From the WSJ Opinion Archives
LEISURE & ARTS
Guggenheim Tests the Limits of Generosity
NEW YORK--On June 3, a seven-person jury convened by the Solomon R. Guggenheim Foundation and supporters in Mexico awarded the commission for the world's newest Guggenheim Museum, a 50-story glass and steel column, to Enrique Norten of the Mexican architectural firm TEN Arquitectos. It is to be sited on the edge of a cliff outside Guadalajara. If the planned $250 million structure is built, it will bring to six the number of museums in the Guggenheim network here and abroad.
Back in Manhattan, the Guggenheim's flagship Frank Lloyd Wright building is covered with sensors measuring cracks that went unrepaired during its 1992 renovation and expansion. Within a year, the exterior will be stripped and replaced.
It's not yet clear who will pay for the Guadalajara tower. But the Guggenheim knows who will fund the repairs to what is arguably its most precious work of art: onetime trustee Peter B. Lewis, chairman and principal stockholder of Progressive Corp. Last January Mr. Lewis quit the board, which he'd chaired since 1998, in a dispute with the Guggenheim's director, Thomas Krens. However, Mr. Lewis still intends to honor his renovation pledge.
Officially, the post-Lewis era is an upbeat time for the Guggenheim. An exhibition of eight massive steel Richard Serra sculptures has just opened at the Guggenheim Bilbao, in Spain, its highest-profile satellite. It recently acquired a house in upstate New York containing an installation of 10 painted car hoods by contemporary artist Richard Prince. A new licensing campaign foresees an eventual $3 million to $5 million a year from Guggenheim-themed eyewear, fabric and paint.
The Guggenheim has at least one other new satellite plan, this one awaiting approval in Singapore, inside the proposed Sands hotel-casino. And a new board that now includes real-estate developers William Mack and Stephen Ross, Jennifer Stockman (wife of Reagan-era budget guru David Stockman), and philanthropist Louise MacBain has boosted pledges, according to Mr. Mack, the new chairman.
Mr. Lewis is wary, watching from a distance. He resigned after venting his frustrations to Mr. Krens and the board, citing negligible giving from other trustees, minimal financial transparency and an expansion mania that consumed Mr. Krens's attention and his own money. At the core of his despair was Mr. Krens. "I concluded that Tom was not manageable," he says. "He's got one idea, [expansion] and he's obsessed with it."
Trustees were expected to give a certain amount annually, says Mr. Lewis, noting that, with some exceptions, most of the Guggenheim's trustees failed to donate even $100,000--a low threshold for a major institution. Mr. Lewis's gifts during his 11 years on the board exceeded $77 million. In 2004, he pledged $15 million toward the estimated $20 million cost of repairing the Wright building's exterior--but demanded the board raise the rest before any work began. "It took over a year to suck out $5 million in cash from the trustees," says Mr. Lewis.
"Our trustees are very generous," counters Guggenheim spokesman Anthony Calnek. "Furthermore, over the last five years, board giving has increased greatly."
Trim and fit at 71, with an artificial leg that he attaches and removes during conversation, Mr. Lewis was forthright over breakfast in his West Side high-rise. He says Mr. Krens pushed for a Rio de Janeiro Guggenheim even after the board voted to abandon the plan, and that he signed onto the Singapore project without informing trustees. Mr. Lewis says the museum was $2 million in the red in January when Mr. Krens, at a board meeting, waved a $5 million check from Sheldon G. Adelson, whose company, Las Vegas Sands Corp., is behind the hotel-casino venture in Singapore and owns the Venetian Hotel in Las Vegas, landlord of still another satellite, the Guggenheim/Hermitage. He believes that this check balanced the museum's 2004 budget, which an April auditing statement shows to be in a $3 million surplus. "Impossible," says Mr. Calnek of the donation. "Our auditors would never let us do that."
So displeased was Mr. Lewis with the museum's accounting that, upon resigning, he refused to put his renovation pledge in writing. His own architect now monitors the project and won't release Mr. Lewis's money until it needs to be spent. "To avoid it being spent on anything else," says Mr. Lewis.
Mr. Lewis, who made his $1.6 billion fortune insuring high-risk drivers, met Mr. Krens through Frank Gehry, architect of the Guggenheim Bilbao. Scorning conventional museums as anachronisms, Mr. Krens sold Mr. Lewis on his notion of a Guggenheim orbit, with satellites in gleaming new buildings taking in art, crowds and expertise, and sending money back to headquarters. (For example, each city's project that gets to the design stage now pays the Guggenheim $2 million for a feasibility study.) The insurance maverick was drawn to the museum maverick, and for a donation of $50,000 Mr. Lewis joined the board in 1993.
