The Death Of Classical Music in America

May 1, 2011 by Douglas A. McIntyre

For generations, large and small cities saw orchestras,  operas and other classical music organizations as part of civic life.  Now,  many are in deep financial trouble with no relief in sight.

The reasons for their predicament is simple:  Costs are rising at a faster rate than their receipts.  That’s why the Philadelphia Orchestra,  long considered a crown jewel of American cultural life, recently had to seek protection from creditors.  Even classical music organizations that are keeping their heads above water have had to slash costs to the bone including laying off staff.

Classical music is probably the art form that is least able to weather any economic downturn.  For one thing, fixed costs are high.  Major orchestras include about 100 players. Top-flight musicians command salaries in the six figures. Some conductors earn seven figures.  Some groups need to pay rent on their halls. Endowments have taken a hit in recent years causing orchestras and other classical music organizations to scale back performances and, sometimes, cut back staff.   Economies of scale are difficult to find.   A symphony isn’t a symphony with one violin player.  This may result in a situation where only the biggest and strongest classical music arts organizations survive.

“It does not really surprise me” that so many orchestras and operas are struggling, says Tim Page,  professor at the Thornton School of Music and the Annenberg School for Communication and Journalism at the University of Southern California, who won a Pulitzer Prize for his writing on classical music. “What really surprised me is that it is getting into the big leagues. .. The small orchestras are probably going  to bite the dust. … I say that with great sadness.”

Classical arts organizations are scoring some financial victories.  Take the Rochester Philharmonic Orchestra.  The ensemble, founded by Eastman Kodak founder George Eastman in 1921, managed to erase a $776,000 deficit it had run-up from the 2008-2009 season.  While the 2009-2010 season did finish in the black, it was a rather modest figure of $2,416.

Our musicians, conductors, and staff accepted enormous wage reductions with the knowledge that this was a necessary step toward stabilizing the RPO’s finances,” Charles Owens, RPO President and CEO, said in a press release.

The RPO may be helped by the demise of the orchestra in neighboring Syracuse.  Still, the huge layoffs that have hit local companies including Kodak certainly don’t help matters.

A far more serious problem facing classical music organizations is that many Americans don’t appreciate the art form   As F. Paul Driscoll, editor-in-chief of Opera News, notes in past years classical music has never had a huge audience but at least people respected it.  That’s less the case today because arts education has been on the decline for years.  Classical music sales account for a small slice, some 2 percent to 4 percent of the $15.9 billion record music industry, according to the International Federation of the Phonographic Industry.  (Updates to remove erroneous statistic.) One reason for the small sales is many large U.S. orchestras don’t have recording contracts.

“It’s necessary for people to become exposed to it at an early age,”  Driscoll says.  “Classical music in general is under a lot of pressure. It’s a big challenge for them to maintain the quality of the product.”

School orchestras are under pressure even in wealthy school districts as they face unprecedented fiscal stress caused by a decline in state aid.  Moreover, the audience for the performing arts in the United States is both declining and growing older, according to a 2010 survey from the National Endowment for the Arts.

“Participation in key `benchmark’ activities (e.g., attending live performances, visiting museums) has declined from 39% in 1982 to 34.6% in 2008,” the NEA says.  ” The arts audience has grown older than the general population.”

Even organizations that continue to attract huge audiences such as the Metropolitan Opera, the largest classical music organization in the US, have begun to struggle.

The Met reported contributions of $127.3 million in 2009, up more than 83% from $69.3 million in 2000. During that same time, box office revenue rose 20% to $93.1 million versus $77.4 million in 2000. Total expenses, however, rose during that same time from $176.3 million to $282.4 million,  a gain of 60%.  Compensation costs rose from $137.4 million to $212.9 million, an increase of 55%.   Charity Navigator says the Met’s loss for the 2009 fiscal year was $71.5 million.  The Met disputes this figure and claims its net loss was only $1.3 million.   A spokesman, Peter Clark, says he “has no idea how Charity Navigator does its math.”  Regardless, its annual report shows  that it faced a tough financial predicament as total assets declined from $495.3 million in FY08 to $422.7 million in FY09, driven primarily by investment losses.

Economic conditions adversely affected the Met’s annual fundraising, its endowment, and its pension fund, and made it impossible for the company to raise ticket prices. We responded with a series of critical belt-tightening measures; expense reductions included cutbacks in staff salaries and benefits. Meanwhile, the combination of a Board-initiated Weekend Rush Tickets program and the successful conclusion of the 125th Anniversary Fund campaign allowed us to weather the worst of the economic storm.

Other big names in the classical music world are managing to hang in there, though none appears to be thriving.

