Monday, June 14, 2004

It's built; will they come?

To survive, center needs revenue, repeat visitors

By Dan Horn
The Cincinnati Enquirer

The National Underground Railroad Freedom Center soon will raise the last of the $110 million needed to cover the cost of its home on Cincinnati's riverfront.

But paying off the construction bill is just the beginning.

To survive and thrive beyond its grand opening Aug. 23, the Freedom Center must come up with at least $10 million a year from ticket sales, gift shop receipts, private donations and federal grants.

Museum's first job: Explain what it is
Freedom center: What is it?
Slave Pen

Click here to view an Acrobat PDF file (4.6mb) showing a detailed comparison of the Freedom Center and other well-known venues.
That total is not exceptional for a facility the size of the Freedom Center, but balancing a budget has proven to be a challenge for institutions dependent on the tourist trade.

Attractions as diverse as the Rock and Roll Hall of Fame and Museum in Cleveland, the Cincinnati Museum Center and the Museum of African American History in Detroit all have struggled in recent years.

Even established national attractions, such as the Holocaust Museum and the Smithsonian Institution, both in Washington, D.C., have seen attendance drop during the post-9-11 economic swoon.

Although the Freedom Center is striving to be different from those institutions, it faces the same economic challenges. Museum and travel industry experts say the center's future depends on its ability to:

• Attract first-time visitors from around the country while giving the local audience reason to come back again. Center officials predict 260,000 visitors a year, but that would cover less than a third of operating costs.

• Maintain a reliable, well-balanced flow of revenue, ranging from corporate sponsorships to the sale of gift shop trinkets. Center officials say up to $7 million a year will have to come from private donations and federal grants.

• Establish a significant endowment that the center can tap to cover unforeseen expenses or a sudden economic downturn. Only about $1 million has been raised for an endowment that was projected to be $10 million by now.

"It's not rocket science, but it does take energy," says Kimberly Camp, former president of Detroit's Museum of African American History. "They're going to have to work hard."

Freedom Center officials say they're doing just that.

But they've already encountered some financial surprises: The cost of the building went up to $110 million in 2001 - $20 million more than the original estimate - because programs and exhibits were more expensive than anticipated.

Spencer Crew, the center's executive director, says finances are on solid ground and should continue to improve once the center opens and shows private donors and the ticket-buying public how much it has to offer.

Although some other institutions, including the Cincinnati Museum Center, have turned to taxpayers for help with annual expenses, Crew says he doesn't expect that to happen with the Freedom Center.

"We see ourselves as raising the necessary money," he says. "I'm not going to say it's a piece of cake, but I think it's doable."

Local support essential

Freedom Center officials expect to beat their attendance estimate in the first year but are bracing for it to eventually level off at 260,000. Combined with gift shop sales and special events, that translates into $3 million to $4 million a year.

Crew hopes to exceed those numbers and says the center will try to draw a wide audience through ad campaigns that will begin in late July, and by cultivating supporters around the world with international programs and awards.

He's also trying to distinguish the Freedom Center from other institutions with African-American themes, billing it as a hybrid of a museum and a learning center that focuses on freedom, rather than just slavery in America.

"You will see a wide variety of people highlighted and discussed here," he says. "It's not just for the African-American community."

No matter what the center's message, experts say, the core audience will be from the local and regional market.

"These things are sold as the big tourist attraction that people are going to travel hundreds of miles for and stay three days," says Edward Hill, an economics professor at Cleveland State University. "Usually, it plays out that the draw has to be mostly local. If they can't get the locals back to that museum once a year, it will not make it."

Keeping the locals interested means spending money to keep exhibits fresh. That sometimes drives up costs, but Camp says it's the only way to avoid the scenario that all museum directors fear: Visitors who leave saying, "Oh, I saw that last year."

Even when the exhibits do change, it's sometimes difficult to get that message across to people who think they saw all there was to see on their first visit.

At the Rock and Roll Hall of Fame, where about 90 percent of visitors are from out of town, efforts to bring in more Clevelanders have had little success.

"It's hard to engage the local audience," says the Rock Hall's president, Terry Stewart. "We've tried a lot of things on the local attendance, and it hasn't really moved the needle."

That's one reason the Rock Hall struggled during the recent economic downturn, laying off 21 employees, or about one-fifth of its staff, in 2002. Attendance, which was about 800,000 in the Hall's first year, now averages less than 500,000.

'A significant subsidy'

One influence on attendance that neither the Rock Hall nor the Freedom Center can do anything about is location: Both are based in mid-sized cities, hundreds of miles from big metropolitan areas on the coasts.

The cities may be nice, but unlike Washington or New York, they are not brimming with tourists eager for something to do.

