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Academy Scrambles to Avert Museum Disaster (EXCLUSIVE)

On March 28, the board of the Academy of Motion Picture Arts and Sciences met behind closed doors to consider the fate of Dawn Hudson, the organization’s CEO. The conversation grew heated as some of Hollywood’s leading figures blasted her oversight of the Academy museum, according to sources in the room.

The Academy broke ground on the long-awaited project in March 2016, as construction crews began demolishing the back half of the old May Co. department store on Wilshire Boulevard. The museum is now two years behind schedule, has blown its original budget, and is facing potentially costly overruns.

Inside the boardroom at Academy headquarters in Beverly Hills, Paramount Pictures chairman Jim Gianopulos presented a report from a consultant on the Academy’s finances. Gianopulos, who chairs the finance committee, said the organization was heading for an iceberg, and expressed a lack of confidence in Hudson’s leadership. Cheryl Boone Isaacs, the Academy president who has clashed with Hudson in the past, suggested renewing her contract for a mere six months — tantamount to a dismissal.

The building process has been plagued with setbacks, including the discovery of a buried mastadon.
Variety

Hudson survived the meeting, as powerful defenders, led by Annette Bening, persuaded the board to vote for a three-year contract extension. But the debate left bruises along with lingering worries that the museum could become a drain on the organization’s resources.

“We are really concerned right now that we won’t have enough money,” says one Academy insider. “This could be a catastrophic situation.”

The chief concern is that fundraising on the project has been stalled for a year and a half. Meanwhile, the official budget has ballooned — from $250 million to $388 million — and internal projections pin it at more than $400 million. In a further cause for alarm, the Academy last month fired its construction firm.

The museum is beginning to resemble that old Hollywood story of the doomed production, in which executives stake the studio on an epic undertaking and then — once it’s too late to back out — suffer escalating setbacks. It’s a tale that dates back to the days of “Cleopatra,” the notorious budget-busting bomb that pushed 20th Century Fox to the brink of ruin and resulted in the sale of much of its backlot. And it was perhaps a cinematic omen when workers excavating under the historic 1939 May Co. building, not far from the La Brea Tar Pits, uncovered half a mastodon. Archeologists were summoned and construction was halted.

The Academy is under increasing pressure to get the project back on track, and says it is relaunching its fundraising efforts. There’s a lot at stake. The organization earns more than four-fifths of its revenue from the Oscar TV broadcast — $113 million last year. It uses that money to pay for film preservation, educational programs, and grants to film festivals. If it cannot raise the money to pay for the museum, then those programs could be on the chopping block.

Insiders, both on the board and within the Academy, say Hudson is ill-suited to the detailed work of overseeing the project. Her critics say she has delegated too much authority to its superstar architect, Renzo Piano, whose design — a glass-and-concrete orb — poses complex construction challenges.

“[Constructing] Renzo’s sphere is not going to be the easiest thing in the world,” admits Kerry Brougher, the museum director.

The Academy has lately suffered some of the worst publicity in its history, due to its struggles with diversity and a snafu at this year’s Oscars that saw the wrong film declared best picture. The glacial pace of its public apology further alienated members. As bad headlines mount, the group can’t afford another black eye.

The Board of Governors has recently moved to establish an independent board to oversee the museum. Hudson will serve on the board, but her direct control over the project is being curtailed. That step has not assuaged the dissidents.

Sink or swim, the Academy Museum will define Hudson’s legacy. Hudson revived the project after she was hired in 2011, and she is the one who announced the Academy would put the museum inside a restored May Co. building, adjacent to the Los Angeles County Museum of Art.

The chief attraction, at the time, was cost. Michael Govan, LACMA’s director, persuaded Hudson to pay $36 million for a 110-year lease on the site. By restoring an existing building, the Academy hoped to keep the budget to $200 million.

That was cheaper than the Academy’s earlier plan to build a museum from the ground up near Sunset Boulevard and Vine Street in Hollywood. That proposal ballooned to $400 million before being scrapped in the wake of the 2008 financial crisis. At the outset, the capital campaign for the new museum seemed to go well. The Academy sold naming rights to the museum’s theater to David Geffen for $25 million. The Dalian Wanda Group pledged $20 million for naming rights to the film history gallery. Other donations rolled in: The Academy christened the Gerry Schwartz and Heather Reisman Mezzanine Gallery for $5 million, and by June 2013 raised $200 million toward a $250 million goal.

An artists rendering of the completed Academy Museum
Courtesy of AMPAS

But then the budget quickly escalated while fundraising stalled. In late 2013, projections to construct the museum were pegged at $300 million — then climbed to $388 million by 2015. Behind closed doors, Academy members quietly admit that costs could surge to $420 million or more.

“We’re still hoping to stick with $388 (million),” Brougher says.

He says the Academy could handle the budget increases, but many within the organization raise alarms about the lag in fundraising.

In 2015, chief fundraiser Bill Kramer announced he was leaving. His job remained vacant for nearly a year. When he left, Kramer claimed to have raised $250 million. The true figure, according to documents filed with the California Infrastructure and Economic Development Bank, was $215 million. Of that amount, the vast majority are pledges — promises to donate, at some future date, often with conditions. Only $62 million was cash in the bank.

The most recent total, according to a document the Academy filed last fall, was $221 million. That was just $6 million more than the year prior, and only $21 million more than the Academy had claimed three years earlier. In the last 18 months, the Academy has said nothing publicly about the capital campaign.

