Yesterday I posted a few thoughts about the Minnesota Orchestral Association’s annual meeting, but I deliberately shied away from responding to the MOA’s financial report that was presented at the meeting, which reported a $1.1 million deficit (as opposed to the $6 million deficit reported last year).
But one thing quickly.
The MOA’s Board Chairman Jon Campbell made an astonishing statement in the press, referring to the Orchestra’s financial report: “The fact that the organization’s deficit is substantially smaller in a year without any performances indicates the degree to which this business model is out of alignment.”
This is a bizarre statement, one that led Alex Ross, the legendary classical music writer, to declare “words fail.”
I am hardly a top executive at one of our nation’s largest banks, but I’ve come up with several other things this could mean.
1. Last year’s $6 million deficit was artificially large, and that it was specifically inflated to make this year look good by comparison. This is borne out by the MOA’s own board minutes, which indicate the board worked with a PR firm to artificially set the size of the deficit since 2009, so it could indicate financial health or financial need depending on the target audience.
2. The board could have chipped in extra money this year to make the contributed income line look better, thus making the overall financial picture look better.
3. As the market has continued to improve, the MOA’s investments have improved in tandem, meaning it could draw down a smaller percentage of its endowment and still receive more money.
4. From a different angle, by eliminating one of the largest sources of revenue—ticket sales—the board made it virtually impossible to avoid a deficit.
5. The MOA wildly overspent on administrative overhead over the last year—essentially spending $13 million while not doing anything.
6. The $200,000 bonus given to President Henson in recognition of his skillful financial management was a waste of money, as he still managed to lose a million dollars last year.
7. Ken Cutler’s stern comments that the primarily goal of the board was to protect the endowment at all costs were untrue, as the board had no problem drawing down millions of dollars from the endowment to produce nothing.
8. The “glow effect” that made up such an important component of the MOA’s financial plan was a bust. It was an opportunity missed because of the conscious choices of the board.
9. The MOA’s highly aggressive campaign to maintain donors and donations has failed.
10. Despite the fact that the top leadership positions of the MOA are held by bankers, the organization continues to underperform relative to its peers.
This is just a partial, preliminary list (I’d be curious to see what other observers come up with), but I think it gives a good indication that Mr. Campbell might be a little premature in making such definitive statements about what that $1.1 million deficit really means.
I have one other final observation for Mr. Campbell. Even if you are right that the Minnesota Orchestra desperately needs a new business model, it does not necessarily follow that the business plan you have proposed and are currently trying to implement is the right one to follow… or is quantifiably better than the plan you are so desperate to replace.