For the detailed methodology, click here.
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April 4, 2018
Long experience observing local public affairs has taught that the term “task force” in the name of a committee of business leaders and government officials is nearly as reliable an indicator of failure as the terms “transformation” and “symphony.” Of course, there’s a chance the City-County Symphony Transformation Task Force will buck the trend.
San Antonio Mayor Ron Nirenberg and County Judge Nelson Wolff established the task force last month to “provide recommendations on how the [San Antonio] Symphony should be transformed for long-term financial success and broader arts community support.”
Artistic transformation is not an idea that should be dismissed out of hand. The kind of orchestral programming that made sense 50 or 100 years ago is not necessarily the kind that makes sense today in a culturally diverse city whose economic base is rapidly changing. If the task force addresses the need for artistic transformation in an intelligent, knowledgeable way, a hosanna will be in order.
The task force might be tempted, however, to interpret “transformation” in a strictly operational and budgetary sense, as a euphemism for “reduction” in the interest of “affordability.”
To help the task force resist such temptation, let’s ask and answer two questions:
• What has been the root of the symphony’s chronic, decades-long financial difficulties? • What size symphony budget can San Antonio afford?
Regarding the first question, I sometimes hear variations on this assertion: “The symphony needs to control its runaway costs and live within its means.”
That assertion is baloney, hooey and balderdash, not necessarily in that order. The San Antonio Symphony is and has always been an exceedingly lean operation – indeed, too lean for its health: It needs to invest more dollars in marketing and fund-raising, in outreach beyond the concert hall and in musicians’ salaries. That last item is a big one: This season’s weekly pay of $1,120, adjusted for inflation, represents a mere $3.32 increase since the 1997-98 season. But the season is much shorter now. Twenty years ago the musicians were paid for 39 weeks; this season was contracted at only 30 weeks, and the mid-season crisis cut that to only 26 weeks. The musicians have collectively given the symphony more than $1 million this season, compared to their annual pay 20 years ago. Costs aren’t too high; revenue is too low.
Regarding the second question, there’s no reliable, objective rule of thumb that says how big a budget a community “should” support for its symphony orchestra. But we can find out how well or poorly we’re doing by our orchestra relative to our capacity and relative to comparable cities.
“Comparable cities,” however, is a tricky term. Population count and ranking are almost useless as indicators of a community’s capacity to support a symphony orchestra by buying tickets and donating money. We really need to look at the size of the regional economy. Ideally, we also should account somehow for variations in per-capita income, cost of living and other characteristics.
Attempting to quantify San Antonio’s relative level of effort, I devised a formula that ranks orchestras according to the proportion of the local economy that goes to pay for each orchestra’s expenses. I wanted to know: Objectively, is San Antonio an underachiever, an average achiever or an overachiever in its support for the San Antonio Symphony.
Spoiler alert: We’re an underachiever.
My methodology is fully explained on a separate page. The short version is this: In 2015 (the most recent year for which orchestras’ tax returns are available from Charity Navigator), metro San Antonio’s gross domestic product (GDP) was $112.2 billion. I looked at the tax returns covering the 2015-16 seasons of the orchestras in metros with GDP ranging from about half the size of San Antonio’s to about 15 percent larger. I omitted some that presented comparability problems. For each of the remaining 21 orchestras, I divided either its expenses or its revenues (whichever was lower, for reasons I explain in the methodology) by its metro GDP. I found that, on average, the fully supported operating costs of these orchestras accounted for a sliver less than one out of every $10,000 of metro GDP.
In other words, to be an average achiever, financially, an orchestra in San Antonio’s league would have a balanced budget equal to its metro GDP with the last four digits lopped off. If metro GDP is $100 billion, an orchestra with a $10 million balanced budget would be an average achiever.
I will modestly call the result of this calculation the Greenberg Index, or simply G. Arrange these numbers from high to low and you have the G scale. Sharp, huh?
If G is close to 1, the orchestra is getting about average support. If G is significantly greater than 1, the orchestra is getting above-average support; if significantly less than 1, below average support.
The results of these calculations were not exactly intuitive. Of the four orchestras with the highest G values, three were the bottom-dwellers in GDP – Buffalo and Rochester, N.Y., and Grand Rapids, Mich. All three metros had half or less of San Antonio’s GDP, and all three orchestras had larger supported expenses than the San Antonio Symphony. At the other end, the orchestra with the lowest G value, the Austin Symphony, was in the city with the largest GDP.
The San Antonio Symphony came in at G=0.71, with revenues more than enough to cover nearly $8 million in expenses. But 2015-16 was an unusually good year for this orchestra. The previous season, revenues of just under $7 million fell more than $1 million short of meeting expenses. The G value was only 0.63 that year. This season and next appear likely to fall lower still.
Some important lessons can be found in the tax returns of these orchestras and, in a few cases, their separate endowment funds.
