Rock and a Hard Place

Bono's first guitar is here. So is the American flag-lined jacket he wore during the Super Bowl XXXVI halftime show.

In the Name of Love: Two Decades of U2 is nearly assembled on the Rock and Roll Hall of Fame and Museum's upper floors. CEO Terry Stewart steps over a patch of sawdust left from the morning's work to point out one of his favorite pieces: handwritten lyrics penned by "The Satanic Verses" author Salman Rushdie.

The collection of clothes, correspondence and endlessly looped video histories of the Irish rock band is the work of curator Jim Henke, who pestered U2 drummer Larry Mullen for months about sending more memorabilia to Cleveland.

"One day we get a call and there's a truck outside," Stewart says. "That's how it happened. We didn't know it was all going to show up."

The result is a slick, somewhat uneven collection of artifacts from one of the world's most famous rock acts. During the exhibit's opening reception, 800 people mill about the museum's upper floors. They peruse record-label rejection letters, Xeroxed flyers and clothing worn during the band's 1997-1998 "PopMart" tour.

Only the band members themselves are missing. And they won't be showing.

The official reason is a scheduling conflict, but their absence illustrates the Rock Hall's relatively low spot on the music industry food chain. The museum's lack of national sponsors and sinking door revenue has done little to change that.

In fact, the Rock Hall spent a portion of the past year digging itself out of a financial crisis that started nearly 18 months ago. The cash crunch publicly boiled over in May 2002, when Stewart was forced to lay off 21 full-time employees and trim manager salaries by 10 percent. The $2.4 million budget cut was a direct response to the drying up of big-ticket corporate underwriting the museum had enjoyed for years.

"After 9/11, we virtually lost all of our national sponsors," Stewart explains. "That was really the big piece of pain that caused us to have to lay off some people."

Other music museums were forced to cut staff, including Seattle's Experience Music Project and Memphis, Tenn.'s Graceland. But the Rock Hall's situation is different.

Paid attendance has plummeted since Stewart's arrival in 1999 and many of the artists the Rock Hall was built to honor seem to want little to do with it. More often, it's the members of rock 'n' roll's B-list who answer the museum's call for support.

All this has left some Clevelanders wondering what happened to the world-class institution projected to draw up to 1 million new visitors downtown each year.

The next 24 months will be critical for the Rock Hall and its image. The institution is preparing for a major capital campaign that hopes to generate up to $50 million for a much-needed building expansion. It will test Stewart's mettle and how connected the former Marvel Entertainment Group executive has become since his arrival here four years ago. It will also, for better or worse, gauge whether Clevelanders still feel as passionate about the Rock Hall as they did when they burned up USA Today telephone lines trying to win it more than a decade ago.

Saturday Night Live laughed at Cleveland when Stewart arrived here in January 1999 to fix the Rock Hall. "My spider sense is tingling," chirped comedian Colin Quinn, alluding to Marvel Comics' famous SpiderMan character. "And it tells me the problem is location, location, location." A few days earlier, The Associated Press described the Rock Hall as a "money-losing shrine" in its article marking Stewart's arrival as the museum's fourth boss in five years.

It was a different story just a few years earlier. A laundry list of rock stars and living legends lined up for a concert at Cleveland Municipal Stadium to celebrate the Rock Hall's 1995 opening. Corporations such as Radio Shack, Levi's and ATandT lavished millions of dollars on the museum in the years after I.M. Pei's strange glass pyramid opened at the end of East Ninth Street.

But that initial burst of corporate support, which still accounted for as much as $3.2 million of the Rock Hall's $17 million operating revenue in 2000, declined to zero last year, leading to the May layoffs.

The Rock Hall's 2003 budget includes no national sponsorships. Except for business communications firm Enterasys Networks' support of the Lennon: His Life and Work exhibit in 2000, Rock Hall management has never landed one of these deals by itself.

