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VOL. 7 | NO. 23 | Saturday, May 31, 2014

Facing the Music

Memphis Symphony Orchestra seeks major lift from financial woes

By Andy Meek

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Starting over is one of those tasks that requires a fresh set of eyes if it’s to be pulled off successfully.

The Memphis Symphony Orchestra entertained fans at this year’s Sunset Symphony at Tom Lee Park.

(Memphis News/Andrew J. Breig)

There has to be an acceptance that what was and what will be probably are mutually exclusive and a willingness to try new things, to be different and, above all else, to keep pressing forward.

The Memphis Symphony Orchestra, reeling from an existential crisis and from the ground of its business model having shifted beneath its feet, finds itself at such a moment.

This year has seen the symphony organization disclose and confront a variety of painful truths – its proximity to financial ruin, that its once robust reserves had evaporated and that its existing business model isn’t adequate for today’s reality, all while orchestra musicians turned hat in hand to the public via Kickstarter.

That Kickstarter campaign ended up beating its goal of $25,000 by pulling in $28,500. Businesses stepped up, too. Amro Music gave the symphony – which plays to more than half a million people each year – several nonfunctioning violins and a battered cello to repurpose as pieces of art to auction off, and at a silent auction in April Amro raised more than $5,000 for the symphony.

Amro held the auction April 15, with more than 50 items to bid on and all money going directly to the symphony. On top of that, a percentage of all piano and instrument sales done in the store that week also went toward the symphony.

Similar efforts were undertaken by other businesses, such as the Eyewear Gallery store at 428 Perkins Road Extended, which hosted its own fundraiser for the symphony – some of whose members are patients there. And thanks to community support like that, plus a major turnaround underway inside the symphony organization, emergency measures have been able to put out the financial fire.

The next step is replacing the rubble from that fire with a business model that’s new and sustainable.

“Our first challenge was to raise enough cash to finish the current season with grace,” said symphony president and CEO Roland Valliere, who said the organization cut $200,000 out of its budget through staffing cuts and other program changes. “We were able to finish the year with cash in the bank – enough runway to move to the next challenge, which we’re calling the second piece of the twin peaks.”

That next step is perhaps more important, because if the symphony continued with its current playbook, the emergency steps taken would have been for nothing.

A Kickstarter campaign to raise money for the cash-strapped symphony ended up beating its goal of $25,000 by pulling in $28,500.

(Memphis News/Andrew J. Breig)

“As we look to next season, we were running $1 million, $1.5 million deficits,” said symphony board chair Gayle Rose, once a clarinetist for the symphony. “When you’re looking forward into next year, you can’t continue to operate with a million-and-a-half (dollar) deficit if there’s no savings account or endowment to help meet that gap. And you can’t keep mounting emergency campaigns.”

What the organization should be doing, instead, is the multimillion-dollar question.

The Memphis symphony isn’t unique in facing these challenges. The Detroit Symphony Orchestra, for example, weathered a financial crisis of its own, which included a labor dispute a few years ago, and today it’s doing things like stretching beyond the confines of the concert hall it calls home to perform at more non-traditional events.

The Nashville Symphony Orchestra nearly lost its Schermerhorn Symphony Center to foreclosure until a benefactor stepped up at the last minute. To stave off its own financial woes, the Nashville orchestra has done everything from renegotiate musician labor contracts to pursue more non-symphony bookings.

“With symphony orchestras across the country, everybody is engaged – all performing arts programs and particularly symphony performing arts organizations because of the labor intensity – and struggling to find the right model,” Rose said. “The competition for entertainment is so much greater now for people’s time, and the way people access classical music in general is shifting from the live experience to being able to download it on your phone and stream it.

“All these big, macro influences are what we’re grappling with as we look to the future. Almost every nonprofit needs to have an endowment, and symphonies when they have a core orchestra especially need a healthy endowment. Without one, there’s no safety net, and you’re lacking that annual 4 to 5 percent allocation.”

Thus the moment of truth the Memphis symphony now faces.

“For us, it’s time to really reflect on where we are, who we are, and what we’re really about and how we can meet the needs of the Memphis community,” Rose said. “In order to do that we needed some more time. But there was no time.

“You cannot innovate when the house is on fire. We had to focus on emergency funding to get us through this year. Looking forward to next year, it would have to be a reduced expense footprint where we could take expenses down to our annualized revenue, and see if we could shrink to that size.”

Our first challenge was to raise enough cash to finish the current season with grace. We were able to finish the year with cash in the bank – enough runway to move to the next challenge, which we’re calling the second piece of the twin peaks.”

– Roland Valliere
President and CEO, MSO

Valliere stressed to the board that turnarounds take time to bear fruit – that, in fact, Memphis’ would take a few years to pay off. Along with that, the symphony board passed a resolution forbidding the passage of deficit budgets.

That means there would be no more kicking the can down the road. The symphony has to begin, as it were, facing the music of its own fiscal constraints.

“So we set out to raise a sustainability fund of $500,000 for next year and the following two years plus some extra money in case we’re wrong about any of our assumptions,” Rose said. “Today, after month and a half, we’ve raised $2.465 million.

“It’s a real demonstration of interest in and support of the symphony longer term. It’s a statement that says we’re going to give you some time to figure it out. And while it’s great we’ve gotten this kind of investment, it came at a great cost. Our staff and our musicians, for example, had to accept cuts.”

Spelling out those cuts and changes to the symphony’s operation, Valliere said the season this year – and for some time now – has entailed 39 weeks. The musicians are paid for 39 weeks, and there are 36 members of the core orchestra who are salaried musicians.

That’s supplemented by professional musicians in the region who do things like teach and freelance.

Next year – for the season that starts in October and runs through the end of May – the core musicians will be compensated for 24 weeks. The season will still span 34 weeks, but Valliere said that change cuts the budget by 38 percent.

“Basically, what we’ve done is reduced fixed costs,” he said. “We’ve now moved to a hybrid fixed cost structure. The critical question now is what are we sustaining? Is it the orchestra as it exists? We want to deliver high-quality music service to Memphis, and that may entail a different structure, but that’s yet to be determined.”

Things have changed considerably for the Memphis symphony since the early 1980s, when the orchestra used to be a part-time group as opposed to the fully professional, paid orchestra it is today. Everything, though, is a choice, and the choice that changed the orchestra into its current form brought a certain level of professional, high caliber talent.

Valliere’s explanation of changing the number of weeks for which musicians will be compensated also is a choice. If you shorten the season, that could give people less of a menu of events to choose from and ensure that more events are better attended – but it’s also a gamble, since there would be fewer chances to grab the public’s attention away from something else that captures their time.

The orchestra knows what it’s trying to do is a gamble. The only certainty, for now, seems to be that the old way definitely wouldn’t have worked – and would have ensured an unwanted final bow.

“This is a great moment for us to establish credibility with our donors,” Rose said. “We’re going to shrink the symphony to the size that the community has made its investment and really engage in a thoughtful planning process as part of this.”

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