Violin Dealer Makes Play for Bank Purse Strings
Fickenscher, Lisa, American Banker
Classical musicians invest years of their lives to perfect their artistry. Now banks are being asked to invest a few million dollars in their classic instruments.
Dietmar H. Machold, a German-born dealer in rare instruments, has set up shop in New York and is calling on bankers in the hope that they will buy antique violins that cost up to $5 million.
The idea is not so farfetched-at least not in Europe, where several banks have acquired Italian 17th and 18th century Stradivarius violins and Guarnerius "del Gesu" instruments. The banks lend the violins to musicians.
The multimillion-dollar rarities, many of them sold by Mr. Machold's firm, Machold AG of Zurich, Switzerland, are seen as an investment and a promotional opportunity. There is also a strong market for the violins in Asia.
The Italian-made instruments' value is tied to their diminishing numbers. There are only about 70 del Gesu violins in existence, made by Joseph Guarneri del Gesu, who lived from 1698 to 1744. By contrast, there are about 650 violins made by Antonio Stradivari, who lived from 1644 to 1737 and is considered the greatest violin maker.
Mr. Machold owns two of the del Gesus and four Stradivarii, and he is eager to start selling to American banks.
In an interview in his new offices, decorated with antique furniture and located across from Lincoln Center in New York, Mr. Machold said the violins appeal to the investor mentality because they never decline in value.
"When I was a young boy, a Stradivarius cost $30,000," he said.
Mr. Machold, 47, grew up around violins. As a child he began working in his family's workshop in Bremen, Germany, where the instruments are repaired and new ones are crafted. Eventually he learned how to play the violin, like previous generations of his family, which started the business in 1871.
Generally the instruments appreciate 10% a year, said Mr. Machold, who is also a lawyer. They can be a tax writeoff. Moreover, lending the instruments to musicians enhances the image of a company.
Nevertheless it will be hard to persuade bankers to fork over millions for a musical instrument.
Robert McDuffie, an American violinist, knows the challenge only too well.
Mr. McDuffie has been borrowing one of Mr. Machold's violins, a 1734 del Gesu that costs about $3 million. It is called the Ladenburg, after a German family that owned the violin for generations.
"Dietmar has been very gracious, but he is also a businessman," said Mr. McDuffie. "If someone offers him the money ...."
The threat of losing the violin has launched Mr. McDuffie on a quest to find a corporate sponsor that will buy the Ladenburg and allow him to use it. His odyssey included visits to SunTrust Bank and NationsBank.
A Georgia native, Mr. McDuffie has performed as a soloist with the Chicago, Philadelphia, and Cleveland symphony orchestras and the Orchestra del Teatro alla Scala of Milan, among others.
But it was his southern roots that he hoped to leverage in meetings with SunTrust's chief executive officer, James B. Williams, and an executive with NationsBank who passed along Mr. McDuffie's proposal to Hugh McColl, the superregional's chief executive.
Mr. Williams asked Mr. McDuffie why he needed a $3 million violin instead of, say, a mere $1 million instrument.
Using the language of musicians, Mr. McDuffie said the violin he covets is "luscious, deep, and piercing when it needs to be." It gives him confidence and allows him to deliver his best performances. …