The Deal of the Art

Want to invest in art without all the risk? Partner with an art dealer.
A municipal bond derivatives salesman by trade, William Zachary has a costly hobby, fine art, that could pay for itself. In addition to buying things to put on his wall he also buys art to hang on a dealer's wall. If the dealer sells at a profit, Zachary shares the loot.
Zachary is among a pool of investors who back art dealer Mark Murray. Members of this investor pool also happen to be clients of Murray's gallery.
A typical contract for funding an art dealer gives investors a two-to-three-year time frame. Alas, they can't expect a profit share in proportion to their capital contribution. The dealer must be paid for his expertise and having the piece authenticated, given a clear title, repaired and reframed. Often the dealer is compensated for this work by being paid 50% or more of the net after expenses. Another approach: Passive investors put up all the cash while the dealer pays expenses of restoration, shipping and the like. After both parties are reimbursed, any profit or loss is split equally. Fairbanks' investors usually contribute half of the money; he makes up the rest. When the art is sold, expenses come off the top; investors get 30% of the profit.
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Irish Art