In fall of 2015, the Academy took on $360 million in debt to finance the museum. At the time, the organization planned to raise the full $388 million in cash and pledges by the end of 2017 — a goal that now seems remote — in order to pay off the bonds over 20 years.

The debt is secured by the Academy’s gross revenues, so if contributions peter out, the Academy must make up the difference out of general funds. Several people close to the situation describe it as “scary” if the Academy is forced to pare back on programs or staff in order to repay the debt.

The Academy hired a new fundraiser, Katharine DeShaw, to replace Kramer last fall. It also recently posted job openings for a “manager of major gifts” and a “director of individual giving” to support her efforts.

“In addition to mining the film community, she’s now working outside the film community,” says Sid Ganis, a former Academy president. “This is an active, positive time for fundraising.”

Brougher echoes that, saying that some “pretty nice announcements” are coming.

If the Academy Museum is shaping up as a “Heaven’s Gate”-style fiasco, then the role of Michael Cimino belongs to Piano. The Italian Pritzker-winner is one of the world’s most renowned architects. His hiring in 2012 was seen as a powerful signal of the Academy’s grand ambitions for the project.

Piano’s concept for the museum revolved around the theater — a massive 130-foot sphere that he likened to a “soap bubble” or a “spaceship.” When it was unveiled, it was tagged by critics as looking more akin to the Death Star.

Earlier plans called for a more intimate theater, but Academy heavyweights — including Jeffrey Katzenberg — lobbied for a 1,000-seat showpiece that could be used for premieres. That benefits studios while marketing the museum.

Another architect, Zoltan Pali, was hired to partner with Piano. Pali had intimate knowledge about the May Co. building after working on plans by LACMA to take over the building and restore it.

His tenure working with the Academy lasted two years after he openly doubted Piano’s vision. “I didn’t think the sphere was the right move,” Pali tells Variety, calling it “a very, very difficult geometry to work with.”

He raises environmental concerns with building a “glass ball in Los Angeles,” noting it will require significant energy to cool. But more fundamentally, he says a sphere is simply “the wrong shape for a theater. Theaters are boxes for a reason.”

He notes the building’s dense column grid was more appropriate for a department store layout, and didn’t have the large open-space design familiar with most major museums. His wanted to keep it whole, while carving out spaces to serve as galleries.

“I had fallen in love with the beast — and she is a beast,” he says. “She’s a very, very difficult building.”

At the time, the Academy still hoped to keep the budget to $250 million.

“If anybody mentioned the word ‘388’ (million), the project would have been scrubbed,” he says.

But Piano’s complex architecture made it difficult to stay within budget.

“We were always battling trying to make that work. Every estimate we were getting was exceeding the numbers we were told to be working to,” he says. A sphere, he adds, “is probably going to be one of the most expensive ways of doing something.”

The Academy was quick to embrace Piano’s vision. Pali’s dissent didn’t register. By 2014, it became clear that Pali and Piano could no longer work together, and Pali was forced off the project.

“I didn’t like where it was going,” he says. “Renzo didn’t like that, and he basically wanted to have me leave. … It was bittersweet, but I’m not bitter about it. If they’re having difficulties, then if I were on the project, I would be having difficulty.”

To manage the project, the Academy hired Andrew Klemmer of the Paratus Group. Klemmer had worked closely with Piano in the past, and some critics saw him as advocating more for Piano than for the Academy.

The Academy also contracted with Morley Builders and Taslimi Construction to build the project. A year into construction, Morley and Taslimi were fired. As it had done with Pali’s departure, the Academy presented this news as a normal transition to a new phase. In fact, construction attorneys say, it is highly unusual.

“It is an extreme measure,” says attorney Marion Hack. “It’s not something you see unless things go fairly poorly.”

Rich Cherry — the museum’s chief operating officer — says the Academy thought Matt Construction, the new firm, would be better equipped to handle the challenging design. “They’re used to the kinds of complexities the dome is going to have,” Cherry says. “This aspect of the project is so complicated.… Nobody’s ever built this particular thing before, including the architect that’s designing it.”

Representatives from Morley and Taslimi declined to comment. Cherry says the delays were the result of several factors, including design changes, construction requirements, and heavy rains over the winter that temporarily halted work.

Now that the subterranean floors have been excavated, he expects construction of the sphere to begin within weeks. The project — initially slated for substantial completion in December 2017 — is now scheduled to be finished by April 2019.

“I’m relatively confident of that date,” Brougher says.

Whenever the museum opens, the Academy believes it will be a hit. It has projected 860,000 annual visitors, which some in the museum business consider optimistic. Brougher declines to be pinned down to a particular visitor number, but says the Academy has looked at several scenarios.

“I can say without a doubt I think the numbers for the museum are going to be incredibly robust,” he says. The goal, he adds, is to give visitors a chance to experience “the power of cinema.”

“You’re getting both sides of the screen — the power of images themselves, and glimpses behind the screen to see how it was made,” he says. “The most important thing from my perspective is to ensure the legacy of cinema into the future.”

The Academy expects that the public will be awestruck — just as they would be at a tentpole film — and won’t worry about the delays, cost overruns, firings, and other setbacks.

“It might be a year later. So what?” says Bob Rehme, a former Academy president. “The key thing is to get it built, and have a museum for the motion picture industry. … Once they build it, people will come to it.”

Peter Debruge contributed to this report.

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