Cleveland-based sports marketing firm IMG found the first round of six- and seven-figure, multiyear national sponsors prior to the Rock Hall's opening. The firm remained a consultant to the museum through the end of 1999. New York City-based Lifestyle Management Group was then paid $67,500 in 2000 to find fresh corporate underwriting. The firm came up empty-handed.

"I can cold-call anybody in America, if they'll take my call, and try to pitch them on an exhibit or a sponsorship," Stewart explains. "But the realities are if you don't go in at a high enough level and you don't have a relationship, the odds of getting heard are really not good."

Late last year, Stewart hired a division of J Walter Thompson — the world's fourth-largest advertising firm — to renew the search for corporate sponsors. Rock Hall management won't say how much they are paying the advertising firm though one insider puts the figure at $20,000 a month.

Icon Entertainment @ JWT, which has access to its parent company's heavy-hitting clients, such as Ford Motor Co., Domino's Pizza and Miller Brewing Co., is building a major campaign that will sell the museum to potential sponsors as the "source of all that is modern music," according to Icon's Rock Hall representative Steven J. Flanders. That could involve traveling exhibitions that promise to put the Rock Hall brand and its sponsors' logos in front of millions more eyeballs each year. Icon has told Stewart that new national sponsors may be found before the end of 2003.

"What's most important is we have people who are highly competent and they're professionals and experts in the area," remarks former McDonald and Co. CEO William Summers, who was named museum board chairman around the time of last year's layoffs. "Not Terry trying to do it part-time or [vice president of development] Jan [Purdy] or any of our staff, or me, who are amateurs, trying to do it."

Stewart, who now earns $295,000 a year, and Purdy, whose salary was $154,000 in 2001, have done an admirable job of increasing individual and corporate museum memberships, as well as philanthropic donations, since 1999.

Rock Hall corporate and individual memberships had fallen to less than $800,000 in 1997 and were just slightly more than $1.1 million in 1998. By the end of 2001, that figure had risen to nearly $3 million. By comparison, Seattle's interactive music museum, Experience Music Project, generated around $3.1 million in membership revenue during its first year of operation in 2000, according to tax records filed by the organization.

Still, a major exhibit exploring the music and spirituality of Beatles guitarist George Harrison, slated for March 2004, will not open if a national sponsor is not found to back it. The museum's Cleveland board of trustees issued that edict after the drug connotations of the psychedelic-tinged Take Me Higher exhibit made potential sponsors skittish. The $750,000 exhibit cost played mightily in the museum's 1997 budget deficit of $1.3 million — the only year the Rock Hall finished in the red.

Stewart says he fully expects the Icon Entertainment deal will yield results before the Harrison exhibit is scheduled to open. He laments that previous Rock Hall leaders did not show enough value to the museum's original batch of national sponsors for them to stay on as supporters.

"The husbanding, the caretaking of those when we opened up wasn't all that it should have been," he says. "…[The Rock Hall] didn't have the people who could focus on it and the world started to change as to what sponsorships should be."

ATandT says it was "pleased" to have been a museum sponsor since the Rock Hall's 1995 opening, but that its decision not to renew museum sponsorship was a matter of putting marketing dollars where they can do the most good. Earlier this year, ATandT did not renew sponsorship of Spaceship Earth at Disney's EPCOT Center in Orlando, Fla., or Innovations at Disneyland in California.

"We made this decision as part of our ongoing efforts to make the best possible use of our sponsorship dollars and ensure the best possible match with our business priorities," says ATandT public-relations director Mike Pruyn.

The product visibility generated from sponsoring an exhibit at a high-profile attraction such as the Rock Hall isn't good enough anymore, Stewart explains. He says any program devised by Icon Entertainment will include measurable returns for the sponsor.

"People are now only doing [sponsorship] deals if you can demonstrate exactly how they are going to sell more product, get people to try more product or sample more product," he says. "They want to know how the bottom line is going to be impacted."

It is now Icon Entertainment's job to do just that.

