Another Case of False Advertising?

It appears the Met’s management is starting to feel uncomfortable. I can see why—over the past few days, there has been a flurry of news stories focusing on General Manager Peter Gelb’s executive compensation, leadership, and vision for the future… and the media attention has not been flattering. In response, the Met’s Board of Directors placed a full-page ad in the New York Times seeking to clarify its position regarding the ongoing labor negotiations and to reassert control over the narrative.

Met NYTimes AdI’d like to respond to this ad.

Longtime readers of my blog won’t be surprised—during the Minnesota Orchestra’s lengthy labor dispute, I posted such rebuttals all the time. In fact, my commentary of a similar, full-page ad the Minnesota Orchestral Association ran on Labor Day last year remains my blog’s most widely-read entry.

Let’s begin.

* * *

“[T]his year, the Met’s strained financial condition has made negotiations more difficult…”

Well, to a degree, yes. But from my perspective, I’m not sure that it is the impersonal “financial condition” that has made things tense—it’s the way that management has approached the negotiations that has made them tense. It’s not just that the Met’s management has thus far taken a hard-nosed approach, but that it has essentially entered in to negotiations with an attitude that the unions must be broken at all costs. That is not helpful. Also, Gelb has repeatedly remarked how opera is a dying art form and its audience is collapsing. That also is not helpful.

In contrast, consider the case of the San Diego Opera, another company that was very much looking at an existential crisis. Facing the Opera’s imminent demise, a new management team came in with a positive, can-do attitude to see if things could be turned around. Rather than to be confrontational, it opted to bring everyone into a collaborative discussion to stave off disaster. This “all hands on deck” approach worked, and in a whirlwind of activity they collectively found a way to save the company. San Diego’s financial condition was far, far worse than the Met’s… but ultimately the negotiations were not nearly as poisonous.

“Difficult financial conditions” do not inexorably lead to difficult negotiations.

“We are increasingly regarded as the best opera company in the world….”

Yes, the Met is the largest, arguably most important opera company in the country… but those attributes can work against it. Here’s something to consider. An article that just appeared in Forbes noted that fairly consistently, the most highly paid CEOs tend to be the worst performing CEOs. Why? Complacency and overconfidence. These are forces that everyone has to fight against; but elite corporate leaders are particularly liable to assume they are better informed and more talented than their counterparts elsewhere. They don’t listen to criticism, and generally refuse to look to their competitors for new ideas. Why should they…they are already on top, right?  Any thing they do must, by definition, be considered a “best practice.”

Sadly, organizations can fall into the same trap. They stop being hungry for success or  willing to try new ideas… and they grow complacent and stagnate. I’m not saying this is the case for the Met, but it is something to guard against.

“Like other opera companies, we face the challenge of gradually replacing an aging audience with a younger one.”

Well, yes… but some of these other opera companies are more successful than you are. Perhaps that’s a warning (see my above point).  But I’m curious as to why you feel that building a “young” audience is such a critical initiative. Do you argue that young music lovers have more capital to spend on tickets or donations? Do you feel emerging executives have greater pull to bring in corporate dollars from their respective companies? Are they more apt to provide bequests or engage in other forms of planned giving? Yes it is important to constantly bring new audiences, but I’m curious to know what kind of return on investment you expect to gain by chasing young audience members at the expense of older ones.

“In spite of our efforts, our New York box office has declined from 92% in 2008 to 79% in 2013.”

Those are, at first glance, alarming statistics. And yet a closer examination reveals that… well, that these numbers don’t reveal all that much. On the one hand, I’m assuming these numbers refer to paid capacity. That is a useful statistic, but it doesn’t necessarily connect with your finances… or inherently relate to your attempts to implement significant cost savings. What are your total ticket sales figures, and what is your overall earned income revenue? What is the average price paid per seat, then and now? Was the reason you sold so many tickets in 2008 because they were substantially discounted?

But there are other problems, too. What is the context for these numbers? What are they based on? What is your evidence, as others have challenged your numbers? Has the seating capacity remained constant during this time? How many performances does each year encompass? Why did you choose 2008 as a benchmark, if this decline is part of a long-term, irreversible trend going back much further? What results did your peer opera companies see during this same time?

And most important, why did your capacity fall? This is critically important. Was it that you produced too many shows, leading to audience fatigue? Did the quality decline, leading to audience apathy? Did ticket prices spiral out of control, forcing potential audience members to economize? Each of these problems would require a very different solution to bring things into balance again.

