Wandering through the house with the executor, I tried to get a sense of the contents of the estate. I was immediately curious about the dozens of shipping tubes I saw; they were everywhere. There were tubes in closets, on shelves and in the spaces beneath the beds.
I asked if the decedent an architect. No, he was a school teacher.
As it turned out, the tubes weren’t filled with building plans; they were filled with art purchased from auctions aboard cruise ships. A fan of shipboard “champagne art auctions,” the teacher had amassed quite a large collection of art.
Like many comfortably situated seniors, the decedent cruised a couple of times a year during his retirement. More than 20 million people—almost 20 percent of the U.S. population—cruise annually. The demographics of cruisers match well the demographics of collectors; they are age 50 or older with an average household income of $109,000, 86 percent are college graduates and 38 percent are retired.
Onboard art auctions are a popular attraction. They are designed to be part entertainment, part sales venue. The primary art vendor for the major cruise lines, Park West Gallery, sells in excess of $300 million annually.
That’s a lot of art, and it’s cropping up at estate sales and online auctions across the country. A quick search of WorthPoint’s Worthopedia Price Guide lists 4,326 results under the search term “Park West Gallery.” I’m sure that if I searched by individual artist, I would find even more cruise-ship art on the market.
Such art is imminently collectible. Thousands of cruisers and others collect Park West art. There is unquestionably a market for its artists, both aboard cruise ships and in the secondary market. Case in point, an eBay search for one of Park West’s most popular artists, Itzchak Tarkay, returned 600 for-sale listings with offerings starting at $70,000. At the bottom of the list was another dozen Tarkay knock-offs from China, valued at less than $20. A click-over to sold listings for the same search returned 408 sales, beginning at $14,895. There were also sales of other types of Tarkay’s artwork at varying price points.
What makes this inventory of art unique is that all of the original sales were made aboard a cruise ship or at a handful of Park West–sponsored land-based auctions. None of it can be purchased at your local gallery, unless it was purchased for resale on a secondary market like eBay.
The concern for estate executors is that much of the art offered by Park West comes with a “certificate of appraisal” that can considerably skew the secondary-market value of the art and result in overpayment of estate taxes.
So, some clarification is in order; what are you actually getting when you buy cruise-ship art, and what’s it actually worth?
The value of the art sold by Park West has been the subject of much debate over the years. At issue is the appraisal provided by Park West. Some critics say that it’s overvalued by as much as 90 percent.
There have been a string of well-documented lawsuits and countersuits between Fine Art Registry and Park West. When it comes to Park West appraisals, there are strong opinions on both sides of the issue.
Here’s my assessment of the brouhaha over Park West art appraisals: it’s a tempest in a teapot. Those who say that Park West art is overvalued either have an axe to grind or don’t know what an appraisal is supposed to represent. For the most part, Park West art buyers are happy with their purchases, evidenced by the fact that they keep coming back and buying more.
First, in the spirit of full disclosure, let me state that I was a contract auctioneer for Park West during most of 2009. After going through its training program, I served aboard Carnival, Celebrity and Holland America ships in Alaska, the Baltic and both sides of the Caribbean. I know its policies and practices. I know what Park West requires its auctioneers to say and what it forbids them to say. I know the content of the paperwork that accompanies the sold art. I know how to “follow the money.”
Long before I worked with Park West, I was a certified personal-property appraiser and licensed auctioneer. I know auction law, and I know the Uniform Standards of Professional Appraisal Practice. So, I’m in a unique position to analyze how Park West’s appraisals stack up to the Uniform Standards.
The root of the dissatisfaction with Park West’s appraisals is a consumer’s misunderstanding of what an appraisal actually is. In a certified appraisal, evidence is offered to support the value claimed. Evidence is typically in the form of comparable sales; that is, what the item has actually sold for recently in a particular market.
Also, the intent of an appraisal will have a bearing on the value. Appraisals can be offered for insurance replacement, liquidation, fair-market value and gift value, and all may yield different results.
Park West art is valued at insurance-replacement value, which is the highest value among those listed. The replacement value is determined from the prices achieved for each work at hundreds of weekly auctions aboard ships all over the world. Park West art tends to bring high prices relative to the rarity of the art because all of it is sold with reserves. There are no absolute auctions aboard a cruise ship.
Generally, if an artwork is damaged in shipment, Park West will replace it with another copy. They can do this because most of the art it sells are signed, limited-edition giclees and serigraphs (both a type of print). The art that’s on the cruise ship—with rare exception—stays on the ship. Park West may have the same print on 60 ships and hundreds more in its warehouse, all part of the same numbered set.
Here’s how it has so much art: Park West has preferred arrangements with its core stable of artists. It provides the artists with studio space and worldwide distribution of their work in return for exclusivity on certain works. A painting may be offered as a one-of-a-kind painting at a premium price, or the same painting might be scanned and reproduced as a set of giclees that an artist “embellishes” or makes slightly different than the others in the set.
The painting may also be reproduced as a limited-edition serigraph set, signed and numbered by the artist. Lastly, the painting might be printed in an “open edition” poster format for promotional purposes. Hundreds of copies of the artist’s original painting may be available in different formats and at different price points. After all, not everyone can afford a $50,000 one-of-a-kind artwork.
When art is purchased, the order is sent to the framing-and-fulfillment center in Miami, and the art is then sent—framed or unframed, depending on what was ordered—to the customer.
One-of-a-kind art, however, is sent from the ship to Miami and then to the customer. The artwork arrives to the customer framed and boxed or rolled up in a tube. if appropriate. The shipment comes with a certificate of authenticity and a shipping manifest. The customer should already have a bill of sale.
If an appraisal was purchased at the time the art was purchased, it will be included in the shipment.
If an executor values the art at the face value on the appraisal certificate, the art will be overvalued. Executors generally want market value or liquidation value, not insurance-replacement value.
If an executor knows enough about art to identify whether the work is oil, acrylic, watercolor or one of the various types of prints, market value can be determined from WorthPoint’s Worthopedia or other online sources.
If an executor lacks the necessary art background, then an appraiser should be called in. But neither executors nor consumers should expect that the market value returned by an appraiser will be anywhere near the insurance-replacement value listed on Park West’s appraisal certificate.
Like most collectibles, the value of Park West art will go down initially and then, if there’s a demand for it, go back up. In the meantime, it’s just nice to look at and a souvenir of a memorable cruise.
Previously published by WorthPoint.com
Originally posted 2014-03-19 14:20:00.