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Branding Bilbao: A Cultural Investment That Paid Off

Thanks in large part to the media attention it has attracted, the Guggenheim Museum Bilbao is a rare success story for the Spanish economy.
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There isn’t a lot of good economic news coming out of Spain these days. But newly published research suggests one Spanish city made a very smart investment 15 years ago, which continues to pay off today.

The city is Bilbao, and the investment is the Guggenheim Museum Bilbao, a postmodern palace for contemporary art designed by visionary architect Frank Gehry.

“Culture-led branding has had real economic returns in Bilbao,” a research team led by economist Beatriz Plaza of the University of the Basque Country reports in the Journal of Cultural Economics Japan. “Since the Guggenheim Museum Bilbao’s opening, press about the museum has effectively attracted visitors to its doors.”

“A durable, valuable brand is a major goal of any city-branding strategy,” the researchers write. “The work presented here offers evidence that Bilbao has achieved such a goal.”

Plaza and her colleagues note that “High initial costs coupled with unpredictable returns make investment in iconic art museums, or any large cultural infrastructure housed by experimental architecture, highly risky.” They report the museum cost 166 million Euros to open in 1997 (about $200 million at today’s exchange rates), including 73 million Euros in construction costs.

“What makes some iconic museums economic engines, and others vacuums for public funds?” they ask.

Their answer: large-scale cultural investments can pay off if they help turn a city into “a place-specific cultural brand.” This occurs when images of the museum or concert hall spread around the world via the media, giving the city a unique identity and whetting the appetites of potential tourists.

Plaza and her colleagues collected data from 1997 through 2010 on the number of news items published about the museum, as picked up by Google News. To compare this with a dynamic that would presumably depress visits to the region, they also cataloged the number of news stories on the sometimes-violent separatist organization ETA during that same period.

They found that, for every 10 percent increase in the number of articles published about the museum, the number of visitors to the institution increased by 1.71 percent. For every 10 percent increase in articles about ETA, the number of visitors to the Guggenheim decreased by .76 percent.

Altogether, they estimate that of the 13 million people who visited the museum during its first 13 years of operation, 8.4 million “can be attributed to international press about the museum.” This means that media coverage of the Guggenheim Museum Bilbao “generates an economic value of 2.025 million Euros per year on average.”

Strictly from an economic perspective, Gehry’s fee—which the researchers put at 8.7 million Euros, or about $10.7 million at today’s exchange rates—appears to have been well worth it. It’s highly unlikely that a bland building, which failed to catch the eye of editors and page designers, would attract the same level of worldwide media attention.

Plaza and her colleagues add that the economic value of the museum goes beyond tourist dollars. “City brands are also valuable for the investment and talented residents they capture,” they write.

“Iconic art museums can help reimage places for economic gains,” the researchers conclude. “This is just one of the ways in which culture can help revitalize a postindustrial economy in crisis.”