Tuesday, July 03, 2012

More on the lack of financial problems at the Barnes

So I went back and looked at Judge Ott's opinion -- his first one, from January 2004 -- to see what it had to say about the Barnes's financial condition at the time.  The bottom line:  "What has been established beyond peradventure is that The Foundation's finances have reached a critical point."

More specifically, here's how he summarized the evidence:
  • The world tour of works from the collection -- a world tour I'm sure most of today's hand-wringers bitterly opposed -- in the mid-1990s generated about $16 million.
  • Half of those proceeds were used for renovations.
  • The other half was placed in a restricted account for capital improvements.  About $4 million remained in that restricted account.
  • Regarding assets available for operating expenses, there was $9.5 at the end of the 1980s.  That had fallen to $6.6 million by the end of 1997, $2.4 million by the end of 1998, and $1.6 million by the end of 1999.
  • "The Foundation had been operating in the red over the past decade."
  • Pew, Lenfest, and the Annenberg Foundation had provided $3.1 million in bridge financing to cover immediate operating expenses.  "In essence, the Foundation is covering its costs of operation at present only because of the bridge financing from Pew and Lenfest."
  • The Foundation retained Deloitte and Touche "to conduct a financial analysis of three different operating scenarios at The Foundation," including one that continues "the education programs and public visitation schedule as they now stand."  "All three were projected to result in deficits."
  • "The Board rejected the idea of filing for bankruptcy."
  • "Lower Merion Township" -- or, as I believe they have come to be known over the last few years, The Friends of The Barnes -- "certainly bears some of the responsibility for the financial crisis.  The Foundation's attempt to raise revenues by increased public access to the gallery was met with hostility, bordering on hysteria, from some of the owners of the adjacent houses.  The township reacted to the situation by imposing a series of administrative regulations that have put a stranglehold on the Foundation's admissions policy."  Hey, that's what Friends are for.
But never mind all that.  The important thing is that a former Barnes official wrote a blog post that said they weren't bankrupt at the time.