Birmingham's Midlands Art Centre has denied it faces a cash crisis - but will have to make 182 of its 190 staff redundant when it closes for renovations.
Officials for the Edgbaston centre, which held crunch talks yesterday with workers and union members, said it was not facing any financial deficit.
But it cannot afford to pay all staff during the 18 months it will be closed for the refurbishment and construction of a new #11.7 million building in Cannon Hill Park.
The Mac, which attracts more than 500,000 visitors a year, currently employs 190 people including part-time and casual staff - 55 of them core staff with permanent contracts.
A spokeswoman for the organisation said: "The reason Mac are consulting on job losses is because we are closing the site for construction work, and not because of a deficit.
"We can state quite confidently that Mac's current balance sheet shows a healthy organisation with both assets and reserves.
"However, there is bound to be a challenge to Mac's operating budgets as Mac are closing their buildings in spring '08 and moving off-site. Without an operating base the opportunities to earn income become severely restricted."
In a statement released today, mac director Dorothy Wilson said: "Consultation concerning the impact on job roles during the proposed off-site period began formally with employee representatives on 12 September 2007.
"At this stage the current proposal, on which consultation will take place, is to lose all job roles at Mac's Cannon Hill site.
"The proposal is then to create eight new roles focused on the off-site operation for which Mac employees will be able to apply."
The project, which will begin in spring 2008 and is expected to be completed in autumn 2009, will include the creation of a new three-storey building at the centre of the site, along with the refurbishment of existing buildings.