# Orchestras Spend More Than They Earn



## dukas

The Andrew W. Mellon Foundation may have just commissioned the most unnecessary of all studies. "The Economic Environment of American Symphony Orchestras," was released this week with the shocking claim that: "Most major symphony orchestras in the United States regularly spend more money than they take in."

Duh!

"The industry should realize that there is an inherent long-term economic challenge," said study author Robert Flanagan, professor of labor economics at the Stanford Graduate School of Business, quoted from the press release.

Really?!

Why on Earth did we need such a study? It ranks up there with the IRS spending millions to tell us we will be getting a rebate check. Perhaps some in the general public were not aware of it, but this has been common knowledge for those in the industry for decades. It's common sense to anyone who knows anything about nonprofits -- this is why they raise money each year.

It gets better. I love this quote:

"Some orchestra managers told Flanagan they disagreed with that conclusion, but other symphony officials he interviewed were hardly shocked."

But this is just plain aggravating:

"It's not clear that [orchestras are] willing to be as tough minded about costs as directors in the private sector."

Of course not! Orchestras aren't selling widgets, they are nonprofits presenting an artform!!! The "product" is radically different, so the model must be, too.

And while the study provides some hard data -- "Flanagan's study includes data from every orchestra that ranked as one of the 50 largest U.S. symphonies for at least two years during the 1987-88 through 2003-04 concert seasons, a total of 63 orchestras" -- it doesn't research enough orchestras to draw these broad conclusions. There are many more than 63 orchestras in America.

And this is highly problematic:

"In many U.S. industries, companies have been able to increase salaries gradually because technology has made workers more productive. Flanagan said symphonies have much slower productivity gains--technology isn't about to turn a string quartet into a string duo--but musicians still expect bigger paychecks. The salaries of symphony musicians increased more rapidly than the pay of most other groups of workers in the late 20th century."

What bogusness is this? Again, it is apples and oranges to compare nonprofits to the private sector, and small organizations to large companies. And why is there a need to only target musicians, and musician unions? What about the increase of fees and salaries for guest soloists, conductors and executives?!

Other conclusions are so obvious they are laughable:

"Any stumbles in the economy only exacerbate the problem. A slumping economy reduces attendance as well as philanthropic support, but has little moderating effect on performance expenses."

Or this:

"One common thread he found is that the orchestras' marketing expenses paid diminishing returns: 'The last $100 you spend yields far less than the first $100 that you spend.' What the optimal threshold would be varies widely from orchestra to orchestra, but Flanagan said many could save money by scrutinizing marketing expenses."

And Flanagan's own conclusion says it all:

"Although Flanagan believes a best-practices effort would help many symphonies improve their financial status, he stressed that the financial circumstances vary greatly from city to city and orchestra to orchestra. 'You can't go through this analysis and conclude that there's a single solution a single smoking gun,' he said. 'I think the report documents the futility of single solutions.'"

Yes, I think the report does indeed document futility. With all the other aspects of this field in need of research, it is unfortunate that money was spent on this investigation of issues we all already know to be true! It's pretty common sense to posit that orchestras spend more than they take in, since they are, after all, called nonprofits! Mellon's money could have been so much better spent on researching the new methods proposed for increasing development, which fills the gap in the tradition of patronage that goes back hundreds of years, or just giving the money to a few orchestras. 
I didn't read the whole report, but, again, took from the summation press release. If you want to waste more of your time, you can read it here: "The Economic Environment of American Symphony Orchestras," Report to Andrew W. Mellon Foundation, March 2008


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## Erik Helm

What Symphonies need is a paradigm shift. They need to be proactive in an increasingly competitive environment and use best practices based on fundamental six sigma support principles to re-engineer their focus line and .....

Mr. Businessman tries to understand classical music.

Best Practices...... What a joke. business speak for following whatever the latest formalized dogma proscribes.

But hey! At least we have a study now.


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## JBI

He just likes to think classical orchestras are the same as pop "singers" and their audio tracks played in the back-ground. It is less of a business, since they are not selling the same type of performance. OF course they won't break even hiring a couple dancers for a mass concert with 30,000 people is a lot different than an orchestra playing for a couple thousand tops, with 30 odd people on the stage, plus maestro, plus soloist (and these are all major symphonies, meaning bringing the well-knowns in is essential and expected).


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