And to be blunt, cutting union wages wouldn’t do a thing to help with any of the problems I just listed.

Look, I understand… in tough times, there is a need to economize everywhere. So yes, you can squeeze the unions and potentially earn some cost savings in the short-term. But this will only buy a little bit of time until the underlying, structural problems re-assert themselves. If management is presenting unpopular operas in opaque productions, it won’t matter what concessions you get from the unions… the company is still going to be in grave danger. And in the meantime, you will have created a hostile environment that will make it unlikely your workers will work with you to find real solutions.

And finally, I have to point out that Peter Gelb has repeatedly stated that opera is a dying art form, and its audience is shrinking. I’m curious that he’s the person you’ve chosen to solve the problem of declining audiences—a problem that you’ve identified as an existential threat. Does he think this problem can be solved? Or has his talk simply been bluster leading up to a difficult negotiation?

“The Met’s endowment is, unfortunately, smaller than our $300 million annual expense budget.”

I get it, that ratio isn’t ideal. But as I’ve argued elsewhere, there isn’t a magical ratio or a set number that you have to have to keep an organization afloat. Simply doubling the size of the endowment isn’t a panacea—there will still be problems, however much money you have in your endowment. One thing to consider, how much money are you are able to access at any given time? The Minnesota Orchestra, for example has an endowment of roughly $150 million, but only a small percentage of it is considered “board designated” and can actually be used to fund operating expenses. The rest is restricted and untouchable.  Simply stated, if you build up your endowment, but the funds are restricted, you haven’t solved a problem so much as you’ve created a new one.

But I’m surprised you bring this up. After all, the management of the endowment isn’t the responsibility of the union workforce—it is the responsibility of the Met’s leadership. One could argue that the Met’s management has mishandled the endowment, has been unable to secure adequate resources to grow it to where it needs to be, and has made dangerously large draws from it (as you classify them) to keep the organization afloat. Isn’t that a failure of the Met’s management? The union workers had nothing to do with these actions, or the decision-making behind them. Again, I understand in a crisis everyone has to pull together; but as I just mentioned above, extracting concessions from the unions won’t do anything to solve the more fundamental problem of financial mismanagement that’s adversely affecting the organization.

Why are the workers expected to endure sacrificial cuts when they’re not the problem? What are you going to do about the real problem?

“Today the box office is only 27% and annual donations are an alarming 48%.”

With respect, why specifically this is alarming? There is no “standard” ratio of what an arts organization should bring in from donations, earned revenue or investment income—every arts organization has a unique formula. You have to do what works for you. It seems as if you’re approaching this with a for-profit mindset, and expecting opera productions to pay for themselves through earned revenue. But as I mentioned in a previous blog post, an overemphasis on earned income can cause an organization real harm. For one, it sets a trap where the arts organization has to over-perform—constantly producing a barrage of new performances to bring in revenue. This in turn puts a terrible burden on the group’s organizational capacity, and put undue stress on its artists in order to earn cash to pay the bills. Plus, organizations that rely too heavily on earned income can face situations where they have to essentially price themselves out of the market.

I ask honestly:  What are your ideal ratios, what what’s the rationale behind these numbers?

“The Met’s administration has proposed to cut personnel expenses by 16%—reductions that will equally affect union workers and administrative staff.”

This would have more credibility if it weren’t for the fact that executive compensation seems to be outside of this formula. It is curious that Gelb has only taken a 10% pay cut, even though he is the most highly paid employee with an annual salary of $1.8 million (versus a chorister who might only make $200,000).  Why is everyone else expected to take a 16% cut?  It is even more curious that leading up to this year, he received a 26% raise, which makes a direct mockery of the 10% cut he just took. If the Met were truly facing an existential crisis, why wasn’t his salary cut before now?

I’m sorry, but the optics of this are horrible.

“These cuts generally do not touch our unionized employees’ basic wages.”

This is embarrassingly disingenuous. Yes, I suppose in the strictest of senses these cuts don’t affect basic wages, but management’s proposal overturns the entire system of compensation… and completely misrepresents the reality of working at the Met. To successfully do the job that the Met’s management has required them to do, stagehands, designers, prop masters, costumers, and musicians have to work long hours that frequently go into overtime. The higher quality sets and costumes required for HD simulcasts, and the additional performances required to bring in additional revenue have placed increasing demands on workers. And naturally, they have made increasing demands on the workers’ time. Again, this is simply to do the jobs management demands that they do. To rewrite the work rules for how these workers are compensated will have a clear and immediate impact on everyone, and the management knows this. The workers will lose a great deal of money—the entire reason management wants to implement this plan is to reduce payroll expenses. But something else will have to give way. Will management demand the same number of hours, and the same high output, or will those expectations be reduced as well? Will quality suffer? Will top talent leave to explore other career options?

