Top

Geffen Hall

Geffen Hall

David Geffen, a Brooklyn-born, self-made billionaire pledged $100 million to Lincoln Center Inc. for the renovation of Avery Fisher Hall. In exchange, the home of the New York Philharmonic, which is also the venue for Mostly Mozart and Great Performances, will be named Geffen Hall. It is the same amount pledged by the oil magnate David Koch, whose $100 million gift to renovate the NY State Theater, gave him naming rights. The difference is that Koch’s gift guarantees the name for 50 years, whereas Geffen’s guarantees his name in perpetuity.

Naming gifts are a significant part of the American cultural tradition. By the late 1800s, nouveau riche Americans like Andrew Carnegie and J. Pierpont Morgan used their riches to build libraries, concert halls and museums. While there was no discussion at the time of ever changing the name of the institution, the assumption was, and is, that the naming rights are in perpetuity. The Weill Recital Hall, Perelman Stage and Zankel Hall recognize the extraordinary ongoing generosity of Carnegie Hall’s board chair and other donors, but it is inconceivable that Carnegie Hall, or Severance Hall in Cleveland, or the Frick, Gardner or Clarke museums’ names would be removed and resold to another donor.

Recently, however, anticipating the need for significant contributions to redo Avery Fisher Hall, Lincoln Center “bought back” the rights from the Fisher family for $15 million and auctioned the naming rights to the highest bidder.

Fisher, the late inventor, scientist and amateur violinist who dedicated his life to the pursuit of great sound, contributed $10.5 million in 1972 for the naming rights, including the stipulation that Avery Fisher Hall ”will appear on tickets, brochures, program announcements and advertisements and the like…. in perpetuity…”

The “buy back” was actually a strategy to dissuade the family from fighting to keep the name on the hall.

Over a dozen years earlier the family threatened to sue Lincoln Center when the idea of reselling the naming rights was first advanced.

The buy back raises some ethical questions: The family doesn’t own the name, why would it be paid to relinquish it? If a gift is made during the donor’s lifetime, do his heirs have any standing to change his intentions? Besides, according to a Fisher family member “While our family enjoyed over 40 years of our father’s gift being highly visible, it is now time to relinquish that spotlight and allow growth and change at Lincoln Center.” Do they get to decide when?

If not the Fisher family, then who are rightful beneficiaries of the buy back? What about the taxpayers who indirectly contributed to the gift (remember, Fisher received a significant tax benefit for his largesse)? Do they (we) have dibs on at least a portion of the $15 million?

Ethical questions are best answered by applying an agreed upon code. However, there is no code of ethics covering these situations.

Art museum directors adhere to a code of ethics that proved a strong deterrent to the city of Detroit’s attempt to sell paintings it owned but housed in the Detroit Institute of Art.

Yet, this code is ignored by some museums that legally, but unethically, sell assets to pay operating expenses. Even more egregious, was when a group of foundations and philanthropists took legal actions to break the will of Albert C. Barnes and relocate his collection to Philadelphia.

These transactions may pass the legal test; but do they past the ethical test; or the “sniff” test?

Contributions at one time were thought of as philanthropy – now they are transactions. And if we are discussing them as transactions, then we may as well talk dollars and cents.

Many arts organizations find themselves in trouble after receiving a magnanimous capital gift because the new building is more expensive to build and to run, the interest on the bonds used to pay for the balance are an added operating expense and, with a new building, or museum or hall comes, the expectation for new and more expensive programming.

So the $100 million Geffen gift may be more of a curse than a blessing.

And perpetuity is a long time. Since naming rights now come with time limits, we can calculate the true value of a naming gift. If a naming gift has a value that can be redeemed and resold in the future, and if we remember that a tax-deductible contribution is subsidized by the IRS (by all of us), then when the dollar amount of the gift is A; and the length of time is T; and the government subsidy .35A (the approximate tax rate) then the value of the gift to society can be expressed as:

V = A/T – .35A

For the Geffen gift, since T is infinity, V = -.35A or a cost of $35MM to society. Geffen was the highest bidder, but what if another bid was $50 million for 25 years? Which is more valuable?

Of course, this is not really the “actual” value since ultimately there will be a concert hall with, we hope, better acoustics – the third time may be a charm – and that some citizens wealthy enough to afford the ticket prices will be able to enjoy that experience.

Albert Barnes’ will and Avery Fisher’s naming rights were overturned posthumously. Who is to say that sometime in the future Geffen’s name will be removed from the hall and sold to a higher bidder? This prospect may discourage other future donors.

James Abruzzo, Consultant, Consulting, Executive Search, Nonprofit Compensation, Expert Witness, Geffen Hall

No Comments

Post a Comment