Introduction
It is not often that museums lead the field in innovative operational management models. However, the Royal Armouries, one of the oldest museums in the world, established in the 15 th century, and which has occupied buildings in the Tower of London since its construction, has developed and established an alternative approach to bringing together public and private sector interests. This model came about because the Royal Armouries, at one time a part of the Ministry of Defence and latterly of the Environment Department, was determined as a result of the National Heritage Act 1983 when an independent Board of Trustees was established, to increase public access to its collections. In order to realise this fundamental strategic aim, the Trustees initiated a development plan which included the establishment of two new museums in Portsmouth and Leeds. Private sector funding was necessary to build and operate the £42.5m museum in Leeds which was opened in 1996.
Prior to building the museum in Leeds, the Royal Armouries, including Fort Nelson, Portsmouth, employed 116 staff representing 70% of the total income of £4,460,000 available to the Board of Trustees in 1995. In that year, the museum exhibited 30% of its permanent collection and was unable to mount any temporary exhibitions due to the significant changes to the Royal Armouries with the development of the Leeds and Portsmouth sites.
The organisation’s structures and relationships between the Royal Armouries and the RAI are described in figure (i).
Performing arts organisations such as theatres, cinemas and opera houses, with a need to refurbish existing buildings or establish new facilities, will find this approach of particular interest. It is an important transferable model, relevant to cultural managers engaging in the difficult task of financing and operating physical infrastructure, irrespective of their arts disciplines.
Background
This strategy and its implementation by the Royal Armouries Trustees requires to be set in a wider context of government policies and practices during the 1980s and early 90s, with the Conservative party in power under Prime Ministers Thatcher and Major. National museums were funded directly by government through the Office of Arts and Libraries, later to become the Department of National Heritage and now, under the New Labour administration, the Department of Culture, Media and Sports. National military museums, interestingly, found their resources through the Ministry of Defence, with other national heritage institutions such as the Royal Palaces and the Tower of London, including the Royal Armouries, funded within the Department of Environment.
The bulk of museums and galleries are, however, grant aided by the local authorities of England, Wales, Northern Ireland and Scotland, with support agencies and area Museum Councils at regional levels, and the Museums and Galleries Commission operating nationally.
It is worth noting that performing arts organisations such as the Royal National Theatre, Royal Opera, Sadlers Wells, Hallé Orchestra and Royal Liverpool Philharmonic are not funded directly by government departments; instead, government agencies with their own boards, the Arts Councils of England, Wales, Scotland and Northern Ireland, provide the channels for government funding.
In that sense, on the face of it, national museums are in a privileged position. However, it is also the case that these museums cannot avoid being directly influenced by government policy, and government policy towards the arts in the Thatcher years was brutal. Progressive year on year reductions in public funding at national and local levels, emphasis on the market, increased accountability, efficiency, effectiveness, and value for money policies were pursued. As a result of these significant policy shifts, the directors of the national museums increasingly found themselves involved more with financial management, fundraising, realising the commercial potential of the buildings and collections, and attracting the public to the museum in even bigger numbers through blockbuster exhibitions and displays, and less and less time for curatorial work. As Sir Roy Strong, the Director of the Victoria and Albert Museum, said in his diaries, 1967-1987 (Weidenfield and Nicolson, 1997, London) describing the changes in the museum in 1982:
"We were on the road which led to the consumer museum. Such a development was a complete reversal of the post-war cultural concept of funding and function of our great national institutions. Until then it was accepted as a given that they were basically sustained, however inadequately, by the state. Those in such institutions worked from the premise that they were to give the public what they thought was good for it. The role of the curator was first and foremost to be a scholar, to know about and collect objects within the orbit of his expertise. The supreme means of curatorial expression was the catalogue. The enemy, it would not be unfair to say, was the education department, which had the audacity to communicate on what they regarded as their objects to the public."
He went on to say that more and more of the Director’s time was spent on fundraising, front of house management and events, with the prime activities of the museum seen as “revenue engendering”. The curator director was rapidly becoming an extinct species being replaced by director managers.
