The Guggenheim regroups: The Story Behind the Cutbacks: in financial crisis, and with its downtown NYC expansion plan deferred or defunct, the Guggenheim museum continues to explore ambitious new global projects - Art & Money

Art in America, Feb, 2003 by Lee Rosebaum

Decline of Empire?

Financial difficulties tell only part of the story of the retrenchment of the Guggenheim empire. With the exception of Bilbao, the Krens-generated Guggenheims have suffered reversals. The Guggenheim SoHo folded a year ago, primarily for lack of audience, according to Krens. "As I looked at SoHo," he said, "I understood that it wasn't powerful enough to attract its own constituency. In other words, its audience was going to linger around 200,000 [annually]. It was not going to be able to create its own separate identity and endowment, because it probably wasn't big enough." To succeed, he reasoned, it would have needed enough space to present "five or six attractions," rather than two or three concurrent shows.

The Deutsche Guggenheim Berlin, on the other hand, has steadily and significantly increased its attendance, from 83,347 in 1998, its first full year of operation, to 126,057 in 2001. But Deutsche Bank, which funds the Deutsche Guggenheim, recently posted big losses and intends to cut back its signature art-commissioning program over the next five years, reducing the number of new works it sponsors from eight to five. Among its previous commissions, ranging in cost from $250,000 to $3 million, have been works by Jeff Koons, Gerhard Richter, James Rosenquist, Rachel Whiteread and Bill Viola. Some of the slack may be taken up by commissions funded by the New York-based Bohen Foundation, whose president, Frederick Henry, is also a member of the Guggenheim's board. At this writing, Deutsche Bank was negotiating its second five-year agreement with the Guggenheim.

In cyberspace, three outside investors--Pequot Private Equity, Softbank Venture Capital and GE Equity--lavished $20 million on Guggenheim.com, launched in 2001 but now offline. It was to have provided cultural content, news, travel information and "a wide range of e-commerce," according to its press announcement. "Guggenheim.com didn't cost us a penny," Krens observed. "It cost the venture capitalists. So, life is complicated." The site was shut down because "the ongoing server fees were in excess of a million dollars annually and there wasn't the cash to do that.... The venture capitalists were trying to put together a second round of funding," when the 9/11 attack occurred, making the outlook for e-commerce even less promising.

Though open only a bit longer than a year, the Guggenheim's Las Vegas branches may turn out to be a bad bet, moneywise. The Guggenheim Las Vegas and the Guggenheim Hermitage were expected to ring up annual multimillion-dollar jackpots for the museums in New York and St. Petersburg. Instead, they have merely broken even (start-up costs excluded), except for some loan fees for the State Hermitage Museum.

"Certainly, in retrospect, our expectations [for Las Vegas] were unrealistic," Krens conceded, noting that revenues had been projected at two to three times the approximately $10 million earned in 2002, before deducting the cost of programming and advertising. Daily attendance, projected at 5,000, hovered around 1,750 at the end of last year.