It's not a very rock 'n' roll moment, to say the least.A girl in an evening gown belts out Lee Greenwood's "God Bless the U.S.A." from the Rock Hall's main stage. Her voice rises all the way up to the museum's jigsaw-shaped upper floors. The stage, sound system and lighting rig were Stewart's first purchases after becoming Rock Hall CEO. He found the stark interior too sterile for a place built to honor the loudest and flashiest art form of the 20th century.

Papa Roach, Vanessa Carlton, John Mayer and more than two dozen other modern rock acts have taken the main stage the past two summers as part of MTV's "Live at the Rock and Roll Hall of Fame" series. Stewart says the show was taped at the Rock Hall the past two years because of a $10 million deal between ATandT and the cable music channel. It will not be back this summer for a third installment, leaving the Rock Hall without a valuable marketing vehicle.

The stage is also used by many of the 50,000 schoolkids that tour the museum each year. It's also loaned to cash strapped nonprofit organizations in need of a space to host their event. This particular Saturday afternoon, that event happens to be a teen beauty pageant.

"We've found a lot of other nonprofits that aren't lucky enough to have an edifice like this," Stewart explains during an interview a week earlier. He seems to genuinely enjoy playing the part of public benefactor. "It's been easy for me. I can't give them thousands of dollars, because I don't have that. What I can do is give them use of the building."

Stewart also waives the $18 admission fee on Martin Luther King Day and other designated community days. He explains that it's his way of making the museum accessible to people who may not otherwise be able to visit. But there may be other motives.

The surge of visitors for these events bolsters the museum's annual attendance figures. A Rock Hall insider, who agreed to be interviewed for this article on the condition of anonymity, says the number of free events hosted at the museum has been a deliberate strategy for propping up weak attendance numbers the past few years. The source claims that even events held off museum premises have, at times, been lumped into the Rock Hall's annual visitor count. Stewart steadfastly denies the allegation.

"We count people who come here for free, for shows and we count people that pay to come here," he says. "That's how it works."

The problem is, a growing number of museum visitors are not paying. Attendance topped 575,000 in 2002, but nearly 35 percent of those people visited the museum for free, according to figures supplied by the Rock Hall. More than 17,000 complimentary passes distributed to corporate and individual museum members are included in that number. So are the more than 197,000 people who walked through the museum last year without contributing a dollar of direct support. One citywide Spirit Day in 2002, for example, brought in more than 17,000 free visitors in eight hours.

Attendance has always been a sore spot for the Rock Hall. It peaked at just less than 873,000 in 1996 ¯ the museum's first full year of operation — before dropping to 550,000 by 1998. Since Stewart's arrival, it has remained either just north or south of that 550,000 mark — a figure he says is consistently achievable.

"It doesn't mean we can't move attendance up the hill," he says. "But too many times since I've been here, people want to argue the only sort of barometer of what we're doing and how well we're doing is attendance."

Tax records from 1997 to 2001 — the most recent available for public inspection — show that cash generated by admissions dropped 30 percent during that five-year period. Door revenue declined from $7.4 million in 1997 to $5.1 million in 2001. Adult ticket prices were $15 during that time.

When comparing that revenue against the number of visitors printed in the museum's annual reports, the gravity of such a decline is clear. The Rock Hall generated an average of $12 at the door for every visitor in 1997. By the end of 2001, that figure had dropped to less than $9.

Stewart says the quality of the museum, its relationship with the community and the fulfillment of its educational mission are as important as the number of paying visitors.

If education and community relations are where Stewart wants to focus the Rock Hall's attention, the last few years haven't been the most favorable. The museum's most recent vice president of education and public programs, David Spero, who assumed his post in 2000 and left this winter, had a tough turn. The education budget shriveled during his tenure and one of his employees was fired last February after showing a Jimi Hendrix documentary that included female nudity to a group of grade-school children.

Terry Stewart walks the museum concourse like a rock star. He sports a black jacket with tiny white flecks woven throughout, black pants and a black sweater. He doesn't wear suits and isn't much for small talk — unless it's about rock 'n' roll.