First lesson: Endowments matter. The Louisville Orchestra would have experienced a smallish deficit, but income of $366,400 from its $9 million endowment fund pushed it into the black. The previous season, endowment income was just icing, contributing to a $1.3 million surplus. The Alabama Symphony saw a deficit of $323,000, but the deficit would have been far larger without $687,000 in income from its $13 million endowment.
Deficits are not necessarily destiny. The Jacksonville Symphony, for example, closed its 2014-15 season with a $2.1 million deficit. The following season ended with a $4.4 million surplus, even though expenses were about the same. Earned income declined slightly, but contributions soared by $6.4 million to $10.8 million, including almost $1 million from its endowment – in a metro whose GDP was far smaller than San Antonio’s. With the right executive and board leadership, it can be done.
Second lesson: History matters. Consider two orchestras that I’ve excluded from this analysis for comparability reasons. In 2015, the metro economies of Cincinnati and Cleveland were only a little larger than San Antonio’s, but their orchestras’ budgets dwarfed the budget of the San Antonio Symphony. The Cleveland Orchestra had revenues of $49 million; the Cincinnati Symphony had revenues of $33.5 million. Those orchestras were established in 1918 and 1895, respectively. They own their concert halls, and they benefit from enormous investment portfolios of more than $160 million each. They began building their assets and their philanthropic traditions during the peak decades of their cities’ industrial power.
The San Antonio Symphony, founded in 1939 in a city that was not then a major center of industrial capitalism, does not have that kind of financial foundation – doesn’t come close. But our regional economy is now large enough to enable the symphony to start building a foundation that can support an orchestra of significant means for the long term. The present is the future’s history.
Third lesson: Will matters. Consider Grand Rapids, Mich. With a GDP of only $53.9 billion, less than half of San Antonio’s, Grand Rapids supported its orchestra to the tune of $9.8 million in 2015. That’s 23 percent more than the San Antonio Symphony’s supported costs in the same year. And Grand Rapids is not a super-rich enclave. Its per-capita personal income of $43,371 was just 4.3 percent higher than San Antonio’s. Jacksonville, with a little more than half of San Antonio’s GDP and only 1.6 percent higher per capita personal income, managed to support its orchestra’s $9.7 million in expenses. A community’s economic strength assuredlymakes a difference, but probably less of a difference than a community’s will.
So what’s the takeaway for San Antonio? How large a budget should the San Antonio Symphony be able to sustain?
The answer depends partly on what what we want the San Antonio Symphony to be able to do – how many concerts, how many kinds of performances, how large its audience, how wide its geographic reach, how connected not only with the standard classical repertoire but also with the diversity of our culture and with contemporary ideas and technology. It costs more to do more. When you consider that the San Antonio Symphony also competes with many other orchestras for musicians, it costs more just to stand still.
The answer also depends in part on how our civic, business and political leaders want our community to be perceived by the outside world and by locals – as sort of average, as an overachiever, or as an underachiever.
Let’s define the average range as a G value between 0.75 and 1.25. An average level of earned and contributed revenue is an honorable, reasonable and achievable aspiration for the San Antonio Symphony. Given the rate of San Antonio’s economic growth in recent years, GDP in 2019 seems likely to reach about $125 billion (unless there’s a recession, of course). To get to the bottom rung of the average range, the San Antonio Symphony would need to sell enough tickets and raise enough in contributions and endowment income to support a $9.4 million budget for the 2019-20 season. Hard? Maybe. Out of reach? No.
That strange sound you hear right now is the murmur of local business leaders poor-mouthing San Antonio. There’s no way a city of such limited means can support such an enormously huge symphony budget, they are all saying. Sorry, nay-syers and head-shakers, but I designed my methodology to pull the rug out from under you. I skewed the range of San Antonio’s league downward so that most of the cities in San Antonio’s league, as I have defined it for this analysis, have much less economic capacity than San Antonio. My analysis might be in error, but if so it errs on the conservative side.
Now that we’ve all agreed the San Antonio Symphony should, can and will have a balanced budget of $9.4 million for the 2019-20 season – you did agree to that, didn’t you? – let’s look farther ahead. Let’s aim a little higher in the average range – say, a G value of 0.8 in the 2024-25 season. Assuming San Antonio’s GDP hits about $150 billion in 2024, that would require a balanced budget of $12 million.
Impossible, you say? Maybe, if the symphony’s endowment doesn’t rise appreciably above its current puny level of about $3 million. But if the symphony’s new board chair, Kathleen Weir Vale, succeeds in her stunningly ambitious goal to raise $50 million in endowment funds over three years, the orchestra would be well positioned for long-term growth.
What might the symphony, its musicians, its concert-goers and the city as a whole get for a roomier budget? I’ll propose some answers in a later article
Mike Greenberg
Money and music
The SA Symphony should aspire to be average
incident light
The chart on the left ranks mid-sized metros according to the portion of each local economy that was dedicated to paying for its orchestra in 2015. The chart on the right shows the gross domestic product for each of those metro areas.
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