Yet Another Feeble WSJ Article on the Met Opera

Goodness.  I don’t have the time to comment on every weak article to come out on the Metropolitan Opera.  By my count, I’ve missed two that have been published in the last six weeks or so.  But a new one has just appeared in the pages of the Wall Street Journal that absolutely demands a response.  While purporting to celebrate a great financial milestone, the piece goes on a rampage of negativity, punctuated by one jaw-dropping statement after another.

Really?

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“Despite a record low in paid attendance last season, the Metropolitan Opera is on track to balance its budget for the second year in a row, company officials said.”

Oh my God.  This one sentence is a perfect example of “burying the lede” in miniature… and just about everything I hate about the state of arts writing today.

The point of this opening (and presumably, the story as a whole) is to relay an important bit of good news: that the Met Opera has balanced its budget!  For two years in a row!  That’s great, right?

So why does this sentence begin with an unrelated, sensationalized bit of bad news?  Why is a decline in paid attendance allowed to frame a story that at its heart is about the overall financial health of the organization?  There’s something quietly insidious about this sentence’s opening… I mean, this is only slightly removed from opening the story with: “Despite a record number of work-place accidents, the Metropolitan Opera is on track to balance its budget for a second year in a row.”

But the problems go deeper than that. Let me point out yet again that the Met is a nonprofit organization—completely unlike a commercial Broadway theater.  Time and time again, people have bemoaned the fact that arts organizations (like the Met) can’t support themselves completely via ticket sales… ignoring the fact that many of them (like the Met) are nonprofits.  Ergo, they are able to balance their budgets via fundraising (like the Met).  Again and again this is portrayed as an embarrassment, as if it were somehow shameful for a nonprofit to resort to fundraising.

This is wrong.

I’ve written exhaustively on this subject (here, for example), but let me summarize… using the Olympics as an analogy, as it is top of mind.  It would be like suggesting that a sprinter didn’t win the race because he or she had the slowest start time getting out of the starting blocks.  But that’s not the whole story, right?  The race is won by crossing the finish line first.  The start time is a factor, and clearly influences a person’s overall speed, but it isn’t the sole factor in a race.  Similarly, no one would suggest that a volleyball team didn’t actually win its set because the losing team actually served more aces.  Yes, getting an ace serve is dramatic, and certainly leads to points when you score one; but there are many other factors that influence the final point tally, including the overall effectiveness of the team’s offense, its defense, and ability to minimize unforced errors.

The Met’s budget works the same way.  Like most arts nonprofits, it has three revenue streams: earned income (ticket sales, merchandise sales), fundraising (individuals, corporations, foundations, government), and investments (the endowment).  Each organization will utilize these revenue streams in different ratios, but they are all valuable, and all add to the bottom line.  There is no “better” way to bring in money.   If an organization balances its budget through donations, then… it balances its budget.

Now, of course it’s fair to report on low ticket sales, and to be concerned about what they mean for the long-term health of the Met.  But it is one problematic line item on a very large ledger sheet that shows a great deal of health.  Stop giving it oversized, lead-off urgency.

But there’s another huge problem here.  Two years ago, the Met was in the midst of contentious contract negotiations with its unionized workers.  At that time, General Manager Peter Gelb repeatedly told the press the Met was in a dire financial situation, and the company literally faced bankruptcy in two years.  The only way to stave off financial disaster was to have the unionized workers at the Met agree to massive concessions with sacrificial pay cuts right that very minute.

The workers refused, and Mr. Gelb was forced to back down. His proposed cuts never went through.

Well, here we are two years later—the exact length of time until Mr. Gelb’s projected bankruptcy. And the Met has recorded two straight years of balanced budgets.

Huh.

Given this astonishing record of overblown, self-serving, and erroneous statements, why would any reporter give credence to anything Mr. Gelb says about… anything?

 

“‘We have fixed things somewhat, but the ultimate fix has not yet been accomplished,’ Peter Gelb, the Met’s general manager, said in a recent interview, where he discussed preliminary figures for fiscal 2016.”

Odd that Mr. Gelb seems to be trying to take credit for these “fixed things” when he fought so hard against them.

And regarding Mr. Gelb’s statement that the “ultimate fix” has not been accomplished. If he’s referring to his own termination, which will bring an end to his catastrophic tenure at the Met… well, I fully agree. This critical step is still outstanding, and I look forward to its swift implementation.

 

“The Met, whose annual budget hovers around $300 million, relies heavily on its moneyed donor base.”

I… I am stunned at this bit of reporting.  As I have pointed out again and again and again and again, the Met is a 501 (c) (3) not-for profit organization as characterized by the IRS.  It is a nonprofit just like Habitat for Humanity, the Humane Society, or the Boys and Girls Clubs of America. Just like these peers, it legally accepts charitable donations.  That’s why it is classified as a nonprofit! By law, contributed income will always be part of its revenue stream.  This is not a flaw with its financial plan—it is the defining characteristic of its financial plan.

Can we please, please stop implying otherwise?

 

“‘There is a limit ultimately to how much money we can raise,’ he said.”

