Met Museum Investments Fall, Deficit Widens to Record (Update1)

Feb. 2 (Bloomberg) -- New York’s Metropolitan Museum of Art shed 14 percent of its staff in the year ending in June amid a record operating deficit.

At least 250 employees were fired or took buyouts as the museum reported that its investments declined by more than $600 million, or 24 percent.

Those numbers and others culled from the 2008-09 annual report posted on the Met’s Web site detail how even the city’s best-attended museum struggled as stocks and fundraising declined.

The museum “never expected to find itself facing the unprecedented challenges that were brought on by the recent global financial crisis,” wrote President Emily K. Rafferty and Director Thomas P. Campbell, who took over in January 2009 from its longest-serving boss, Philippe de Montebello.

The operating deficit widened to $8.4 million from $1.9 million. Spokesman Harold Holzer said that was a record for the 140-year-old museum. The job cuts were intended to circumvent future annual deficits of $20 million or more, the museum said.

Designated gifts by donors plunged by 46 percent to $43.1 million, according to the report.

The Met said it had 4.7 million visitors for the year ending in June. That compared with about 4 million at the American Museum of Natural History and 2.8 million at the Museum of Modern Art.

The Louvre, in Paris, is the world’s most-visited museum, with annual attendance of 8.5 million in each of the past two years.

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Membership renewal levels “dropped from those traditionally achieved by the museum,” according to the annual report. Even after venturing onto Facebook, YouTube and Twitter to raise money, the Met said income from fundraising via its Web site fell by 10 percent.

Voluntary retirement packages were accepted by 95 staffers -- including librarians, curators, editors, researchers and sales people -- with a combined 2,536 years at the museum. The Met fired 157 in its money-losing retail division as it closed 10 stores outside the museum.

The museum spent $70 million on construction as it renovated its American wing and galleries housing medieval and Islamic art. It spent an additional $39 million adding to its collection of 2 million artworks.

Before taking into account spending and gifts, its investments lost 19.8 percent in the year ending in June, slightly worse than the median 19.1 percent decline for foundations and endowments, according to Wilshire Associates, a Santa Monica, California, investment-consulting firm.

Investments totaled $2.3 billion as of June, according to the annual report. The decline didn’t have an immediate effect on operations because the Met determines spending based on the average market value of its investments over the previous five years.

With foundations’ assets and income off their peak, “the museum anticipates that support will remain soft” through June, according to the annual report.

To contact the writer on this story: Philip Boroff in New York at pboroff@bloomberg.net.