Tuesday, July 27, 2010

Mutilating the majors: Can Portland's arts groups survive a thousand cuts?

By Barry Johnson

When Michael Kaiser spoke to a large Gerding Theater audience of arts administrators in May, his message was simple. Even though they face the worst economy in decades, arts organizations can't cut themselves to health.

“Revenue comes from really strong, exciting work," he said (I'm quoting from Lisa Radon's Ultra PDX here). "People get excited about the work, and your family gets bigger. It becomes a self-reinforcing cycle. On the other hand, if you cut programming as a first response, do less work, less marketing, your family starts to look elsewhere where something exciting is going on. You get sicker and sicker.” An analog might be the fox caught in the trap. To survive, he gnaws off his own leg, but in doing so, he endangers his survival going forward, post-trap.

If Kaiser is right, then the premise of David Stabler's article in The Oregonian on Sunday is all wrong, because Stabler equated success with the severe budget cutting the city's largest performing arts groups did this year to stave off large deficits. No budget deficit, no problem.

Although I'm about to argue that Kaiser is, in fact, right, that isn't to disparage my old colleague, Mr. Stabler. No one at the paper has kept us better informed about the ongoing state of the major performing arts institutions (Portland Center Stage, Oregon Symphony, Portland Opera, Oregon Ballet Theatre) than he has during the past decade. I just think he's making a mistake by confusing the absence of red ink for organizational health.

What did the budget-cutting frenzy at the majors really mean?
  • They had the discipline to plan and execute serious cuts to their own salaries and benefits and other expenses.
  • They didn't have the cash reserves, endowments or lines of credit sufficient to cover their deficits, or, if they did, they didn't think their future prospects were stable enough to dip into that money now.
  • Their ability to project themselves into the center of the city's cultural life was compromised along with the potential to increase their audiences and donor base.
In short, they have gnawed off a leg. Those furloughs, staff reductions, salary cuts and hits to their  production or marketing budgets will hurt them in the long run.  Let me just say, though, that for some of them and maybe all, chewing away a limb really was the prudent course. But the central question at this point isn't whether or not they avoided deficits this year. (Of course they did; for some of them, failure was not an option.) The question is, what are their plans for the future and how likely are those to succeed.

The other question, of course, is what can we do to help. The arts aren't a spectator sport. If we believe that a vital, locally produced cultural life is important to us, then we can't sit by and watch a three-legged fox limp around. There are other traps in the woods, and the survival rate for two-legged foxes is zero.

Kaiser was helpful and characteristically provocative about the future.  He was big about leadership (and speaking with one voice as an organization), big on artistic ambition and big on planning to achieve it over much longer time-frames than arts organizations usually consider. He had good advice about boards and their roles, wanted arts groups to focus on big donors and he wanted the blame-game about the past to stop. You didn't have to agree with each of his 10 points, each carefully articulated, to accept the notion that a positive, dynamic, ambitious, well-marketed arts organization has a better chance to succeed in this (or any) economy than the alternatives.

How closely are our arts organizations following Kaiser's advice? I don't know -- a lot of this stuff is behind the scenes and hard for an outsider to ferret out. I do know that even if they wanted to, it's difficult to get buy-in from everyone involved -- donors, subscribers/members, staff, sponsors, board members. Maybe that's why good leadership was Kaiser's very first point.

Some observations based on Stabler's story:

1. The symphony's ticket income fell $1.1 million and "the number of paying customers per performance dropped 11.9 percent." This is exactly what Kaiser predicted. The symphony pays a full-time wage to more local artists (in its case, musicians) than any other arts group in town, and so it faces special problems when it has to cut.

2. The Portland Opera cut its budget 15 percent, and substituted "The Barber of Seville," an easier sell, for Berlioz's "Beatrice et Benedict." Under fire, it's harder for arts groups to stick by their artistic guns, though the opera's programming is still far more adventurous these days than it once was.

3. Portland Center Stage almost set subscription records AND cut its budget, which Kaiser would not have predicted, though adding an inexpensive-to-produce "The Santaland Diaries" that was also a big hit helped a lot.

4. I don't know how White Bird had a 2 percent drop in ticket income and a 34 percent drop in donations and still only lost $6,000 after increasing its budget 6.4 percent.  Some very large foundation grants must have covered the balance?

