If the Met can’t break even, who can?

Spotted this in a long article on Lee Rosenbaum’s Culturegrrl blog:

Just posted online: the Met’s fiscal 2006 annual report…You will learn that although “fiscal year 2006 was an exceptional year for the Museum,” with “strong endowment growth,” the museum nevertheless ran its fifth straight annual operating deficit, with last year’s amounting to $3.2 million…. All told, the Met raised $26,829,579 from art disposals [i.e. selling works at auction] in fiscal 2006 (ending June 30), compared to $538,404 the previous year (when only two over-$50,000 items made the published list). The money spent on art acquisitions in 2006 was $34.83 million, compared to $99.21 million the previous year (presumably boosted by the Duccio.)”

So, basically, the Met ran a $3.2M deficit despite selling off $26.3M more art than in the previous year. And that’s the Met. I remember reading a recent report that 60 percent (or something like that) of British museums have no acquisitions budget at all. As in “0.00 Pounds Sterling.” This is bad news on the cultural-legacy front.

The booming art market may be great for artists, dealers, collectors and consultants, but for museums and curators it doesn’t seem to be making life any easier. And in some ways it’s complicating things.

2 thoughts on “If the Met can’t break even, who can?”

  1. I’m not going to argue numbers with a VC, but I decided not to get into the purchase numbers, simply because the Met bought that Duccio and raised funds specially for that purchase – making it a bit of a freak year, I imagine, on that front.

    Although virtually every number in any financial report would be subject to the same caveats, and have the same hidden elements of narrative. That’s the beauty/treachery of accounting. It takes the results of day-to-day life and makes them seem abstract and somehow orderly.

  2. Actually the numbers are even worse than that. The NET SELL was even HIGHER. According to the article figures, they sold in fiscal06 $26.3m vs f05 $0.5m, but the purchases in 06 were also well down on purchases in 05 ($34.83m vs $99.21m), So the NET SELL/PUCHASE VARIANCE of 06/05 was $26.3 + ($99.21-$34.83) = $90.68m.In other words their 06 cashflow was improved by over $90m against 05 and they still lost $3.2m.

    One caveat: the article doesn’t say whether the MET acquisitions and divestitures go through the P&L. Some institutions consider these asset sales and acquisitions (and not part of the operating budget) and thus allow them to pass hidden on the balance sheet. The movements would thus not appear on the P&L and therefore would not impact the bottom line figure; in this case the $3.2m.

    None of this detracts from Marc’s key question, though, which is the impact on Museum buying of increased pricing in the market place.

    I guess my response is: that it were ever thus. Museums fortunes rise and fall with generations, and business cycles, but they always seem to win in the end. Because most of those private collections end up being sold or gifted and they therefore end up being seen sometime somewhere. Eventually.

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