Two months shy of its 10th anniversary in a glass-and-steel showpiece on Washington’s most prestigious thoroughfare, executives at the struggling Newseum will meet Thursday with a top real estate firm to explore options that include selling their building or moving to another location.
The museum’s financial woes, including lackluster fundraising and the weight of its primary benefactor’s $300 million debt burden, have long prompted speculation that it would be forced to leave its grand location on Pennsylvania Avenue, just blocks from the Capitol, or close altogether. But Chief Operating Officer Scott Williams insisted in an interview Wednesday that its biggest supporter, the Freedom Forum, intends to keep the museum alive.
“The plan is to continue to have the Newseum in some capacity, here or perhaps elsewhere,” Williams said.
The survival of the Newseum — which charges one of the city’s highest museum entrance fees at up to almost $25 per person — has long been in doubt as it has sought to compete for visitors and donors in a capital awash in free cultural institutions. In 2016, the museum operated at a substantial loss, spending $8.2 million more than the $55.7 million in revenue it generated, according to previously unreported tax documents. That was more than triple the shortfall from the previous year. The museum has posted an annual deficit every year since it opened in its current location, tax records show.
“It’s a slow-motion disaster,” said a person familiar with the museum’s inner workings and finances who commented on the condition of anonymity to speak frankly about nonpublic matters.
The museum is at the center of a particularly complicated real estate puzzle. Not only does the 470,000-square-foot building house the Newseum, but it also is home to dozens of apartments and the Wolfgang Puck restaurant The Source. The complexity of the building, which was appraised at $667 million in 2014, might require an unconventional solution for its future. One option, according to Williams, is finding a buyer who “wants to use part of the building and loves the idea of a museum here [and] might let us lease back part of it. There are so many different options.”
The selection of Eastdil to guide that process may be a signal that the museum is open to a creative approach. The firm, which describes itself as “a low-profile powerhouse,” touts its expertise in property sales, as well as its investment banking services, loan sales and financing. The company is one of the nation’s most active brokers for large commercial real estate deals. In 2011, it brokered the sale of the Watergate offices, a building made famous by the break-in at Democratic Party headquarters that led to President Richard M. Nixon’s resignation.
Eastdil officials did not respond to an interview request.
The Newseum opened in 1997 in more-modest environs in Rosslyn, Va. It made a splashy move in April 2008 to its current location, a dramatic structure with a soaring glass facade. It amassed a collection that includes a large chunk of the Berlin Wall and an antenna salvaged from the wreckage of the World Trade Center after the Sept. 11, 2001, terrorist attacks. But it flailed in its efforts to find a sustainable financial model, and it suffered through the rocky tenures of several chief executives who were unable to balance its ledgers.
In August, amid heightening worries about its future, the Newseum undertook what it called a “strategic review” of its operation. Little information about the review or how it has been conducted has been disclosed publicly. Williams said that a public statement will be made Thursday after the meeting with Eastdil.
The museum’s finances have been a perpetual source of concern, even as it has paid hefty salaries to its top executives. It has an outsize reliance on a single donor. The Freedom Forum — established by USA Today founder Al Neuharth — is its largest source of contributions, turning over $22.5 million in 2016.
The Newseum is billed as a monument to the First Amendment and an exploration of media in the United States. From a financial perspective, however, it looks as much like an events space as a museum.
The Newseum earned $18 million in rental and catering revenue and only $7.8 million in admissions in 2016. Other revenue came from a parking garage and food court. The museum attracts about 800,000 visitors annually. Williams, the chief operating officer, disclosed Wednesday that it recorded an uptick in admissions in 2017 when 855,000 people visited — its best attendance figures since its debut year.
To its supporters, pondering the museum’s future is nothing short of an existential exercise with ramifications far beyond a mere building.
“Arguably in 2018 the notion of free press and the First Amendment and other elements of the Bill of Rights are perhaps more important to remember and understand than they have ever been,” said Tom Rosenstiel, executive director of the American Press Institute. “I think in many ways it’s an extraordinarily good time to rethink what this means to us.”
Jan Neuharth, the Freedom Forum’s chief executive, was not available Wednesday. In August, she said the foundation could no longer prop up the museum without help. (Tax records show the Freedom Forum has poured $272 million into the museum from 2008 to 2016.)
“It has become obvious that the current model — where the Freedom Forum is the primary funder of the Newseum — cannot continue indefinitely at this level,” she said in a statement. “Left unchecked, this deficit spending rate would eventually drain the Freedom Forum’s entire endowment.”
Williams, the chief operating officer, said Wednesday he is confident the museum’s main benefactor is committed to its survival.
“The Newseum is one of the tools the Freedom Forum uses to champion the First Amendment and the freedom of the press,” Williams said. “They have no intention of it going away. . . . The Newseum will continue.”
Now the big question is this: How?
Jonathan O’Connell contributed to this report.