Is this a good idea?

“Two examples of work rules under discussion are….”

Oh boy. This is a classic demagoguing technique that gets used all the time—find a couple of “egregious” examples, remove any context, and squawk loudly about them so we start to think all that all such work rules are ridiculous.

But they’re not ridiculous.

First of all, that “16-week” vacation. Yes, I’m sure most readers see that number, reflect on their own number of PTO hours, and cry foul. But as I’ve argued before… you’re mischaracterizing what “vacation” means in this context. Musicians of this caliber don’t just take a break for 16 weeks—they have to practice daily to keep in shape, keep their endurance up, and keep their skills sharp, whether they’re performing or not. It’s like suggesting an Olympic athlete just stops training for 16 weeks and gets a free vacation. No. A more accurate way to characterize this period is “non-performance weeks.” It is crucial to give musicians these lulls, because they reduce the chance for injury and extends the length of the musicians’ careers.

Plus, the “16 weeks” number you casually mention seems to be inflated anyway, completely undermining your credibility.

And look, have you ever been in an elaborate costume? Movement is restricted, your ability to do many mundane tasks is compromised, and you are quite obviously still on the clock. If they’re still on the clock, why shouldn’t they be paid?

But there’s a larger point here, too. You fail to explain how many work rule changes you want, how invasive they are, and what the financial implication is for the affected workers. Over the course of the Minnesota Orchestra labor dispute, management attempted to implement more than 200 changes to the work rules, including the elimination of seniority pay and forced participation (unpaid) in community outreach activities. Plus, the CEO or board leadership would be able to force musicians to perform at events of management’s choosing, such as private parties. The rule changes, in fact, were more controversial than the proposed pay cut. So it worries me that you gloss over your proposed rule changes so lightly. What are they?

* * *

This is already over-long, but let me close with a few general observations.

● It’s been pointed out that spending $30,000 on an ad in the New York Times is an odd way to try and convince the public that you’re broke. Well… odd and ironic.

● It’s disappointing that this ad had so little new information. Nearly all of this has already been said by Peter Gelb in the many interviews he’s been giving recently. In fact, in some interviews he’s given more specific information than what we get here.

● If you haven’t made your case by now, after multiple interviews and sympathetic stories… you’re not making your case.

This ad does little to change the narrative. My sense is you’re losing the public relations war… and you realize it.

 

Xochipilli

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18 thoughts on “Another Case of False Advertising?

  1. If I am not mistaken, the reference to16 weeks of paid vacation is quite simply not true. I believe that the orchestra is given 9 weeks by contract and must be available to work the other 7 weeks should the Met provide that work. In years past these weeks were filled with touring and concerts in the New York area parks. Often these park tours can be corporately underwritten thereby helping to offset the cost as well as generate goodwill and visibility.

    Can someone verify the authenticity of this number?

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  2. Thank you Scott!

    I wish I had $30,000 to print THIS in the Times. Even if I did, I need to save what little I have to try to survive the threatened lock out.

    Greg Erbach
    Electrician
    Met Opera

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  3. I can’t believe Gelb is losing the propaganda war against these leeches. The real dilemma is not the poppy field in Prince Igor but 15 unions trying to suck the blood out of a bankrupt opera house that’s been in the red since before Gelb took over. It should file for bankruptcy now, not in 3 years. It’s true anyway, the MET is bankrupt. Yet, these “Save The MET” parasites want to keep the same fat salaries and benefits. Time for a purge at the MET, there are a lot of talented, out of work choristers, musicians and performers out there. Replace Gelb if you want too, but there’s still be no money to keep paying these fat cats of the opera world.

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    • George, it is a bit difficult to determine if you are writing in earnest or if you’re just trolling, as your comments accuse the union workers of being everything but Dark Lords of the Sith.

      A few observations.

      Other than ideology, do you have any evidence that the unions—and the unions alone—are to blame for the Met’s current situation? In my article, I think I’ve done a good job of laying out why unions are not the root of the problem, and you don’t seem to offer any specific evidence to the contrary.