He points to the lobby marquee and quizzes a visitor about the originating band of guest lecturer Michael Smith. He nods his approval like a stern college professor when he's given the correct answer: The Dave Clark Five.

Stewart is a rock 'n' roll junkie. Known, prior to the museum's budget cuts, for hosting staff parties at his Bratenahl home once or twice a year, his vast personal collection of rock memorabilia led some to dub his residence the "mini Rock Hall."

"I'm a big collector and probably give stuff to the museum weekly or monthly," Stewart says. Roughly 75 to 80 percent of the memorabilia displayed at the museum is on loan from collectors. "Guys like me that have all this junk can't display it," he observes. "A lot of people like having the pedigree of knowing that it's been at the Rock Hall. It's been validated. The system's worked quite well."

Stewart is polite, his rock 'n' roll knowledge is deep and his desire to fill the museum with significant artifacts seems pure. However, attempts to learn more about Stewart's leadership style met resistance from those who would know best: people who have worked for him at the Rock Hall.

Many did not return phone calls. Others returned calls, only to report that they were unwilling to discuss Stewart at all. One former employee explains that staff members who were cut last year signed agreements not to talk to the media about the Rock Hall or its inner workings in exchange for their severance packages. Rock Hall management confirms this fact.

There are a handful of former employees willing to discuss Stewart, but only on the condition their names not be used. While they relate numerous incidents detailing what they saw as erratic leadership on Stewart's part, the stories cannot be repeated, as the specifics would give away their identities. It's safe to say, though, that their stories portray Stewart as a leader who showed favoritism to certain staff members, procrastinated to the point that projects suffered and made poor decisions.

One person who can openly talk about working for Stewart is former Marvel Comics artist Todd McFarlane. In comic book circles, he became a legend for his depictions of SpiderMan for Marvel during the '80s and early '90s. He's also known as the buyer who plunked down $3 million for Mark McGwire's No. 70 home-run ball.

McFarlane explains that Stewart's tenure as president and chief operating officer of Marvel Entertainment Group from 1989 to 1995 and company vice chairman from 1995 to 1997 was marked by the corporation's tumultuous transition from a privately held company to a publicly traded one. The conversion involved a string of ill-fated acquisitions and ended with the company filing for Chapter 11 bankruptcy protection at the end of 1996.

McFarlane is somewhat vague in his critique of Stewart's leadership. When asked directly whether Stewart is a "strong leader," McFarlane answers, "Yes," but then insinuates that such a description carries both positive and negative connotations.

"Depending on where you're standing in any decision or any conversation, your definition of a strong leader could use different words," he says. "You can be called someone who stands up for their convictions because you want to implement something and see it through. And there are other people who will say you're being big-headed and egotistical and just want to get your way."

To be fair, the music museum business is not easy. As president of the 40-member Music Museum Alliance, Robert Santelli has heard it from everyone. As the CEO of Seattle's Experience Music Project — Microsoft co-founder Paul Allen's interactive museum honoring popular music — and a former Rock Hall staff member, he's lived it.

"The state of corporate underwriting for music museums is rather dismal," Santelli says. "It's always been that way, actually."

Music museums are difficult to market, he explains, because they are relatively new creations compared to the history, art and science museums corporations have funded for decades. But that didn't stop EMP from landing what Santelli will only call a "multimillion-dollar deal" with German car manufacturer Volkswagen to sponsor the museum's largest exhibit of 2003, titled Sweet Home Chicago.

The Volkswagen money was earmarked for educational programming, namely an EMP Radio 13-part history of blues music to premiere on NPR this fall and a Feb. 7, 2003, concert at Radio City Music Hall that featured 41 blues artists. It will become part of a seven-part documentary film series executive produced by director Martin Scorsese. Titled "The Blues," the documentary is set to air on PBS this fall.

The Volkswagen deal that made all this possible was struck in-house by EMP management. "I kind of take that as part of my personal job to do that," Santelli adds. The presentation to Volkswagen was complicated and also involved representatives of Boston's WGBH public television and Vulcan Productions, a for-profit film company owned by EMP founder Allen.

