Luxury items in bits a growing business

Anyone can easily own a Basquiat painting, a pair of Yeezy sneakers or even a Ferrari — at least, that’s the promise of a growing number of fractional ownership platforms that sell shares of these rare items, starting at just a few dollars.

One platform, Masterworks, in spring 2020 turned the $6-million painting “The Mosque” by Jean-Michel Basquiat into 284,420 shares at $20 each.

With fractional ownership, there’s no chance of hanging the painting in a buyer’s home, parking a Lamborghini in their garage or storing six bottles of Romanee-Conti wine in their cellar.

But by owning at least a piece of the property — at least on paper, like the shares of a publicly listed company — anyone can now directly benefit from an increase in the item’s value, just like a wealthy collector.

Whether it’s paintings or baseball cards, “it’s not a new industry,” says Ezra Levine, the CEO of Collectable, a platform that specializes in sports paraphernalia.

“It’s not like cryptocurrencies where it was literally invented five or 10 years ago,” he said. “It’s just that the ways that people can participate in (the market) and experience it, enjoy it, have just dramatically changed in the last six months.”

Slugger, the username of a collector who preferred to stay anonymous, made a 500-percent profit on a few shares of a box of Pokémon cards, initially priced at $125,000.

The platform Rally had offered the box via an initial public offering, similar to the listing of a company on the stock market and also subject to controls by the US market regulator, the Securities Exchange Commission.

“These fractional platforms just open up the class to people who can’t afford to buy a full (Michael) Jordan (trading) card,” said John Schuck, 43, whose holdings amount to about $20,000 in cars, paintings or sports memorabilia.

The concept of shared ownership of physical assets started with real estate. Over the past 20 years, it has expanded to include private jets and yachts, but entry prices have remained high and largely inaccessible to the general public.

The new fractional platforms have drastically lowered prices, sometimes to less than $10 a share. Such entry prices allow sneaker enthusiasts, for instance, who initially built the “sneakerhead” culture but were priced out, to own at least a part of cult pieces, explains Gerome Sapp.