In February 2009, the French company Lordeurop presented its technical and economic substantiation, operational strategy and business plan for the future Latvian Museum of Contemporary Art (the entire presentation can be viewed here). The company’s Vice-president, Mr Paul Alezraa, has kindly answered to our questions about issues regarding the museum’s project – public/private partnership, industrial heritage, involvement of the city and the distribution of functions.   

In your presentation, you mentioned that there exist a few PPP-based projects in arts and culture. Can you name any successful PPP projects, and why were they successful? What are the main reasons in the case of a PPP-based arts and culture project's failure? What aspects should Latvians pay the most attention to once it is decided to carry out our museum project in a PPP?

P. A.: The term of PPP is often used in different senses, often to designate any form of co-operation between the public and the private sectors, such as sponsorship. If we take PPP strictly in its legal sense, the only complete example for a museum that we know of and for which we have a little perspective is the Royal Armouries museum in Leeds.

In fact, the Armouries decided to proceed in 1990 with the establishment of a new museum as it considered that this would help it meet its statutory duties by allowing to put more of its collection on display (collection of weapons of which only a small part was exposed in the Tower of London). The profits from the new museum would also allow it to meet its strategic business objective of becoming more financially self-sufficient by reducing its need for grants.

In December 1993, the Royal Armouries (the Armouries) signed a contract with a private sector company, Royal Armouries (International) plc (RAI) for a new museum in Leeds to house the majority of the Armouries' collection.

Under the contract, RAI were to build and operate the new museum and, in return, would retain all the income generated from visits by the public. The new museum was delivered on time and to budget. The private sector received all profits from admissions, retailing, catering and corporate entertaining.

However, the museum never made enough money to meet its operating costs and RAI faced the prospect of becoming insolvent in July 1999. Consequently, in July 1999 the Armouries revised its agreement with RAI and took over responsibility for the running of the museum. The Ministry of Culture had to inject 10 million pounds to avoid the outright closure of the museum. As a result of the revised deal, the Royal Armouries receives from the Department extra grant-in-aid of £1 million a year but has also had to make efficiency savings of almost £2 million a year.

Unfortunately, we can see that this example is not a successful one. However, there is a series of lessons to learn from this case study that can prevent future PPP projects to fail:

• risks can come from a bad anticipation and evaluation of the museum attendance. In this case, the number of entries ensuring the economic balance of the contract had been overestimated; without taking into account the disadvantages associated with the location of the museum and all its running costs;
•  the museum failed to establish an appropriate and identifiable image and brand,
• it failed to develop the strategic direction of the Museum and to understand and fulfill customer expectations;
•  the museum suffered from poor collections management, failed to effectively plan, manage and deliver external events and failed to maintain the Museum’s assets.

It is important to note that it is not because there are few successful examples of PPP agreements in the cultural field that implementing a museum project through a PPP contract is a mistake. In fact, simply in Europe, there are currently at least four museum projects to be done through a PPP agreement:    

• Musée de la mer et Cité de l’océan, Biarritz, France: the planned expansion of the Museum of the Sea will be done through a public-private partnership between the City of Biarritz and the Vinci group. The Vinci Group won the tender with a proposed 29.5 million for the construction, maintenance and operation of equipment. The early work begun in September for the City and early 2009 for the Museum. The inauguration of the two facilities is expected late 2010 or early 2011;
• Cité de l’air et de l’espace du Bourget, France: EPA Plaine de France has begun a major study that will identify the concept of this institution, its implementation, its feasibility and costs. The study should define an innovative concept of European dimension for the Cité, establish the specifications for an international design consultation but also examine various scenarios (legal and financial) of public private partnerships;
•  Musée des beaux-arts, Bellerive/Lausanne, Switzerland: A new major museum project in Switzerland, of 7800 sq/m of permanent exhibition, that will present the exceptional artworks of the current collection. A private financer will invest 32 million Swiss francs for the building construction, for a total investment of 68 M°. There will be a transfer of authority to a foundation under public law, in which the private partner will be represented in proportion to his investments;
• Odyssey 21, Le Havre, France: The ambition of the Centre for the Sea and Sustainable development (called Odyssey 21) is to present the modernity of international maritime navigation, the economic and industrial dimensions of ports, the fragility of seafronts and oceans… To realize this project, the price of which will probably be close to 100 million euros, the city of Le Havre would like to find a private partner to finance, construct, maintain and probably operate the future museum. At this time, the city has seeked the assistance of a law firm to study the legal, economic technical and environmental implications of such a project.