5. Going into the year, Oregon Ballet Theatre, which I covered extensively last year when it teetered on the brink of bankruptcy, cut its budget most severely -- around 28 percent -- and managed a large surplus of $400,000 on a budget of $5.1 million. New executive director Diane Syrcle still has some tough decisions to face going forward.

The deep cutting that the major performing arts groups did is evidence of how fragile they are. They don't have big stores of money to cushion economic downturns or to invest in major production or marketing initiatives. For the most part, they scrape by season to season. Small waves can endanger them. And if we are in the middle of a real economic "reset" as some have suggested, their situation is going to take the most creative and disciplined kind of thought, the kind that leads to major restructuring. But again, this isn't something we, their public, should observe silently from the sidelines. Their work is too important for them to be left to their own devices, teeth gleaming in the night.

Kaiser is the director of the Kennedy Center in Washington, D.C., and has a reputation as one of the preeminent turn-around artists the arts world, having successfully guided several large dance groups back to health.


jerryketel said...


I'm glad you brought up the Micheal Kaiser presentation. There was much positive buzz about what he had to say but I don't see any results. Specifically in the areas of bold leadership and marketing. Arts groups here have sunk into safe programming and rote marketing plans. This is not a way to build an audience that is younger than 65.

This all leads to a very tough question: Are there too many arts organizations in Portland? The symphony barely made it this year. What would have happened if they hadn't? Perhaps the big 4 needs to be whittled down to the big three. There would be larger slices of the same pie for both audiences and donations.

One last thing: does White Bird really count? Everyone knows it is self funded. And in many ways they are more of a production company than a performing arts group.


Jerry Ketel

Barry Johnson said...

Thanks for the comment, Jerry. I agree about Kaiser's visit. I've talked to lots of arts administrators in town who wish that both their organizations and the arts community at large had grappled with what he had to say.

On the tough question: If Portland and Oregon supported the arts at even the national average -- government, corporate, foundation support -- then that question wouldn't arise, at least not now.

For several reasons, White Bird is sui generis, I agree, but The Oregonian included it in the survey.

MightyToyCannon said...

Michael Kaiser's talk was certainly provocative (in a good way), but is it realistic to expect major arts institutions to turn to a new paradigm in programming and marketing just a few months after an inspiring two-hour speech? Give it a little time. In the meantime, some of the institutions cited in Stabler's article may not have had much choice but to slash costs in the short-term. There is a little matter of cash flow and payroll to be met. Once the bleeding is stanched, perhaps they will begin to get on track with bold programming. Let's hope so.

My quibble with including White Bird as the "fifth major" is that they aren't that, at least as measured by budget size. At $3.4m in 2008 (from IRS tax reports), ART's revenue was more than twice White Birds's ($1.3m)in that year. The outfit with which I'm associated (Oregon Children's Theatre) generated $1.7m in revenue in 2008, and is pushing $2m now. (By the way, we also reach over 100,000 people in any given year). Hint: If you haven't already, sign up for a free account with guidestar.com and you too can have access to tax return information from both nonprofits and foundations.

I agree with Jerry's comment about White Bird being a different kind of beast because it is an arts presenter, not a producer. However, I object to his statement that "everyone knows it is self funded." White Bird founders have generously built an institution through a lot of hard work and a sincere commitment to the arts community. They give the organization a ton of in-kind support by not collecting salaries and contributing office space. But Jerry's statement implies that White Bird doesn't face real financial challenges and doesn't really need community contributions to survive because the founders will simply fill the gap. Not true.

Barry Johnson said...

Thanks for the comments, MTC.

No, I don't think it's realistic to expect large organizations to change in a couple of months, along Kaiser's lines or other ones. But I am impressed with his analysis enough to think that something does have to happen. I didn't hear much conversation after Kaiser's visit, pro or con, let alone applying his ideas directly to our arts organizations, which is why I brought him up.

I think the arts organizations DID have to cut their budgets, for the reasons cited. But I don't think that constitutes "success," as the article seemed to suggest. We shouldn't be lulled into thinking that the majors are not still in a crisis situation. They need our help.