[…]

Wow.  Mr. Gelb must be the first fundraiser in history who—in the press!—puts a ceiling on how much money he thinks he can raise.  I mean,  of course back in the office you do a capacity study to come up with a realistic fundraising goal that gives an honest appraisal of what the community will support and what you can bring it.  But as a strategy, you never publicly and preemptively put a cap on your goals.  We’re always asking for more.  We’re always trying to surpass goals and expectations.  This begs a couple questions… what is that upper threshold? How do you know what it is, and what criteria were used determine it?  Do you publicize this to your donors? When you start to approach it, do you dial back your fundraising efforts?

Maybe this is my own personal view as a fundraiser, but I think we’re at our most successful when we approach things with an attitude of abundance rather than scarcity.  That there are funds out there—we just need to discover them, and link the right funders with the right project at the right time.  The 2016 Giving USA report shows that total charitable giving in 2015 was a record $373.25 billion, which averaged out to more than $1 billion given each day. Moreover, contributions to the arts have grown wildly over the last five years, with record growth in 2015.  But more to the point, the Met itself has seen strong fundraising in the last two years—that’s the point of this very article.  Mr. Gelb’s view seems defensive and defeatist; if this is how he’s talking to prospective donors, I can understand why he finds fundraising difficult.

 

“Paying customers occupied just 72% of all seats.”

I’ve written extensively about this, so let me cut and paste something from earlier this summer:

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.

But the argument to focus on paid capacity seems 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.

 

“‘Across the board in the U.S. and in Europe…the core opera audience is shrinking,’ [Gelb] said. While the Met had 74,000 new individual ticket buyers this year—its biggest increase—it takes about six new ticket buyers to replace one subscriber, said Mr. Gelb.”

I love the interplay of these sentences that include sweeping generalizations, the minimizing of positive data, and a casual deflection with unrelated info.

On the broad generalization… no, core opera audience is not shrinking across the board.  Again, I’ve covered this extensively.  Many companies have reported record ticket sales.  Of course there are some real declines, but by and large those who bemoan the fact that opera is “dying” are using outdated statistics, anecdotal evidence, or appeals to conventional wisdom.

But what’s really curious is that Mr. Gelb attempts to undermine his own positive news—the record number of new individual ticket buyers—by throwing out the suspect, and unrelated observation that it takes six ticket buyers to equal a subscriber. First, we’re breaking the old model that’s supported arts programming by becoming an on-demand society, and the data is still trying to catch up.  I’d re-evaluate the 6-1 ratio, in light of recent trends.  Plus, there are far too many caveats, and far too many ways to segment populations—so throw-away terms like “subscribers” lose any meaning. As Jessica Philips aptly notes in this piece, if you segment the data, some very positive trends appear.  So do potential areas for future growth.

I’d also point out that all performing arts group are facing the decline of the subscription model, and have been for decades.  Many of them are succeeding… why is the Met having such difficulties?  Is this a problem of the subscriber model in general? Or Peter Gelb’s marketing model?

 

“‘It’s the constant struggle to find what it is that strikes the right chord with people,’ said Kevin Case, general counsel with the International Conference of Symphony and Opera Musicians. ‘Nobody has hit on the magic formula.’”

I… again, I find this curious.  On several levels.  One the one hand, I absolutely agree with the sentiment—marketing is a constant struggle to find what it is that strikes the right chord with people.  There are always challenges, and will always be challenges.  That’s true of nonprofits and for-profits alike.

But I’m surprised… Kevin has been a keen observer of recent trends in the world of classical music, and written about them eloquently on his blog.  This is all the real estate he’s given?

More to the point, this straightforward sentence seems to be used as a club against the Met.  Again, this feels odd.  The starting point of this story is the Met has balanced its budget for two straight years, after dire warnings of financial doom.  But the bulk of the story thus far has focused on the problems the Met is facing; and in that context, this quote seems a portent of doom rather than a simple statement of fact.

And this gets to my overarching problem with this article.  There is an unsubtle, negative undercurrent that permeates this story, which is reinforced by Kevin’s quote, along with Jessica’s and David Frye quotes immediately prior.  All these individuals are deeply invested in the success of opera and the Met in particular, so I find it striking that per this story, they aren’t quoted as saying something along the lines of: “Congratulations to the Met! Thank you to the generous donors! And here are some other ways to improve its financial health even more!” Instead, it feels like their words are heavily edited, and being pulled out of context to serve as additional, outside proof that the Met is in rough shape.

Or maybe they weren’t asked about the good news, but only asked to comment on the bad… which seems to be the focus of this piece?

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All in all, I’m stunned by how negative this story is… in reporting a moment of institutional triumph.

Peter Gelb strongly implies that the Met’s financial success is a fluke, based on one-time gimmicks that can’t be replicated.  The roots of this success are discounted as vaguely unsavory, and the Met’s ongoing problems are laid out in exhaustive detail.  Moreover, Mr. Gelb seems to be the only source of real information here… the outside voices quoted for the story are given next to no space, and their perspectives seem to be crammed in to fit an existing narrative.

I don’t get it.

I’ve been strongly critical of many of Peter Gelb’s actions, and of course I have concerns about the future.  I’ll continue to write about these things here on my blog. But again, this is good news.  The dire forecasts didn’t come true—the Met has had a successful year.  It has pools of strength to draw on, and a wide circle of friends willing to support it.

I’ll certainly keep after the Met to up its game… but today, can we just celebrate?

 

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