In an article for the Financial Times newspaper, London, written in April 1984, as a result of the National Maritime Museum introducing admission charges, Sir Roy Strong sums up the Thatcher years for national museums, particularly the shift in emphasis on funding:
"That has interlocked the national museums into the world of commerce as never before. Indeed, virtually no major exhibition can now be staged without a sponsor. In many ways, this is a welcome development, although it does painfully constrict the choice of subject. But it is not only temporary spectacles that require subsidy, it is also the permanent collections. Nearly every national museum now runs an appeal to reinstate galleries, looking to the private sector and to charities to achieve part if not all the whole. Fundraising organisations, formal and informal, are also an integral part of museum management which they certainly were not a decade ago. In short, an important bridge is in the process of being crossed, because all this means that government is no longer able to fund our national collections on the scale needed either to keep their fabrics in repair or their displays up to date … "
The point was also made in the same article that the independent-of-government Boards of Trustees, newly established as a result of the 1983 National Heritage Act, spent more time discussing financial matters than "haggling over works of art and other forms of acquisition". It was also noticeable that these Boards included many more business people, lawyers and accounts at the expense of scholars.
It is worth noting here that most national and local authority museums were incorporated within departments. Typically, at national level this would include the Office of Arts and Libraries, Ministry of Defence, Environment and Education Departments, all constituent members of the government civil service.
The Royal Armouries Answers the Challenge
The Royal Armouries was no exception to this and faced similar challenges. The Trustees' response, guided by the Master of the Armouries, Guy Wilson, was to develop a strategy which responded to the museum's statutory duties, its mission and the harsh public sector financial climate. Strategy 2000 was adopted by the Board in 1990 and proposed:
- the enhancement of the Royal Armouries' displays at the Tower
- the establishment of a new museum of arms and armour outside the Tower
- the continued development of Fort Nelson as the Royal Armouries museum of artillery
- the possible establishment of a self-made funding exhibition centre in the United States.
These proposals were a clear manifestation of the statutory duties of the museum to
- care for, preserve and add to the objects in their collections
- secure that the objects are exhibited to the public
- secure that the objects are available for study and research
- maintain a record relating to their collections to arms and armour in general and to the Tower
- generally promote the public's enjoyment and understanding of arms and armour.
The National Heritage Act also gave powers to the Trustees of the museum to
- provide education, instruction and advice
- enter into contracts and other agreements
- acquire and dispose of land and property
- charge for admission to their collections displayed outside the Tower
- make limited disposals from the collections
- lend and borrow objects.
Essentially, the Royal Armouries with its single constrained site at the Tower of London and an increasingly diverse collection of world-wide comparative material largely undisplayed or available for scholarship, was finding it increasingly difficult to realise its duties, particularly that of increasing public access to the collections. Hence the adoption of Strategy 2000 with its proposal to establish a new museum outside the Tower to complement both the Tower and the Royal Armouries Museum of Artillery at Fort Nelson, Portsmouth.
After a beauty parade based on a detailed specification for a new museum, Leeds in the North of England was chosen as the location, not least because Leeds City Council and Leeds Development Corporation, with the government, provided £28.5m of the £42.5m required to build it. However, the significant departure from conventional practice and subsequent impact on the management arrangements for the new museum was, from the outset, the conception of a partnership between the public and private sectors. In particular, the Board of Trustees wanted a private sector partner(s) to provide the remaining £14m needed to realise the project.
The partnership led to the establishment of the Royal Armouries International plc (RAI), a private limited liability company (plc) with shareholders and profit distributing powers. Although the public funds allocated to the project by the government, Leeds City Council and the Leeds Development Corporation were handed over to this company to construct and operate the new museum, Royal Armouries International plc was a private sector company with shareholders, including 3i, a private sector venture capital company; and Electra Investment Trust, Yorkshire Electricity, Gardner Merchant and the Bank of Scotland. James Glover, a former Commander in Chief of UK Land Forces and non-executive director of a major international oil company, BP, chaired the company. The Master of the Armouries and the Chairman of the Board of Trustees at the Royal Armouries, Lord Younger of Prestwick, do not sit on the Royal Armouries International board, nor do the Chairman and the Chief Executive, Christopher Boyle, sit on the Board of Trustees.
