Money Problems Threaten Petersen Auto Museum

The Petersen Automotive Museum, considered one of the top automobile collections in the nation, is about to lose its main financial support in a battle between the T. rex and the T-Bird.

Although the car museum on Wilshire Boulevard would seem to stand as an inviolate symbol of Los Angeles, county officials fear the Petersen’s indebtedness could foul a $200-million fund-raising drive being considered to finance a replacement for the Natural History Museum’s aging Exposition Park facility. The Petersen is one of four facilities governed by trustees of the Natural History Museum of Los Angeles County.

“We don’t believe people will be willing to contribute if they know we also have a major outstanding debt issue [with the Petersen] and don’t have our financial house in order,” said James L. Powell, the Natural History Museum’s president.

In a vote that could come at the board’s next meeting Dec. 15, museum trustees are expected to be asked to discontinue a nearly $2.5-million annual subsidy for the Petersen as soon as practical.

Insiders say that only financial intervention from the private sector can save the 5-year-old Petersen, developed to depict the influence of the automobile on Southern California over the years.

Loss of the auto museum--which could continue limping along on a limited budget for two years if a paying occupant for its building cannot be found--would be a blow to auto fanciers and, some say, to the public.

One concern of community and elected officials is that Natural History Museum directors could turn to a commercial tenant if they are unable to find another museum or nonprofit organization to take over the Petersen building at Wilshire and Fairfax Avenue. It is a prime location that has already drawn the interest of retail operations, including the Costco discount warehouse chain, museum officials say.

But the Wilshire strip is also known as museum row, and some officials, including county Supervisor Zev Yaroslavsky, are opposed to any retail operation at the Petersen site. Yaroslavsky would not comment, but through an aide said that if the Petersen cannot be salvaged, museum trustees should limit their search for occupants to other museum operations--public or private.

Automotive historians also bemoan the Petersen situation because it could eliminate a valuable historical teaching tool.

There are about 40 public automotive museums in the United States and the Petersen is “easily in the top five,” said Ron Radecki, president of the National Assn. of Automobile Museums and director of the Studebaker Museum in South Bend, Ind. “We think of Detroit as the center of the automotive world, but it really is only the center for manufacturing,” he said.

“Not to have an auto museum in L.A. would be sad because so many major automotive developments, as far as styling and how our whole national lifestyle was formed, came from there, and the Petersen has done a really nice job of putting all that into context for the public,” Radecki said.

Internally, there is no debate over the quality of the Petersen. “It’s one of the best; that’s not an issue,” Powell said.

The problem is that museum trustees voted in 1991 to float a $28.5-million bond issue to purchase and refurbish the museum’s building, based on assurances that it would draw enough paying customers each year--about 400,000--to cover its operating costs and the debt service on the bonds. But the museum’s best annual attendance figure so far is 152,000, and attendance fell to just under 133,000 in fiscal 1999, which ended June 31. Ticket revenue and funds from private functions--the Petersen is a popular venue for corporate parties and charitable fund-raisers--last year fell $100,000 short of funding the museum’s $2.2-million operating budget, and for the fifth consecutive year the Natural History Museum foundation dipped into its endowment to pay the debt service of $2.5 million annually on the bonds.

Petersen Director Ken Gross said that the Natural History Museum has largely ignored the auto museum when it comes to fund-raising and that officials this year eliminated the Petersen’s budgets for marketing and advertising, functions critical to keeping public interest--and paid attendance--high.

“The target of 400,000 attendance is higher than the 85-year-old Natural History Museum pulls in,” Gross said. “They sold 354,000 tickets last year and are expecting to hit 379,000 this year. They have a $22-million budget and 200 staff and we have a $2.2-million [budget] and 19 staff and get 35% of their attendance, and that’s pretty good.”

Gross acknowledges that he is “expected to defend this museum, but the fact is that people do like it and not just auto buffs. Someone is saying that natural history is more important, but the auto museum should be just as important. The funding exists; it is just a matter of priorities. And we have a number of wealthy supporters who want to help, if some sort of public-private effort could be mounted.”

County officials say that it will take about $23 million to retire the Petersen’s bond debt. But the earliest the bond can be paid off--with a prepayment penalty of about $560,000--is April 1, 2002. Until then, the Natural History Museum or anyone else operating the Petersen will have to continue making the annual interest and principal payments.

The Petersen’s fate has been up in the air for more than a year but came to a head this fall when talks between museum trustees and Petersen benefactor Robert E. Petersen broke down.

Petersen, 72, is the retired automotive magazine publishing magnate who led the drive to start the museum--which is named after him--and who, with his wife, Margie, contributed $5 million in start-up funding and has pledged an additional $10 million upon his death.

He had offered to buy out the Petersen’s debt through a nonprofit foundation that would take over operation of the museum, but says that county officials could never agree to terms.

“Every time I thought we had a deal, they’d come back in with something else they wanted me to pay for,” Petersen said. “I finally got frustrated and cut them off.”

The history museum’s chief negotiator, trustee Richard Volpert, could not be reached for comment. Powell calls the breakdown regrettable and said he is “appreciative of the generosity of the Petersens and the work of the [automotive] museum staff. But as it happens, we got in over our heads and we can’t go on this way.”

Museum trustee Bruce Meyer--an avid automobile collector and fan of the car museum--said that Petersen broke off talks because “he felt the atmosphere was too adversarial, that the museum wasn’t embracing him and was fighting him over every dollar, every point.”