Given the recent round of doom and gloom being pandered throughout the business over large cuts in classical music coverage among traditional media outlets, I thought it would be useful to imagine a brighter future…
If you spend any length of time in this business, you eventually run into the Euro vs. US debate, which essentially breaks down into discussion over which system is better for the arts: a state or privately funded model. Nevertheless, it is one thing to have an intellectual discussion and another to look at some hard figures.
As such, I took a little time and put together some figures which illustrate what the US orchestra business would look like if Federal Government subsidies were more akin to European counterparts by accounting for 35% of a US ensemble’s annual revenue.
To begin with, and since I have all of this data on hand, I tabulated expenditure data from the 2004-2005 season for 76 ICSOM, IGSOBM, and ROPA symphonic orchestras. Next, I correlated this against the breakdown of revenue as presented by the ASOL. Although it is highly unlikely the League’s data associates with the 76 ensembles I used for the expenditure figures (the ASOL data doesn’t indicate which orchestras they used to compile the data) any differences should be relatively negligible for this exercise.
Setting The Scenario
The following chart illustrates how orchestra revenue broke down during the 2004-2005 season for our 76professional symphonic orchestras. Notice that government support accounts for 4% of overall revenue:
Naturally, the government support listed here is the combined Federal, State, and Local figures but since it is so small we’ll just call it “Federal Support” for the sake of simplicity. Next, I imagined how those figures would look if the Federal Government subsidized 35% of orchestra budgets with only one condition: grantees need to adopt an “art for all” policy and reduce existing ticket prices by 50% along with programming one free public concert for every 16 paid concert events.
As such, I reconfigured those revenue categories based on those parameters. In doing so, it made sense that ticket revenue would sharply decline, I imagine it would be at least 50% lower. Additionally, it is fair to assume that contributed income would decrease as some donors are likely to adopt an “if the government is paying for it, why should I?” attitude. Nevertheless, even with that drop in contributed income, donors wouldn’t entirely disappear thanks to good old philanthropic spirit bolstered by tax deductions. The remaining categories would continue mostly unchanged.
Consequently, the following graph illustrates how revenue would look if orchestras received 35%, or $371,852,915, of their annual revenue from direct Federal support:
One important component to keep in mind with this exercise is that overall orchestral expenditures would remain unchanged. I don’t think sizable government subsidies would, or even should, be accompanied by equivalent increases in spending. Instead, the Federal support would subsidize lost revenue from lower ticket prices and lower capital level giving.
All in all, it is a very straight-forward model, one which would allow orchestras to continue operating very much the way the do now albeit without the attendance crisis which would be marginalized by substantially lower ticket prices (thereby relieving other stressors such as decreased value among the cultural consciousness, artistic malaise, etc.).
How Does This Stack Up To Existing Federal Spending?
Although $371 million seems like a great deal of money, in the grand scheme of the US budget, it isn’t. In order to appreciate just how small $371 million is compared to other categories of Federal spending, I dove head first into US Federal Budget via spreadsheets from the U.S. Government Printing Office.
For example, I’ll start small; the chart below illustrates the $371 million subsidy compared to four other relatively obscure Federal expenses from 2005:
Frankly, I’d be surprised if more than 20% of taxpayers under the age 25 even know what the former Soviet Union is which is nothing to say about any of their independent states (“the Iron What? the What Curtain?”). Furthermore, the orchestra subsidy doesn’t even amount to more than 1/3 of the administrative costs for Farm Income Stabilization operations and who knew the US Patent and Trademark offices had such high personnel costs. Perhaps Big Recording’s efforts to retain their stranglehold on digital media are keeping them flush with work.
Now let’s move up a level in the Federal budget, the chart below illustrates the $371 million subsidy compared to four more Federal expenses from 2005:
Notice that the bar for our $371 million subsidy doesn’t even budge compared to the size and scale of the other categories and amounts for only 1.56 to 11 percent of the other spending. One of the key words you should notice for most of these categories is “discretionary”, meaning the government isn’t required to spend money on any of these items (as they are for Social Security, Parks and Wildlife, etc.).
I particularly like the generic listing for discretionary spending for Legislative branch programs. The budget spreadsheet didn’t even bother to break down that category into subcategories (although they routinely did exactly that for other categories).
Finally, we reach a level in the Federal budget where our $371 million subsidy is barely a fraction of a percentage. The chart below illustrates the $371 million subsidy compared to the largest single Federal expense as well as the entire Federal budget from 2005:
In this final comparison, the $371 million subsidy looks more like a hole in the ground than a comparative category when measured up to discretionary defense spending and the overall Federal budget.
Conclusions
Granted, the overall 2005 budget for the National Endowment for the Arts was $121 million or approximately $250 million less than the orchestra subsidies calculated for this fun exercise. And even though most inside this business would expect to see hell freeze over (or perhaps just the halls of the Internal Revenue Service) before the US Government would subsidize 35% of symphonic orchestra budgets all I have to offer is this: remember, in the end, it is the Federal Government and stranger things have happened.
In the end, all it takes to find Federal funding like this is knowing the right people who are in the right place at the right time. Beyond that, it is all academic.