In effect, a new private sector company was established with public and private sector funds to establish and operate a new museum of arms and armour in Leeds. This museum was expected to fulfil the following functions as described in the Royal Armouries Triennial Report 1993-1996:
- house and display the greater part of the collection (30,000 of a total of 50,000 items) to the highest standards of presentation, access, scholarship and conservation
- create a major visitor attraction, educational resource, cultural centre and economic stimulus for the city and the region
- generate income so as to move the museum towards greater self-sufficiency.
Agreements were reached in December 1993 whereby a 60 year sub-lease was granted to RAI and in return RAI would honour the Royal Armouries lease obligations, and construct and operate the new museum commercially, at the same time safeguarding the key principles of the Royal Armouries and its statutory duties. There was an additional understanding that if commercial targets were exceeded, the surplus would be shared between the Royal Armouries and the RAI. This arrangement enabled the Royal Armouries to rehouse and display its collection in purpose built accommodation at no cost to itself in capital debt repayments. It also, to a large extent, avoided the revenue implications of managing and maintaining a significant capital asset. As far as the government is concerned, there was no significant call by the Royal Armouries for additional grant aid to meet the operating costs of the new museum. The RAI took care of all that by agreeing to operate the museum commercially. This included entry and car parking charges, shops, restaurants, private functions, conferences and popular exhibitions. Within this framework the RAI has agreed to pay for specified services which relate to the Royal Armouries statutory duties, including conservation, collections, management, education, design, photography, display and interpretation.
It was also the case that the RAI was not restricted to operating the new museum at Leeds but can develop its business with other museums, galleries and visitor attractions in the UK and throughout the world.
Management Arrangements
In management terms, there was a Chief Executive of the RAI responsible for operating the Royal Armouries Leeds commercially, without grant aid from the government via the Royal Armouries. Christopher Boyle, as the Chief Executive, was responsible to the Chairman and board of shareholders of RAI for delivering the agreed financial targets to enable the company to service the capital debt, buy the specialist museum services required to satisfy the statutory obligations of the Royal Armouries in Leeds, and meet the remaining staff and maintenance costs. These financial projections were set against visitor income through charging entry, car parking, and related commercial activities.
The Master of the Armouries, Guy Wilson, remained responsible for the care, display and interpretation of the collection at Leeds, as at the museums on the other sites.
An operating committee was established at an early stage and continues to meet on a regular basis, comprising the Chairman of RAI, James Glover; Chief Executive, Christopher Boyle; Head of Administration and Development, Royal Armouries, Dick Mundell; and Master of the Armouries, Guy Wilson, to discuss and agree forward plans for the museum and to address any operational difficulties which may have arisen between the company and the trust. There were no other committees at other operational levels which provided a formal and explicit interaction between the RAI and the Royal Armouries. The staff from both organisations interact on a daily basis as necessary to fulfil their respective functions, whether it be security or conservation. However, some staff have dual responsibilities, particularly in common functional areas such as marketing, where there are related interests of the RAI and the Royal Armouries. Independence is maintained and co-operation encouraged where functions coincide.
Line management arrangements at the museum relate to the function an individual is employed to carry out. For example, education staff are employed by the Royal Armouries and subcontracted to provide services paid for by RAI at the Royal Armouries Leeds. Security staff are directly employed by the RAI and are expected to deliver a security services for RAI as expressed in the company's contractual relationship with the trust, the Royal Armouries.
Distinct arrangements are made using contracts for temporary exhibitions, particularly the more commercially orientated such as the Monsters of the Deep, and Dinosaurs: The Next Generation, or the planned Buffalo Bill's Wild West exhibition. This has enabled the company and the Museum's trustees to clarify the levels of service required from marketing, education, interpretation, and avoided clashes between museum-led, and the museum as a venue temporary exhibitions. It also avoided any potential confusion over line management arrangements.
Regardless of these arrangements, however, the Royal Armouries has reserved the "right" to protect its name and reputation and ensured that the buildings revert to the Royal Armouries if the RAI fails.
Benefits to both organisations
On the face of it, this model has tangible benefits for the two organisations and particularly for curators. RAI benefits from the reputation of the Royal Armouries "brand name" to operate a successful business for its shareholders and, moreover, is able to sell services to other visitor attractions throughout the world.
