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Saving the Mastodon

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fantasia.jpgIt is heresy to ask this, but should the Philadelphia Orchestra cease to exist?

There is strong evidence that it can no longer be sustained as a business enterprise, even with millions in support its gets each year from its endowment and regular donors.

Its audience is declining and seems destined to diminish even more in the coming years.

It sucks up a lot of oxygen -- donor and foundation cash -- in the fragile ecosystem that is the city's arts and cultural community.

And the distance between what it brings in at the gate (about $15 million) and what it costs to operate ($46 million this year) continues to widen.

Here is how the orchestra summed up its situation in its bankruptcy filing last week:

"In recent years, the Philadelphia Orchestra Association has experienced a series of challenges stemming from factors including declining ticket revenues, eroding endowment income, decreased donations, increased operational costs, increasing pension obligations and burdensome contractual agreements."

(It did not mention, but should have, and poor decisions by management.)

The orchestra association's immediate answer to these problems has been to declare bankruptcy so it can shed some liabilities.

To name a few: it wants to be freed of the $2.2 million a year in additional pension payments it is must shell out over the next 10 years to make up a deficit in the musicians pensions fund. It wants to be released from the contractual requirement that it cover the deficit for the Philly Pops, which totals $800,000 this year. It seeks to renegotiate its contract with the musicians union to extract concessions on wages, work rules and benefits. It wants cheaper rent from the Kimmel Center.

In sum, it seeks to screw its employees, screw the Pops and screw its landlord.

If it can do that, the orchestra leadership says, it can emerge from bankruptcy and move forward. It will launch a campaign to raise $160 million to increase its endowment (currently at $116 million. It will implement a strategic plan that focuses on "increasing audiences by enhancing the concert experience and connecting patrons in fresh innovative ways to the music." Whatever that means.

The bankruptcy filing generated a lot of publicity. There was hand wringing and some tears shed. It's a civic embarrassment to have the 'world-famous Philadelphia Orchestra' on the rocks.

But let's put away the hankies and ask some questions.  The central one is: Is this 111-year-old institution a mastodon in today's world?

Look at the numbers: tickets sales for the orchestra's main season declined from 183,000 to 151,000 between 2008 and last year -- an 18 percent drop. In a recent study of national trends, the League of American Orchestras projected another 14 percent decline in the classical music audience between now and 2018 -- and said the decline could be as much as 28 percent if negative demographic trends accelerate.

Classical music always has always had a passionate, but relatively small audience (compared, say, to theater or sports).  It is just getting nichier, as the older generation passes on. On a percentage basis, younger people have half the participation rates as their elders.

The most disturbing part of the 2009 LAO study was that it debunked the belief that audiences age into concert attendance at around age 45. According to LAO that simply is not true. Participation within all age groups tends to decline as they get older.

Orchestras aren't the only ones waiting for younger people to age into customers. Oldsmobile had the same strategy. So did newspapers. Enough said.

Another reality: The angels (rich people) who have supported the orchestra over the years by opening their checkbooks are also aging out. For instance, it's hard to calculate the loss to the orchestra caused by the death of Lenore Annenberg in 2009 at age 91. She was a loyal and generous supporter, giving $25 million at one point and millions more over the years.  

Who will step forward to give the $160 million the orchestra will soon be asking for? Is there a new generation of wealthy people out there about the age into becoming orchestra givers? Will the area's big foundations, traditionally averse to funding operating deficits, change their policies for the orchestra? We will see.

So, here's a thought: rather than grooming the mastodon and putting it on a diet, maybe it is time to rethink the whole deal.

Would fewer concerts mean a full hall and lower costs? Instead of using the brass knuckles to extract money from the musicians union, can they be made full operational partners, with more say in operations but their compensation tied to the gate? Do we have to have a separate orchestra operation, a separate opera operation, separate ballet and chamber orchestra operations? Is it time to consolidate and integrate?

Should the Philadelphia Orchestra cease to exist? That's a trick question.  The orchestra as it operated for 100 years has ceased to exist. Its bankruptcy proved that the old model is dead.

The question is: What creativity can we bring to making something new?

 

-- Tom Ferrick

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