After that exceptional beginning on the fund-raising front, we initiated an international design competition, which attracted more than one hundred submissions and resulted in the selection of the distinguished Japanese architect Yoshio Taniguchi. His design will almost double MoMA’s exhibition space and provide larger and more flexible galleries for the display of contemporary art as well as temporary exhibitions. In addition the museum will now include an extensive educational and research center, a new administrative complex, another movie theater, and a dramatic lobby gallery that will overlook our beloved Abby Aldrich Rockefeller Sculpture Garden. All in all the museum will expand by more than 250,000 square feet, and its configuration will be dramatically altered into an innovative campus complex. In my opinion this design captures the exciting future of MoMA while remaining faithful to our storied and essential past.
In the fall of 2000, with more than $460 million in hand, the Dorset was demolished in preparation for the construction of “the finest museum of modern art in the world.”
The building of a new MoMA has not settled the argument between the advocates of modern versus contemporary art. That discussion still rages within the walls of MoMA and without. While I have supported those who insist the museum must be continuously open to evolving forms of artistic expression, I am often startled and even angered and repulsed by the strange directions and provocative content of the new forms that seem to pop up every few months. For instance, on my first visit to the P.S. I Contemporary Art Center, MoMA’s contemporary art center, I found many of the exhibits baffling. Strange videos, distorted and grotesque paintings, graffiti, and perverse photography lined the halls and crowded the walls. They made the “fenders” sculpture, which had caused such a controversy at Chase in the 1960s, seem tame and charmingly naive.
I was relieved when the tour ended and I returned to the comforting confines of my home and its Cézannes, Signacs, and Derains glowing peaceably before me. As I looked at them, however, I remembered that these men had once been members of a revolutionary artistic vanguard themselves, and quite often their revolutionary zeal was not limited to their palette. They had banished perspective, grappled with the disturbing currents coursing through their societies, and insisted that their vision and methods were as valid as those that had gone before. They had also been roundly denounced by the establishment of the day and their work ridiculed as pointless, grotesque, and without beauty. They had “invented” modern art and changed the way in which the world was perceived. Perhaps, like the Neo-Impressionists and Fauves, this latest generation of “modern” artists had more to offer than I was giving them credit for.
I know that would have been my mother’s reaction.
*Our Boy with a Red Vest is one of four Cézanne painted. The others hang in the National Gallery in Washington, D.C., the Barnes Collection in Philadelphia, and the Musée d’Orsay in Paris.
*The Thyssen-Bornemisza Collection is now housed in the Villa Hermosa in Madrid.
*A few years earlier I had organized a similar syndicate to purchase the Edward G. Robinson Collection, only to have Stavros Niarchos snatch it away from us with a higher bid.
†Leo Stein purchased Picasso’s Girl in 1905 for a few dollars from an art dealer; we paid just under a million in 1968, and it was recently reappraised at $25 million.
*Three of my Picasso selections—the Reservoir, a Cubist landscape of 1908, and Woman with a Guitar—were among the six identified by MoMA in advance. We gave the landscape and Woman with a Guitar to MoMA in the mid-1970s but still retain Reservoir, which will go to the museum upon my death.
CHAPTER 30
ROCKEFELLER CENTER REDUX
No physical structure is more associated with my family than Rockefeller Center, majestically situated in the heart of midtown Manhattan.
Father’s courageous decision to move forward with the Center, in the depths of the Depression, is his crowning legacy and an enduring symbol of hope and optimism of which all his descendants are proud. Indeed, since 1934, Rockefeller Center has served as the family’s “nerve center” for its diverse business operations.
As solid as the Center’s standing in the City has been over seven decades, its financial history has been surprisingly turbulent—from Father’s scrambling to keep the property afloat at its conception to my own intercession sixty years later to help rescue the center from an ignominious bankruptcy.
It has been a curious and memorable evolution.
THE TRUSTS
My generation’s ownership of Rockefeller Center stemmed from the creation of the 1934 Trusts, which Father established for his six children during the Depression. These trusts, in particular, have been the primary source of the preservation, enhancement, and transfer of the family’s wealth from generation to generation.
At the time Father set up the trusts, all of us were relatively young; I was only nineteen. As I have noted, Father had a number of compelling reasons for creating the trusts even though he worried whether we could handle the responsibilities of great wealth at such a young age.
Father resolved the dilemma by setting up sizable trusts for each of us but limiting the income we could receive from them before the age of thirty and prohibiting us from drawing down on the trust principal before then. To ensure his wishes were carried out, he appointed a five-member Trust Committee from among his closest advisors—all experienced men he could count on to provide us with prudent counsel. However, while the trustees were given important powers to dispense or withhold income, he gave the Chase National Bank’s Trust Department sole responsibility for investing the principal.
