By Tim Smith
November 23, 2008
Norma went on as scheduled - the final performance is today - but the remainder of this season, and beyond, depends on the company's making a major fiscal turnaround. Already this year, ticket sales fell $200,000 short of the goal for Verdi's Aida, normally a very popular work at the box office.
Deborah Goetz, senior director of marketing and communications, saw sales dip with each nose-dive of the stock market. "This is worse than what we saw after 9/11."
Although most other local arts organizations don't feel quite as threatened, all must confront unusual financial pressures and uncertainties. Due to stock market turmoil, endowments at the Baltimore Museum of Art and the Baltimore Symphony Orchestra have dropped by millions of dollars, limiting the money that can be withdrawn for operating expenses. State grants have been cut significantly. And some arts groups have seen a drop in ticket sales.
The latest casualty is the Baltimore Chamber Orchestra, which yesterday canceled some of its scheduled January activities, including a recording session. The news comes just three weeks after the ensemble made its successful New York debut. Locally, concert attendance has dropped sharply since the orchestra opened its season in October, and contributed income is likewise down.
Stories of the economy's impact on the arts pop up almost daily around the country. Within the last few weeks, Opera Pacific in Southern California's wealthy Orange County closed its doors. A little farther north, a consortium of orchestras in Pasadena canceled half of this season's remaining concerts and furloughed its executive director.
Despite strong advance ticket sales, the Washington National Opera has postponed its much-anticipated production of Wagner's Ring, a four-part cycle of operas, because the company could not find donors for the remaining $5 million-plus needed for the project. At the San Francisco Opera and New York's Metropolitan Opera, there is talk of fewer and less expensive productions next season.
That the arts have survived other downturns doesn't provide much encouragement.
"To me, it feels scarier," says Michael Kaiser, president of the Kennedy Center. "No one really has a sense of how deep this is going to be. I've never seen endowments fall in this precipitous way."
The Baltimore Museum of Art's endowment has declined $19 million in value since July, for example. That leaves about $52 million, but the decrease will hit the museum's operating budget - nonprofit organizations take an annual "draw," typically around 5 percent, from endowment funds to help offset expenses.
At the Baltimore Symphony Orchestra, the endowment is down to about $51 million, nearly 20 percent lower than where it was at the end of August. The Walters Art Museum has also seen a 20 percent drop in its endowment (officials declined to provide a dollar figure). And at Centre Stage, the endowment has dropped from $19 million to $14 million, more than 25 percent.
Local organizations are re-evaluating budget plans, especially after the Maryland State Arts Council cut all grants by about 12 percent. That means a loss of $240,000 that the BSO had been counting on, for example. Baltimore Opera and Centre Stage will get about $55,000 less than originally expected.
"We all are on tenterhooks because we all could be looking at another big cut [in state grants] after this one," says Anne Fulweiler, executive director of the Baltimore Theatre Project. She anticipates having to shrink an already small staff and defer such expenses as an upgrade to the theater's heating and air-conditioning system.
But Fulweiler, like other arts administrators in the area, remains confident. "We are all in this together, prepared to tighten our belts because we understand the difficult position the state is in," she says. "We'll survive because we've survived for 37 years now. But we anticipate it being a very, very difficult time."
Ian Tresselt, managing director of Everyman Theatre, notes strong ticket sales this season and a solid start to the company's annual fund drive, enough to make the cut in state arts funding less troubling. "People who have contributed to us in the past are continuing to contribute."
Centre Stage's fund-raising is also holding steady, says director of audience development Barbara Watson, although she has noticed that people are buying less expensive seats. "We have generally weathered economic downturns, like post-9/11, pretty well."
But the Centre Stage operating budget relies on a draw from the endowment, and the steep drop in that fund's value is already being felt at the theater company - literally.
"We're turning down the heat, and it's cold in this old building," Watson says with a laugh. "We're really pinching every penny we can. But we are not cutting anything related to the art."
When box office traffic slowed at the Baltimore Opera at the start of the season, rumors of an imminent, permanent shutdown quickly flew around the music world. But the company's board of directors agreed to a "re-positioning project" that involves cost-cutting and a heightened fundraising campaign.
"We've had cash flow problems for three years running," says James Handakas, newly appointed acting general manager for Baltimore Opera. "We've always managed to get through it. Our concern now is that we don't know how the economic downturn is going to affect contributions. December has always been a huge month for us, when a lot of people write checks."
