Columbus’ Smoking Gun

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If the Columbus Symphony Orchestra (CSO) is destined to die, then patrons and the local community at-large deserve to know why the fatality should be investigated as a homicide. To that end, it is time to go hunting for clues and as it turns out, there’s a smoking gun at the crime scene…

In the CSO’s case, the barrel is still hot from the executive
board’s decision to suspend 2008/09 subscription sales, or more
precisely, the timeline related to that decision making process. The
executive board’s decision to forego subscription renewals in February,
2008 and new subscriptions shortly thereafter was made as early as
January, 2008 even though the organization’s executive director
described the plan as "injurious" to the 2008/09 season. This single
decision delivered two critical blasts into their current financial
strategy, one by way of earned income and the other by way of
negotiations.

Earned Income Injury

According to the CSO’s proposed financial plan, the
organization will need to implement a $9.5 million budget beginning in
the 2008/09 season. The executive board arrived at that number after
concluding that was the revenue figure the organization could sustain
without the participating in the sort of emergency fundraising activity
practiced in recent years. However, according to their proposed
financial plan, the CSO generated $3.040 million in concert and
performance revenue, including subscription sales (renewals and new
sales, pg. 25). If the executive board implements the proposed
financial plan via a new collective bargaining agreement they expect to
generate $3.154 million in concert and performance revenue for the
2008/09 season, an $114,000 increase from the 2005/06 season (pg 27).

This might sound reasonable until you consider that the
executive board’s decision to forego 2008/09 subscription sales makes
their planned concert and performance revenue goals entirely
unrealistic. Even if subscription sales commenced as early as July, the
added costs associated with last minute marketing and additional
advertisement buys would likely dwarf any eleventh-hour sales. The most
likely result is that the CSO would experience a considerable financial
shortfall from expected earned income revenue thereby requiring the
board to engage in emergency fundraising activity in order to support
their $9.5 million budget: precisely the sort of activity they claim is
no longer sustainable.

Negotiation Injury

Since January, 2008 the CSO executive board has been
accusing the musicians of preventing the organization from moving
forward toward fiscal responsibility. The most recent notices from the
executive board claim that financial stability is impossible unless the
musicians acquiesce to a collective bargaining agreement that falls
within the proposed $9.5 million budget.

What is clear at this point is that absent a new labor
agreement with the union that permits the CSO to operate within its
available resources there can be no 2008-2009 season. Unless and until
the CSO regains the confidence of those who stand ready to support it,
there is no prospect of raising an endowment or taking other steps to
strengthen the CSO and increase the compensation of its musicians. – Statement Of The Board And Management Of The Columbus Symphony Orchestra April 28, 2008

The
above point regarding unrealistic earned income goals has already
demonstrated that the concert and performance goals in the proposed
financial plan have been severely compromised as a consequence of
foregoing subscription sales. Consequently, claiming that the musicians
are preventing progress through their refusal to accept the board’s
negotiation proposal is a red herring.

Given the fact that the executive board made the decision to
suspend subscription sales no less than two months before negotiations
commenced, it is clear they had no intention of bargaining in good
faith once bargaining sessions commenced on March 18, 2008. Even if the
musicians accepted the CSO’s initial offer of a $3 million budget
reduction after the first bargaining session, economic forces were in
motion for a full six weeks ensuring that the executive board would
have to engage in more emergency fundraising. In short, the board’s
public position is nothing more than a fatal string of internal
contradictions.

Conclusions

Given the volume and intensity of commentary emanating from
the CSO executive board, and board President Robert "Buzz" Trafford in
particular, the primary focus of the organization is obtaining
financial stability within predictable revenue goals, codified in a new
collective bargaining agreement with the musicians. However, the
decision to suspend subscription sales for the 2008/09 season months
before the onset of negotiations and against the advice of their
executive administrator is entirely counterintuitive to these stated
goals. The consequences of which all but guarantee that the
organization will experience the same negative financial cycle it is
attempting to repair regardless of how negotiations conclude. As a
result, there is no substantive reason for prospective donors and
patrons to believe that the proposed financial plan is capable of
delivering the sort of economic stability it promises. Simply put: if you do the math, it doesn’t add up.

