An Odd Article Coming out of Philly

Here we go again… another bit of arts journalism that makes me want to punch my computer screen.

This time from Philadelphia.

What sets this particular story apart, however, is that this one particular story seems to incorporate all the various tropes that irritate me so much: over-the-top negativity, an inappropriate conflating of for-profit thinking onto a non-profit organization, facts without context, and nonsensical quotes from clueless leadership.

Man.

A few thoughts.

* * *

To get the full impact, let me quote the opening three paragraphs in their entirety.

Philadelphia Orchestra Not out of the Woods Yet, by Peter Dobrin

More Bad News from Philadelphia

“You might assume that the Philadelphia Orchestra today is benefiting from a popular music director, an economic climate greatly improved since the Great Recession, and the good fortune of living cheek to cheek with a growing – and affluent – downtown population.

Yet this trio of assets has not been enough to buoy some key measures of the orchestra’s health. Board Chairman Richard B. Worley diagnosed the core concern at the Philadelphia Orchestra Association’s recent annual meeting: Concert attendance between September and May fell again last season – to 153,000 paid listeners in 2014-15 from 160,000 the season before. The goal had been 189,000.

‘I don’t know if it’s because the audience isn’t here, or the audience is here and we don’t know how to reach them,’ Worley said at the gathering of board members, musicians, and interested others. On average, Verizon Hall was filled to just 76 percent of capacity with paying listeners for the orchestra’s 84 main subscription concerts. (An additional 9,000 student passes were sold through the eZseatU program.)”

I have neither the time nor patience to deconstruct this as I would like, but let me say a few things.

First, I get it.  Philadelphia has had a rough go of it, and is just re-emerging from bankruptcy protection.  And of course, it’s always challenging to run an arts organization… or a non-profit generally. It’s important not to get swept up in overly-sunny expectations.

But this story is absolutely apocalyptic in its outlook.

The overwhelming sense one gets in reading this is that the Philadelphia Orchestra is tottering on the precipice.  We may not be sure which precipice, but it doesn’t matter… it’s tottering!  And the comprehensive badness is magnified because people don’t even realize just how bad the badness is.  Several folks picked up on the hysteria, and amplified it as it zipped across social media.  Philadelphia was at the center of yet another “death of classical music” meme.

But here’s the thing—the stats used to make this bleak case are almost completely devoid of context, making it hard to ascertain if the bleak case is truly warranted.  Yes, I understand that the total number of tickets sold was down from last year… but what’s the deeper meaning here?  Before we can say if this development is good or bad, we’d need to see what the broader trends are, both for Philadelphia’s peer orchestras across the country and other performing arts groups in the area.  Did the Orchestra, for example, outperform Opera Philadelphia? Was last year an epic year for sales, and this year is simply a return to the norm?

Plus, it’s hard to know how close a comparison we’re talking about between last year and this one.  Were there fewer events last year?  More? What about segmentation… did concerts led by Maestro Yannick Nézet-Séguin sell well, while those featuring guest artists tanked?  Were there new initiatives, or a slate of conservative concerts?

Was this a case of bad music, bad estimates, or bad marketing?

As an aside, let me point out that paid capacity and total tickets sold can be useful metrics, but they aren’t necessarily the most important ones.  For example, you could fill the hall by selling tickets for $1, thereby scoring highly in both criteria, and still run the organization into the ground.  Ticket revenue, and earned revenue generally, are the only metrics tied to the budget.

This brings up an issue that has long bothered me—one that I just covered in regards to Lyric Opera of Chicago a few days ago. The Philadelphia Orchestra is a 501 (c) (3) not-for-profit organization as recognized by the IRS.  By law, it does not rely on ticket sales to support its operation… that it why it is a 501 (c) (3) non-profit. So, like all other non-profits in the country, it’s important to ask how its other revenue streams performed, too. For example, other orchestras engage in fundraising, have investment income from an endowment, rent out their facilities, and bring in marketing sponsorships, and the totality of these revenues are what make up the budget.  How did Philadelphia do in its other revenue streams?

“The slip in attendance is worrisome. Philanthropy tends to spring most naturally from active listeners, and the downtick produced a drop in revenue. ‘We had a shortfall of $3 million in our ticket sales and in our recurring contributions,’ orchestra spokeswoman Katherine Blodgett said. ‘Nevertheless, expenses were within budget and additional extraordinary gifts enabled us to balance the budget.’”

