Bottom Line On Broad Gift

0

Eli Broad’s decision to lend, rather than give, his art to the Los Angeles County Museum of Art is a fabulous deal financially for LACMA.

Of course, that’s not the impression you got from the coverage that followed Broad’s announcement last month. It’s been described, most civilly, as “a disappointment,” and more savagely as a reputation-roughing event with “serious implications for LACMA’s future,” according to one headline. An art critic for Time.com put it simply: “LACMA got screwed.”

Time out here.

Art critics might know art and they might understand how reputations are burnished in the rarefied world of institutional art. But, I dare say, most art critics are not businesspeople who appreciate the beauty of a great financial deal. Broad, who’s helped build two Fortune 500 companies, is such a businessman. And the financial importance of his decision has been skipped over by some.

Here’s the background: Broad has some 2,000 pieces of contemporary art, most of which are owned by his Broad Art Foundation, and some by him and his wife personally. Rather than give all or a portion of that collection to LACMA, he’s decided to keep ownership of it. LACMA can borrow what it wants for as long as it wants. If LACMA wants, it can turn a piece back in and get another.

But here’s the important financial part: Broad will pay all the costs of the art. He’ll store it, secure it and conserve it. He’ll pay to insure it, which can’t be cheap in earthquake-prone

Southern California.

I asked Broad last week what all that’s worth. He estimated it costs him close to $1 million a year.

I asked him how LACMA benefits from his decision to keep, rather than give, the art. “They don’t have to pay those costs,” he shot back.

Indeed, LACMA gets the benefits of ownership without the burden of paying perhaps $1 million in costs every year.

The downside for LACMA? It doesn’t get to call the art its own. When the pieces are loaned to other museums, they’ll have Broad’s name on them, not LACMA’s. That, according to some, will hurt LACMA’s reputation.

Well, maybe so, but consider an analogy. Suppose your uncle had a fabulous collection of exotic cars, and he gave you a choice. You could choose to take ownership of the entire collection, and in that case, you’d have the reputation of being a big exotic car owner, but you’d have all the costs to insure the cars, and maintain and store them. Or, instead, you could choose to let your uncle keep ownership. In that case, he’d pay expenses attendant to ownership, but you could drive whatever you want, whenever you want, for free. Tired of the Lamborghini? Turn it in and get the Bugatti Veyron.

I don’t know about you, but I’d choose the second option immediately and gleefully. I wouldn’t fret about the damage to my reputation longer than it would take me to say, “Red Lotus, please.”

LACMA is getting a great deal. Oh, and throw in the fact that Broad gave $56 million for LACMA’s new building to house the contemporary art and that LACMA charges admission for folks to walk through it, and LACMA has a fabulous deal.


Charles Crumpley is editor of the Business Journal. He can be reached at

[email protected]

.

No posts to display