Museum to sell art to pay debt

The money - up to $30 million - will be used to repay bond debt and replenish depleted endowment, museum officials announced.

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In a rare move, the Delaware Art Museum will sell as many as four works of art, valued at $30 million, to repay debt from a facilities expansion and replenish its endowment, museum leaders announced Wednesday.

Museum CEO Mike Miller said the "last resort" board action was necessary to avoid closing the museum.

He acknowledged that the decision could damage the museum's reputation nationwide, resulting in possible loss of accreditation and professional sanctions that would bar the museum in the short-term from loaning or borrowing works from other museums. The move could also hamper the century-old Delaware museum's efforts to recruit a new director.

"We're basically shunned for a period of years," he said.

Museum leaders declined to name the specific works that will be auctioned off within six months, but they said they were selected to have "minimal impact" on the museum's 12,500-piece collection. The sale could involve paintings and sculptures. The board has identified three works to be sold, Miller said, and could select a fourth from a short list if needed.

No work that was acquired through a gift or bequest – representing roughly 90 percent of the museum's collection – will be part of the sale, Miller said. That includes one of the museum's most iconic works, Edward Hopper's "Summertime," which officials said could easily fetch $30 million on its own. The painting was donated in 1962 by the sister of Wilmington art collector John L. Sexton.

Housing the largest collection of British pre-Raphaelite art outside of the United Kingdom, the museum also boasts significant holdings from one of Wilmington's favorite sons, Howard Pyle.

Sixteen board members in attendance voted unanimously to approve selling the works, including Pyle's great-grandson, board vice president Roberts Brokaw III. Brokaw did not return a phone call late Wednesday.

Three trustees – board chairman Gerret Copeland, Paula Malone and Joshua Twilley – were absent. Copeland, a major donor, was traveling out of the country, but agreed with the decision, said Miller.

After losing its credit guarantee from Wells Fargo bank, the museum was faced with having to repay by October the full $19.8 million remaining on the bond, which would have nearly liquidated the museum's reserve fund.

To avoid that scenario, trustees had been working for a year on various refinancing options, an alliance or merger with another local arts institution, or restructuring the museum's operating model. None of those options proved viable, Miller said, given the museum's outstanding debt. Currently, the museum's operating deficit is $1.6 million, which represents more than 40 percent of its $4 million budget.

The museum also sought guidance from two professional associations: the Association of Art Museum Directors (AAMD) and the American Alliance of Museums (AAM). AAMD president Timothy Rub, who directs the Philadelphia Museum of Art, said he advised museum leaders to go public with their financial difficulties to rally support among private donors and legislators to restructure the debt.

Museum officials first learned in early 2013 that the bank had planned to withdraw its credit guarantee, Miller said, and leaders subsequently reached out to major donors with no success.

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