Berkshire Museum reached for 'silver' solution through arts sales

Posted
PITTSFIELD — When trustees of the Berkshire Museum met for a retreat in October 2016, they viewed a table of choices they might make about the institution's financial future.

In a slide called "Scenario summaries," the bad news was on the left: "Current," it said. "Unsustainable."

To the far right, in a column headed with the word "Silver" and the figure $69.78 million, the museum could see "major upgrades," reach goals on visitor experience, fix balance sheet problems and, in terms of the property, be poised for "major changes."

Nine months later, the board backed the silver option, announcing July 12 that it would seek to leverage more than $60 million from the sale of 40 works of art to overcome years of financial problems and make the "major changes" that only a reserve of nearly $70 million could achieve.

That peek into the board's process is contained in one of the court documents released Monday by the museum in response to requests from The Berkshire Eagle.

Other documents released include a redacted version of the museum's consignment contract with Sotheby's, a presentation from a May 2016 board retreat and a 12-page memo to the board produced by TDC, a Boston consulting firm.

All had been assembled by the Attorney General's Office in the course of its investigation into the legality of the planned sale; the documents were impounded Nov. 1 by Judge John A. Agostini at the request of attorneys involved in litigation over the sale, which remains on hold.

Taken together, the documents add numbers and context to the museum's effort to overcome financial problems and enhance its value to the community through a renovation and programming shift.

The nonprofit's New Vision project is controversial because it would be paid for in part by proceeds from the sale of works from the 114-year-old museum's collection. Museum field ethics restrict the use of such funds to the good of collections.

'Scenario summaries'


The single document related to the October 2016 board retreat, marked "confidential for Berkshire Museum board discussion only," notes that one option was to embrace recommendations in what became known as the "opening bid" choice outlined by the consultant the spring before.

For $25.61 million, the slide informed board members, the museum could fix its structural deficit, address "key needs" of its balance sheet and collections management and carry out "baseline" renovations.

A "bronze" option, though, at double the value of $52.09 million, would allow it to go further, but still achieve only "limited" architectural changes and bring about only a "modest refresh" of visitor experiences.

All of the check marks lined up in only one column, the "silver" choice.

In a statement Monday, the museum said the "opening bid" represented no change beyond the "status quo."

But as the TDC report reveals, the museum would have addressed its money woes for years to come with that option of applying $25.61 million to pay off aging bills and loans ($1.94 million), invest in facilities ($9 million), bolster its endowment (to $20.3 million from a then-current $7.3 million) while also tucking money away for working capital ($409,000) and an operating reserve ($1.2 million).

Consultant's report

The TDC report from April 2016, titled "Core Capitalization Needs," notes that it is "focused on quantifying the overall need, and not developing a strategy for funding this need."

For months, another newly released document reveals, trustees had known they were sitting on a collection worth up to $95 million.

The consultants' recommendations assume no change in the museum's business model, which the board voted to revamp in meetings in July 2016, according to court documents.

For that reason, the museum said Monday, the TDC recommendations are out of date, given its New Vision goals.

The $25.61 million figure appears on a chart on the report's third page and is described as a figure that uses conservative estimates "that would not leave the Museum in a high-risk position."

"We do however recognize that institutions each have their own degree of risk tolerance," the TDC team says, "and we look forward to discussing how you see these numbers and the level of risk the Museum should take going forward."

Data in the TDC memo, the museum said Monday, was produced "when the planning process was not even halfway through. Additional information was compiled after this document was considered."

But the TDC memo set a figure that is now part of the attorney general's argument that museum leaders went too far with their plan to sell 40 works.

In an Oct. 30 filing in Berkshire Superior Court, the state says the museum board's actions raise questions about whether they carried out their fiduciary responsibilities.

"First, the Board set a financial goal through its Master Planning Process that was so grand it could only be funded through wholesale deaccessioning of the Museum's most significant art," the motion reads.

It was, in short, the "silver" option of raising at least $60 million.

"This amount exceeded other options presented to the Museum and far-exceeded the $25.6 million the Museum's own consultant identified as necessary for the Museum to stabilize its operations."

Agostini, the Pittsfield judge who handled that case, saw it another way. He denied the state's effort to halt the start of the art sales, forcing the attorney general to seek, and secure, relief at the appellate level Nov. 10.

The museum said this week that its goal has been to do more than stabilize its operations. The $25.61 million target, it said in a statement, "does not address what is needed to sustain the museum into the long-term."

Setting values

When the TDC report arrived, it had been almost a year since both Sotheby's and Christie's, competing auction houses, visited Pittsfield to assess the museum's collection.

The values the two firms placed on the collection were shared at a board retreat in May 2016, five months before members looked at the "opening bid," "bronze" and "silver" choices.

That is now known because slides presented at that gathering were released from seal Monday. They were pages 25 through 30 in a presentation of unknown length.

The slides recap the nature of the museum's collection, noting its variety from fine art to animal specimens to ancient artifacts to living creatures in the aquarium.

The presentation then zeroes in on the auction houses, noting that they visited in July 2015 and issued evaluations that month and in October 2015, with the dollar estimates previously shared with board members.

"The auction houses evaluated objects with the highest values, those they would be best positioned to assist with selling," one slide reads. Sotheby's valued 270 objects, Christie's 503. Together, the firms studied 585 works and estimated their values between $54 million and $95 million.

"Of these," one slide reads, "40 objects are valued between $47 million and $85 million total."

Larry Parnass can be reached at lparnass@berkshireeagle.com, at @larryparnass on Twitter and 413-496-6214.

Unredacted Ex H by The Berkshire Eagle on Scribd


Exhibit E by The Berkshire Eagle on Scribd


Exhibit F by The Berkshire Eagle on Scribd


Exhibit T by The Berkshire Eagle on Scribd


TALK TO US

If you'd like to leave a comment (or a tip or a question) about this story with the editors, please email us. We also welcome letters to the editor for publication; you can do that by filling out our letters form and submitting it to the newsroom.



Powered by Creative Circle Media Solutions