      Also, I’m intrigued by your novel definition of “bankrupt.” A $2 million deficit is not a good thing, but by its own accounts the organization did bring in nearly $370 million, meaning that it’s not currently “bankrupt” in the sense that it has no money. Do you mean that it is bankrupt artistically? Emotionally? Spiritually? Ideologically?

      I’m not just being glib here, this is a major point of contention—that the Met has more resources that they’re willing to admit. This was a big problem with the Minnesota Orchestra dispute, where the administration testified to legislators that the organization was in strong shape in order to get state bonding money… but turned around and demanded sacrificial cuts from the musicians because the organization was on the brink of bankruptcy.

      I could also point out that there are indeed a number of out of work choristers, musicians and such. But consider that since they are out of work, and looking for employment, not recreation. Specifically, they’re looking for a gig that pays well enough that they can pay their bills. I suspect they have no interest in putting in 70 hours a week at a gig if they still have to go out and find a job to pay their rent.

      Plus, how many people will pay premium prices for Met tickets to see amateurs?

      It’s clear you have no use for parasitical fat cats that are bleeding the Met dry. Got it. But I have to say that based on what you’ve written here, it feels like you aren’t really a fan of the Met per se… you just really don’t like unions.

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      • Scott, I’m not trolling. Does it matter at this point who’s to blame? Even if you replace Gelb, what matters is that the Metropolitan Opera is in the red, will be for at least the next 5 years and CANNOT AFFORD to keep paying the same fat salaries and benefits, even under a different general manager. What part of ****’operating in the red’****since 2002 and will be for at least the next few years don’t you understand?

        How extremely selfish of you to demand the same salaries and benefits. Screw the budget, screw Gelb, I want the same fat paycheck!! Same benefits, same 16-week vacation!!! Just incredible.

        And how extremely arrogant of you to assume that whoever replaces the current staff will be ‘amateurs’. Get a grip. Gelb should fire your arrogant asses ASAP.

        You’re not interested in saving the MET, you’re interested in saving your standards of living. That’s selfish and childish.

        I’ve never met a more clueless class of people in my life. There’s a very high unemployment rate in every age bracket not only in the US, Europe, Asia, the dollar is being dumped as the reserve currency by country after country, hospitals, schools and libraries are closing all over the country, not to mention opera houses, the US is in a cold war with Russia and China, yet you selfish hypocrites want to “save the Met” by keeping your extremely long fully paid vacations and unrealistic fat pay! And to get it you want Gelb to cheapen the productions. You want cheap sets and costumes so you can keep you delusional pays and benefits. As if that would bring the budget under control. Get a freaking clue.

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      • And another thing, you claim to be responsible for the magic! That there’s no MET without you, right? If you’re so wonderful how come tkt sales are down and the house is half empty all the time? You claim credit for the good things but blame everyone else for the bad things, how magnanimous.

        Everyone should take responsibility for everything, the good, the bad and the ugly. That includes Gelb, who should also take a pay cut and start paying rent where he lives for free like everybody else.

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      • Very well, you are not a troll. You’re an ideologue with a great deal of hostility toward union members… and a poorly developed sense of irony. For example, I am intrigued that you ask, “Does it matter at this point who’s to blame?” before laying the blame entirely on union members and their fat cat salaries. And again, failing to note that financial administration of the organization is done by management, not the stagehands, costumers and such. Those people are doing their jobs, and doing them well… by your own argument, the management is not doing its job of managing financial resources well. You seem to believe that paying union wages is crippling the organization. But doesn’t Gelb have some responsibility for this state of affairs since he’s the one hiring the union workers to create elaborate sets that require tons of overtime? Isn’t that a hallmark of inefficient and ineffective management? What if he scheduled productions that were less time- or labor-intensive, or was more creative in using resources?

        And I am intrigued that you seem to blame me personally for what’s happening—or think that I somehow benefit from the union workers’ “fat cat” contract. I don’t live in New York, I have nothing to do with the Met, and I am not spokesperson for the unions or any of the workers. I’m sure before these posts went up, none of them knew I existed. If you look at my blog’s “About” section, you will see that I reside in Minneapolis. I am a board member of the Minnesota Chorale, a major arts organization in Minnesota, so I know what it’s like sitting on the other side of the table. I’ve also been an arts administration for fifteen years where I’ve led marketing, fundraising, and public relations for a variety of different organizations. Yes, I understand what it means for an arts organization to be “in the red.” As a board member I’ve made difficult decisions about staffing and pay cuts, and as a staff member I’ve felt the pain of such cuts personally.