Public authorities seem therefore to be more and more aware of the benefits of such contracts.

In my opinion, one of the most important elements to keep in mind to optimize the success of such a partnership for the Latvian contemporary art museum is to carefully plan the image and brand of the museum. In fact, it should appeal both to potential visitors and to other cultural institutions: external partners should be selected carefully as that is what will build the credibility and reputation of the museum.

Apart from that, the success of any public private partnership will be dependent on the strength of the partnership and the effort that goes into developing and maintaining a good working relationship. Good internal project management will have a significant effect on the success of the project and the relationship with the project partners. In any case, the development of Public-Private Partnerships and collaboration requires a considerable investment of time and resources and the team should have access to expert legal, financial and human resources advice to be able to best tackle the risks.

To ensure the success of such a contract, the different parties of the contract should agree on the following principles:

•  the partnership sets performance objectives and requires to make available all necessary skills for the service delivery;
• the partners benefit from a large amount of freedom in the suggestion of the means to achieve the objectives, in a professional way, in a spirit of fraternity, mutual respect and loyalty;
• each professional is responsible for the actions that fall under his competencies;
• the distribution of functions and the working principles must be clear in order to guarantee the final quality of the service delivered.

At this point, one might say that the museum project lacks close co-operation with the city of Rīga.

From your experience, to what extent and in what ways and functions can cities become involved in such projects? Is it essential to ensure an active participation of the city?

P. A.: Cities in Europe and in the world are becoming more and more aware of the impact a major cultural initiative can have on sparking its transformation. Of course, the “Bilbao effect” is in everybody’s mind, but it is not the only example of such a city’s revival. In fact, creating international cultural institutions or museums can really contribute to placing the city on a map, especially in a period of European integration.

Such an effect is highly desired by urban planners, politicians, trustees and of course museum directors, as it means creating a vibrant an attractive place for residents, visitors and inward investment. Indeed, these projects are “cultural accelerators”: they accelerate the entry of cities and communities into the knowledge economy by educating people and favouring other developments to locate in its proximity.

To illustrate this, the Guggenheim Museum in Bilbao recently released a study of the impact of its activities on the Basque regional economy in 2008. It reveals that after over ten years of opening, 2008 was another gold-year for Bilbao. Indeed, the total direct expenditure generated by the activities of the Museum in the Basque Country in 2008 mounted to 232 M€, which represents an average expenditure of approximately 244 € per visitor. When you consider the small population base of Bilbao and its immediate region (2-3 million), the problems of terrorism and distance from major markets, this figure is astonishing.

The sectors that have benefited most from the development of the Museum's activities are as follows:

• catering: 91,6 M€ in restaurants, bars, and cafeterias;
• shopping: 29,7 M€ in shops and stores;
• accommodation: 46,4 M€ in hotels, guesthouses, and other kinds of accommodation;
• transport: 13,4 M€ in vehicle hire, gasoline, motorway tolls, fares, etc.;
• leisure: 21,7 M€ in cinemas, theaters, visits to other museums, etc.;
• an additional 29 M€, which correspond to visitor expenditure within the Museum premises (admissions, items purchased in the Store-Bookstore, expenditure in the restaurant, contributions of Individual and Corporate Members, expenditure deriving from the organization of special events at the Museum, subsidies, etc.).

Therefore, considering the direct, indirect, and induced effects, the activities of the Guggenheim Museum Bilbao in 2008 have generated 210 M€ of GDP, provided 28 M€ in additional revenues for the Basque Treasury, and have contributed to keeping over 4’000 jobs. There exist many former examples of such successes: The Lowry in Salford (UK), the City of Art and Science in Valencia (Spain), the Museumsquartier in Vienna (Austria)…

However, such a Bilbao effect does not happen by itself, and there are some prerequisites to follow. Of course, an outstanding building highly contributes to the success of the museum, but its content is just as much important. Only the meaning of the future institution and a stimulating content will ensure that people come back to the museum.

Furthermore, the expected economic benefits to the community cannot be achieved without a strong planning phase: rigorous feasibility studies, business planning and visitor projections are crucial to the success.

But the most important elements are certainly the vision and the leadership of the project. In fact, such a project needs to be motivated and guided by a clear and shared vision for social transformation. In the case of the Louvre branch in Lens (France), the aim is ”decentralisation”, making the French national collections available to a wider public and bringing economic growth to the region. The Saadiyat Island’s project in Abu Dhabi aims to develop a world-class, environmentally sensitive tourist destination. Every city should have a different vision, common to all stakeholders.

