Yesterday, after reading our interview with Metropolitan Museum of Art President and CEO Daniel H. Weiss, writer Felix Salmon took a long look at the numbers in the institution’s annual reports, all of which are available online, and he doesn’t think the admission numbers add up. Salmon wrote:
There hasn’t been a spike in visitation over the past 5 years; in fact it has risen more slowly than revenues. What’s more, those visitors aren’t paying less: admissions revenue was $6.11 per visitor in fiscal 2017, which is higher, not lower, than the $6.02 it was in fiscal 2012. So I don’t know where Weiss is getting his 71% figure, but at best it’s cherry-picked. (It’s not by including membership revenue: although that hasn’t risen as fast as admissions revenue, it too has risen over the past 5 years.)
So while it’s true that the Met has swung from a $153,000 profit in fiscal 2012 to a $10.1 million loss in fiscal 2017, it’s very hard to blame admissions revenue for that. Much more germane is the $63.5 million rise in annual expenses, including a $7.5 million spike in “financial, legal, and other administrative functions,” as well as $10.8 million in “restructuring charges,” which is a euphemism for layoff costs.
Salmon doesn’t see how admissions are the issue, and he believes the answer is an appeal to donors, pointing out that: “In the last year alone, the Met received $232.2 million in public and private donations.”
A big chunk of that money went towards the museum’s endowment, which Salmon points out has grown in the past five years (from $2.58 billion in fiscal year 2012 to $3.43 billion today). That certainly is a significant jump, and he even quotes the museum’s CFO in the 2016–17 annual report, who writes:
The Met’s net assets grew by $399 million in fiscal year 2017, from $3.0 billion to $3.4 billion. Investment returns of 14.1% drove a substantial part of this improvement, coupled with $106.5 million of endowment gifts.
Pointing out that the museum’s endowment continues to grow, receiving over $100M a year in donations, he posed the question:
You’re already receiving over $100 million a year in gifts from big private donors, much if not most of which is going into a general endowment which can be used for anything you want. If you want to increase your revenues by $10 million a year, why not just take it out of that endowment?
While Salmon seems to believe the museum should adjust the endowment’s investment income to cover the admissions shortfall, his thinking diverges from Weiss’s thoughts on the issue.
It also seems to diverge from conventional thinking in the field as well: traditionally, the purpose of a museum’s endowment is to provide a financial bedrock for the institution’s ongoing stability by generating interest and dividends; while a small percentage is allocated for spending, it’s historically discouraged to draw on the endowment for operational purposes. As Lee Rosenbaum of CultureGrrl explains in a blog post on the topic, the Met Museum’s draw on its endowment is already at the high end of its 4.5%–5.75% range and she quotes their 2017 annual report (emphasis hers):
According to the Met’s fiscal 2017 annual report (p. 107), “spending rates applied to the market value of the endowment are limited to a range of 4.5% to 5.75%….The Museum applied a stated spending rate of 5.75% [the high end of its range] in fiscal year 2017 [emphasis added].”
As Weiss explained in the interview with Hyperallergic, shifting the burden away from admissions would mean they would have to depend more on donors, which the Met Museum head sees as being perhaps more exclusionary.
Hyperallergic reached out to the Metropolitan Museum for a response and they provided the following statement about Salmon’s article:
Mr. Salmon’s analysis misses the point: as costs have risen, admissions revenue has not kept sufficient pace.
Over the past 13 years, costs at all museums have risen, and while the admissions price has increased at all these venues (suggested for The Met, mandatory for others), the percentage of those paying full price at The Met has declined, plus the amount paid per visitor has declined. In 2004, 63 percent of paying visitors contributed the full suggested price of $12. Today, 17 percent pay the full suggested price of $25. In 2004, the average per visitor contribution was $7.39 ($9.58 adjusted for inflation). Today, the average contribution is $9.13 and our overall operating costs are substantially higher than they were in 2004.
Therefore, the policy has declined in two ways: people don’t pay what is expected and they are paying less than they did in the past. A healthy museum requires co-investment: from government, donors, and the public. We are seeking a modest adjustment in our revenue model to reset the admissions component of our overall revenues.
Finally, we disagree with Salmon’s suggestion of asking our generous contributors to offset an admissions policy that is not performing as intended and that is not meeting the institution’s needs.
UPDATE, 11:58pm EDT: Salmon has responded to the Met Museum’s statement on his blog post. He writes:
This is obviously a significant shift from Weiss’s original comments to Hyperallergic. But one thing remains the same: a visceral aversion to the idea that big donors might want to subsidize admissions (more than they already do). In the original interview, Weiss said he had a moral objection to asking David Koch to do such a thing. But surely subsidizing admissions is pretty much the best and highest use that donor money can be put to. After all, the whole point of a museum is to show art to the public. Art without viewers is nothing.
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Correction: An earlier version of this report incorrectly stated that Salmon “seems to believe the museum should spend part of its endowment to cover the admissions shortfall.” In fact, he was referring to the endowment’s investment income, which is variable. We thank LA Times art critic Christopher Knight for drawing our attention to this error. We have also added a small quote about the matter from Lee Rosenbaum of CultureGrrl to provide more clarity and context.