For instance, the Chicago Symphony Orchestra had a deficit of more than $15 million in Fiscal Year 2009.  The figures for FY 2010 , which have not been finalized, show ” breakeven or better results,” says  Raechel Alexander,  a spokeswoman, in an email.  She wasn’t more specific.

The Boston Symphony Orchestra, which had losses in 2008 and 2009, dipped into its Immediate Impact Fund to build budget surpluses of $279,000 in FY 2010 and another $585,000 in FY 2011.  Bernadette Horgan, a spokeswoman for the BSO,  says achieving fiscal success has not been easy.

“The organization cut $4 million from its $84 million budget for FY 2010; eliminated a planned orchestra tour of Europe for early 2010; laid off about 5% of the staff; music director and managing director took 10% pay cuts; higher paid management staff took 5% pay cuts,” she writes in an email. “The orchestra members agreed to a two-year contract extension (FY 2010 and 2011), freezing their current pay …. –a 19% cut; fees for guest artists were frozen and in a few instances reduced.”

The Cleveland Orchestra, which like Boston, Philadelphia and Chicago, has a world-renowned reputation,  has its share of fiscal woes as well.   Staff members took pay cuts which are being restored.  However, Cleveland, which posted an operating deficit of about $2 million last year probably will post a deficit in the fiscal year ending in July, a spokeswoman said.  Players staged a brief strike.

For an orchestra or classical music organization to make the 24/7 Wall St. list,  it had to either be in financial distress or have the substantial potential to be that way because of a downturn in the economic fortunes in its region.  Those that have surpluses only because of massive cost cutting were also included.  Most are either rated one or two stars out of a possible 4 by Charity Navigator.   The CN “star” system is based on financial strength and long term viability. We also based the findings on a review of financial documents and discussions with experts.  Some of the organizations are already heading out of business.

Here is our list of the most cash-strapped classical music organizations.

1. Philadelphia Orchestra

  • Founded: 1900
  • Location: Philadelphia
  • Operating Revenue: $33.08 million (FY 2010)
  • Structural Deficit $14.5 million (FY 2010)
  • Allison Vulgamore, CEO (Since 2009)

The Philadelphia Orchestra was driven to seek Chapter 11 last month for the same reasons many private companies do:  its expenses ($46 million) were quite a bit higher than its revenue ($33.08 million).  . ‘Although The Philadelphia Orchestra has no long-term debt, it is operating at a significant loss based upon declining ticket revenues, decreased donations, eroding endowment income, pension obligations, contractual agreements, and increased operational cost,” The Orchestra said in announcing the bankruptcy.  A spat of emergency fundraising was expected to reduce that shortfall to $5 million, but that only covers this season.  Undaunted, the Orchestra is planning a $160 million fundraising campaign.   The orchestra was without a CEO for 10 months, which surely didn’t help matters.

2. Baltimore Symphony Orchestra

  • Founded: 1916
  • Location: Baltimore
  • Total Revenue: $21.7 million (FY 2009)
  • Deficit: $5.3 million
  • Paul Meecham,  CEO

The Baltimore Symphony Orchestra is faced with the unenviable problem of competing for corporate patrons and ticket sales with National Symphony Orchestra in neighboring Washington,  D.C.   Its struggles have only gotten worse as the economy slowed down.  Charity Navigator shows it has a negative net asset value of $3.3 million.  In 2010, musicians agreed to accept a pay freeze for this season and take a 16.6% pay cut for the next two seasons.

3. Columbus Symphony Orchestra

  • Founded: 1951
  • Location: Columbus, Ohio
  • Total Revenue:  $6.9 million (FY 2009)
  • Surplus:  $285,529
  • William B. Conner, Jr., Executive Director

The Columbus Symphony Orchestra calls itself the only full-time professional orchestra in Northern Ohio. Unfortunately, its modest financial success  has come at a steep price. In March 2010, the musicians agreed to $1.1 million in wage cuts through 2011.  The organization’s board had threaten to shut its doors permanently unless wage concessions were made.

4. New York City Opera

  • Founded: 1943
  • Location: New York
  • Total Revenue: $5.99 million (FY 2009)
  • Deficit: $5 million (Current)
  • George Steel, General Manager and Artistic Director

The New York City Opera was founded to make opera accessible to American audiences, perform new music and to give breaks to U.S. born singers.   Think of it as an alternative to the Met.   The current season is up in the air.  We’re working very hard to get this institution on a sound financial footing,”  Board Chairman Charles Wall told The New York Times that he is donating $2.5 million to help cover the deficit and seeking contributions. “The opera has ceded time to New York City Ballet, with which it shares the David H. Koch Theater, in exchange for a reduction in payments,” the paper says.

