[ad_1]
“As I began zooming into the finances of the authority, it was really scary,” she told the Post in an interview.
The government had long made clear it was unlikely to inject any fresh funding after pumping in HK$21.6 billion (US$2.8 billion) in 2008 to create an endowment.
The 40-hectare (99 acres) arts hub, one of the world’s largest cultural precincts, has been in the works since the 1990s, but its first landmark attraction, the contemporary art museum M+, opened only in 2021.
Progress was delayed over the decades by a host of issues, from political wrangling to changes in development plans, management reshuffles, the Covid-19 pandemic and the repercussions of building the West Kowloon high-speed rail terminus on an adjacent site.
The financial situation was further complicated by the sudden addition of another star attraction, the Hong Kong Palace Museum, announced in 2016 by then-chief secretary Carrie Lam Cheng Yuet-ngor.
The HK$3.6 billion project, which opened in July last year and showcases China’s national treasures from the Palace Museum in Beijing’s Forbidden City, was included without public consultation, its construction funded by the Hong Kong Jockey Club.
Other key components of the arts hub include a Chinese opera facility, Xiqu Centre, contemporary performance venue Freespace, and a family- and pet-friendly Art Park, with the Lyric Theatre Complex slated to open in 2025.
Fung was not exaggerating when she described the authority’s dire financial straits. In the financial year ended March last year, its losses doubled to HK$1.56 billion from HK$869 million in 2021.
By March this year, however, its losses had been trimmed to HK$718 million, with revenue up 13.7 per cent to HK$635.26 million in 2021-22.
“I have been a civil servant for 35 years, but I’m now very entrepreneurial,” she said. “I’ve told my colleagues at all levels that they have to be really business-oriented. They have to be very mindful of the money they spend.”
Despite the improvement, she said the authority was far from out of the woods.
Fung said her priority when she started as CEO was to cut costs aggressively, and that resulted in lowering the deficit by a third to HK$718 million in 2022-23 from the estimated HK$1.07 billion.
That meant its available funds would stretch 16 months longer than expected to 2025, instead of running out at the end of this year.
But Fung said she could not keep cutting costs over the coming year. The staff team was already lean, the facilities still needed air conditioning and security guards, and programmes had to be changed regularly to attract visitors.
“I can see the bone, no flesh,” she said.
‘With more facilities, a bigger deficit’
At the heart of the arts hub’s funding problems lies a lag between income and expenditure in its unique funding model.
The authority was supposed to be funded by income generated from commercial development in the area, including hotels and office towers.
However, the pandemic and changes in the property market caused delays in the tendering of sites.
The first commercial plot was only awarded last November, after failing to attract bidders in February. After the authority extended the operation period of the development by 13 years to 47 years, Sun Hung Kai Properties was the sole winning bidder of a 699,654 sq ft (65,000 square metres) parcel of land, estimated at HK$10.5 billion.
The Artist Square Tower Project, which would have three office towers with retail, dining and entertainment spaces, was expected to be completed in 2026, the developer said.
Under the agreement, ownership of the development will be transferred to the authority at the end of the operation period.
Fung said the revised terms meant the authority would receive less revenue from office rental, and must come up with new ways of financing for 2025-2070.
It will also face a bigger deficit in 2025 when the Lyric Theatre Complex is completed.
“The more facilities we open, the bigger the deficit we have,” Fung said.
She said revenue and expenditure were like two legs, running together.
“We have been jumping on one leg for a long, long time,” she said.
She said the government endowment had been drained by construction and operation of the infrastructure. With no substantial income coming in, there was a prolonged mismatch.
A source close to the authority said the income-generating projects should have been built before the museums and performance venues.
“Unfortunately, due to god knows what – it could be bureaucracy, unwise decisions, simple mistakes – they did it the other way around,” the source said.
Fung revealed that following the impact of the pandemic on the property market, the authority was revamping its funding model, which the government approved in 2016.