Ultimately, the future of the Columbus Symphony is not about
blame; rather, it is about building a strong organization with an
institutional culture capable of projecting itself into the cultural
consciousness throughout all levels of the Columbus community. The
current economic condition is just that, a condition. As such, it needs
to be addressed in a responsible fashion but only with a plan of action
that incorporates acceptable levels of input from all stakeholders and
inspires confidence throughout donors, sponsors, and patrons alike. In
short, a singular vision the majority of all stakeholders are excited
to support.

Currently, the CSO’s proposed financial plan fails to meet those minimum requirements for future success
but the positive aspect is that the organization is in an ideal place
to conduct a new study. To that end, here is what needs to be done:

  1. The musicians’ current offer to reduce operating expenses
    for the 2008/09 season by at least $500,000 is adequate ground for both
    sides to reach a minimum one-year agreement by the end of June.
  2. Retract the decision to cancel the summer season.
  3. Begin selling 2008/09 subscriptions immediately.
  4. Acquire several new executive board members who embrace the
    concept that responsible governance is only obtainable when board
    leaders accept a minimum degree of personal and professional risk;
    i.e., "no one ever cut their way to success" (Granted, easier said than done but not impossible).
  5. Craft a new strategic plan that includes detailed artistic
    goals and the financial requirements necessary to reach those goals
    that satisfies both board and musician bargaining concerns.
  6. Design and launch an endowment campaign by the end of the 2008/09 season.
  7. Inspire confidence through competence: no one wants to get involved with an organization sinking in debt nor do
    they want to get involved with an organization that alienates and
    denigrates employees or forces them into a position to lash out at
    those responsible for governing the institution.

About Drew McManus

"I hear that every time you show up to work with an orchestra, people get fired." Those were the first words out of an executive's mouth after her board chair introduced us. That executive is now a dear colleague and friend but the day that consulting contract began with her orchestra, she was convinced I was a hatchet-man brought in by the board to clean house.

I understand where the trepidation comes from as a great deal of my consulting and technology provider work for arts organizations involves due diligence, separating fact from fiction, interpreting spin, as well as performance review and oversight. So yes, sometimes that work results in one or two individuals "aggressively embracing career change" but far more often than not, it reinforces and clarifies exactly what works and why.

In short, it doesn't matter if you know where all the bodies are buried if you can't keep your own clients out of the ground, and I'm fortunate enough to say that for more than 15 years, I've done exactly that for groups of all budget size from Qatar to Kathmandu.

For fun, I write a daily blog about the orchestra business, provide a platform for arts insiders to speak their mind, keep track of what people in this business get paid, help write a satirical cartoon about orchestra life, hack the arts, and love a good coffee drink.

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4 thoughts on “Columbus’ Smoking Gun”

  1. It’s tough to know from here whether the apparently willful incompetence of the CSO’s board is due to simple cluelessness, or a desire to ensure that they “win” against the musicians. This is obviously not good for the organization this board claims to support and represent. One wonders how long they will continue to put their fingers in their ears and hum.

    I’ve pondered that as well and I think it would be useful for the business to conduct a study of the situation after the fact. ~ Drew McManus

  2. This is a great summary, Drew, thanks.

    I think the one part of the situation you’re actually _underplaying_ is the effect on the donor base. According to the CSO website, ticket sales make up only 25% of the annual operating budget, with 62% coming from the Annual Fund–in other words almost two and a half times as much money is raised through the Annual Fund as through Ticket Sales. One of the points of contention between the Board and the Union is whether the Columbus area has significant untapped philanthropic resources, and in a sense we can consider this not just a bilateral “negotiation” between the Board and the Union, but rather a trilateral negotiation between the Board, the Union, and the Donor base, with the donor base being asked whether they’re willing to increase their support in order to help meet the budgetary needs. Cancelling subscription renewals represents not just a blow to ticket revenue but a major symbolic disenfranchisement of the donor base.