The Royal Armouries, as explained earlier, has benefited from a new museum without the management headaches of financing and operating buildings. It has achieved a significant target of redisplaying 30,000 of its 50,000 objects in five galleries totalling 75,000 ft 2 and provided 14,647 m 2 of public, office and ancillary support areas. The RAI had an operating income in 1996 of £3.539 million, employing 150 core and 50 casual staff. This has, it seems, enabled curators and related staff, including senior management, to focus on the 'core business' of the Royal Armouries, a position Sir Roy Strong, a past director of the Victoria and Albert Museum, would envy.
However, nothing is simple and although there have been considerable advantages to these arrangements, the curators have to work harder because of the increased number of museums to programme, and the grant aid from the government has declined in real terms from £4.02m in 1995/96 when the Royal Armouries Leeds opened, to £3.723m in 1996/97, and £3.724m in 1997/98. In effect, the Royal Armouries has expanded from one museum to three over three years, with a marginal increase in staffing. This increase has been met from the RAI, Fort Nelson, Portsmouth, and the Tower internal rationalisation. The position of the senior managers has also shifted from managing a collection on one site, to operating on three sites in differing geographical locations.
The results
For the RAI, the focus is on visitors and their willingness to pay to enter the museum, to stay for some time, and to repeat the experience. The RAI with a business orientated management team has a need to generate revenue to meet its financial targets, ensure that costs are met (and preferably exceeded) and surpluses generated. This is of course a shared ambition as the Royal Armouries does not want the RAI to fail, and both have a common interest in attracting more and more visitors for differing purposes, one educational, the other commercial.
In the case of the Royal Armouries, the number of visitors attracted to the museums has been a key government performance measure in meeting the statutory duty to "generally promote the public's enjoyment and understanding of arms and armour". In this regard, by expanding the number of museums, including Leeds, the Royal Armouries has been able to increase visitor numbers by 36% over the last eight years. The critical phase, for the RAI and the Royal Armouries, has however just begun, with the initial novelty factor giving way to familiarity and increased competitiveness from other visitor attractions in the region, funded by the National Lottery. It has been noted that National Lottery funds were not available to the trustees when developing Fort Nelson, Portsmouth, and the Royal Armouries Leeds. Christopher O'Boyle, the Chief Executive of RAI, has subsequently pointed out that private sector involvement would still have been required for such a substantial capital project, to match the public sector grants including the National Lottery.
Today, this prototype model is described as a private finance initiative (PFI) and used not only in the cultural sector but also in health and education, to build and operate hospitals and schools. Prisons, and road building, have also increasingly been funded using public/private sector partnerships, both in the construction phase and the operation of the building(s) once completed.
The Royal Armouries Leeds was, in effect, a prototype private finance initiative (PFI) project.
It has initially worked well because there are common objectives, and a willingness to ensure that the partnership is effective in realising the objectives. Clarity of roles and responsibilities were recognised and enshrined in the management structures when the partnership was established. This has been underpinned with a legal framework of agreements, including the property leasehold structure; development agreement and joint venture for the existing site and the thirteen acres retained for future opportunities; insurance; and the operator agreement, which details the commercial performance and operational business plan of RAI for the Royal Armouries.
However, Christopher O'Boyle has made the observation that the private sector needs to be involved in these schemes early and have control. In particular, operational requirements needed early incorporation to avoid difficulties and misunderstandings in later phases of the development and operation of the museum. In this respect he has pointed out that private institutional investors back the management to deliver and consequently must have confidence in that team to focus on managing the risks, exercising financial control and maximising revenue streams.
The skills, background and experience required to attract and retain private sector funding into the Royal Armouries Leeds did not rest with the Master of the Royal Armouries and his team. Guy Wilson's management team did, however, hold the expertise necessary to care for, interpret, display and manage the collection. This expertise did not rest with the private sector team led by Christopher O'Boyle, although central to maximising revenue streams. Common to both management teams, however, was marketing and visitors, particularly the desire to increase the number of visitors and repeat visits.