Though Santelli says EMP looks to the Rock Hall's worldwide visibility as a goal for its museum, it is clear EMP is a healthier institution. Its mix of corporate backing and thought-provoking, well-planned educational programs are establishing it as the leader in the field of popular-music preservation and celebration — the field the Rock Hall has always hoped to dominate.

All indications are the Rock Hall cannot operate in that league without a serious influx of national sponsors or dramatically better revenue to bolster its bottom line. Look no further than the Rock Hall's 2002 American Music Masters Series tribute to Hank Williams for proof of that.

Often billed as the Rock Hall's "signature event" of the year, the pressure was on for the 2002 installment to make up for a scaled-down tribute to 1920s blues great Bessie Smith a year earlier. In a May 24, 2002, letter to museum backers, board chairman Summers promised that the next installment would be a "tremendous, star-studded event."

By most accounts, it was a dud.

Country artists Marty Stuart, Jett Williams, Brett James and Jack Scott, along with rockers Joe Grushecky, Bonnie Bramlett, Styx singer and guitarist Tommy Shaw and actor Billy Bob Thornton, served as the night's lineup of entertainment. Slow sales of the $45 tickets forced organizers to move the concert from Playhouse Square's 3,200-capacity State Theatre to the Rock Hall lobby. Only 400 people attended.

While admitting that the Hank Williams tribute "wasn't what we wanted it to be," Stewart declares that it "wasn't a failure." The concert was light on star power, he says, because Hank Williams Jr. backed out without giving a reason. Yet, Merle Kilgore, the man who wrote "Ring of Fire" for Johnny Cash and now represents Hank Williams Jr., says he told museum management from the start that his client might not make it.

"It was just a family emergency," Kilgore says. "I knew it was coming, but it hit that week."

The American Music Masters program has fallen from the heights set for it in 1996, when the EMP's Santelli worked for the Rock Hall and used his connections as a former music journalist and his New Jersey roots to bring Bruce Springsteen to Severance Hall for the program's first installment, a tribute to Woody Guthrie.

Upon Santelli's departure, the responsibility for lining up talent for such events fell to David Spero, the museum's most recent vice president of education and public programs. Though he resigned in March to work full-time for the artists-management division of TBA Entertainment, Spero was successful in getting veteran rock acts such as Styx and Bad Company to lend the Rock Hall a hand.

Critics argue that with his connections primarily concentrated in the '70s arena-rock genre, Spero's reach wasn't broad enough to land today's stars. That may be so. But when asked about the lackluster lineup for the American Music Masters tribute to Hank Williams, Spero says it came down to a matter of money and artist cooperation.

"My budget was probably less than a quarter of what the budget was, say, two years ago," Spero says. "When that happens, our options are scaled down as well."

Next up is a scheduled October American Music Masters tribute to Buddy Holly. Stewart said in mid-February that he had a "fair amount of talent lined up" and was "close on a star." Yet Spero remarked during an interview his last day on the job in late March that the search for performers was "just beginning." A replacement for Spero had not been hired at press time, and who will actually land the talent for the Buddy Holly tribute is anyone's guess.

Rolling Stone editor and publisher Jann Wenner raised the idea of a Rock Hall from infancy. He helped create the New York-based Rock and Roll Hall of Fame Foundation. Everyone assumed any museum honoring the Rock Hall inductees would be located there as well. That was until Cleveland campaigned, pushed and made organizers an offer they couldn't refuse — an offer that divided the Rock and Roll Hall of Fame against itself.

The Rock and Roll Hall of Fame Foundation hosts the annual induction ceremony and basks in the media attention that accompanies it. Cleveland gets clothes, guitars and other memorabilia to put on display.

"I think it's doing great," Wenner responds, when questioned about the Rock Hall's health. "It's a new kind of institution that doesn't exist anywhere else. … There are a lot of things to find out and figure out for the first time."