    Presumably a very large portion of the donor base, and an even larger portion of the major donors, are subscribers, and they can’t possibly be expected to continue their charitable support at current levels if their feeling of access to, ownership of, and importance to the Orchestra has been undermined. Even if subscription sales resume tomorrow and sales somehow meet the Board’s projections, the patrons will remember having almost been collateral damage in the fight between the Board and the Union when the annual fund solicitations arrive. I expect that the CSO is essentially guaranteed to take a substantial hit to annual fund revenue–their most important means of support. The Board’s actions, thus, have turned their assertions about fundraising possibilities into a self-fulfilling prophecy. And given the economic downturn, they will probably get away with blaming the reduced annual fund support on the economy.

    Your prescription seems spot-on, although I might make one modification: rather than running and endowment campaign, it might make more sense to do a comprehensive campaign. By calling it a comprehensive campaign they would have the ability to count all gift revenue, current use and endowment alike, in the totals. This means that the total goal is higher, which makes for good PR, and means that every person who makes a gift of any kind is participating in the campaign. Certainly one of the campaign priorities would need to be raising the endowment, and most of the major gift asks should probably be for the endowment (with a corresponding emphasis on participation in the annual fund, so that endowment givers are encouraged to make their endowment gift an addition to rather than instead of their annual gift.) One of the useful functions of a campaign is to raise giving across the board in order to increase annual support going forward–counting annual fund gifts as part of the campaign would encourage people to give larger annual fund gifts during the campaign, and many would continue that level of support going forward. Also, treating annual fund support as part of the campaign acknowledges the importance of annual giving to the overall budget in a way that makes the smaller donors feel more valued.

    Of course one of the difficulties that any campaign is likely to face is extent to which the board’s credibility has been damaged. And it’s not just a matter of donors wanting to be able to trust the governance–those same tainted board members need to be able to personally solicit gifts and their credibility as solicitors may have been badly damaged as well. Finding new board members, as you suggest, may be important to the success of any campaign.

    Many, many thanks for providing all of the info and your perspective Galen. Several readers have sent email messages pointing out some of the same points you have and in fact, an earlier draft of this article contained more of the details you pointed out but I decided to cut them for length. Regardless, I wholeheartedly agree that the decision to cut subscription sales is going to have far more impact on the organization’s near term cash flow and the revenue goals in the proposed financial plan that other issues such as spending caps.

    I think it would be useful to hear more from other managers about their observations regarding subscriptions sales and whether or not an organization can launch a successful subscription campaign with such a late start. ~ Drew McManus

  3. This sounds very, very familiar. When I was with the Denver Symphony, I came back from my honeymoon to a threat of a 20% pay cut. The musicians had taken about a 20% hit only two years earlier, so we were in no mood to go down that road again. After battling with the board and management, they agreed to hold off on the cuts if the community came up with (I forget the amount, but it was probably around several hundred thousand dollars, a figure the board thought unattainable)in three weeks. Well, the community did it in a little over a week! The board was stunned, but they had “emergency backup plan B” ready to go. Midway through the winter season, they decided to put all incoming ticket renewal revenue in an escrow account, as this was the “fiscally responsible thing to do.” I’m sure this looked perfectly reasonable to a public that did not understand that it was the DSO’s policy to use next season’s ticket revenue to help cover the current year’s operations. Obviously, this created an immediate, enormous deficit, and the 20% gun was back against our heads. The public felt betrayed, and there would be no emergency bailout plan this time. Within a month or so, the DSO was out of business.

    Good luck, Columbus musicians – you are in for a tough fight. My heart goes out to you…

  4. Drew – I asked Bob Levine this same question on his blog, but I was hoping for your input. What do you think the real motivation is behind all of this? What does the CSO board stand to gain by “murdering” the CSO (as Levine puts it)? I’m convinced that is what seems to be happening, but I just don’t understand why. The comments of JWilt, above, further illuminate the almost bizzare willfullness of these actions by the CSO board.

    RW, I wish there was a simple answer to that question but like any sort of homicide it would take a great deal of investigative work to obtain enough reliable information in order to produce a reliable conclusion. A diverse group of individuals have sent in bits of information which address the very questions you ask but without the time or resources to follow-up on everything, I suspect that this will end up becoming another situation where hindsight will provide those answers.

    It is a shame as a proper inspection of events and data at this point could be enormously useful in helping the organization avoid finding itself in bankruptcy court. At the very least, a bankruptcy judge would find the information useful in order to help determine the bet course of action if things come to that point. ~ Drew McManus

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