Money woes have SAM feeling 'a little beat up'

The Seattle Art Museum is drawing record crowds to 'Picasso,' but financial troubles have forced it to borrow $10 million from its own endowment. Will SAM's risky and ambitious downtown expansion pay off in the long run?

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The Seattle Art Museum, with its 'Hammering Man' sculpture, adjoins the 42-story office tower built by now-defunct WaMu bank.

The Seattle Art Museum is drawing record crowds to 'Picasso,' but financial troubles have forced it to borrow $10 million from its own endowment. Will SAM's risky and ambitious downtown expansion pay off in the long run?

Part 1 of 2

On the first Thursday in November, the kind of chilly, wet day that discourages people from going out, the Seattle Art Museum admitted visitors until midnight, an unusual accommodation made for its Picasso exhibit, the most heralded, expensive, logistically complex in the museum’s history.

Well into the night, when residents of a city typically seek entertainment in the form of music or sports, people stood in lines with no visible end in the museum’s lobby, for discounted tickets to see art. Two floors above, ticket-holders waited again in platoons to be admitted to the Simonyi Special Exhibition Galleries, where more than 150 paintings, drawings, sculptures and photographs by the cubist master Pablo Picasso were displayed. Attendance for the first four weeks of the exhibition, which started Oct. 8, had almost doubled the museum’s somewhat conservative expectations.

Viewing some of the world’s most valuable art at 10 p.m. is an enviable amenity for any city. On that day, a record 10,394 people went to see “Picasso: Masterpieces from the Musee National Picasso, Paris” — a figure roughly equal to the attendance of an NBA basketball game or rock concert, reassuring numbers for an institution at a crossroads.

“It is definitely a milestone,” said Derrick Cartwright, who succeeded Mimi Gates as the museum’s director one year ago. He explained that the exhibition validates the status of the Seattle Art Museum (SAM) in international circles. To be Picasso-worthy is to be more than a local, provincial museum.

“It’s the point from which we will mark our progress,” Cartwright said. “This is a real turning point for us. Hopefully we can correct some of the bad luck we’ve had.”

Shortly after the Picasso exhibit ends on Jan. 17, the museum will close for two weeks — a furlough intended as a cost-saving measure for the museum, which earlier this year faced a budget shortfall for the first time since its meteoric growth spurt began two decades ago. It also trimmed staff (eliminating 15 of 223 jobs) and cut the salaries of high-level administrators including Cartwright in order to save about $1.3 million for the 2011 fiscal year, which began in July as the museum prepared for its most important show ever.

SAM’s annual operating expenses nearly doubled from a range of $15 million to $18 million before its recent expansion to $31.1 million in 2008. It is on course to spend just under $25 million in 2011.

The cost overruns are due to plenty of factors, the most obvious of which is the national recession. Contributions and attendance are down at SAM and many cultural institutions around town and across the country. The Seattle Repertory Theatre, the Pacific Northwest Ballet, the Seattle Symphony, the Seattle Opera: All have either cut staff or reduced pay recently to save money, according to The Seattle Times.

Museums and other institutions are prone to fluctuations in the stock market because many have endowments that depend on stocks as investments. And because some large museums also take on considerable debt to grow, they also are vulnerable to the bond market and rising interest rates.

San Francisco's Asian Art Museum is currently trying to avoid bankruptcy by renegotiating $100 million in debt with its creditor — coincidentally, J.P. Morgan Chase, the bank that SAM is now tied to financially after the collapse of Washington Mutual bank. The Wall Street Journal reported last week that the San Francisco museum's difficulties stem from a 2005 loan it took out to move into a new building, and that it is hardly alone in its financial troubles.

But making SAM’s budget problems uniquely difficult is that the $56 million debt it took on for its expansion involved a partnership with now-defunct WaMu to build a new museum and office tower. When the bank famously folded, the rental income SAM had been counting on disappeared, severely crimping its cash flow.

In the context of SAM's finances, the Picasso exhibition arrived at an inauspicious time, in the wake of layoffs, pay cuts, and ballooning debt. To meet its payment obligations on that debt, the museum in September said it had to borrow $10 million from its endowment (currently valued at $96 million). The deal to show the Musee Picasso’s collection (made possible because the Paris facility is closed for renovations) was struck when SAM was flush. If the same opportunity arose under current financial conditions, SAM would likely have to pass.

From another perspective, however, the exhibition serves as a great portent of the museum’s future. Its cash flow problems, while serious, are theoretically temporary. In the meantime, SAM has secured the space it needs for decades to come, along with hundreds of pieces of art to fill it with (promised by private collectors) and, it seems, an audience that might be convinced a true, world-class museum is in their backyard. Once the furlough ends Feb. 13, the museum will stage an exhibition of performance artist Nick Cave’s “soundsuits,” forms of wearable sculpture. This summer, SAM will explore the national pastime, baseball, through the work of three artists: Douglas Tilden, Norman Rockwell, and Jacob Lawrence.

“We’re planning for a challenging year,” Cartwright said, “but this is not a time to go into hiding, this is a time when the community needs its institutions to lift it up. This is a time when the community is hurting. If this museum does its job, people who come in feeling low will leave feeling inspired about their world.”

While older, more august institutions exist in other American cities, the Musee Picasso chose SAM to be the first U.S. museum to show its collection, which is the art Picasso had chosen to keep for himself. His estate, upon the artist’s death, turned the works over to the French government. (While Picasso is Spanish, he lived most of his adult life in France.)

“As boundaries and centers of power and influence shift in this globalized world, Seattle is clearly a city of the present and the future, and it is especially meaningful to have this exhibition shown here,” Musee Picasso curator Anne Baldassari wrote in a statement released by SAM.

Piccaso’s close friend and biographer John Richardson deduced that Picasso, a forward-looking artist, would have loved Seattle, a forward-looking city, Cartwright said.

In less than a few decades, the 77-year-old SAM has been transformed from an Asian art museum to an encyclopedic one, capable of exhibits as ambitious as any in the world. Cartwright likened SAM to a middleweight champion moving up a weight class.

And as a heavyweight, he said, SAM “is getting a little beat up.”

Tomorrow on Crosscut: The complex real-estate deal at the heart of SAM's financial troubles, and the museum's recovery plan.


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About the Authors & Contributors

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Hugo Kugiya

A former national correspondent for The Associated Press and Newsday, freelance writer Hugo Kugiya has written about the Northwest for the Puget Sound Business Journal, The Seattle Times, the Los Angeles Times, and The New York Times. His book, 58 Degrees North, about the sinking of the Arctic Rose fishing vessel, was a finalist for the 2006 Washington State Book Award. You can reach him at