Hill says the solution may be to market the center as a package deal with similarly themed museums in Detroit or Louisville, or with unrelated attractions such as a Reds game or the zoo.

"I can't see someone living in the great state of Maine saying, 'Eureka, I've got to go!'" Hill says. "But throw in a roller coaster and a couple tigers and hey, I'm there."

Several museum directors say the Freedom Center should have little trouble reaching the projected attendance of 260,000. Dennis Barrie, who specializes in museum development for Malrite Co. in Cleveland, says that may not be good news.

He says he would have expected a much higher attendance figure for a $110 million facility.

"That's not very ambitious," says Barrie, former director of Cincinnati's Contemporary Arts Center. "I'm just shocked at those numbers. It may be realistic, but it just seems to be an incredible investment for 260,000 people."

If the estimate holds true, Barrie says, it means the Freedom Center "will have to be subsidized pretty significantly" to cover its annual operating costs.

Some museums and educational facilities offset operating costs by establishing partnerships with colleges and universities, as the Carter Center in Atlanta has done with Emory University.

The Freedom Center has no such partnership, but Crew says it will be able to cover its costs. He says he expects to raise $5 million to $7 million a year through donations from individuals or corporations nationwide.

He says the center's founders have been successful so far in raising the money needed to build the facility - collecting $24 million last year alone - and he expects no significant decline after the building opens.

But individual and corporate giving, as well as attendance, tend to rise and fall with the health of the economy.

"The economy will dictate the success of all of us," says Douglass McDonald, president of Cincinnati's Museum Center.

Even when the economy is good, corporate dollars sometimes dry up when the newness of an institution wears off. The Rock Hall, which raised almost $5 million a year in its first few years, now receives almost no corporate sponsorships.

No rainy day fund

The fluid nature of fund raising and the economy make the establishment of an endowment all the more important, experts say.

Endowments are essentially rainy-day funds, consisting of money and investments that are set aside and allowed to grow over time. A small portion of the endowment, usually between 6 percent and 10 percent, can be siphoned off each year to help cover costs.

"So many people build these things without any kind of endowment," says Stewart, who doesn't have one at the Rock Hall. "These centers need that. If attendance dips because of gas prices or the economy, you want some revenue you know will be there."

If the Freedom Center had established the $10 million endowment that was hoped for, up to $1 million could have been used each year. That effort fell short because donations went instead toward the higher-than-expected construction costs.

By contrast, the Holocaust Museum in Washington has an endowment approaching $120 million.

"That's one challenge for the future," Crew says. "You have hopes and dreams when you start a process, and as it unfolds you have to make adjustments. The endowment part didn't unfold as well as we had expected."

Camp says building an endowment is difficult after an institution opens because the money raised often goes to more immediate needs, such as paying the bills. But Crew says he plans to build an endowment approaching $50 million within five years.

Although his staff is focused on the Freedom Center's grand opening in August, Crew says he's already looking ahead to the job of raising the money the center will need to survive and grow for years to come.

He says the building and its mission will be his greatest allies.

"We need to get out and find the people for whom this place has real resonance," Crew says.

National Underground Railroad Freedom Center at a glance

What is it: A combination museum/learning center/research lab dedicated to telling the stories of people who have fought for freedom throughout history.

Opens: Aug. 23.

Location: Second Street at the Roebling Bridge, on the banks of the Ohio River.

Cost: $110 million (about 55 percent from private donors; 45 percent from federal, state and local governments).

Annual attendance: 260,000 projected.

Admission: $12 adults, $10 seniors, $8 children 6-12. Group rates and memberships are available.

Features: Historic artifacts including a reconstructed slave pen from Kentucky; a theater in which visitors "experience" a slave's nighttime escape across the Ohio River; videos and interactive exhibits.

Major donors (more than $1 million): Procter & Gamble Co., US Bank, Cincinnati Bell, Convergys Corp., Harold C. Schott Foundation, Deloitte & Touche, KnowledgeWorks Foundation, John and Francie Pepper, Castellini Foundation, Harry and Linda Fath, Otto M. Budig Family Foundation, Episcopal Diocese of Southern Ohio, Richard T. Farmer and family, Cinergy Foundation, Federated Department Stores Foundation, The Boeing Co., Xerox Corp., Guardsmark, The Coca-Cola Co., General Electric, Ford Motor Co. Fund, Carl H. Lindner Family, Robert L. Johnson, Hewlett-Packard Co. Foundation, Haworth, city of Cincinnati, Hamilton County, state of Ohio, U.S government.

In-kind donations of media and services: Clear Channel Worldwide, Leo Burnett USA, Time Warner Inc., Cincinnati Enquirer/Gannett Foundation.



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