        But I suspect that if you honestly feel that skilled workers like the crew at the Met should accept a punitive contract because of unemployment in Europe and Asia, the closing of unnamed hospitals, and the fact that the US is somehow involved in a cold war with Russia and China, there is little hope for us coming to any sort of agreement.

        Perhaps we should go our separate ways.

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  4. George, for not being a troll, you do an excellent job of demonstrating three strategies of “wedge politics” that play out on blogs and comment boards. First, you throw insults at your opponents, in hope of insults in return, which serves to galvanize your side and potentially split those casual observers who don’t have an emotional attachment to the issue at hand (but do start to feel emotions when they see all those fightin’ words). And recent studies have shown that when faced with new evidence (or logical arguments) that their view is incorrect, those with strong emotional attachments will double down and argue their side even more strongly, even if illogically. Second, you resort to false equivalencies (“everyone should take responsibility for everything”), which can be used when one side takes advantage of another, but no blame can be cast since it’s “everyone’s” fault. Finally, you call on the shock doctrine with a litany of economic woes and paranoid fears.

    If you are earnest, and want your opinion to be taken seriously, my advice to you is this: Be respectful, avoid generalizations, use logical argument, and stick to the subject at hand.

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  5. Scott and Barry, you really, really refuse to face reality don’t you? Let’s not use my strong language as a way to distract from the issues. If I threw insults it was out of my love for the MET not hostility towards unions, please. If I offended anyone I apologize, but I don’t take anything I said back.

    What selfishness and greed don’t allow you to grasp is the fact that the MET is bankrupt, the COUNTRY is bankrupt, with Gelb or without him, regardless of whose fault it is, the company CANNOT AFFORD to keep paying the same salaries and benefits. Is that so hard to understand? The house is in the red, tkt sales and donations are down, there are no liquid assets to keep paying the same salaries and benefits. Do I really have to repeat myself 40 times? There’s no money. Firing Gelb isn’t going to change that.

    Your intention was never to “save the MET” but to save your fat pay checks. If you really cared about saving the MET you’d accept the current economic reality, that the US economy is collapsing, opera houses are closing and the MET with the current job market can very well keep going without your royal highnesses on its pay roll. There are a lot of first class musicians, choristers, dancers, actors out there looking for work. Let’s get real here.

    If you really cared about saving the MET you would tell the media “well if we don’t get what we want we will work for other venues.”

    Go. Good riddance. Bed bugs aren’t the only problem at the MET, they have leeches too.

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    • George… no, I simply refuse to accept the reality you have chosen to construct. And I feel no shame in rejecting it as it appears to be based on generalizations and ideological arguments rather than any facts on the ground. In my blog posts, I’ve stated my case for why I disagree with the Met’s position, and provided the facts behind my rationale. You, however, have merely stated that the employees are overpaid leaches… and then repeatedly demanded that I accept your assessment. No evidence, no rebuttal to the points I made (and presumably you have read), you just restate yourself in all caps. Again, as this really isn’t a conversation, let alone a debate, I feel we’re done. My kind regards.

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  6. Scott, as always, you have provided a measured analysis of the ad that appeared in the NY Times and of the situation with the MET. This fellow, George Kaplan, IS a troll. Check out his Twitter page. There’s nothing there! Nothing!

    Your replies to his rants were excellent. Your restraint is admirable and only increases my respect for you and this blog. We need more positive thinkers in this world to help solve the problems that we humans have created for ourselves. I applaud your efforts.

    Gina Hunter

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  7. Is a troll someone who doesn’t agree with you? Get a grip fellas. The company has been in and out of the red since before Gelb took over. That’s a fact proven by numbers. Get a new manager if you will, she or he’ll be faced with the same numbers. If a new manager gets in tomorrow, he won’t be able to get the numbers back in the black for at least 5 years. And that’s and incredibly optimistic forecast. It’s fun to have a villain to crucify and put all the blame on for all your problems but truth is, the economic reality of opera in the US today isn’t caused by one single boogeyman (Gelb at the MET, Steel at NYC Opera, etc).

    Yet, you want to “save” the MET by sinking the company deeper into insolvency, by keeping your unrealistic fat salaries, unrealistic long paid vacations and unrealistic benefits. You think highly of yourselves but you can be replaced. And should. You’re overrated and behaving selfishly.

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