A hard place to run an orchestra

There has been a remarkable run of good financial news in the orchestra
industry this year. But two items in the news recently got me thinking
about why some orchestral institutions consistently work well and some
others consistently don’t.

The  Honolulu Advertiser reported yesterday that:

About 65 full-time musicians, as well as part-timers and other staff members, were told late last week that the Honolulu Symphony Society did not have enough money to meet its $60,000 biweekly payroll, officials said.

"It was one of the hardest things I’ve ever had to do, especially at this time of the year," said Jeff Minter, chairman of the symphony’s board of directors.

Minter and other symphony officials yesterday said a variety of factors, including being forced to play most of its fall season outside its home base at the Blaisdell Concert Hall, contributed to the shortfall.

In a much colder place, the Detroit Free Press reported that:

The Detroit Symphony Orchestra’s three-year streak of balanced budgets has ended.

The orchestra finished 2007 with a deficit of $190,000 on a budget of $32 million, though the complete financial picture is more sobering.

The DSO was heading toward a deficit of about $2 million until 11th-hour largesse from a handful of its most generous donors stopped the flow of red ink. The donors, whom DSO officials declined to name, allowed the orchestra to shift about $1 million in gifts restricted to the endowment and apply them toward annual operations.

The board also approved a one-time increase in the income drawn from investments that added an extra $800,000 to the bottom line.
….
The DSO’s dauntingly complex financial picture in 2007 boils down to a relatively simple equation: Expenses rose from $30 million to $32 million while income from ticket sales, state funding and hall rental and retail sales decreased. Meanwhile, fundraising from individuals and corporations — which showed slight upticks — failed to keep pace. DSO leaders had planned for increases in all income categories except state funding.

In a snapshot of the orchestra’s dilemma, the DSO’s overall fundraising reached a record of $14.6 million but it still wasn’t enough to guarantee a balanced budget. “We were pedaling as fast as we could,” Parsons said.
…..

Ticket income fell by 4% to $9 million for the year, including drops in subscription and single-ticket revenue; last year a record surge in single-ticket sales helped offset declines in subscription sales, a trend for arts groups nationwide.

Detroit and Honolulu are very different orchestras. While both go back to the early 20th century Detroit’s history as a full-time professional orchestra goes back a lot farther than Honolulu’s. Detroit has had its ups and downs, but has been one of the so-called “10” for a long time, while Honolulu has long had a reputation as an orchestra with serious institutional issues. But why are they both running counter to the recent spate of good news?

Typically older orchestras are the more stable orchestras. But both St. Louis and Buffalo have long and deep histories of being professional ensembles, and both have had major stability issues (St. Louis recently, and Buffalo back in the 80s and 90s). It’s a truism that the quality of the board is determinative of institutional success. But this begs the question of how boards get good in the first place. Great boards do not spring fully formed from the forehead of Athena; they are built.

But they also cluster. Cities with strong orchestral institutions seem to have lots of strong non-profits. Cities that don’t – don’t. So is location the key?

Orchestras are representational institutions. They express civic pride; even more than they express civic wealth or civic culture. And such civic pride tends to be strongest in capital cities.

One of the most interesting ways to look at geography is to consider the key unit as a region, rather than simply a governmentally-defined entity such as a nation, a state or a city. If one looks at North America that way, there are clear regional divides. I see them as centered on the following regional “capitals”:

Boston (New England and the Maritimes)
New York (the city, its hinterlands, upstate New York and Eastern Ontario)
Atlanta (the old South)
Chicago (the industrial Midwest, including the Minnesota Iron Range and western Ontario)
Minneapolis (the grain belt up to and including the Canadian plains provinces)
Denver (the Rockies)
Dallas (the New South and the eastern Sunbelt)
Salt Lake City (the Great Basin)
Seattle (the Pacific Northwest)
San Francisco (the West)
Los Angeles (the New West and the western Sunbelt)

This list lines up amazingly well with the list of orchestras regarded within the industry as having a long track record of financial and governance excellence (with the obvious exception of Denver and the arguable exceptions of Salt Lake City and Seattle). Even more interesting is to compare those cities, and those orchestras, to near-by large cities and their orchestras. Compare Chicago, for example, to Detroit or Milwaukee. Compare Minneapolis to St. Paul. Compare New York to Philadelphia. May of these orchestras are well-run, and some have reported very good financial news recently, but none of them have the financial and board depth that most of the orchestras in regional capitals do. And most of them have had far sharper ups and downs than their regional capital-based neighbors.

Cleveland is a weird outlier to this analysis. But Cleveland (like Buffalo and Detroit) is a city that was far more important economically, and far more of a regional capital, in the past. There are a lot of strong institutions in Cleveland, the Cleveland Orchestra being just one.

Now, how do we make Milwaukee a regional capital?

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