Winning the Art Lottery: The Economic Returns to the Ganz Collection

Abstract

In 1997, the Christie's sale of 20th century art works from the estate of Victor and Sally Ganz netted more than $207 million, a record sum for a single-owner sale of art at auction. The paper presents estimates of the Ganzes' financial returns from investing in art using records the Ganzes' kept on the prices they originally paid for the works sold in 1997 and two earlier auctions in 1986 and 1988. Over the period 1948 to 1997 the Ganzes earned real rates of return ranging from 12 to over 21 percent for works sold at the three auctions. Overall, the Ganzes beat-often by a wide margin-the returns from diversified portfolios of common stocks. The empirical evidence shows that the Ganzes were not only lucky but skillful investors as well. Their financial success did not result from a few lucky purchases. They earned consistently high returns, regularly beating the stock market on works by different artists acquired at different time periods. I also found that buyers were willing to pay a price premium for works from the Ganz collection compared to works sold by others. For example, buyers paid between 25 and 90 percent more for prints from the Ganz collection than for otherwise identical prints. Whether this premium resulted from Christie's extensive promotion efforts prior to the auction or a kind of celebrity premium attached to their works or a combination of the two, I cannot tell.