She anticipated a glut of office rental space, which could worsen the vacancy rate of 12 per cent last year. The pandemic also reshaped the city’s working mode, with more people working remotely, further dampening demand for office space.
Overall office rents continued to trend down in the first half of this year, according to real estate firm Cushman and Wakefield, with overall office vacancies at their highest since the third quarter of 2020.
The authority is studying how to revamp its business model, for example, by maximising the land use of sites not yet up for tender.
Ticket sales a core revenue source
Unlike some of the best known names around the world, such as the Louvre in Paris, which is largely state-funded, and the four Guggenheim museums which are privately funded, Hong Kong’s M+ and Palace Museum fall under the model of private-public partnerships.
John Zarobell, a professor at the University of San Francisco who researches museum funding, said there were other museums using the private-public partnership model, but the West Kowloon Cultural District Authority funds were the only one he knew of that did not rely on government support for operations but capitalised on its own development.
“It is unprecedented,” he said. “It’s based on the fact that urban development generates more resources … Rather than harvesting all of those advantages privately, some of them get pushed into the public domain, and not directly to the city government, but rather, to the institutions themselves.”
Professor Oscar Ho Hing-kay at Chinese University, who specialises in museum management and was a member of the Museum Advisory Group for the arts hub, said M+ was envisaged as a space for “visual cultures”, mainly less costly works such as comics and cheap street designs.
“Unfortunately, it seems to be collecting mainstream art such as paintings, sculptures, installations, which are, by comparison, more expensive,” he said.
The Palace Museum was an unplanned project that added significantly to the cost of the hub.
“Running a museum of antiques of extremely high value – the maintenance, insurance, transport – is far more expensive than a museum of contemporary art,” he said.
Unless there was substantial funding, he said, “it would be a disaster”.
For a start, visitors will have to pay more to visit the Palace Museum. General admission fees will rise 20 per cent to HK$60 from HK$50 for adults and concessionary fees to HK$30 from HK$25 on September 27.
At M+, adult and concessionary general admission fees remain the same at HK$120 and HK$60 respectively, while special exhibitions adopt a flexible pricing structure.
For example, a standard ticket for the “Yayoi Kusama: 1945 to Now” exhibition was HK$240, and the coming “Madam Song: Pioneering Art and Fashion in China” exhibition will cost visitors HK$140 for a standard ticket.
Admission fees are a core income of both museums, which were also enticing corporations to sponsor their programmes.
Fung pointed out that the two museums performed well in their cost recovery rate – the percentage of operation costs the institution made, so the higher the percentage, the better.
The rates for the two were among the world’s highest at 46 per cent for M+ and 44 per cent for the Palace Museum, she said, compared to 36 per cent for the Metropolitan Museum in New York and 10 per cent for Singapore’s National Museum.
Unlike the two Hong Kong museums, she added, many museums around the world received government funding for their operations.
As for the city’s government-run museums, such as the Hong Kong Science Museum and the Hong Kong Museum of Art, their cost recovery rate stood at 7 per cent and 2.3 per cent.
The government currently runs 15 public museums covering visual art, science, and history, among others. They come under the Leisure and Cultural Services Department, which spent HK$1.16 billion on their operations in 2022-2023.
For M+, one income source in the past year came from exporting the curation services of Japanese artist Yayoi Kusama’s polka dot artwork to the Guggenheim Museum Bilbao, Spain.
The show in Hong Kong attracted 280,000 visitors over six months before ending in May this year. In Spain, it attracted 35,000 people in its opening week in June.
“Our first ever special exhibition of a one-year-old museum could be shown in Guggenheim – it’s a big deal for any museum in the world,” she said.
In the longer run, she hoped the government would map out comprehensive policies to support the arts and culture industry.
While money was always on her mind, Fung was optimistic about the arts hub’s future.
But if it was not for the lack of funds, she said, now would have been the time to reap the full potential of the massive project.
“People ask me, ‘Why are you always talking about money?’ I have to talk about money. If I don’t have the money, I cannot do anything,” she said.
[ad_2]
Source link