Father recognized that our need for financial guidance would diminish as we grew older. For that reason he included provisions in our trust indentures that allowed each of us, once we turned thirty, to withdraw portions of the principal if the Trust Committee concurred with the request. Indeed, Father also gave each of us the right to withdraw the entire principal and dissolve our trust altogether if we wished.
Father realized, however, that continuing the trusts might be in our best interest and those of our descendants. For that reason he directed that the principal of each trust be passed automatically to our children.
THE BROTHERS, THE CENTER, AND THE TRUST COMMITTEE
For nearly fifty years the relationship of my brothers and me with the Trust Committee was routine and eminently satisfactory. Over the course of that time, in fact, there was only one financial transaction between the brothers and our trusts that turned out to have unexpected and complicating repercussions: the transfer of ownership of Rockefeller Center.
From time to time we asked for permission to invade our trusts for some special purpose, and the committee was always sympathetic and responsive, as Father had intended it should be. Once a year at Christmas time the trustees invited the beneficiaries to lunch with them. On those pleasant occasions the Chase officer responsible for investing the funds would report on the trust’s financial performance, and we would discuss the financial markets and any changes there might be in investment policies. The market value of the trusts grew substantially over time, as did the income from them.
In 1955 our lawyers advised my brothers and me that our joint ownership of Rockefeller Center placed us in a precarious position if one of us were to die unexpectedly. Such an event, they said, might trigger the liquidation of our ownership in order to pay estate taxes. To guard against that eventuality they urged us to transfer all Rockefeller Center stock out of our personal portfolios as quickly as possible.
That was much easier said than done because the lease agreement with Columbia University prohibited us from selling or otherwise disposing of our shares without the university’s consent. When Columbia’s lawyers understood our dilemma, they agreed to allow us to sell our shares, but only to the 1934 Trusts, thereby ensuring the family’s continued involvement in the Center. The Trust Committee agreed to buy our stock and gave us shares of the former Standard Oil companies in return. The deal
netted each of us slightly more than $12 million.
While the sale took care of our individual estate problems, it did not resolve two other important issues: Rockefeller Center’s divided ownership—the trusts now owned the buildings and Columbia University owned the land—and the continuing illiquidity of the asset itself. The resolution of those issues had to be deferred to the future. Over time an even more troublesome development arose: the increase in power of the Trust Committee rather than the Rockefeller family over the operations and destiny of Rockefeller Center. Initially no one was concerned by what seemed like a technical change in ownership, but thirty years later this exchange led to a controversial and infuriating confrontation.
NEW CHAIRMAN, NEW COURSE
In March 1982, a year after retiring from Chase, I became chairman of Rockefeller Center, Inc. (RCI), which by then owned not only the original Rockefeller Center but also a number of other properties as well. The restrictions imposed by the Columbia lease limited our ability to manage and expand the company. I had long believed that if RCI were able to acquire the land under the Center, it could become an asset of far greater value for my family. Indeed, I felt it could become the financial engine for future generations of the Rockefeller family, just as Standard Oil had been for the first three. That was my vision. I would soon discover that neither the Trust Committee nor several members of my family shared my view.
Nelson had been directly involved in the Center’s management from the early 1930s through the mid-1950s. In fact, it was he who had taken the lead in persuading Father to sell us the property in 1948 for $2.2 million. When Nelson entered politics in 1958, Laurance succeeded him as chairman of RCI, and under his leadership and that of his successor, Dick Dilworth, the head of the Family Office, the modernization of the Center was successfully completed. Laurance and Dick also led the Center’s physical expansion across Sixth Avenue through the construction of the Exxon, Time-Life, McGraw Hill, and Celanese buildings.
The real estate and stock market booms of the 1960s were followed by the prolonged economic malaise of the 1970s. Dick Dilworth was forced to act and, along with Alton G. Marshall, RCI’s president and CEO, began to diversify the company in order to free it from its overwhelming dependence on a single property in a city that was experiencing a strong “shakeout” in real estate values. Starting in 1975, RCI purchased Cushman & Wakefield, one of the country’s largest commercial real estate brokers; Trinity Paper & Plastics Corporation, the nation’s largest paper grocery bag producer; Wessely Energy, a petroleum exploration and production company; and the Tishman Realty and Construction Company. They also launched Rockefeller Center Television (RCTV), a cable television company, and expanded the Center’s involvement in property development outside New York City. These actions soon had the desired effect: The losses of the mid-1970s were replaced by record operating profits, $19.9 million in 1979 and almost $21 million in 1980.
Despite several valiant attempts, Dick Dilworth was never successful in convincing Columbia to sell us their land. He did, however, negotiate important modifications in the lease, the most important of which eliminated the $12 million escrow account that required RCI to hold three years of rental payments at all times. In return for this important concession and other technical adjustments, RCI increased its rental payments to the university from $4 million to $9 million a year.
Dick Dilworth and RCI’s management substantially improved RCI’s financial position, but many changes still needed to be made. More than 70 percent of the company’s assets were still concentrated in real estate, primarily in midtown Manhattan. And while earnings had improved, they were still a minuscule percentage of the company’s estimated market value of more than $400 million.
