Not that many (any?) people are really using this forum yet, but I thought I would start a new thread anyway which is motivated by the failure of the LVCO (Lehigh Valley Chamber Orchestra).  Many musicians in the LVCO consider this a disaster and it has caused me to think more about why such a thing happens.  

It is well known that orchestras throughout the country have a hard time making enough money to survive.  The expenses are high and the majority of the public do not attend concerts.  

One might ask "Is there a need for 3 orchestras in an area with 800,000 people?"  I don't know the answer to this question but it is evident in the case of the LVCO that there is not enough interest in the vast majority of the 800,000 people to keep 3 orchestras alive.

Not having a degree in business, I can still understand the most basic of principles, for an organization to survive they must be bringing in as much as they are spending.  Otherwise you eventually have to give up when your debt becomes too great.  Simple business 101.

It's my understanding that between 20% and 30% of the revenue of an orchestra comes from ticket sales.  

This being the case, most of the money is from donations of wealthy people and organizations who believe in the value of classical music.

I am assuming that is a fact of life that requires good fund raising abilities and responsible management of expenses.  

So I wonder why so much value is placed on big name soloists.  The ASO is constantly on the search for soloists we hire for very large sums of money.  But what is the pay-off of such a goal?  Even if the theory is correct that we bring in more people, how does that affect the bottom line?  

Let's say we increase our ticket sales by 20% because a recognized soloist is playing.  (I question how many people even recognize the big names since classical music is generally not listened to and certainly the people playing the classical music would be less known than the music)

If however we do increase ticket sales by 20%, this means that now 24% of the revenue is from ticket sales if my estimate of 20% is correct.  (36% if an initial estimate of 30% for ticket revenue is used)

Hardly much of an improvement in the bottom line.

In my experience an increase of 20% in ticket sales is not common (to put it mildly).

Besides increasing revenue, on the other hand is the reduction of expenses.  Where do you do that?  

I thought the consolidation of management expenses was a good idea for the 3 orchestras however probably not a huge savings.  

You really can't reduce the musicians' pay much.  My income from playing in the symphony is low by any standards.  (Annually less than $5000.00)  If the statement that the majority of the expense comes from the musicians' pay if true, is only because there are so many musicians.  This is the nature of an orchestra of course.  It is the musicians and conductor that make an orchestra.

It seems to me, giving local musicians some of the spotlight is a good way to save money and also has the nice side effect of inspiring local pride in the orchestra.  I would want to be paid more for playing a concerto however I would not require the huge sums that our big name soloists demand.

There is a close analogy to the revenue of an orchestra and the noise of an amplifier.  In an amplifier, the first stage needs to be the most noise-free.  Reducing the noise in the last stage of an amplifier helps very little in the same way that increasing ticket sales changes the bottom line very little.  Reducing the noise in the first stage is always the best approach.  

Similarly reducing the cost of _______ (fill in the blank) improves the bottom line the most.  What goes in that blank space?

There are other motivations to hire big name soloists such as pride.  I suggest that this kind of motivation is costly to the organization and misguided.  Not that we shouldn't have pride in the orchestra, but pride in the orchestra should be related more to the quality of performance than the ability to draw in soloists.

So I am hoping some people with interest in this subject will contribute eventually and I can get a better insight into this dilemma.  

Regards,
Michael Toth

I think that the insistance upon using major soloists was certainly a factor in the death of the LVCO and I see your reasoning about that, Michael.

Here's what Norman Lebrecht wrote about the cost of big-name soloists in his 1997 book, Who Killed Classical Music?


"In Hollywood, a movie actor who makes eighteen million dollars for a six-week film will earn back the money in two months at the box-office.  When Elton John receives a forty-one-million-dollar advance on his next four albums, Warner/Chappell who signed the cheque expects to recoup full value, knowing that the pop singer/writer clears twenty-seven million dollars a year in royalties.  A soccer club that buys a striker for five million pounds will regain it in gate money and sponsorships, especially if the new recruit helps win a trophy.

Classical artists are, by comparison, an uneconomic embarrassment.  While Caruso and Heifetz justified their high fees by leaving some profit in the till, today's stars are judged by how much of a loss they are going to rack up for the companies that engage them.  Unless they sing in a ballpark and sell ten million discs, the big modern names are massive loss-leaders.

Every opera, concert and major recording loses pots of money, largely because the  artists who get top billing are grotesquely overpaid and their agents are in on the take.  Caruso and Heiftetz also had agents, but stars in those days earned every cent of their hire and no one got conned.  Today, with music on life support of subsidy, charity and sponsorship, it seems slightly offensive for stars and their agents to milk the donors so remorselessly.

