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Text File | 1992-10-19 | 8KB | 155 lines

                                                                                BUSINESS, Page 36

The CEO of Culture Inc.


Controversial Guggenheim director Thomas Krens is changing the
way the world's art museums operate

By ALEX PRUD'HOMME -- With reporting by Alexandra Tuttle/Paris


    In 1988 New York City's Solomon R. Guggenheim Museum was
in trouble. Money was tight; the museum's famous Frank Lloyd
Wright-designed building was falling apart; exhibitions were
uninspired; donors were losing interest. Enter Thomas Krens,
armed with a degree in nonprofit management from Yale. As the
Guggenheim's new director, he offered the board of trustees a
stark choice: Preserve funds and run the museum conservatively,
or attack. "If you want a vital institution," he said, "change
has to take place on so many fronts that it's likely to be
bewildering."

    That turned out to be an understatement. Today the museum
has projects going in New York, Massachusetts, Italy, Austria
and Spain, and a Guggenheim exhibit has just wound up a
four-month tour of Australia. Using aggressive financial and
marketing strategies normally applied to commercial enterprises,
Krens, 45, may be reinventing the way museums do business -- and
in the process creating the art world's first multinational. He
is the most outspoken and controversial of a growing number of
museum directors who are fusing hard-edged business acumen with
classic connoisseurship.

    "He's really a visionary," says Arthur Levitt Jr., former
head of the American Stock Exchange and a Guggenheim board
member. "But he's breaking some eggs in the art community."
Krens' business-school jargon and management style offend many
in the traditionally genteel, nonprofit world of museums. Says
Hilton Kramer, editor of the New Criterion, a monthly arts
review: "Krens has so far proven himself to be a complete
disaster. His conception of a museum is all about expansion.
He's a perfect example of what happens to a major cultural
institution when it is given over to a bureaucrat."

    After a 20-year boom in the museum business, the costs of
acquiring, insuring, transporting and storing art are spiraling
beyond the means of many institutions. As tax breaks that
encouraged the rich to donate to museums are eliminated in the
U.S. (roughly 80% of all the objects in American museums are
gifts), corporate and individual contributions are drying up.
Public funding for art is shrinking dramatically. According to
the American Association of Museums, as many as 29 states are
contemplating reductions of 50% or more in art funding. And the
recession has dampened Americans' interest in visiting museums,
buying gift-shop tchotchkes and becoming members.

    Krens' solution is a three-pronged attack that
traditionalists consider radical:

    Construction and Financing.

    The museum's spiral-shaped building on Fifth Avenue will
reopen in May after two years of restoration and expansion. The
$48 million project will increase exhibition space by
two-thirds, even though critics charge that a new, 10-story
annex designed by Gwathmey & Siegel detracts from the Wright
building's architecture. At the same time, the Guggenheim will
unveil a fully funded $5.5 million exhibition and office space
in New York's SoHo district, designed by Arata Isozaki. To help
pay for the flagship expansion -- and additional storage
facilities -- the Guggenheim floated $54.9 million in tax-exempt
bonds in 1989. Other museums issue bonds to finance projects,
but typically use their endowments as collateral. The Guggenheim
has an endowment of only $30 million and its loans are secured
with a letter of credit from the Swiss Bank Corp.

    De-accessioning.

    In May 1990 the Guggenheim auctioned three paintings from
its extraordinary collection of 19th and 20th century art -- a
Kandinsky, a Chagall and a Modigliani. The purpose was to raise
$30 million for a deal to acquire more than 300 pieces of
American Minimal art owned by Italian collector Count Giuseppe
Panza di Biumo. It was the first step in Krens' plan to become
a world-class presence in postwar art. Although such sell-offs
-- "de-accessionin museum jargon -- are not unprecedented,
cognoscenti complained that Krens was callously treating
masterpieces as "assets." Maybe so. But each of the paintings
went for more than 40% above Sotheby's highest estimate,
bringing in $47.3 million. Krens insists that he does not have
a policy of de-accessioning and sold only to obtain the Panza
collection.

    Franchising.

    Because of space limitations, the Guggenheim can show only
about 3% of its 6,000 works at any one time. To air out its
collection and raise the museum's profile, Krens hopes to create
what amounts to Guggenheim franchises. While the Whitney Museum
of American Art has branches around New York and Connecticut,
the Guggenheim is the first museum to think of opening
international satellites.

    Critics mock Krens for creating a "McGuggenheim" chain and
contend that constant travel will endanger fragile art. But the
museum insists that every precaution is taken to ensure quality.
Krens argues that overhead would be kept to a minimum by
planning exhibitions years in advance and lining up
international companies as sponsors. The key element is that
host governments would bear the cost of building and operating
the franchises, benefiting from the cachet (and tourist dollars)
generated by the visiting collection.

    In the U.S., Krens has been involved in planning an $87
million satellite museum in North Adams, Mass. If the
long-delayed project gains enough financial backing -- most
importantly from the state -- the Guggenheim would operate its
new art outpost much as it has the Peggy Guggenheim Collection,
housed in a neo-Palladian palazzo on Venice's Grand Canal since
1979. And Krens is making moves in Europe. In December
representatives from Bilbao signed an agreement for a $100
million Spanish Guggenheim to be designed by architect Frank
Gehry. In 1989 Salzburg proposed an $80 million Austrian branch
to be built inside a mountain. But many in Salzburg -- resentful
of the huge cost and what they see as Krens' imperious ways --
oppose the project. In Paris, meanwhile, three of Peggy's
grandchildren are threatening to sue the Guggenheim over the way
the Venetian palazzo is run. "Krens has robbed the museum of all
its originality and personality," says one of the Guggenheim
grandchildren, art dealer Sandro Rumney. "He's just a
businessman." Replies Krens: "We believe we've been faithful to
what Peggy wanted in every way."

    "What cost success?" wonders a museum director. "He's very
smart and ambitious, but how many projects can you do and keep
your focus?" Krens is unapologetic. "My colleagues know what I'm
doing, and it makes them apprehensive," he says. "Are we
becoming a tough institution? I'd be a little bit concerned if
I were not on this side of the picture. I believe, culturally
speaking, that we're going to blow people's minds."

    Other young directors are watching Krens carefully to see
how his initiatives fare. Says Ned Rifkin, 42, the new director
of Atlanta's High Museum: "If Krens succeeds, we can truly say
there is a new way to foster and nourish these institutions that
are the lifeblood of our country." If not, Krens may be
remembered for little more than reaping the whirlwind of his
aggressive tactics.