A Reply to Karen Cohn

Opera lovers—and really, everyone from the world of classical music—remember all too well the near-collapse of the San Diego Opera from earlier this year. But although this meltdown made many headlines and sparked many conversations, I never wrote about it here on my blog. This wasn’t for lack of interest… the truth was I wasn’t needed. San Diego took care of that problem itself.

A quick refresher of what happened. Last spring, when the San Diego Opera made its surprise announcement that it would close permanently after the last performance of the season, the community reacted swiftly and with purpose. In short order Karen Cohn— President of the Board of Directors for the San Diego Opera and a key force behind the attempted closure—was deposed, and her supporters on the board pushed out. Everyone remaining adopted an “all hands on deck” approach that gathered all stakeholders to the table to see what could be done to save the organization before it was too late. They threw decorum to the wind, looked at the problem from every angle, and in short order rebuilt the organization into a leaner, but still viable opera company. The turnaround was stunning and inspirational, particularly that it happened so swiftly and so organically.

Well and good. But a few days ago, as part of a year-end retrospective, the San Diego Union-Tribune (U-T) wrote a piece about bad board leadership among local arts organizations, and spotlighted the problems with the San Diego Opera.

Karen Cohn, who had been ousted as President of the Board, took exception to this and submitted a rebuttal to the paper, arguing that the U-T’s criticisms of her actions leading to the closure were unwarranted and unfair.

Ms. Cohn, I think your rebuttal needs a rebuttal.

* * *

“The San Diego Opera board was well aware of the precariousness of its finances and spent its energies attempting to meet its obligations.”

That is debatable. I got the clear sense that as a collective whole, the board was not “well aware” of the full extent of the Opera’s “precariousness.” For that matter, they were certainly not aware of your plan to quickly pull the plug on the organization—they indicated as much when they engineered a coup to oust you and Executive Director Ian Campbell immediately after you moved to kill the organization. Given that lack of transparency was a large factor in the board’s revolt, it is hard to take this statement seriously.

“San Diego Opera’s board gave millions of dollars to provide audiences with this beautiful but expensive art form.”

And now the warning bells start pealing in earnest.

The wording here deeply disturbs me, implying a clear sense of ownership and entitlement… you state that you provided the Opera to the public. You most certainly did not do so, nor should you have. This was not a private enterprise. You were a key source of support to the Opera so that it could fulfill its mission, but you were hardly the only source of support. Does board giving eclipse ticket sales? Does board giving surpass non-board giving? Board giving without these additional sources of support would not begin to be enough to keep the Opera running, so I find it odd that you feel you were “providing” the Opera to the community.

And what about broader membership, are you suggesting they do not play a role in providing audiences with this beautiful and expensive art form? This might explain why you chose not to involve them in the official decision to close the Opera, even though you were required by the Opera’s bylaws to do so.

But let’s take a broader view. An opera company that only exists because its board provides it to the community is completely irrelevant to that community. The public has no buy-in or stake in its success, and will tend to write it off as a plaything of the glitterati that functions as an elite social club rather than an arts organization. If the above statement is indicative of your world-view, I’m not surprised you were unable to grow the donor base or increase audiences. How could you possibly expand the numbers of audience members and donors when it appears that you think they don’t “count?”

“The board carefully used the Kroc Production Fund for Excellence for 10 years to bridge the shortfalls from decreasing ticket sales and donations.”

“Careful” is in the eye of the beholder. Using long-range resources to solve immediate crises is not just irresponsible, it is unsustainable. I’d be curious to hear a fuller explanation as to why you believe your actions were an example of “careful” stewardship, rather than just telling us that it was.

“However, the costs remained higher than our revenue.”

If one more arts leader throws out this statement….

Let me try to make this as simple as possible. The San Diego Opera is a 501 (c) (3) not-for profit organization, as recognized by the IRS. That means the organization is not a commercial theater, it is a non-profit. In structure, it is like the Humane Society. Like every other non-profit in the country, your costs will be higher than your earned revenue. That is why you are classified as a 501 (c) (3) non-profit. By definition, you will engage in fundraising activities to supplement the revenue coming in from ticket sales and other sources of earned income. Just like every other non-profit in the country. This is not a failure of your business model… it is your business model, as approved by the IRS.

Please, please stop this mendacity.