Handakas says the company, with an annual budget of about $6 million and a modest endowment of about $1.5 million, has "a relatively manageable" accumulated debt of $715,000.
The "re-positioning project" will include a couple of staff layoffs, as well as using a consultant to guide changes in management practices and spending choices. (Longtime general director Michael Harrison has moved from the administrative arena and is now artistic director.)
To save money, the company is substituting a less costly set for the March/April production of Rossini's The Barber of Seville. And productions already planned for next season may be modified to gain further savings.
"We don't want to make huge cuts," Handakas say. "But we need to see if there are ways to limit this cash-flow drain. We will have an aggressive campaign in December to let the public know we are here and to urge them to continue giving."
Other arts groups will be making similar efforts in the weeks ahead. Baltimore Chamber Orchestra music director Markand Thakar, who has turned his salary back into the orchestra, informed his musicians yesterday that "an urgent appeal letter is going out to 600 current and past subscribers and donors" and that "new potential funding sources are being solicited."
"Awareness is half the battle," says Paul Meecham, president and CEO of the Baltimore Symphony Orchestra. "We're increasing communication to our donors, reminding them more than ever why we value their support."
The BSO, with a $27 million annual budget, is the state's largest arts organization and, after years of heavy debt, has been on firm fiscal footing since 2007. The downward shift in the economy could endanger that record.
"Our season subscription campaign exceeded our goals, but we have sold 8 percent fewer single tickets at Meyerhoff [Symphony Hall] than this time last year," Meecham says. At the Music Center at Strathmore, the orchestra's second home in North Bethesda, single ticket sales are down about 12 percent.
"We don't need [cash] immediately," he says. "But we're looking at ways to make up for the state arts grant cut, and we are looking at making expense cuts, too. I'm not panicking. But ... I do not think business as usual will be sufficient for any organization."
At the BMA, Bolger echoes that sentiment. "We're not looking at any dramatic changes for the museum at this time. But we're concerned, and we're being prudent. The whole staff is engaged in discussions to see where we can save money."
Anticipating a $400,000 budget shortfall, the museum has already targeted $300,000 in cost cuts. Bolger points to some other positive news.
"A capital endowment campaign raised $40 million between July 2006 and June 2008, and another $2 million since June," she says. The goal is $65 million, with nearly half targeted for the endowment.
There are no plans to return to paid admission, which has been free at the BMA and the Walters for two years.
"We're a little bit off both in membership and annual giving," says Toni Condon, director of development at the Walters. "But we haven't had people renege on or renegotiate [contribution] pledges. And we haven't cut anything at this point."
Condon, however, is hearing the word "no" more often when requesting financial help for museum projects, "even from people who have been close to us for a number of years." And as corporate and foundation funding tightens up, she's relying on multiple sponsorships for exhibits. "If there is a trend, it's that [exhibits] are not supported by one individual or one corporation; you have to piece it together out of a lot of different size gifts."
No one knows whether arts donors will continue to step up if the economy weakens further.
"The arts may weather the downturn better than the for-profit sector," says Washington National Opera executive director Mark Weinstein. "Nonprofits are mission-driven, not bottom line-driven."
As Weinstein sees it, that mission is all the more powerful because it relies on the community, and the community, in the end, will not want to see the arts disappear. But, he said, arts organizations must be managed realistically and prudently.
The Kennedy Center's Kaiser, famed for turning around financially troubled performing arts institutions in this country and England, hasn't abandoned his basic philosophy for tough times: Don't diminish the artistic product. "Cut everything else first," Kaiser says. "That said, if you have to reach that step, announce something exciting for the next year or year after that. And focus on how much exciting work you can do on a smaller budget."
A significant precedent for weathering tough times can be found at the BMA, which opened its John Russell Pope-designed building when headlines told of stock declines, rising unemployment, and dire warnings about the nation's economy. It was November 1929.
"The museum rose like a phoenix right after the launch of the Great Depression," Bolger says. "And throughout the 1930s, we continued to get great gifts of collections and to serve the people of Baltimore, to do the basis of everything the museum does today. Maybe that's what gives me the strength to think we'll do it again."
Baltimore Sun reporter Mary Carole McCauley contributed to this article.
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