Sunday, March 17, 2013

Tim Rutten Scoops Everyone With News of LACMA's Rapidly Declining Balance Sheet

Tim Rutten, formerly with the Los Angeles Times and now at the Daily News turns the tables on LACMA and presents a case that  LACMA and not MOCA  has more serious long term financial problems and those problems started to get out of control in 2008 - which was just two years after Michael Govan was hired  And the date of the decline seems to start just two years after Govan took the reins.

Rutten opens  with a detailed and  look at both MOCA and LACMA and where they stand in the world. MOCA  has a collection of post 1945 work that only the Modern cam compare with while LACMA has multiple collections - none of which are are in the best in their class - which suggestsa why LACMA needs MOCA so much more than MOCA needs LACMA.  And then get he gets to the real meat of his argument:

....more to the point, the attractiveness of this takeover - and that's essentially what's on the table -- turns on the perception that LACMA's own finances are robust and MOCA's remain unstable. Before anyone rushes into anything, it's worth asking whether both those things are true.
A careful analysis of LACMA's publicly available audited financial statements paints a picture of an institution whose own foundation is not quite as steady as the chutzpah inherent in this merger proposal would suggest. The museum currently has an endowment of $110 million, but only $52 million is available as unrestricted funds. Between 2008 and 2012, its total assets declined from $797.5 million to $660.5 million. When you figure in bonded indebtedness and other liabilities, LACMA's net assets declined over the period from $387.4 million to $213.7 million or a total of $173.7 million. At the same time, its net revenues declined by $111.6 million.
When it comes to bonded indebtedness, LACMA's liabilities far outstrip any other leading American art museum; it is currently carrying on its balance sheet roughly twice as much as New York's Metropolitan Museum of Art and almost $100 million more than the Museum of Modern Art. Moody's has downgraded its outlook on LACMA's bonds to negative, and the museum's ratio between adjusted net assets and indebtedness is within one-hundredth of a point of triggering a technical default.
MOCA, by contrast, currently has no debt, $8 million in the bank, $23 million in its endowment with more to come shortly in donations, sources tell the Los Angeles News Group. It also is restoring the vigor of its board with the addition of activists like super agent Ari Emmanuel. Moreover, it's currently in talks with the National Gallery, which would like to provide curatorial assistance and loans of art without in any way infringing MOCA's independence.
Obviously, more needs to be done, but that's not quite the "troubled" MOCA nor the "dynamic" LACMA that many uncritical reports recently have suggested. There's no reason to rush into a merger that would irrevocably sacrifice MOCA's unique contribution to this region's aesthetic spirit.
What's interesting here is that I don't think any of these facts are unknown by anyone who closely watches the museums.  But as far as I know, the only person who has actually sat  down and done the math - has been... Tim Rutten.

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