There is, of course, a simple route for live performance to stand again on its own two feet.  If star fees were halved, other costs would fall commensurately, tickets could be made cheaper and audiences would increase.  This is not an agenda that the music business wishes to contemplate.  Stars and their managers have got used to living off the fat of the public purse."

How this relates to the Allentown Symphony Orchestra is important.

It is my understanding that the ASO is also having serious financial difficulty and the prospects of the ASO could be dangerously close to that of the LVCO.

I sincerely hope that the people managing the ASO are not digging it into the same deep hole that the people managing the LVCO did.

It would be a real shame if the Lehigh Valley could not maintain a full orchestra and unfortunately, like the companies which are suffering and continue to spend millions of dollars on CEO bonuses and eventually fail, the people who really suffer are the people who work there.

-Michael

During the course of the ASO's contract negotiation, the ASO's financial records were evaluated by an accountant hired by the AFM. Ron Bauers evaluates orchestra finances in orchestras all over the country. His analysis was that the ASO is in decent shape and has no major financial concerns. Of course one never knows what the management will do in the future.

Carol Yale

This information about the ASO being in decent shape financially is nice to hear but very surprising!  It contradicts all the messages I am getting from people very close to the situation there.   Is there a way to see this report?

Glad to hear some good news for a change though.   If the report from Ron Bauers is correct, then this message needs to be understood by the ASO management as well.  Perhaps we can eventually get some of the management to be involved in this discussion as well.

-Michael

Sorry I am joining in the conversation so late. I too have heard that the ASO is concerned about its finances. In fact, that was one of the reasons I was told that we reduced the mileage reimbursement and fixed it in addition to not receiving the raise we all deserve. But as those words were being typed I was thinking back to all negotiations in history and I am sure management has ALWAYS pleaded poverty when it came time to look at giving the musicians a raise.

The problem with orchestras is simple. Fundraising. There simply is not enough people out there to buy tickets or who even want to buy tickets. So in order to support the high cost of running a business, there needs to be wealthy doners. I have had this conversation before with other members and one of the ways in which the city could feel more of an ownership of the ASO is if there was more connection with the musicians and the patrons.
How about this for an idea. We set up a committee of our musicians to act as telemarketers. We would be calling people who have given money in the past. If I identified myself as a musician, there may be an automatic connection with the patron. If they gave money, I would certainly say something like "thanks for your wonderful gift and the next concert you can make, be sure and come up at the end and say hi. I would love to meet you. I am the horn player with the beard." Stuff like that really gets noticed and is really good PR. I remember hearing a story from years ago that the orchestra was in need of money and a musician went door to door and sure enough got the money that management could not.

Anyway, thats my thought for now.

John DeVivo

I think the idea of having musicians communicate to previous donors is a great idea and I'd be happy to spend some time doing that.

I would want to make sure that they were not on a Do-Not-Call list however.  Even if we are exempt from such a restriction, I would want to honor that because the whole reason they put themselves on Do-Not-Call is because they don't want calls!  We are constantly getting calls from one company or another and when I say to them "I'm on a Do-Not-Call list'" they reply "We can still call you because we are not selling anything" (at that point I am thinking Bulls**t)

I still don't want them to call me!  I don't care if they are singing the Star Spangled Banner! Being on the Do-Not-Call list means I don't want soliciting phone calls to interrupt what I am doing.

It's likely that previous donors would be sympathetic to our call rather than a blanket phone book attack.  (I did telemarketing like that once in my college years and I have to say I could not stand it.  I only lasted 3 days)

How about also sending them a couple of free tickets saying "We want you back."?  It's no great hardship for us to hand out some freebies to show appreciation.  Not a bad idea to do that every now and then to our donors anyway I think.

Perhaps as a reward for spending their time on the phone, musicians could get to attend the Annual Ball with their spouse for free.  That would also allow the donors to meet the musicians.  

I know we were given a discount in the past but frankly even spending $75-$100 per head is too steep for my budget.  (I don't remember what the discount was now but it was still too pricey for me)  I'm assuming each plate costs somewhere around $30-$40. I know there are other added costs but let's not quibble about things like that. Again, showing appreciation really makes a big difference in my opinion. I know Steve is sincere when he thanks the orchestra at each concert. Showing real appreciation is another thread which I wouldn't mind starting sometime.

As far as management just "poor-mouthing" it, I don't believe they are.  I seriously believe the ASO is in poor financial condition and my opinion comes from speaking to people who are very close to the pulse of the symphony.

-Michael