Finally, the leadership is probably the most important element of success. Indeed, such a project takes between seven and twelve year to be finalized and has therefore to outlast several politic administrations and governments before springing from the ground. Therefore, the leadership of the project has to be strong, unified, broadly based and long range. It is crucial that all stakeholders are unified around a common objective and share a common vision.

In this sense, it seems crucial that the city of Rīga seizes this exceptional opportunity for both its social and economic context, by facilitating the decision process and contributing to building a strong cohesion of the different stakeholders and local community actors around the project of the Latvian Contemporary Art Museum.

In the future building of the Latvian Museum of Contemporary Art, there remains the Latvenergo Company’s industrial heritage, such as the equipment and other objects from the old electric power station. This includes a steam boiler made by the German company L&C Steinmüller (dates back to 1935), an AEG steam turbine (1929), USSR-made equipment for chemical treatment of water and various drilling machines, lathes, routers, etc. What is your opinion on preserving such industrial heritage for exhibiting publicly? Would it fit in well with the rest of the museum?

P. A.: In general, when large industrial buildings are reconverted into exhibition spaces, project managers choose to empty out the building to keep only the large volumes and to create a neutral exhibition platform. This is the case for example of La Villette and the 104 in Paris, and of course, the Tate Modern.

An exception to the previous examples is Santralistanbul, one of the initiatives undertaken by Istanbul Bilgi University. Indeed, the Silahtaraga Power Plant was the first urban-scale power plant of the Ottoman Empire. It provided electricity from 1911 to 1983 and reopened as an interdisciplinary cultural and artistic platform in September 2007.

The building was split into two distinct spaces: the Museum of Energy, created by the preservation and transformation of the old engine rooms; and the Main Gallery, a space for contemporary artistic and cultural activities. In this case, we have two spaces clearly separated, both on entirely different themes.

The Latvian Contemporary Art Museum could choose a third direction which would be to finely imbricate the industrial heritage and the presentation of contemporary art. Artists and scenographers could then use the machines as an exhibition design support. This could contribute to creating a very special atmosphere to the museum.

A similar approach is adopted by the Domaine Pommery in France that organizes every year contemporary art exhibitions in its wine cellars. They are each time a big success, acclaimed by both the public and experts.

Historically, to adopt such a position is very coherent, as the industrial world has always been an endless source of inspiration for artists, every since the end of the 19th century. Futurism and Pop Art are only two of the numerous examples of such art movements.

However, for such an approach to work, all functional precautions must be taken so that the machines do not get in the way of the presentations. This would mean for example to plan for sufficient volumes for welcoming the artworks, for the public’s ciruclation and the interpretation materials. In any case, the machines should not be more present than the art works. Also, any problem linked to security of hygiene must be prevented.

To conclude, preserving this kind of industrial heritage for exhibiting publicly can be an excellent idea that will make the Latvian Contemporary Art Museum stand out from other museums, but this necessitates to conduct a serious study so that it does not become a bad idea.

Do you think the floor area of the museum is adequate, considering its location and accessibility in this part of Rīga? Would you recommend to increase rather than decrease the total floor area of the future museum? Do you think the museum could also include the Rīga City Library as an additional function? Would such functions be in harmony with each other?

P. A.: Given the actual program of the future museum and all the functions, I certainly think that the floor

area is adequate. However, it is always possible to decrease, if for functions and budget reasons, it will become necessary.

The most important thing will be in the planning and design phase, to keep some flexibility in some areas.

Regarding the Rīga City Library it could certainly be done and could be a good idea. In this case you are able to use a lot of surfaces in common like the storage for instance, the lobby, the café and restaurant.

Storages for books and Arts require the same type of environment so you can mutualize the spaces.

A very good example of this will of course be the Centre Pompidou in Paris which is both a Museum and a Library open to the public.

It will probably need to be thought in that context and also have more information about the quantity of books that the Rīga City Library contains.

Unique in its design, the building is destined to become a place that cannot be avoided in the cultural life of Riga. Its innovative character and the interest generated by a new artistic establishment in Riga will make it a very attractive and highly publicised place.

The space, if studied accordingly, could be made more modular, allowing to imagine the organisation of all types of events: fairs, conferences, product launches, business seminars and meetings, gala evenings and cocktails, artistic events (concerts, fashion parades etc.).

All these activities will, of course, be a very good source of revenues and therefore guarantee the economic sustainability of the project.