And here we go, with more about the big picture.  But this is rather odd. As written, the article states that the springs of philanthropy that traditional encourage donations have dried up, leading to a drop in contributed revenue.

One line later, however, we learn that there was a huge spike in donations, and the budget was balanced.

What? I’m confused.

So again, despite the financial horrors outlined in the first three paragraphs, a throw-away line at the end of the fourth paragraph tells us the budget was actually balanced?

Plus, I’m also confused by the complaint that the Orchestra had to rely on big gifts coming in to make its finances come out right.  I mean… welcome to the world of non-profit management.  This is what non-profits do all the time.  Reports by Giving USA for the last few years have noted that this is the trend in philanthropy over the past few years—gifts that are fewer in number but larger in size.

I’m also concerned about the way “extraordinary gifts” is being used.  It is possible that these are indeed once-in-a-lifetime gifts that were only clawed out after heroic efforts.  But again, we would need to look at the Philadelphia Orchestra’s peers—including its fellow orchestras from around the country and other non-profits locally—to determine just how “extraordinary” these gifts are.  It is possible that they might very well fall into the realm of “expected” for an organization of its size and stature.  Maybe the Orchestra is underperforming, relative to its peers. In fact, that has been the musicians’ point all along, and one of the reasons the Orchestra hired arts consultant Michael Kaiser to evaluate its fundraising operations.

That’s a lot of context missing, which could change the story remarkably.

“Music director Yannick Nézet-Séguin earned $519,319 in 2013, which represents 10½ weeks’ paid work, according to [President and CEO Allison] Vulgamore.

[…]

Music director pay typically is pegged to the number of weeks on the podium, but the job entails more. ‘Of course, music director responsibilities are a year-round job,’ said Chicago spokeswoman Rachelle Roe, ‘which includes artistic planning and oversight of the full season of offerings, as well as musical responsibilities.’”

I’m intrigued by the contrast of these two statements.  Ms. Vulgamore seems to be doing some sort of dodge, downplaying Maestro Nézet-Séguin’s contributions… only to be contradicted by other arts administrators that know the full extent of a music director’s duties….

“Compensation for Nézet-Séguin, recently named Musical America’s 2016 Artist of the Year, was lower than for Vulgamore, whose total compensation during that year was $733,242, according to the orchestra’s tax returns – on the high end of her colleagues, though not the highest, and a flip of the conductor-CEO compensation model typical of large orchestras.”

…and here we learn why.  Ms. Vulgamore is making more than the music director?  Why on earth is this so?  The Orchestra is a music-making organization, right?  So why the greater investment in executive compensation rather than its core product?

But another point, why on earth is she on the high end of her peers, especially right now?  I recognize that Philadelphia can be an expensive city, and the Philadelphia Orchestra has enormous cachet.  But the organization just came out of bankruptcy protection… why the lavish salary, when the musicians are struggling to make up ground they lost when the organization went into bankruptcy?  And forgive me if I’m wrong, but my understanding is that the Orchestra doesn’t own its main performance venue, Verizon Hall in the Kimmel Center for the Performing Arts.  So, since she doesn’t have the same range of managerial duties as, say, the Minnesota Orchestra’s Kevin Smith (who does manage Orchestra Hall in Minneapolis), why does she warrant so large a salary?  Especially with all the extravagant perks?

“Vulgamore would not say whether Nézet-Séguin’s contract – which extends through the 2021-22 season – calls for raises, though his number of weeks has increased. ‘I will say he is generous, both in when he charges us and what he charges, and he gives additional time frequently,’ she said. ‘Frankly, we never resist offering him opportunities to conduct beyond the contract.’”

It’s nice that Ms. Vulgamore doesn’t “resist” it when Maestro Nézet-Séguin goes above and beyond the terms spelled out his contract.  And it is great that Maestro Nézet-Séguin freely gives of his time and talent, as in when the Pope arrived in town.  But I can’t believe I’m the only one who has concerns that she’s taking advantage of this.  Did Ms. Vulgamore freely give of her time and talent when the Pope arrived, or did she simply bask in the warm glow of the others who did?  Others, I might add, who are making less money than she is.

