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How Do You Value a Painting like The Scream?

Sigma Investment Counselors

May 7, 2012

Edvar Munch’s The Scream achieved the highest price ever for a painting at auction this week when the bidding closed at nearly $120 million.  It is one of the most famous paintings in the world, featured on posters hanging in college dorm rooms around the world (I had one in mine) and featured in movies such as “Home Alone”.

The Sotheby’s buyer is still unnamed.  I can’t wait to find out what motivated them to spend $120 million on a painting.  I’m an art lover and appreciate the value of a truly creative and moving work.  But is it worth $120 million?  As Chartered Financial Analysts we spend hours studying cash flow statements, return on investments, balance sheets, revenue projections and profit margins trying to find the value of companies and investments.  After reading about The Scream I wondered how one might value a painting like this.  Is it simply worth $120 million because of its fame and cultural familiarity?

To a billionaire collector spending that much to have a trophy piece such as The Scream may be worth the bragging rights.  Or someone might want the piece to be put on display and drive tourism dollars.  (Rumors after the sale suggest the government of Qatar could have bought it for a new museum.)  For example, most visitors to the Louvre in Paris want to see the Mona Lisa.  According to the Louvre’s website, in 2011 over 8.8 million people visited the museum paying roughly $13 a person.  If The Scream can draw a quarter of that crowd annually into a museum, maybe the painting could pay for itself in five years.  Maybe it’s not so expensive?

As an aside, this blog reminded me of one of my most favorite art stories surrounding the painting, Whistler’sNocturne in Black and Gold, held at the Detroit Institute of Art. The painting has a mostly black background with gold flecks and splatters representing fireworks in the night sky.   When it was first shown in London in 1877, it was very ahead of the times.  An art critic criticized the painting as severely overpriced for what he called “flinging a pot of paint in the public’s face.”  Whistler sued the critic for libel.  When the critic’s lawyer asked Whistler in court how long it took him to paint the picture, Whistler replied it was completed in a day or two.  The lawyer asked if the piece was overpriced for two days work.  Whistler replied, “I don’t ask to be paid for two days work, I ask to be paid for the knowledge I have gained in the work of a lifetime.”

This also makes me think – if cultural familiarity can increase value – how much does that make something as ubiquitous as Facebook worth?

Your thoughts are welcome.

Marisa A. Lenhard, CFA, CFP®

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