“The tickets sales had dropped from 90 percent to the 60 percent range.”

Again, this is a tired statement that does little to bolster your case. First, there’s no time frame here… did the decline take place over 10 years?  20?

But there’s a much bigger issue here, and one I’d like to address a bit more forcefully.  As I’ve said before, there are three separate criteria for measuring ticketing success. They are:

  • Ticket revenue. The total amount of money that is brought in by selling tickets, over the entire year. This number is directly tied to an organization’s budget. It assumes over the course of the year some shows will do better than others, but sets a final benchmark for where the organization hopes to land at the end of the year. If the company doesn’t hit its ticket revenue goal, there are serious, direct budgetary consequences.
  • Number of tickets sold. This simply reflects the number of tickets an organization sells over the course of the year. This number is usually tied to marketing goals, but it doesn’t have to tie directly to the organizational budget. In part this is because different tickets cost different amounts. And, it doesn’t necessarily indicate who actually attends the performance—there is always a number of people who buy tickets but ultimately don’t use them, as a result of inclement weather, last minute emergencies, or such. Or, a local business could buy a block of tickets to give to its employees, only to find the employees aren’t interested or available. Again, this is a useful metric, but hard to tie directly back to the budget.
  • Percent capacity sold. Percent capacity refers to how many people are actually in the theater as a percentage of the total seating capacity. This is the number that really makes a difference to the performers, who love to perform to a full house. But just because the house is full, or at near-capacity, that doesn’t mean the show is doing well. If a show is struggling, administrators may choose to “paper the house” or give away tickets to improve the optics of the situation. Or, it could offer a wave of last minute discounts to lure people in for a fraction of the listed ticket price. There are other issues that can eat into inventory, such as stage extensions or closed-off sections that actually reduce the number of seats available. This can be a useful metric, but as a result of the qualifications I mentioned it is usually the least important metric, and has the least impact on a company’s budget.

The key to remember is that all of these things are different and don’t directly relate to each other… or necessarily to the overall budget. As a result, your final analysis of how successful you are will look very different based on which criteria you choose.

Ms. Cohn, you seem to base your argument for the decline of the San Diego Opera on paid capacity—a particularly problematic choice. Again, capacity in and of itself doesn’t tell the whole story. Were those seats occupied because the opera company papered the house? Or were the ticket prices relatively cheaper 10 or 20 years ago, leading to more tickets being sold but far less overall revenue? What were the total number of seats sold, and what was the average price per ticket? Was the price per ticket appropriate for the performance, leading to acceptable amounts of revenue? After all, it is possible, particularly when an expensive superstar performer is headlining a production, that a company could sell every ticket in the house and still lose money.

And, have the sizes of the auditoriums stayed constant since the 1990s, an era when many arts organizations renovated their facilities? The Minnesota Orchestra, for example, just completed a refurbishment of its home, Orchestra Hall that reduced the total number of seats in the hall in order to make those that remained larger and more comfortable. Therefore, it will be impossible to compare paid capacity pre- and post-renovation.

The point is that while obviously opera houses want full houses, paid capacity alone doesn’t tell if an organization is financially healthy or not… or relevant to the community or not. A company could have full houses 20 years ago, but have been overextended and increasingly marginalized. Was it making wise investments in building audiences or patting itself on its back assured that good times would last forever? Was it investing in artistic partnerships or going on autopilot? Was it working to understand its audience’s tastes or relying on conventional wisdom?

As we all know from the business world, sometimes a company’s glossy exterior is hiding the rot below, and sometimes a smaller, leaner company is having a greater impact.

“The board tried to solve the financial problems by selling our only asset, the Scenic Shop. We asked successive mayors and City Council members to pay our yearly $750,000 rent at the Civic Theatre. Unfortunately, none of these solutions proved possible.”

Perhaps this was edited for length or you were trying to be concise… but you bring up precisely two attempts to solve the financial problems that threatened to shut down the Opera. This is hardly an exhaustive list of options.

Plus, they are both problematic options. Lobbying the mayor and City Council to absolve you of rent? But such a move involves a substantial amount of public revenue—and public entities have to move with great deliberation and transparency to avoid accusations of sweetheart deals and favoritism. I admit I don’t know much about the intricacies of San Diego’s municipal politics, but if such an attempt occurred here in Minneapolis the process would have had to have included a massive, public lobbying effort that provided a clear rationale as to why such a move would be in the public’s interest. You… called the mayor? I can imagine the response you received… something along the line of: “Other non-profits seems to be able to pay rent. Given your resources and connections, why can’t you?”