With such differing cultural perspectives, shared aims, mutual trust, respect and regular communications have been central to this management model and there are now additional benefits accruing to those involved, through the acquisition of new skills and knowledge. This institutional and individual learning has provided the basis for continuing to develop the model and open up new opportunities, both at the Royal Armouries and the Royal Armouries International plc to realise the potential of the museum at Leeds.
An afterword
The circumstances over the last 12 months have conspired against this model, with the change of government to New Labour, the re-introduction of free entry to museums, and the establishment of several major lottery-funded cultural and heritage attractions in the Yorkshire region. This includes the National Centre for Popular Music in Sheffield, the "Magna" Project (a museum on the steel industry) in Rotherham, and the Earth Centre near Doncaster.
As mentioned earlier, however, the success of this model depended on attracting the visitor targets described in the RAI business plan as a means of paying back the loan. With the dramatic increase in competition, a change of government policy regarding museum admissions, comparatively high admission charges and over ambitious visitor estimates triggered a crisis.
The RAI in partnership with the Royal Armouries was not able to attract the business plan visitor targets and thus the income to service the capital debt which caused both parties to reconsider the funding and management arrangements.
The initial reaction of the RAI and Royal Armouries management were attempts to boost numbers, but without much success. This may well have been to do with the limited "flexibility" of the collection and the "unattractiveness" of arms and armour compared with other visitor attractions in the region such as the National Railway Museum, and the National Museum of Photography Film and Television quite apart from the new Lottery attractions referred to earlier.
During the early part of 2000 the crisis had deepened to the point that the future of the project was in serious jeopardy and discussions commenced with the financial supporters. Neither the RAI, Royal Armouries, Leeds City Council or the Department for Culture, Media and Sport (DCMS) wished Royal Armouries, Leeds to fail. Consequently, DCMS has provided the interim funding necessary to enable the managements to renegotiate contracts and redefine relationships, raise additional funding, and a re-appraisal of the exhibition programme.
This has resulted in the introduction of a revised management structure at the Royal Armouries to absorb the increased operational responsibilities and the scaling down of the RAI. In effect the Royal Armouries, Leeds has been fully integrated into a unitary structure, the Royal Armouries with a Chief Operating Officer. The Chief Operating Officer reports to the Master of the Armouries on the day to day management of the museum. It is also expected that the Master and the Chief Operating Officer will jointly report on strategic issues to the Trustees. Similar arrangements have also been put in place for the Tower of London and Fort Nelson.
The splitting of marketing activities has also been addressed in the revised arrangements with the establishment of a new department under the leadership of the Head of Marketing and Sales. It is expected to maximise visitor numbers, and generate income from fund-raising, sponsorship, donations and retail initiatives. The RAI role has as a consequence been substantially diminished and realigned to focus on what could be described as a traditional facilities management.
As mentioned earlier one of the benefits of RAI arrangements was that curatorial staff were freed from the business of operating the museum and could concentrate on the traditional work of a curator. It seems that this is still the intention with the new arrangements as the Master of the Royal Armouries, Guy Wilson will have more freedom as the Trustees principal adviser to develop long term strategic planning , creative and educational programmes as well as continuing his role as advocate, and museum spokesman nationally and internationally. It seems that there is a recognition that operational management in the museum needed strengthening and it is worth noting that the Chief Operating Officer does not come from a museum background but rather the commercial visitor attraction world.
Questions still remain as whether the revised management structure will deliver the visitor numbers and increased income or will the public agencies such as the Department of Culture Media and Sport be required to increase the annual grant to make up the financial underachievement?
There is an outstanding question regarding the continued relationship between the revised Royal Armouries management structure and the facilities management RAI which still has a substantial capital loan to service.
There are also important messages here for other public/private partnerships, and for major lottery-funded capital projects. The most significant of these is the importance of realistic, empirical market intelligence data. In particular the need for accurate data on visitor numbers and what they will pay to see is central to the success of such projects.
Sources
- Royal Armouries, Triennial Report, 1993-96
- BURA, Visitor Cities, Museums and Heritage Projects and Catalysts for Urban Regeneration, November 1996, Royal Armouries Museum, Leeds: Conference presentation by the Chief Executive, RAI, Christopher O'Boyle
- Roy Strong Diaries, 1967-1987, Weidenfield and Nicholson, 1997, London
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