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Guggenheim’s Modified Helsinki Proposal Reduces Costs, Keeps $30-Million Licensing Fee

Waterfront site of proposed Guggenheim Helsinki (in red)

Waterfront site of proposed Guggenheim Helsinki (marked in red)

In its revised proposal for a new Global Guggenheim branch in Finland, the Solomon R. Guggenheim Foundation has attempted to address the concerns expressed by government officials who had scuttled the original proposal in May 2012. From the Finnish point of view, the new plan is likely to be seen as an improvement, but serious questions still remain as to whether it can live up to its billing as “a strategic investment for both Helsinki and Finland, raising the international profile of the entire region.”

The museum is conceived as having “a strong focus on Nordic and international architecture and design and their intersection with art.” In addition, it would “provide Finland with unparalleled access to important artists and movements within the canon of 20th- and 21st-century art.” It would generate its own traveling exhibitions and be a venue for shows organized by the Guggenheim New York and elsewhere.

The project’s architect would be chosen through an “anonymous and international” competition, open to “young and emerging practices as well as the most established figures in the field”—a far cry from the iconic Guggenheim Bilbao’s selection of architect Frank Gehry. I presume that if a complete unknown is chosen through the anonymous competition, steps will be taken in insure that firm is not only willing but also able to take on this task.

Changes in the new plan include the elimination of the controversial proposed merger with the Helsinki Art Museum. This will result in the loss of a previously anticipated €0.7-million government subsidy. Also new: this plan, unlike the previous one, envisions a permanent collection to be gradually developed for the new facility, “based on its exhibitions.”

But the most fundamental questions (which I detailed in this post about the original proposal) still remain:

Where will the money come from? While many of the financial projections have become more optimistic in the new proposal (costs are down, revenues up), the most formidable numbers remain unchanged—a hefty $30-million “licensing fee,” to be paid for the Guggenheim’s “brand,” and €130 million to build the new facility. The Guggenheim now says that the licensing fee will be come from unnamed private sources, with the necessary funds to be “identified and committed” by the time of the completion of the architectural competition. (Presumably, the building cost is only a rough estimate, since there is as yet no architect, let alone a design.)

The Guggenheim hopes for government funding (from Helsinki and/or the Finnish State) for the cost of the building and some of the operating costs. This could prove to be a significant stumbling block in the public-approval process.

How reliable are the Guggenheim’s financial projections for the project? The estimates of income and expenses (arrived at with the assistance of Boston Consulting Group) seem speculative at best. Projections include: €41 million in annual economic impact; 550,000 in annual attendance (up from 527,000 in the original proposal); €8.1 million in annual revenue (up from €7.7 million); €4.4 million in expenses for salaries and benefits (down from €4.8 million, due to staff reductions); €13.1 million in annual expenses (down from €14.5 million).

A main reason for the drop in expenses is the Guggenheim’s willingness to reduce its annual “operations fee” from €2 million to a maximum of €1 million: The operations fee would be “variable until the visitor goal of 550,000 is achieved and would remain a flat fee of €1 million thereafter,” according to the proposal.

Will this project complement or compete with existing cultural institutions in Helsinki? Funds raised for this project could siphon off limited resources that might otherwise be available to the city’s large existing local network of museums. But the Guggenheim argues that the increased international interest in Helsinki’s cultural offerings, thanks to the Guggenheim project, will float all boats.

The Guggenheim says that “the Guggenheim Helsinki’s program would be unlikely to
overlap with those of existing institutions,” because the latter have “few significant collections of international modern and contemporary art,…precisely the Guggenheim’s focus.” But in the next paragraph, the Guggenheim states that it intends to “featur[e] Finnish art within the Guggenheim’s international program”—a worthy plan, but one that would inevitably create some “overlap” with “existing institutions.”

Why would a sophisticated, culturally rich city like Helsinki feel the need for Americans to oversee a new cultural institution that we think they need? Projects like this, I still believe, should percolate from the ground up. Helsinki is not a cultural backwater and is capable of shaping its own institutions and forging international relationships.

That said, given the amount of time, thought and energy that it has now devoted to this proposal, and the pressing imperative to get it right this time (after the closures of Guggenheim offshoots in Las Vegas and Berlin, not to mention the fizzled plans for new facilities in Rio de Janeiro, Guadalajara, Taichung, Tokyo, Hong Kong, Salzburg, Moscow, Singapore and Vilnius, Lithuania), the Guggenheim can be expected to do everything in its power to make this one work, for the benefit of both sides.

It will now be up to government officials in Helsinki and Finland to determine whether this snowball will fly. For the time being, the Guggenheim is running a series of “Guggenheim Helsinki Live” forums in that city, to encourage public understanding and input.

Janne Sirén, left; Richard Armstrong, center; Ari Wiseman, right

Promoting original Guggenheim proposal in Helsinki, almost three years ago, L to R: Janne Sirén, then director of Helsinki Art Museum (now of the Albright-Knox Gallery); Tuula Haatainen, Helsinki deputy major; Richard Armstrong, Guggenheim Foundation director; Jussi Pajunen, Helsinki mayor; Ari Wiseman, Guggenheim deputy director

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