New York is hands-off when it comes to assessing how the Rock Hall's Cleveland contingent does its job. Wenner declines to comment on the Hank Williams tribute, saying he is "really not familiar with all the details," and does not know the specifics of the arrangement with J Walter Thompson, saying only that "it looks promising."

The relationship, according to Stewart, has been hands-off since the beginning.

"New York doesn't do anything on a day-to-day basis," Stewart says, adding that the Rock and Roll Hall of Fame Foundation does get approval over national sponsors, exhibitions, curatorial decisions and merchandising. "That's been that way since they licensed the [Rock Hall] concept to Cleveland."

What Wenner is sure about, is that Cleveland's Rock Hall directors must raise money "more thoroughly and methodically" than ever before. That ability will be put to the test as management and board members ready for a capital campaign with the goal of generating between $35 million and $50 million. The money will be used for a crucial building expansion, as well as the creation of a museum endowment that would ease the institution's heavy reliance on revenue and national sponsors. The Rock Hall's New York board has set aside $5 million for the project already. Wenner says it is Cleveland's responsibility to provide the rest.

"Like all other institutions, they are basically rooted locally and require local support, whether that's the Metropolitan Museum of New York or the Railroad and Caboose Museum in Poughkeepsie," he says. "That's why we went to Cleveland in the first place, because of the extraordinary amount of enthusiasm shown in the local community."

New construction on the Rock Hall site would include a 40,000-square-foot underground library and archives to serve as a research facility for scholars studying 20th-century popular culture. It will likely include temporary exhibition and classroom space, as well. Plans also call for a public waterfront restaurant and an enclosed walkway to the Great Lakes Science Center's parking garage. The "strategic plan" was released in May 2001 with a goal of being completed by 2006.

That plan has not moved in the past two years.

Last June, the Cleveland Foundation set aside up to $194,600 over a 10-month period so the Rock Hall could hire consultants to study the museum's financial model and examine the best time and means to canvass the city's corporate and philanthropic sector for support. When asked about the timing of such a campaign, Stewart says, "We don't know, exactly." Summers, on the other hand, is adamant that it must begin by the start of 2005, at the latest.

"We have to move forward with a capital campaign during the next two years," the Cleveland board chairman says during a mid-February interview. "You can't wait for the perfect time, because there is never a perfect time."

But what about the one change that could re-ignite Cleveland's excitement in the Rock Hall and loosen up some checkbooks? Is it possible the city could wrest the annual induction ceremony away from the recording industry's East Coast stronghold?

Wenner says "Yes." There are, of course, conditions. First, the inductions serve as the Rock Hall Foundation's only fund-raiser of the year and would likely remain so. Secondly, museum management must ensure it can sell $1 million worth of tickets to the event — a feat that is much easier to accomplish in Manhattan.

"The Hall of Fame would have to be willing to sell those tickets," Wenner says. "And we've said as soon as they want to do that, we're ready to do it."

However, Dix and Eaton senior adviser and former Jones Day partner Richard Pogue — one of the people instrumental in bringing the Rock Hall here in the first place — says he believes too much has been made of the fact Cleveland does not host the induction.

"The media has blown that out of proportion," he says. "That was not the objective when we set out to create the Rock and Roll Hall of Fame. It was more to celebrate an art form.

"The inductions would be nice to have, but that wasn't our intention at all."

Clevelanders have always felt they deserved the annual induction ceremony. It was held here in 1997 with reportedly positive results both artistically and financially, even if East Coast record executives found the environment a bit alien.

The annual event would make it a possibility — no matter how remote — that the average rock fan could catch a glimpse of his idol strolling through the lobby of the Ritz-Carlton Cleveland or having dinner at a Warehouse District restaurant. The ceremony carries an energy that a museum filled with the clothes and instruments once owned by those icons has never been able to muster by itself.

And until that sort of fervor can be generated in Cleveland year after year, with or without the induction ceremonies, the heart of rock 'n' roll and the shrine built to honor it may always remain somewhat broken.

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