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Betting the house, and the art
Moving the Barnes: Now to pay the bills
Robert Zaller
The Cultural Policy Center of the University of Chicago has just released a study of the art world building boom between 1994 and 2008 that details how overbuilding has placed even major cultural institutions at risk.
Closest to home was the world-famous Art Institute of Chicago, which undertook a major expansion to house a new modern art wing. As reported by Robin Pogrebin in The New York Times, the new wing was a $300 million venture that was expected to increase yearly operating costs by about $4 million and would require another $87 million in fund-raising to expand the Institute's endowment.
Although attendance spiked initially when the new wing opened in March 2009, it soon dropped back to normal levels. A precipitous decline in endowment income then provoked pay cuts, furloughs, a salary freeze and two rounds of layoffs.
"Instead of expanding its budget as expected," Pogrebin's article concludes, "the Art Institute was forced to contract instead."
If we substitute "Barnes Museum" for "Art Institute," we have a remarkably similar venture in terms of expense, expenditure and (unfounded) assumptions.
Moving the Barnes from Merion to the Parkway in downtown Philadelphia easily cost more than $300 million in direct and indirect expenditure, including of course the construction of a new museum. And the difference between operating the Barnes in Merion and operating it in Philadelphia is not, as in Chicago, an additional $4 million per year, but $8.5 million (from $5.5 to $14 million). You might recall that the Barnes operated for many decades on a budget well below $1 million.
That elusive endowment
The large endowment increase proposed for the Art Institute was in line with the experience of major museums. As Lee Rosenbaum points out in her well-respected CultureGrrl blog, the Metropolitan Museum of Art covers 37 percent of its operating expenses from endowment-generated income, as opposed to 14 percent from admissions revenue. The Barnes, by contrast, plans to generate 60 percent of its operating budget from admissions, which as I have noted previously is three to four times the estimate for mid-sized museums in studies published by the American Association of Museums. The Met's 14 percent is very close to the Association's lower estimate of 15 percent.
The Barnes plans to generate 20 percent of its budget from endowment. At a 5 percent rate of return (which few institutions of any kind are earning these days), that would require a $56 million endowment in place. The Barnes claims to have $30 million in hand, but I've heard far lower estimates.
Who will pay?
In any case, if what is required from endowment is more like the Met's ratio, the Barnes would actually need an endowment in excess of $100 million. That's pretty close to the Art Institute's goal of $87 million to sustain a much smaller budgetary increase.
The Art Institute's gamble concerned only a new wing, and it proved disastrous enough. The Barnes's gambit risks the whole of one of the world's greatest art collections.
The bills will start to arrive soon. The tab will wind up in the hands of the same crowd of Philadelphia civic leaders who pushed the Philadelphia Orchestra into bankruptcy.
Maybe the guy who plays Alexander Hamilton on those TV bank commercials will figure out what to do next. As for Cézanne, Matisse and Renoir: Good luck, fellas.♦
To read responses, click here.
To read a response by Dan Rottenberg, click here.
Closest to home was the world-famous Art Institute of Chicago, which undertook a major expansion to house a new modern art wing. As reported by Robin Pogrebin in The New York Times, the new wing was a $300 million venture that was expected to increase yearly operating costs by about $4 million and would require another $87 million in fund-raising to expand the Institute's endowment.
Although attendance spiked initially when the new wing opened in March 2009, it soon dropped back to normal levels. A precipitous decline in endowment income then provoked pay cuts, furloughs, a salary freeze and two rounds of layoffs.
"Instead of expanding its budget as expected," Pogrebin's article concludes, "the Art Institute was forced to contract instead."
If we substitute "Barnes Museum" for "Art Institute," we have a remarkably similar venture in terms of expense, expenditure and (unfounded) assumptions.
Moving the Barnes from Merion to the Parkway in downtown Philadelphia easily cost more than $300 million in direct and indirect expenditure, including of course the construction of a new museum. And the difference between operating the Barnes in Merion and operating it in Philadelphia is not, as in Chicago, an additional $4 million per year, but $8.5 million (from $5.5 to $14 million). You might recall that the Barnes operated for many decades on a budget well below $1 million.
That elusive endowment
The large endowment increase proposed for the Art Institute was in line with the experience of major museums. As Lee Rosenbaum points out in her well-respected CultureGrrl blog, the Metropolitan Museum of Art covers 37 percent of its operating expenses from endowment-generated income, as opposed to 14 percent from admissions revenue. The Barnes, by contrast, plans to generate 60 percent of its operating budget from admissions, which as I have noted previously is three to four times the estimate for mid-sized museums in studies published by the American Association of Museums. The Met's 14 percent is very close to the Association's lower estimate of 15 percent.
The Barnes plans to generate 20 percent of its budget from endowment. At a 5 percent rate of return (which few institutions of any kind are earning these days), that would require a $56 million endowment in place. The Barnes claims to have $30 million in hand, but I've heard far lower estimates.
Who will pay?
In any case, if what is required from endowment is more like the Met's ratio, the Barnes would actually need an endowment in excess of $100 million. That's pretty close to the Art Institute's goal of $87 million to sustain a much smaller budgetary increase.
The Art Institute's gamble concerned only a new wing, and it proved disastrous enough. The Barnes's gambit risks the whole of one of the world's greatest art collections.
The bills will start to arrive soon. The tab will wind up in the hands of the same crowd of Philadelphia civic leaders who pushed the Philadelphia Orchestra into bankruptcy.
Maybe the guy who plays Alexander Hamilton on those TV bank commercials will figure out what to do next. As for Cézanne, Matisse and Renoir: Good luck, fellas.♦
To read responses, click here.
To read a response by Dan Rottenberg, click here.
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