And selling your Scenic Shop? Yes, that might bring in short-term funds, but what is the long-term strategy behind such a move? How would that help increase ticket sales, donations, secure additional grants, or gain increased public support? Or for that matter, how would it allow you to strengthen your artistic product, which is the reason you exist as an organization?

“After many approaches to donors, the board had to face the fact we would run out of funds by June 2014.”

Again, as a non-profit, you will always be approaching donors. That is the defining characteristic for all 501 (c) (3) non-profit organizations.

More to the point, I can’t help but sense you only talked to a small, closed group of donors, who already supported your closure plan. Most organizations would require a capacity study before taking such an extreme step. I’ve seen no indication that you did so, making me wonder what your data was.

And I should note that some donors did come forward to save the organization. How did you miss these people the first time? Did you present clear evidence to your donors that the end was indeed in sight?

“There was no misappropriation of funds and Ian and Ann Campbell made no grab for a huge payday as the U-T has written. The auditors have given the opera a clean audit for all 31 years of Ian Campbell’s leadership.”

Well… perhaps. But the U-T is hardly the only source making these accusations.  There is, for example, this investigative report from Opera News.

And out of curiosity, if the Opera got a clean bill of health for the last 31 years… why did the company nearly collapse in such short order? I’d love to see a deep dive into the audits to see what was going on under the surface.  Others feel the same way, which is why the California attorney general’s office began an audit of the company’s financial dealings.

“I would also like to point out that no one at the U-T ever tried to contact me.”

That is a fair point. But I have to say, based on your public statements, and your rebuttal here, I don’t think there would have been much to gain. Obviously you’d deny wrong-doing, as you did in the Opera News piece. But the point of this piece was that board dysfunction has brought down several key arts organizations recently, and almost did so with the San Diego Opera. It’s hard to factually challenge the notion that that is, in fact, what happened.

“The San Diego Opera’s future success cannot be based on denigrating those who have contributed so much to the vitality of the San Diego Opera.”

But… you came within a hair’s breadth of killing the organization. Your plan—the one you almost succeeded in implementing—would have by definition made it impossible for the San Diego Opera to have any future success. Or a future at all.

It is a tad ironic, then, for you to suggest that the real threat to the organization’s future is… denigration of former board members who tried to end its future altogether.

* * *

With respect, Ms. Cohn, I don’t think this editorial helps your cause.

 

Xochipilli

Advertisements

8 thoughts on “A Reply to Karen Cohn

  1. As many of us in non-profit management know, and most of us have told our boards from time to time,” Ladies and Gentlemen, we are in the business of losing money wisely!” That’s what sensible non-profit management does. It’s not a bottom line business,guys, it’s what we can do with what we have as wisely as possible, and try to raise the money to pay for it!. When can this finally be realized by the eternal bottom-liners. Of course we do our best to be frugal, but this is not a profit or loss situation.

    Liked by 1 person

    • Well said. As a member of the White Knight Committee and the union head for AGMA, I can say they definitely did not try everything to save the company and they kept everybody working for the company in the dark about the financial troubles.

      Liked by 2 people

  2. Beautiful piece!!!! I am a stage hand, occasionally employed by San Diego Opera, that attended most of the protests of the Opera closure. You brought to light many of Ms. Cohen’s inconsistent statements! Thankfully WE saved OUR Opera and it will continue to thrive without some SERIOUS fat at the top of the organization.

    Liked by 1 person

  3. The most significant failure was the failure to believe in the art form, and in the audience. Opera became what this leadership team decided it was, and they defined the audience as themselves and their friends. It was a classic case of an institution being captured by the people who run it, and its energies and resources being turned to the people who run it. When this happens, whether public or private sector, non-profit or profit-taking, either those people leave or the institution withers.

    Liked by 1 person

    • Gah! You are of course right! I hate that kind of error, as it undermines everything else. Fixed. And thank you for the kind words… after months with the Minnesota Orchestra, Met Opera, and ASO disputes, I’ve had some practice….

      Like

  4. Pingback: A Curious Letter from Fort Worth | Mask of the Flower Prince

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s