In less than 17 years of institutional life, as the Hammer Museum has grown from orphanhood into contemporary art stardom, director Ann Philbin has won a reputation as a remarkably successful turnaround artist.
Since her arrival in 1999, the museum has grown into a cutting-edge art space from a vanity institution beset with troubles, beginning with the death of founder Armand Hammer 15 days after its November 1990 opening.
But even as the museum prepares for the Tuesday opening of a show to celebrate acquisitions of the last few years, the Hammer's finances remain heavily dependent upon a work that's been gone for 12 years and still fuels ethics debates.
To help bankroll the institution's exhibitions and programs, the Hammer board of directors and Philbin have been relying on interest income from the sale of Leonardo Da Vinci's Codex Leicester to Microsoft founder Bill Gates for $30.8 million in 1994 -- a move that, at first glance, conflicts with the code of ethics that major U.S. museums have endorsed for decades.
The Codex Leicester, a 72-page notebook of scientific musings and sketches, was one of Armand Hammer's proudest purchases -- in fact, he unsuccessfully tried to rename it the Codex Hammer. But when the patron's death at 92 left the Westwood institution in disarray and UCLA stepped up to take over its operations in 1994, campus and museum leaders decided to sell the codex to raise money to fight legal battles that might arise from Hammer's messy estate.
Philbin says the Hammer Museum's chaotic beginnings exempt it from de-accession spending guidelines, and many museum professionals agree, including the Assn. of Art Museum Directors itself and Selma Holo, director of the International Museum Institute at USC. And all agree that the institution carries a singularly thorny legacy.
The Hammer's quandary, Holo said, is "a unique situation, to my knowledge, in that an object of world-class cultural significance -- which is only debatably art -- is a part of an art museum's collection. Should you sell it? And how restricted should you be in using the proceeds? This raises fascinating questions, challenges and possibilities for a museum."
Hammer, a physician turned entrepreneur who rose to control Occidental Petroleum Corp., built his art collection in part by using funds from that company. For more than a decade, he pledged the collection to the Los Angeles County Museum of Art, then he reneged and opened his own museum instead, using an estimated $96 million in Occidental funds to put up the Wilshire Boulevard building.
The idea of selling the Codex Leicester was controversial from the start. Though many museums sell off works from time to time and the codex struck some as a document more scientific than artistic, de-accession has long been a knotty issue in the profession.
State and federal laws do not address such sales, but leaders of the Assn. of Art Museum Directors have long maintained that museums that sell off artworks should spend the income, and the interest it generates, only on acquiring further artworks.
Though the codex sale seemed to cross that line, the Hammer's boosters argued that the museum's tortured birth made the move necessary. Henry Hopkins, who took over as director of the museum in 1994, wrote in the Los Angeles Times that year that if no legal challenges arose between then and 2002, the codex income and accumulated interest together "could represent about $40 million in accession funds."
But the text of the agreement between the museum and the university, Philbin said, has always allowed more latitude than that. In fact, Philbin said, when she arrived, the institution was spending some or all of the codex interest revenue every year on exhibitions and programs and other expenses -- and none of it on buying art.
Philbin and the board kept that strategy in place, she said, and in 2001, with the release of the principal coming up and no legal challenges imminent, Philbin put the situation before the leaders of the Assn. of Art Museum Directors.
"I went to them and said, 'Look, here's this money. We are totally dependent on it.' The museum had absolutely no donor base at the time," she said. "When I first got here, we solely used that money for our exhibitions and programs."
Association Executive Director Millicent Gaudieri said the board decided that Hammer's unique circumstances did exempt it from the usual restrictions on de-accession spending. This was in part because of the institution's chaotic first years, Gaudieri said, and in part because the codex, for all its value as an artifact of science and history, "wasn't a Renoir."
By then, Leonardo's notebook had been gone for eight years -- yet it was still central to museum finances. Not yet ready to rely on fundraising and earned income to cover all of the museum's operating costs, the Hammer's leaders left the principal alone but continued to rely on interest from the codex sale, using it to cover expenses other than acquisitions, Philbin said.
But that changed in April 2006, Philbin said, when she and the museum's directors agreed to start spending half of the codex interest for acquisitions -- about $650,000 yearly -- and half or less on exhibitions and programs. The first purchase was a set of drawings by Raymond Pettibon.
The art-world discussion of the Hammer's strategy has been conducted mostly in whispers until now, but the new exhibition puts the museum's collection and acquisitions-policy center stage.
If the Hammer had been spending the codex interest on acquisitions all along, Philbin acknowledged, its collection would be far richer -- but "we would have been severely limited" and many of the museum's wellregarded exhibitions might never have been mounted.
The $30.8 million from the codex sale has now grown to about $37 million, Philbin said, and her goal is to build museum fundraising so that eventually all of the interest can be used for acquisitions.
"I would love it if we got there in three to five years," she said. "The fact that we've gotten halfway there is something I feel very good about."
Hopkins, now retired, said Friday, "I did not know that interest money was being spent" on anything before 2002 -- either on his watch or Philbin's -- and that the sooner Philbin can cover operating expenses with other income, the better. The steps Philbin has taken in the last year, he said, are clearly "a positive thing."
From the beginnings of his involvement with the Hammer, Hopkins added, one worry has been that "finding funds to come into an institution with a person's name on it -- particularly Armand Hammer's name on it -- was not going to be a particularly easy sell."
Though Hammer's grandson Michael Hammer has remained on the museum board of directors and many works acquired by Hammer remain in the museum -- including French 19th century masters, European old masters and thousands of works by French caricaturist Honore Daumier -- the museum has changed direction substantially in the last decade.
Under Philbin, the Hammer has focused on works made since 1960 and particularly works on paper, which typically cost less than paintings and sculptures and can reveal more of the artist's creative process. That contemporary strategy, Philbin noted, also complements the holdings of the UCLA Grunwald Center for the Graphic Arts, which has been joined with the Hammer since 1994.
In the museum's tax filing for the year ended June 30, 2005, the Hammer reported revenue of $8.2 million and operating expenses of $7.4 million. The income included $1.6 million in public donations, $2 million in indirect support (including memberships and admission fees) and $3.9 million in interest and dividend income on more than $90 million in investments. The museum gets about 100,000 visitors yearly.
Meanwhile, USC's Holo said she had begun to wonder about whether strict de-accession guidelines need rethinking, given the record high prices in the art market and the many museums that are rich in objects yet poor when it comes to protecting, interpreting and displaying those objects.
"We should, as an industry, be reconsidering how we can best use the moneys that come from de-accessioning," Holo said.
"This is going to be hard for us to do," Philbin said Friday of the museum's new acquisitions spending policy, "but this is what we're going to be doing."