5. Houston Symphony

  • Founded: 1913
  • Location: Houston
  • Operating Revenue: $8.72 million (2010)
  • Deficiency From Operations (2010) $14.85 million
  • Mark Hanson, CEO

In 2009, The Houston Symphony announced sweeping austerity measures including furloughing musicians and staff and reduce the pay of conductors to save $900,000.  It didn’t seem to do much good.  The organization’s annual report shows that its deficit in 2010 was $14.85 million, the highest it’s been since at least 2006. Revenues were at their lowest level since 2007.  As of the 2009 fiscal year, the Orchestra had negative net assets of $16.1 million.

6. Detroit Symphony Orchestra

  • Founded: 1914
  • Location:  Detroit
  • Total Revenue: $23.58 million (FY 2009)
  • Deficit: $11.89 million (FY 2009)
  • Anne Parsons, CEO

The Detroit Symphony Orchestra has had a rough few months, including a six-month long musicians’ strike that was settled this month.   According to Dynamic Arts Consulting, the DSO has been caught in an economic maelstrom since the start of the recession as Detroit’s auto industry fell into decline.   Its finances are a mess as corporate support withered away.  “The financial crisis of 2008 greatly affected the DSO, which subsequently lost $19 million in ticket sales and remains in default on the terms of its $54 million real-estate debt (to build Max M. Fisher Music Center and restore Orchestra Hall),” the company says.  The rest of the season has been canceled.

7. Milwaukee Symphony Orchestra

  • Founded: 1959
  • Location:  Milwaukee
  • Total Revenue: $14.18 million (FY 2009)
  • Deficit; $3.3 Million
  • Maryellen H. Gleason, President & Executive Director

One the youngest symphonies in major cities, the Orchestra was hit with a steep drop-off in contributions during the last fiscal year because of the recession.  Total revenue for the year was 16.5% below projections. According to the Journal Sentinel newspaper, the Orchestra is as ambitious as ever. “Belt-tightening and staff furlough days have not resulted in a reflexive lack of ambition or innovation,” it says.  Nonetheless, the Symphony slashed $500,000 from its expenses for the 2011 fiscal year.

8. Syracuse Symphony Orchestra

  • Founded: 1961
  • Location: Syracuse, NY
  • Total Revenue: n/a
  • Debt: $5.5 Million
  • Interim Executive Director Paul Brooks

The Orchestra has been in life support for a while. “Last summer the arts organization was close to collapse when it was without operating funds. An “angel investor” came to its rescue,” the Syracuse Post-Standard says. “In late January, it announced it faced a similar fate if it didn’t receive an immediate $375,000 to cover February expenses and needed a total of $1.75 million by Aug. 1 to continue its 50th anniversary season.  The campaign, which included an orchestral staging of Led Zeppelin songs, fell short.  “In plain terms, if there is to be another Symphony, it can start with a clean sheet of paper,” the Orchestra says on its website.  The season was canceled, including a  concert featuring world-renowned cellist Yo-Yo Ma.

9. New Mexico Symphony Orchestra

  • Founded: 1932
  • Location:  Albuquerque, New Mexico
  • Total Revenue: $4.06 million (FY 2009)
  • Deficit: $1.45 million
  • Ruth Silva-Hernández
    Interim President/CEO

The New Mexico Symphony Orchestra filed for Chapter 7 bankruptcy protection on April 21.  Like other orchestras,  the New Mexico Symphony was caught in the twin vice grips of the economic slowdown and rising costs.    Musicians are reportedly owed $800,000.  It also was behind in its rent.  The orchestra will cease to exist once the bankruptcy is completed.

10. Louisville Orchestra

  • Founded:  1932
  • Location: Louisville, KY
  • Total Revenue: $6.57 million
  • Deficit: $813, 676
  • Robert A. Birman, CEO

Weeks before its 75th anniversary in 2010, the Louisville Orchestra filed for protection from its creditors.  As the Louisville Courier-Journal noted,  the group sought to cut its roster of full-time musicians from 71 to 55 which would be supplemented with that with 16 part-timers to reduce costs by about $1 million.   Musicians were, of course, livid and CEO Robert Birman said at the time of the filing that he understood their frustration.

11. Honolulu Symphony Orchestra

  • Founded: 1900
  • Revenue: N/A
  • Deficit: N/A
  • Executive director: N/A

The good citizens of Hawaii may get their orchestra back, which was forced in 2010 to liquidate.  A group of local citizens bought the orchestra’s assets at an auction.  “We’re kind of taking a leap of faith in buying all the symphony’s memorabilia and musical works because we feel that is going to be necessary to restart the symphony,”businessman Mark Polivka told The New York Times.  They might just succeed, having reached a 3 year agreement with the musician’s union.  A new season is scheduled to start in September.

Jonathan Berr

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