I appreciate your comments about White Bird and the dedication of Walter Jaffe and Paul King to the cause of bringing dance to Portland -- and becoming a catalyst for joint activities by Portland arts groups. They've earned the support they've received -- and more.

Jeff @ RACC said...

@jerryketel: While there are interesting conversations to be had about the extent to which arts supply outstrips arts demand, who would be the whittler here if not the market itself? My take is, the organizations that prove themselves to be relevant and sustainable will survive or even thrive, and those that do not will not. No organized whittling required, certainly not for the sake of making the rest of the arts community stronger.

But Barry, I too am glad you bring up Michael Kaiser. Kaiser warns about the downward spirals that too often come with budget cuts: a diminished product attracts fewer audiences and donors, revenue goes down, forcing more cuts, and so on to irrelevance and insolvency. But Kaiser himself has cut a budget or two in his life, and “squeezes every nickel until the buffalo poops,” he’s just very smart about not cutting the artistic product upon which all else depends. It’s an important distinction.

Arts organizations are small businesses, and they are not immune to the constraints of their markets during such an extraordinary recession – less consumer spending, reduced public funding, fewer philanthropic resources to invest. I am grateful for the arts organizations that can react to these conditions as needed without diminishing their product, while reminding us of the exciting future they have in store. Smart, subtle cuts behind the scenes and clever stop-gaps such as smaller productions and mass-appeal titles are acceptable on a temporary basis. Call me pragmatic but as long as long as I’m still inspired by a healthy portion of your programming, and as long as you tell me what you’re planning to do in the next few years to stay exciting and relevant, I’m OK with that.

But we really do have to start getting more people excited, and I’m still waiting to hear some of the fantastic big ideas that arts organizations are dreaming about! And, as we look toward the future, it’s important to ponder the converse of Kaiser’s argument, which is, I believe, that increased investments should be focused on creating more exciting work that will build audiences and donors. In the past, that hasn’t always been the case: coming out of our most recent period of economic growth of the mid 2000s, several arts organizations grew their budgets yet failed to build their audiences and donors. Not sustainable. Some groups funded what growth they could muster by raising their ticket prices faster than inflation, contributing to community disenfranchisement. Some grew to unsustainable proportions and now must right-size their organizations to give them another day and a new baseline from which to build upon.

Public participation in arts and culture is changing dramatically, with continuing declines in attendance at traditional arts events even while personal artistic creation and nontraditional arts activity is on the rise. For the most part, I believe that our arts organizations maintained a quality artistic product last year. So I am less concerned about what measures each arts organization took to achieve its own balanced budget, and more interested in how our arts community is responding to – or ideally, informing – these trends in participation. It is definitely incumbent upon our artists and arts organizations to show us what exciting, engaging and relevant work lies ahead, and being so moved the rest of us should support that vision with all of our might.

Barry Johnson said...

Jeff, I think that's an excellent description of what happened. In the good times, we have to invest in building audiences, because those audiences will help us through the bad times. Oh, and because that's what it's about anyway -- changing and enriching the lives of as many people as possible...

tpancio said...

Barry (and Jerry),

Just because the conversation about how to apply Michael Kaiser's "big ideas" and "long term planning" strategies to arts organizations hasn't happened in the public eye yet does not mean that it was not discussed extensively at the staff and leadership and board levels of arts organizations throughout Portland.

Big OMG ideas take time to gestate if they are to be done right. But believe me when I tell you that every arts administrator I spoke to after Kaiser's speech went right back to their constituent organization and looked long and hard about how their current strategies (and future plans) jibed with the most salient points of that discussion.

Barry Johnson said...

Tpancio, I think Kaiser's ideas were interesting enough to sustain debate and discussion of the best sort, the actionable sort, so I'm glad to hear that it was going on, even though I wasn't hearing it! I'd also like to insert here that enough creative talent exists in the arts organizations and their communities to generate loads of great ideas, better even than Kaiser's. I continue to worry that time is short...

jerryketel said...

I could spend a good amount of time clarifying my position but instead I suggest that, Barry, you host an Arts Dispatch Salon on the State of the Arts in Portland. I'll bet that Tom Manley would be willing to provide the space. Best, JK

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