thriller-jacket

When someone's famous, almost everything she touches or owns turns into a collectible—regardless of its intrinsic value.

This concept forms the basis for one of the world's most lucrative markets: celebrity memorabilia.

These items aren't just for fans or museum owners. They're also a sound alternative investment for people tired of stock market swings, says Darren Julien, president and CEO of Julien's Auctions in Beverly Hills, Calif.

"A lot of CEOs are looking to diversify [but also] want a conversation piece in their offices," says Julien, who sold $20 million worth of celebrity assets in 2011. "You've got [the cachet of] George Harrison's or John Lennon's guitar hanging [up], and the extra benefit is it appreciates in value."

Many of these investors know particular celebrities (or wish they did) and want mementoes of those relationships, says Brett Sherlock, managing director of Christie's Canada.

"They just want something that carries their DNA," says Sherlock. "But then you have [people] who feel if they own something that belonged to a celebrity, it is going to increase in value." That takes time. Experts say you have to hold the item for a minimum of five years, and 10 is better.

Julien's seen this firsthand. He sold two pairs of Marilyn Monroe's shoes in 2009 for $28,000; they had previously sold for $3,000 in 1999. Another client paid $2,500 for one of Michael Jackson's jackets in 1989. Julien sold it for $271,000 after the King of Pop died in 2009. The important thing is to restrict purchases to items owned by blue-chip celebrities. That excludes manufactured, fly-by-night popstars.

"Madonna's collectability probably is going to go up," says Julien. "You can't really say that [about] Britney Spears. She would be more of a risky investment." The need to ensure the celebrities have global followings assumes more significance when you consider the market's new frontiers.

"Asian investors have started to look at Western pop-culture memorabilia as a way to diversify their portfolios," says Julien. "China and Japan now account for almost half the pop-culture sales in our auctions."

But the emergence of knock-offs adds another dimension to the due-diligence process. "Buy from a reliable, reputable [seller]," says Julien. "We typically get items directly from the studios or the celebrities themselves, or their estates."

Being able to trace back the history of an item helps the piece hold its value, says Sherlock, who helped organize the US$183.5-million sale of Elizabeth Taylor's personal collection of jewelry, art, fashion and film memorabilia. "There has to be some sort of documentation, whether it is recognized by the estate, or the celebrity's child or their executor who runs the estate," he says.

Read: Is high fashion worth the investment?

A fake piece is worthless. So ensure clients follow a rational, impulse-free buying process. "Set yourself a limit prior to the auction," says Julien. "You [must] investigate the piece or the items that you're bidding on in advance."

Apart from the glamour quotient, memorabilia's appeal lies in its relative immunity to economic upheavals.

"When the market goes down, our business goes up; it's similar to art," says Julien. "The last two years have been record years for us [but] they've been the worst economy-wise."

There's another factor that drives the market up. "It's true, unfortunately, that death increases the value of a celebrity," says Julien. "Michael Jackson [items] sky-rocketed [when he died] because he's no longer wearing jackets or gloves."

And the sky's the limit for art pieces in a deceased celebrity's collection. An Elizabeth Taylor portrait fetched $108,000 at a Christie's auction in 2011—a world record for the artist, Hiro Yamagata.

"Imagine being able to say that a painting is not only done by Andy Warhol, but it's also come out of the collection of a celebrity," says Sherlock. "That adds a huge cachet to the item [as] a status symbol."

Hassle factor

Memorabilia is fun to collect, but finding and protecting the right pieces may not be. Challenges include:

  • Too many fakes on the market
  • A specialized insurance policy. U.S.-based Collectibles Insurance Services LLC offers policies for memorabilia and other collectibles. General coverage of $100,000 costs about $600 per year
  • Proper storage to prevent damage
  • Occasional restoration work may alter the piece and destroy its value

Read: What are the weirdest celeb insurance policies?

Originally published in Advisor's Edge

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