition timing.
Following the fractional bidding road, aShareX and Auction Houses work together to market the consignment, the auction house marketing team focusing on full bidders, the aShareX marketing team on fractional bidders. Together they likely increase the number of bids and reduce the possibility of a passed lot. In short, reducing risk for the auction house, and, going all of the way back to where we started, engaging with the fan base at every possible price point.
Does it work for Auction Houses
Auction houses have passed rates ranging from a low of 10-15% to a high of as much as 50%. A pass on a high value consignment represents a significant loss to the house in terms of marketing dollars spent, and expert employee hours. Reducing the risk of a pass and engaging new and existing customers in high value lots enhances the auction house brand, deepens the relationship with its existing customers, and lets the fans engage with artists’ works.
Please drop me an e-mail (kevin@asharex.com) if you have any questions, or for a demo of our fractional bidding system.
If you have a second, please answer our 1 question survey below.
A major auction says that 85% of bids are now received online, is this what you are seeing?
Yes, very high rates of online bidding 80-95%
Maybe, that seems a little high 60-80%
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