RCI’s record of modest earnings and erratic performance, and its uncertain prospects, soon became a point of contention within the family.
After the deaths of Winthrop, Babs, John, and Nelson, their children replaced them as direct income beneficiaries of the 1934 Trusts. This meant that in the case of three trusts—those of Babs, John, and Nelson—income would have to be divided among more individuals. Many of the new beneficiaries were disappointed when they learned how limited their income would be. In their eyes the main culprit was RCI, which had never paid dividends on its common stock. While RCI began to pay a nominal dividend of $1 on a class of preferred stock in 1976, the only trusts to benefit were mine and those of Babs, John, and Laurance. In view of this fact, Nelson’s children were the most vocal in insisting that RCI should distribute dividend income to all shareholders in an amount commensurate with its net worth. I opposed that option because to do so would entail paying income in excess of earnings and because it might require selling assets without due regard for their longer-run potential. I suggested instead that we move aggressively to improve RCI’s profitability by hiring a new management team and adopting a new business plan. Mine was a distinctly minority view within the family in the late 1970s and early 1980s. Laurance had an even more radical view: He thought it was time to sell RCI. Most of the family seemed to agree with him.
REVITALIZING THE CENTER
Soon after I retired from the Chase in April 1981, Dick Dilworth and I began a series of discussions with the RCI board and members of the family about the challenges facing Rockefeller Center. It had become painfully apparent that RCI needed to be restructured from the ground up if it was to become a profitable company capable of meeting the ambitious demands of its family shareholders.
As a first step I agreed to replace Dick as RCI chairman when he stepped down in March 1982. Next, we desperately needed a new business plan and a strong CEO to implement it. Heidrick & Struggles, the search firm we hired, identified Richard A. Voell, the president and chief operating officer of Penn Central, as a prime candidate. After a successful career at Beatrice Foods, Voell had managed Penn Central for a three-year period, diversifying the company and increasing its revenues. Although Voell was reluctant to leave Penn Central, he was intrigued with our situation and agreed to review our portfolio of investments and advise us on how to proceed. Voell concluded that many of the companies we had acquired during the previous seven years had now reached their apex in terms of market value and should be sold. He advised us to continue diversifying out of real estate and suggested focusing on investments in the communications industry, which he considered the most promising alternative for us. It was a radical proposal whereby RCI would first divest itself of all corporate properties other than Rockefeller Center and then transform itself over five to seven years into a real estate, communications, and financial services conglomerate. Once the transformation was accomplished, Voell said, we should sell RCI to the public.
Dick Dilworth and I were so impressed by Voell’s creative recommendations that we eventually persuaded him to become RCI’s president and CEO in order to implement his plans. He took over on March 19, 1982, the same day I was elected chairman. He and I quickly established a close and effective partnership.
Dick Voell and his planning team, led by Lorian Marlantes, who holds a Ph.D. in economics from the Stanford Business School and had worked on Penn Central’s diversification, spent the next year developing a strategic plan for RCI. It was an exhaustive effort that examined every aspect of RCI’s current operations and studied dozens of industry sectors for profitable investment opportunities. The result was a three-pronged strategy that would beautify, diversify, and unify Rockefeller Center.
Beautification involved a multimillion-dollar program of capital improvements designed to make the Center a more attractive location for our tenants. It focused on modernizing the Center and involved everything from cleaning and relighting murals and other artwork to rewiring the entire complex to meet the power requirements of high-speed computers. The lower concourse and restaurants surrounding the skating rink were completely refurbished, and Prometheus, the Paul Manship statue that hovers over the rink, was given a new coating of gold leaf. The Rainbow Room was brought back to its or
iginal Art Deco glory, and the other restaurants on the sixty-fifth floor were also renovated and brought under new management. The sixty-fourth floor was entirely done over to include dining, meeting, and conference rooms, each a masterpiece of period decoration.
The second step was diversification. In order to move RCI decisively out of the real estate business, we sold most of the assets purchased during the 1970s, including Wessely Energy, Trinity Paper Bag, and a number of our real estate joint ventures in other parts of the country, most at the top of the market. We also sold RCTV, which was losing about a million dollars a month, to a joint venture owned by Hearst and ABC, which eventually transformed the operation into the Arts and Entertainment Network.
We then purchased Outlet Communications, which owned a group of radio and TV stations in a number of strong markets across the country, for $330 million. In 1983, the company’s name was changed to the Rockefeller Group, Inc. (RGI), to reflect our broadened base of holdings.
Our final strategic step was unification—persuading Columbia University to sell us the twelve acres of land it owned under the old Center so that RGI could unite the Center as a single unit. I had always considered this the key to unlocking the value of Rockefeller Center and to our long-run success. How in the end we achieved that objective was little short of miraculous.
Memoirs Page 60