It was the Bilbao Guggenheim's opening in 1997 that made expansion seem credible, launching a wave of Guggenheim supplicants--municipalities coveting the cachet and cash of having one's own Guggenheim. Bilbao's instant branding created what Mr. Lewis calls a "perfect storm"--a box-office windfall drawing about one million visitors a year that the museum hasn't been able to replicate at any other satellites. (Bilbao's attendance is still near that level.) He cites as projects dead after design not only the Rio de Janeiro venture, but one in Taichung, Taiwan.
"The only way to grow an art collection and to grow as a museum was to look at overseas relationships," says Ms. Stockman, the Guggenheim's new president. "It can't be refuted that that strategy really makes sense--[although] you can ask, 'Is it being implemented the best way?'"
Interviewed in his office, Mr. Krens says expansion still makes sense and can make money for the Guggenheim in Guadalajara and Singapore. "It's not so much motivated by the desire to have as many Guggenheims as you can as it is by the desire to access the art and culture of an important region," he says.
Mr. Lewis's doubts about the Guggenheim's finances arose as early as 1998, when he was recovering from a leg amputation, and grew after 2001, when Mr. Krens asked that funds from $40 million that Mr. Lewis gave for the endowment be diverted to cover operating deficits. Then, he found he couldn't read the books.
"The numbers presented were incomprehensible to me," Mr. Lewis recalled, "I begged and begged and sometimes my begging in meetings became loud. I just never got anywhere."
According to Marc Steglitz, the Guggenheim's deputy director and chief operating officer, who wrote in response to questions, "The format of management reports was significantly revised in 2003 to increase transparency of the global Guggenheim operations."
By 2001, Mr. Lewis was demanding cuts and staff reductions, but he had also championed the museum's most ambitious project yet, a $1 billion, 40-story Downtown Guggenheim, designed by Mr. Gehry again, for a site on the East River. The model alone cost $1 million. Mr. Lewis pledged "the last 25% of the cost of this project, up to $250 million," once the other funds were in hand.
Today he admits it depended on money he knew would never be raised. "It was $750 million short, and there was no sign of anything," he says. The attack of Sept. 11 was a further setback. Finally, "at my insistence," the museum canceled the project in December 2002.
Yet Mr. Lewis kept giving to the endowment, and releasing endowment funds to the operating budget to meet persistent deficits. "I started to develop that patina of doubt. My doubts began to build--the results continued to affirm the reasons I was doubting," Mr. Lewis said. Guggenheim satellites closed in Las Vegas (one of two originally in the Venetian) and in SoHo. Digital and online ventures also folded. Yet Mr. Lewis watched Mr. Krens plan new branches.
"Each one was a wing and a prayer, and they all fell by the wayside in one way or another," he says.
But Mr. Lewis says there was more to expansion than met the eye. "In speeches, it was, 'We're the museum of the future.' It was sold that sort of way," he says. In fact it was driven by the need for revenue. "The rationale always was, 'We had a nongenerous, noncontributing set of trustees--therefore we had to have other sources of revenue and capital--that's why we must expand,'" he says.
"It's not the Guggenheim--it's the Guggenheim merchandising the Bilbao effect," says Mr. Lewis.
The museum's financial woes are history, Mr. Krens insists, brought on by the 9/11 attacks, which halted European tourism and scared off corporate donors. Brazilian politics killed Guggenheim Rio in 2004 and Taichung's Guggenheim fell victim to Taiwanese politics. But by the time Mr. Lewis left the board, he says, the Guggenheim's budget was balanced.
"We do risk," Mr. Krens observed, eyeing a Daniel Buren installation that filled the Fifth Avenue rotunda. "The world's a complex place, you know. I remember there was a big terrorist incident in New York, too. Where is culture supposed to intercede, in the Garden of Eden?"
Ms. Stockman hopes to get the endowment, currently audited at $45 million, up to $200 million in five years. ("Why not make it $300 million?" jokes Mr. Lewis dismissively.)
With that target, and at least $250 million to raise in Guadalajara, the Guggenheim's fund-raising goals are nothing if not ambitious. On the Guadalajara project, Mr. Lewis echoed the reaction of skeptics: "I wonder where they're going to get that money." Yet he conceded that all they need is "one big supporter, and they can sustain themselves."
So far, that supporter is nowhere in sight, but one thing is certain. It won't be the insurer of high-risk drivers. "They tried to keep me from leaving. They told me, 'You two were such a team,'" Mr. Lewis said. "Yeah, we were a team. I wrote the checks and he [poured] the money away."
Mr. D'Arcy is a correspondent for The Art Newspaper.
