Hands Off the Please Touch
The Please Touch Museum isn’t just another Philadelphia landmark on the mandatory class-trip agenda. For kids seven and under, it’s the exact opposite of a stuffy museum or snooze-worthy historic site. Put your hands all over everything? Yes, please. Meanwhile, parents love it because they can let their children roam free in a wonderland with fun, educational experiences at every turn. It’s the kind of place where even a clear-eyed financial guy — who offers very sobering statistics about the museum’s future — can’t wait to tell you his grandkids are big fans.
The problems at the museum, which first opened in a cozy space at the Academy of Natural Sciences in 1976, have been well documented: The institution is some $60 million in debt after borrowing to move from its longtime 21st Street home to palatial Memorial Hall in Fairmount Park.
Clearly, Please Touch made some faulty assumptions in its 2006 plan to expand there. While attendance has surpassed projections — running 10 percent higher than expected in 2013 — admissions revenue has fallen short: The $4.5 million anticipated for 2013 turned out to be only $4.1 million, according to documents available on the Municipal Securities Rulemaking Board website.
Nor have other revenue sources panned out as planned. Please Touch projected almost $1.8 million in donations for 2013, but received only $1.3 million; in 2014, donations dropped to around $945,000. And the $8.5 million expected from the sale of its former location? The 2008 recession dashed those hopes; the building finally sold for just $3.1 million in 2011.
In September 2013, Please Touch declined to pay either a $1.5 million debt payment or a $570,000 principal payment and began putting pressure on bondholders to restructure. When initial negotiations went nowhere and the museum continued to withhold payments, bondholders countered by threatening to sell museum exhibits and other assets.
The museum’s financial woes couldn’t come at a worse time for Fairmount Park. Six million dollars in funding has been allocated by the William Penn and Knight foundations for Centennial Commons, a family-friendly park next to Please Touch with gathering spaces, rain gardens and a water pathway. Without Please Touch as an anchor, that project could be doomed before it begins. “This institution is really a cornerstone for development in this area,” says Lynn McMaster, Please Touch’s president and CEO.
So can Please Touch be saved? The museum’s bond is worth only 15 to 18 cents on the dollar, says Alan Schankel, managing director at Janney Montgomery Scott. Plus, Please Touch doesn’t own real estate, has a limited audience, and can’t merge with or acquire another museum in town, because, well, there’s no other museum like it.
“[Bondholders] can go after current revenues,” Schankel says, “but then the museum won’t be able to pay people and will have to shut down — so it’s in their interest” to keep Please Touch operating.
That leaves bankruptcy and reinvigorated philanthropic outreach as potential solutions. “Fund-raising efforts need to step up,” says Kathryn Ott Lovell, executive director of the Fairmount Park Conservancy. “We as advocates need to do whatever we can to give support.”
The museum has tightened its belt recently — increasing efficiencies, laying off staff and totally redesigning its fund-raising efforts. With such changes, McMaster is defiantly certain it will stay afloat.
“We’re here for good,” she says. “Our goal is to come out with a great plan.” McMaster wouldn’t elaborate on negotiations with bondholders. (One, New York Life, also declined to comment, and a representative from Lord Abbett and a lawyer for U.S. Bank National Association didn’t respond to requests for interviews.)
Letting Please Touch wither away in a cloud of bad bond debt and the worst economy since the Great Depression just seems wrong. Closing the museum should be unthinkable to parents, teachers and the philanthropic community. It’s too unique, beloved, and important to the development of Fairmount Park and West Philly. It’s time for bondholders — and donors — to step up and let the past be the past.
Originally published in the June 2015 issue of Philadelphia magazine.