He gave his life for tourism.
Golden idol!
He's an Egyptian
They're sellin' you.
Steve Martin, King Tut (1978)
At last week’s 38th Annual ALI-ABA Legal Issues in Museum Administration conference, the 260-plus attendees were treated to a rare glimpse of the inner workings of blockbuster museum shows. In one of the more engaging presentations of this fine conference, Fred Goldstein, General Counsel of the Los Angeles County Museum of Art (LACMA) and Sophia Siskel, formerly Vice President, Exhibitions and Education, the Field Museum, gave a joint presentation describing what considerations went into staging Tutankhamun and the Golden Age of the Pharaohs currently making four stops in the United States (Los Angeles, Fort Lauderdale, Chicago, and Philadelphia).
Both Goldstein and Siskel are aware...
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of the criticism that museums receive when they stage blockbuster shows that require assistance from commercial partners. Yet, both also recognize that museums must be profitable if they are to continue to serve their educational and preservation functions. In a 2003 survey, the American Association of Museums reported that the median admission price to a museum is $5 while the median cost of serving a visitor is $21. That leaves a $16 gap that must be closed. Museums attempt to cover it with what AAM describes as earned income. Each visitor generates about $1.72 in museum store sale revenue and just .73 cents in food revenue. That last number suggests that many visitors don’t bother eating when they visit a museum because we can’t remember the last time we spend just .73 cents on a Coke at a museum, let alone a roasted vegetable panini.
LACMA was the first stop on the tour. The specially-ticketed admission
price ranged from $20.50 for members to $30 for nonmembers who visited
on weekends. Those ticket prices appear to close that $16 gap,
but not so quick. The Egyptian government demanded a $5 million
payment for each stop on the tour. According to Mr. Goldstein, some
937,000 people attended the exhibition at LACMA. We don’t know the
gross revenue, but at $20.50 each, LACMA would have taken in over $19
million in gross revenue from the gate. That sounds like a lot of
money, but LACMA had a number of "partners."
Specifically, it entered into agreements with Arts and Exhibitions International (AEI) and Anschutz Entertainment Group Exhibitions (AEG). AEG put up the capital and has expertise in promoting blockbusters and handling the logistics posed by large crowds. AEI brought its experience in creating and marketing museum shows. In addition to these two commercial entities, LACMA also contracted with National Geographic. It published the exhibition catalogue, prepared the exhibition Web site, promoted the exhibition through a variety of media channels, and added credibility.
Listening to both Mr. Goldstein and Ms. Siskel, it became clear that their institutions came to the venture with mixed motives. Each institution clearly viewed the exhibition as an opportunity to close that $16 gap. However, both also saw the exhibition as being an integral part of their educational mission. LACMA estimated that over 150,000 children attended the exhibition, with some 60,000 children visiting a free interactive, educational exhibition entitled "Pharaoh's World." Moreover, 46% of all those attending the Tut exhibit were visiting LACMA for the first time. Another 24% had made their last visit to LACMA more than two years earlier. Twenty-seven percent planned to attend other LACMA exhibitions.
LACMA also derived significant benefits in terms of increased membership. A basic membership to the museum is $75 (at least as of today); student membership is $25. LACMA added somewhere around 20,000 new persons to its membership rolls, boosting them to over 85,000. Mr. Goldstein openly acknowledged that he did not expect some of the new members to renew because they were out of towners who decided to join to avoid long lines. However, if just 5,000 of the new members renew for one additional year, LACMA is looking at somewhere around $375,000 of additional revenue.
By working with commercial entities, the museums significantly reduced their exposure to financial risk. According to the materials distributed at the conference, AEI/AEG guaranteed the royalty paid to the Egyptian government, various exhibition and venue costs, including demolition and restoration of the exhibit space, design, installation, and transportation costs, on-site staffing costs, legal fees, and marketing and promotion. In return, the parties agreed to place ticket sales, a percentage of national sponsorship, local sponsorship, and revenue from Tut store sales in a common fund. This fund was apparently first used to recover costs, and then there was a split between the parties. Given the fact that the commercial entities took the greatest risk, they also took the higher percentage of the split. If we heard correctly, in at least one instance this split was 80/20. The museums apparently retained control over their catering operations, parking, facilities rentals, and retail operations to the extent that they did not involve Tut-related material. The presentation and related materials on the contract terms are not entirely clear because they are not museum specific. Each museum negotiated its own arrangements so the terms of any particular arrangement might differ from the general description in the materials. Neverhteless, we suspect there are similarties between the contracts.
