In the early 90s Bilbao Metropolis was formed, a public-private institution who made a plan to revitalize the city. This plan included the environmental recovery of the Nervion River and the construction of an art museum as a catalyst of the city, but not necessarily both projects at once (in fact the proposed site was on another location).
For its part, the foundation Solomon R. Guggenheim was going through a serious economic crisis, despite the enormous wealth he possessed, 95% of which was held in storage by the museum in New York. Thomas Krens, director of the museum, was looking to create a branch of the Guggenheim in Europe.
Although initially Krens was not very keen on developing the museum in the little-known Spanish city, the seriousness and enthusiasm of the local authorities convinced him: the city of Bilbao would build a museum and upon payment of the franchise the foundation would provide some works of art from its costly and unique collection, as well as assessment.