More on Museums and the Economy

Alexandra Peers of the Wall Street Journal has a very interesting article on museums and how they plan on surviving in the future. Interesting point is that many museums during the boom times of the past few years have adjustable rate bonds which financed the construction of renovations, expansions and new wings. The question of course is how will they repay these bonds in a contracting economy.

Peer reports The economy's swoon and Wall Street's woes are taking a particularly specific and tough toll on art museums. The art boom of the past two decades, and the resulting skyrocketing costs of acquisitions and insurance, led museums to staff their boards with more than a few deep-pocketed executives from real-estate firms, financial institutions and hedge funds -- industries that are now among the hardest hit. Plus, the tough times come at the tail end of a nationwide boom in museum expansions, and many of those glamorous buildings and new wings are not yet paid for. A handful of major institutions financed those expansions with bond issues that face the same climbing adjustable interest rates that are bedeviling homeowners.

For some time now, most museums have been betting that a golden age of giving was soon to end. But even institutions that braced for a downturn say the stock market's decline, the bankruptcy or disappearance of major investment banks, and the liquidity crisis have made this one unique. "We know from history the bell curve of support goes down," says Emily Rafferty, president or the Metropolitan Museum of Art. "But as far as the corporate world is concerned, we've never seen anything like this" current climate, she says. "We need to navigate a very, very difficult time."

The article is a very interesting read with some very good insights into the museum management. Click HERE to read the Wall Street Journal Article.