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Today in Museum Accounting: Financial Windfall at MoMA, Shortfall at the Met

The contrast in the financial news emanating today from New York’s two premier art museums could not have been more dramatic.

The Museum of Modern Art issued an exultant press release celebrating David Geffen‘s $100-million naming gift for its planned renovation and expansion. That equals his recent Lincoln Center benefaction for the NY Philharmonic’s home.

Photo: Bruce Weber

David Geffen
Photo by Bruce Weber

Meanwhile, about a mile up Fifth Avenue from MoMA, the Metropolitan Museum had deputized Robin Pogrebin of the NY Times to release some shocking financial news (not to be found among the museum’s own press announcements, at this writing).

Robin revealed:

The [Metropolitan] museum is acknowledging that it may have overreached and is facing a deficit of $10 million this year, which officials said would almost certainly balloon to as much as $40 million [emphasis added] if the Met does not change course and scale back….

So the museum is changing course. On Thursday [today], it announced a 24-month financial restructuring that it said was likely to include staff reductions, slower construction of its new wing and reduced programming.

With the benefit of hindsight, my conversation a month ago (on the occasion of the opening of the Met Breuer) with Daniel Weiss, the Met’s president (who, I suspect, may have been responsible for this much needed, belated reality check), gave us an early hint of things to come.

Daniel Weiss, Metropolitan Museum's incoming president

Daniel Weiss, Metropolitan Museum’s president

Here’s what Weiss told me about the Met’s operating shortfalls. (My own asides, in brackets, were part of my Mar. 15 post.):

WEISS: We’re doing various things to control our spending and to match revenues to spending. This year [fiscal 2016, ending June 30], we had a projected deficit of $8.2 million [emphasis added], which was approved by the board. There are always changes to revenues and costs that might change that number.

[The projected $8.2-million deficit this year almost equals the $8.4-million deficit in fiscal 2009, in the depths of the Great Recession. After that, thanks in large measure to cost-cutting (fiscal 2010) and the Alexander McQueen Effect (which straddled the next two fiscal years), there were three years of surpluses$3.7 million (FY ’10); $1.3 million (FY ’11); $0.2 million (FY ’12). Those were followed by deficits for the past three years: $4.4 million (FY ’13); $3.5 million (FY ’14); $7.7 million (FY ’15).]

This year has been a bit challenging, because it’s been a very difficult retail environment for everybody. The strong dollar has cut back on the spending from international tourists coming to New York and what we’ve seen is that total visitor numbers are up a little bit—not only at the Met but across New York—but spending is down. So they come three days instead of four days and they spend a little less money.

That’s had an effect on our budget and we want therefore to take a look at our cost side to make sure that we’re trying to track the commitments that we need and the budget that we had approved.

Apparently that “look at our cost side” was more alarming than anticipated: This year’s “projected deficit” of $8.2 million has ballooned to $10 million, with the worst yet to come in future years, unless drastic measure are taken. Robin foretold cuts in staff and exhibitions, and indefinite postponement of the planned new wing for contemporary art, designed by David Chipperfield.

The obvious question is this:

Did the Met bite off more than it could chew when it took over the renovation, operation and programing of the Whitney Museum’s Breuer building for a period of at least eight years?

As I mentioned to Weiss last month, the size of the Met’s financial commitment to the Breuer had made me wonder if “you relieved the Whitney of the financial headache of running two buildings, but maybe gave yourself one.”

Just a week ago, the Met’s director, Tom Campbell, and his counterpart at the Whitney Museum, Adam Weinberg, were cheerfully discussing the results of their institutions’ Met Breuer agreement, with nary a hint about the Met’s financial distress:

Tom Campbell (left) and Adam Weinberg in conversation last week at the Met Photo by Lee Rosenbaum

Tom Campbell (left) and Adam Weinberg in conversation last week at the Met
Photo by Lee Rosenbaum

Pogrebin’s article tells us that “museum officials” (unnamed) maintain that “philanthropic dollars” (and also, presumably, earned income from admissions and sales) had covered the (undisclosed) renovation costs for the Met Breuer, as well as its operating budget (previously estimated at $17 million). Unmentioned by the Times is the cost to the Met of its eight-year lease of the Breuer building and how that is being paid for.

Given recent developments, it’s time for the Met to be completely transparent about its financials, including those of the Met Breuer arrangement, answering the questions on which I was stonewalled last month:

How much is the Met paying the Whitney for this arrangement? (Both museums have refused to say.)

What are the detailed provisions in the Met’s “Collaborative Agreement” with the Whitney?

How much did the Met pay to restore, upgrade and enhance the Breuer building?

Overlying all this is a larger question: If the Met hadn’t taken on this substantial additional financial burden, might some or most of that money have been available for what Weiss calls its “core programs”? And might some of the time and money spent on certain tech tricks of dubious value, and on branding (including the new logo, above) have been better spent on preserving the justly celebrated exhibition program, which now stands to be weakened by “longer exhibition periods [meaning fewer changing exhibitions] and fewer loans [from other institutions],” according to the Times?

The buck stops with Tom Campbell, who is not only the Met’s director, but also its CEO.  How did he allow things to come to such a pass? The recession-driven 2009 belt-tightening, which affected all museums (causing a staff purge at the Met), was understandable. This one isn’t—a jaw-dropping future shortfall of $40 million, unless major changes are instituted.

The resulting crisis in confidence could make it hard for the Met to convince Geffen-like donors that the museum is well managed and that their money will be well spent. It could also harm the morale of staff members, who were brought together today for a meeting.

“I wouldn’t want to be a curator over 50,” one ex-staffer today quipped.

NOTE: Just as I was about to publish this post, the Met issued this cryptic statement (not yet on its press website) about its financial situation.

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