“Despite the widespread perception that the orchestra would be just fine after exiting bankruptcy in September 2012, the financial struggle continues.”

I’m surprised… who was it who thought the orchestra would be “just fine” coming out of bankruptcy?

“The questions will only multiply in coming months. Kaiser, chairman of the DeVos Institute of Arts Management at the University of Maryland, was brought in at the behest of the musicians during contract talks, and he already is interviewing a broad sampling of the orchestra’s constituency – board, staff, musicians, donors, community members – to arrive at an organizational call to action that Worley said would become the orchestra’s new five-year plan.”

I have to say, I’m disappointed that the Philadelphia Orchestra’s management took the critical step to hire Michael Kaiser now, in response to musicians’ demands as part of the contentious contract negotiations.  I’m curious as to why this wasn’t done before, or why leadership didn’t take this step on their own volition.

“Vulgamore suggests a future that will be much more heavily educational, and that might find the orchestra less frequently in Verizon Hall.

‘Does that mean we would do less subscription? I don’t know. Does that redefine the work we do at some of our venues? It might, if it’s exciting to all the partners. For me programmatically it’s not just the obvious – which is, is there a different way to earn money using an orchestra?’”

So many thoughts.

It’s great to innovate, and think outside the box.  But this strikes me as catastrophically foolish.  It suggests that the Philadelphia Orchestra is going to abandon its competitive advantage, its assets, and its mission to chase a shiny new thing… a shiny new thing that no one has defined.

For example, education is great, and should be pursued, but what does this mean?  Education for whom?  Education about what?  In what capacity?  Where?  When?

More to the point, this can’t replace the organization’s real work.  You don’t need a full orchestra to have an education program, so it would be a monumental waste of the Orchestra’s resources.  Plus, there are far too many groups that are better equipped and better trained for this, so taking on this new project would mean abandoning the Orchestra’s competitive advantage in the marketplace… and competing with someone else on their terms.

And how would this happen?  If the Orchestra is surviving on “extraordinary gifts” and bridge funding, where does Ms. Vulgamore propose to come up with the seed money to design and launch these pilot programs?

* * *

For me, this article raises so many issues.  While I believe Peter Dobrin’s framing of the story is a bit pessimistic, I can see his concerns.

But as I’ve posted in my article on the coverage Lyric Opera of Chicago’s year-end announcement, I find it irritating that ticket sales seem to be the only thing that “counts,” as if fundraising is unexpected or somehow shameful.

But even that pales beside the ideas put forth by Ms. Vulgamore… or the enormous salary she’s earning at a time when the musicians are struggling to make up lost ground after coming out of bankruptcy.

All in all, this is just depressing.

.

Xochipilli

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5 thoughts on “An Odd Article Coming out of Philly

  1. There is the matter of the Annenberg donation 50 million dollars, which had stringent conditions attached, including no bankruptcy. Additionally, there are clauses about mainternance of the Phaladelphia Orchestra as a world-class, internationally important ensemble of the highest quality. When the POA filed for bankruptcy, the Annenberg foundation sued and took the money back, placing it in a trust fund run by them, not the Orchestra. The money represented nearly half the endowment. Access to the income from the gift is now extremely limited, and must go through the Annenberg Foundation. I wonder if the board considered this consequence of their thoughtless and stupid action.
    I do not believe YNS’ income from the Philadelphia Orchestrais as stated. He would be paid less than some pretty minor characters. They are probably paying as an independent contractor for the concerts he actually conduct, which is why he does so many more concerts than one would expect.
    Eschenbach received 25,000 dollar per concert in addition to 1.2 million for his “duties” as music director, adding up to nearly three million dollars per year.
    The information can be found in the 990s. Another tidbit is the fsact that at one time, the POA had four Executive Directors of the payroll– Kluger, Lafferty, Undercofler, and Vulgamore, which added up to nearly 2 million dollars per year for incalculable ineptitude.

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  2. Wait, what? That money went into the “sacred” endowment? But there was this massive flurry in the press when the Annenberg money came in, all this fuss about all the things it was earmarked for (the one I remember was staged opera), but once squirreled away into the endowment, doesn’t it become, like, untouchable?

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