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The Met's $3 billion endowment couldn't save it from layoffs as iconic museum struggles with pandemic

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The Metropolitan Museum of Art reopens its doors to the public on Saturday after the coronavirus pandemic forced it to close for an unprecedented 5 months.

The iconic New York City museum, which celebrates its 150th anniversary this year, is projecting $150 million in lost revenue from the pandemic through next June and had to cut its staff by 20% through a combinations of layoffs, furloughs and early retirement packages. Like many museums throughout the world, the Met is facing an uncertain road ahead.

“It’s an exceptionally difficult time for the cultural landscape,” spokesman Ken Weine said in an interview.  “We are very eager to reopen. But we will be reopening in a very different environment.”

Across the country, cultural institutions of all sizes have experienced serious financial challenges during the pandemic. According to a June survey from the American Alliance of Museums, 16% of museums believed they faced a significant risk of permanent closure without additional financial relief.

Even the Met — with a $3.3 billion endowment and a 150-year history of generous donors — has struggled amid the financial shock.

Before the pandemic, the museum was on its way to balancing its budget, according to CFO Jamie Kelleher.

“But of course, Covid hit and the world changed,” she said.

The Met closed on March 13 after New York City Mayor Bill de Blasio declared a state of emergency and shuttered most cultural institutions. That left the museum, which has an annual budget of around $300 million, without any of its usual revenue from admissions, retail sales and restaurants. Its more than 2 million square feet of gallery space, usually filled with both tourists and local New Yorkers, sat empty.

The museum cut spending on programming and new acquisitions and also trimmed executive pay. It also has received about $4 million via the CARES Act Employee Retention Credit.

“Those measures were taken with an eye toward doing everything we could to preserve jobs,” Weine said. 

The Met ultimately decided to reduce its headcount by more than 400 positions — some 20% of its staff. These cuts were made through a combination of volunteer retirement programs, furloughs and layoffs.

When the coronavirus crisis first hit, the museum launched an emergency relief fund, which redirects some endowment earnings as well as support from trustees and other donors. To date, the museum’s trustees have raised $30 million for this effort.

“So that fund is going to be able to address half, if not more than half, of the lost revenue that we expect over this period,” Kelleher said.

Memberships, which usually makes up about 10% of total revenue for the Met, aren’t expected to drop significantly. Members are “very eager to return,” Weine says, and were able to go Thursday and Friday before it reopened to the general public. 

Most corporate support comes through exhibition sponsorships, Kelleher says. Despite changed exhibition dates, most sponsors have remained flexible and  haven’t pulled any significant deals, she said. 

Bank of America is the lead corporate sponsor of “Making The Met, 1870-2020” — the signature exhibition celebrating the Met’s 150th anniversary. The exhibition features more than 250 works of art and explores the museum’s history and development.

“What is unique about the American system of funding culture, and philanthropic funding in general, is it’s philanthropy that funds many of the things that our society treasures and relies on the most,” Weine said.

New York Gov. Andrew Cuomo announced Aug. 14 that museums, in addition to aquariums and other cultural centers, in New York City would be able to reopen August 24. The state requires operating at 25% capacity, with timed entry. Masks and temperature checks will also be required.

“The challenges will continue, even after we reopen,” Weine said.

The Met has seen record numbers of visitors in recent years. In Fiscal Year 2019, 28% of the Met’s more than 7 million visitors were international tourists. Now, the Met will be reopening to a limited and almost entirely local audience.

“What has been striking in these months is how uncertain the terrain is and how every day, it can and has moved in a different direction, from the public health reality to the pace of the economic recovery,” Weine said.

In this environment, preparing for the future can be a challenging task. The Met is continuing to model several different scenarios for the months and years ahead.

Kelleher says that what seemed to be pessimistic outlooks 6 months ago have actually turned out to be optimistic. 

“We need to be prepared to be able to weather a storm that is a lot longer than we ever thought,” she said.

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