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That’s great! Let’s hope for strange things to happen then.
Just one question: How would concert income go down with at least 50% if ticket prices are cut with 50%? Shouldn’t we expect an increase in number of tickets sold then?
(I am assuming the programming of 1 free concert for every 16 paid concerts would be an addition, not a replacement.)
This is interesting stuff. A couple of thoughts/questions–in the European model is the 35% figure guaranteed for any orchestra, or is it the result of the division of a fixed pie among a certain number of orchestras? And in either case, accounting for the differences in the number of orchestras per capita is important for gauging the accuracy of the comparison. If, for instance, Europe has a lot more orchestras per capita than we do, that means Eurpopean governments are spending even more per capita than we would be under your model; conversely, if Europe has fewer orchestras per capita then the model you propose would actually put US spending higher than European spending.
And how do the budgets of the European orchestras compare to ours? Presumably some of their costs are lower–fundraising budgets would especially be smaller. But what about other expenses? Are their staffs smaller or larger, better or worse paid? Are the musicians better or worse paid? And how many concerts per year do they play? If you break the annual budgets out by concert, who’s paying more per concert?
I don’t mean to criticise your analysis; most of the stuff I’m wondering about would be supplemental, or minor adjustments. And even if due to the details I’m asking about your figure is 50% too small we’re still only talking about a fraction of the total US budget.
Unfortunately, the political will to implement dramatic increases in federal arts funding is pretty lacking. There was a study done a few years ago (at Princeton, I think) which determined that American support for government arts funding is broad but shallow, whereas the opposition is narrow but deep. This means that the opposition is able to win most of the actual budget fights becuase they’re willing to fight hard and the majority support doesn’t care enough to really fight back.
Interesting stuff, Drew. Any idea how this subsidy would stack up against the total budget for all the military bands? How about the budget for the NEA?
A couple of other factors to weigh:
1. I believe ticket revenue would drop by less than 50% because the lower ticket price would enable more people to attend. Obviously, that’s a good thing!
2. A much larger factor is that there is no way we could get the Feds to subsidize orchestras and not other arts organizations, nor would we want to. Keep in mind that the NEA’s appropriation of $121 million is for ALL art forms. I don’t know what level of gov’t support European theaters, museums, dance companies, etc. receive, but I would guess that the combined total would mean that we’d need to do more than just scrape together some pennies from miscellaneous gov’t pockets. Since the gov’t is currently deficit spending and big chunks like Social Security and Medicare are on the brink of collapse, not to mention the sorry state of education, adding $1 billion to the Federal annual budget to subsidize all the arts would probably require a new tax structure, which would then impact charitable donations due to most people having less discretionary income. (Sorry for the run-on sentence!)
Interesting analysis. Just a couple comments:
– OF COURSE $371 million is peanuts in the federal budget; everyone can stipulate to that without having to resort to pie charts.
– I don’t believe you mentioned the point I often heard made, which is that the tax-deductibility of private donations (which AFAIK are not deductible Europe) is in fact a federal subsidy. Your chart indicates that about $414 million was donated in 2005. Figuring these are mostly upper-income people (so assume marginal tax rate of about 25%), that’s a $100 million subsidy right there. Still short of the $371 million, but a start.
– I lived in Montreal for two years (2001-2003) and followed the Montreal Symphony avidly. One thing I noticed was that the OSM had a very underdeveloped fundraising operation – most likely because the orchestra got a significant amount of financial support from the Quebec government. The downside to this was that it never really felt to me that the orchestra had developed a strong base of community support; many people really could take it or leave it – just one more entertainment event among many. Much as private fundraising is a major nuisance for US arts groups, it at least forces the group to build a constituency and a base of political and financial support to ensure it’s continued existence.
– One commenter asked about budgets for military bands, a question that usually makes me wince. More than one critic has in the past compared the NEA budget with what the US government spends on military bands (often with the implication that that this represents a warped sense of priorities). The Marine Band , IMHO, is not only the best wind ensemble in the world, but perhaps one of the best musical groups of any sort. And with a range of activities (free concerts, tours, recordings, some degree of self-governance, commitment to new music, etc.) that probably make it more relevant than nearly orchestra. Even on purely musical terms (never mind recruiting or morale), well worth every penny Uncle Sam pays to keep it going, I’d say.
I’ve already posted this information elsewhere, so forgive me, please, for repeating myself, but I do think it is information that needs to be kept in mind.
During WWII, when I was a Hospital Corpsman at the US Naval Hospital in San Diego, treating patients from the war in the Pacific, the highest casualty rates were among hospital corpsmen and bandmen. Surprise, huh!
During battles, the corpsmen worked on the battlefield treating wounded Marines and the bandsmen acted as stretcher bearers carrying the wounded to treatment centers.
Excellent article on an important topic but I prefer to be even more idealistic – our goal should be that classical music is loved and supported by a vast audience of all ages – not propped up by government largess. There was in interesting article in the Boston Globe about orchestras using market forces (specifically the internet)to engage more people. A reference is here http://deproblog.blogspot.com/2007/06/classical-music-and-long-tail.html