According to the Mr. Goldstein and Ms. Siskel, the museums retained control over their brand name and logos. Each museum attempted to maintain some control over curatorial selection and design, the education plan, Web site, on-site staffing and hiring, and on-site Tut related revenue-generating opportunities. Mr. Goldstein noted that complete curatorial control was impossible given the “packaged” nature of the exhibition. He did note, however, that the level of control that LACMA retained was not all that different from its control over other traveling exhibitions that are assembled by other museums. Moreover, the commercial participants had no input into the curatorial process. The framework for those decisions was apparently developed during a meeting between the museums and the Egyptian government in Basil, Switzerland. Both Mr. Goldstein and Ms. Siskel were clear that maintaining museum integrity and reputation are something that any museum negotiating an arrangement with a commercial entity must keep in the forefront.
Both speakers acknowledged that they expected criticism because of the involvement of commercial entities. They believe that the quality of the exhibit should be judged solely on the merits and not on the means used to finance, sponsor, and stage the exhibit. They knew that the “$30” admission price draw criticism. Yet both pointed out that museums are operating in a competitive entertainment market. In their view, $30 was a relatively inexpensive admission price when admissions to Disneyland, operas, and Broadway shows are the basis for comparison. Although Broadway and Disneyland are commercial operations, a lot of music, opera, theatre, and dance is staged by nonprofits. One only has to look at Stubhub to see the prices that tickets to the Pajama Game are bringing. That play is staged by the New York City-based Roundabout Theatre Company, a nonprofit theatre group.
Both Mr. Goldstein and Ms. Siskel also noted that museums entering into these sorts of arrangements must focus on the tax issues, particularly on protecting their tax-exempt status. This means making sure that the exhibition primarily furthers the museum’s mission rather than the private interests of the commercial entities. Obviously any museum considering such a venture should consult with a tax lawyer. As a practical matter, the tax issues will not preclude this sort of arrangement, particularly if the museum is a large institution and the exhibition is a relatively small part of its overall ongoing activities. But museums do need to be cognizant of these issues. For a leading case on nonprofit/commercial partnerships, see Plumstead Theatre Society, Inc. v. Commissioner, 74 TC. 1324 (1980), aff'd, 675 F.2d 244 (9th Cir. 1982).
The most significant and far-reaching issue posed by the Tut exhibition is whether this monetization of cultural heritage will become even more pervasive as commercial entities like AEI and AEG look for more product. Even if those entities are not involved, can we expect to see owners of other cultural artifacts charging significant fees for what are elaborate lending arrangements rather than engaging in traditional reciprocal loans between institutions? In other words, will European museums or governments put together traveling exhibits of their works of art rather than agreeing to lend painting X or painting Y for a show curated by an American museum featuring paintings by a particular artist? Will such monetization eliminate scholarship at the local museum? Joe the curator at the Chicago Art Institute may see a linkage between paintings in the Art Institute’s collection and the works of a 17th century painter, but may be unable to put together a show because museums that own that painter’s works may demand high fees for lending the works. This is an issue that those in the museum world will need to monitor if they are to maintain their stellar reputations with the public.
The speakers also made a number of other interesting points. Mr. Goldstein noted that the exhibtion probably placed the greatest burden on LACMA's accounting staff. The agreements provided for some very detailed and complex allocations and tracking. He also was impressed with the quality of the special cases that were developed for the show.
All and all, a truly outstanding presentation. We can only hope that the actual exhibit equals the quality of the presentation when King Tut arrives in Chicago.
It should be noted that Ms. Siskel has recently changed positions and is now Vice President of Operatons, Chicago Botanic Gardens.
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