Met Museum prepares for $100 million loss and closure till July
Looking at lost revenue, together with carrying costs, the Metropolitan Museum of Art, one of America’s strongest cultural Institutions, Estimates losses Around $60 million through THE END of THE fiscal year on June 30, writes Robin Pogrebin.
In a powerful sign that casualties of the coronavirus outbreak include even the country’s strongest cultural institutions, the Metropolitan Museum of Art is projecting a total shortfall of close to $100 million for the near future and expects to be closed until July, according to a letter the museum sent to its department heads Wednesday.
“This is an extraordinarily challenging time for us all,” said the letter, signed by the Met’s top executives, Daniel H. Weiss, the president and chief executive, and Max Hollein, the director. “As staff members of The Met, we all have a profound responsibility to protect and preserve the treasured institution we inherited.”
The Met is an important canary in the coal mine for arts institutions all over the country; when the museum announced March 12 that it was closing, others followed close behind. If even a behemoth like the Met — with an operating budget of $320 million and an endowment of $3.6 billion — is anticipating such a steep financial hit, smaller institutions may not be able to survive at all.
“Many museums are using any reserves they have to get through the next month,” said Laura Lott, the president and chief executive of the American Alliance of Museums, a professional association. About a third of museums surveyed in the United States were operating in the red or close to it before coronavirus, Lott added; three-quarters have now closed and one-third will not reopen if the crisis continues. “This situation is by far more dire than anything I have experienced in my 25 years of being an arts finance professional,” she said.
The Tenement Museum on Manhattan’s Lower East Side — which has a $2.7 million cash endowment and depends on earned revenue for more than 75% of its operating costs — has laid off 13 employees, which amounts to a 20% reduction in staff.
“Our budget projections now take us through the end of June showing no revenue,” said Morris Vogel, the museum’s president, adding that the institution owes about $9.5 million in bonds with covenants that restrict its ability to borrow money. “We still have to make those monthly payments.”
The Met, preparing for its own financial hardship, has developed a threephase response: having all staff members work from home and continue to be paid through April 4 as the museum evaluates possible furloughs, layoffs and voluntary retirements; from April to July, evaluating how to control spending and reduce operating costs, including freezing discretionary expenditures and hiring; and from July to October, “reopening with a reduced program and lower cost structure that anticipates lower attendance for at least the next year due to reduced global and domestic tourism and spending,” according to the letter.
The Met, which estimates the overall damage from the virus will be spread over this fiscal year and next, is also creating an emergency fund of more than $50 million by reallocating discretionary resources usually used for acquisitions and programming toward operating expenses, fundraising from foundations and donors and pursuing government assistance.
“We’re trying to be as proactive as we can in an environment of profound uncertainty,” Weiss said. “It became clear to us that this is a very big deal, and it requires very significant action right away.”
The museum made these plans based on information it has received from “the epidemiological world,” Weiss said — namely, that the pandemic is likely to reach its peak in early May, so recovery is unlikely to begin until at least the middle of June.
The Met’s executives came to these decisions in consultation with the board’s leadership and executive committee. The full board was informed at 4 p.m. Wednesday, and the staff was notified earlier that day.
Salaries currently cost the Met about $16 million a month, which “burns pretty fast,” Weiss said, adding that layoffs were likely inevitable.
“We’re going to have to do it like everybody is going to have to do it,” he said. “It’s a very disheartening thing.”
Henry A. Garrido, executive director of District Council 37, the union that represents most of the Met’s staff, said he was distressed to see the museum talking about layoffs before consulting with the union, which he called “a violation of our collective bargaining agreement.”
“The museum is also sitting on a pile of cash they should be looking to use before they look at cutting the workers,” Garrido said.
Looking at lost revenue, together with carrying costs, the Met estimates losses around $60 million through the end of the fiscal year on June 30. The museum estimates another $40 million in lost revenue heading into July and the expected early phases of recovery. Before the virus outbreak, the Met was projecting a deficit this year of $3 million to $4 million — down from about $10 million in fiscal year 2017 — which Weiss said amounted to a balanced budget.
The Met hopes not to have to raid its endowment, which Weiss estimated has probably fallen to about $3.3 billion, because of the stock market decline. “The actual impact on the endowment is going to be hard to say until the market stabilizes,” he said. “Our intention is not to go into the endowment except as a last measure.”
The Met still expects to turn over its Breuer building to the Frick Collection, as planned, in July, and the Frick said the Board of Standards and Appeals on Tuesday unanimously approved the project, which so far remains on track.
Sheena Wagstaff, who leads the Met’s department of modern and contemporary art, bemoaned the fact that the acclaimed Gerhard Richter exhibition she organized was only open for nine days (it had been set to run through July 4), but said such decisions were not taken lightly. “I sent notes to every single lender to reassure them that the work is safe, and we’re doing as much as we can to flatten the curve — to do the right thing,” she said, “and to reopen as soon as we possibly can.”
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