Dead Cat Bounce

For those unfamiliar with the expression “Dead Cat Bounce,” it comes from the world of finance as a way to describe “a temporary recovery from a prolonged decline or bear market, after which the market continues to fall (source)” – even a dead cat will bounce if dropped from high enough. This phrase came to mind after reading an article by Jeffrey Sheban in the 3/5/2010 edition of the Columbus Dispatch that reports on a 16.6 % budget cut at the Columbus Symphony Orchestra (CSO) over and above the 28% cut from the previous season…

The cuts are achieved from a variety of sources including expected musician compensation concessions and reducing the season from 38 to 25 weeks but one area that should catch your attention includes plans to sub-contract most of the CSO’s administrative staff. According to Sheban’s report, the CSO is anxious to wrap up negotiations designed to outsource nearly every aspect of administrative responsibility.

Meanwhile, talks have been under way for several weeks to let CAPA [Columbus Association for the Performing Arts] handle finance, marketing, development and concert production for the orchestra.

Sheban also reports that CAPA, which owns and operates a handful of Columbus area venues, provides outsourced administrative functions for four other area groups (Franklin Park Conservatory, Contemporary American Theatre Company, Phoenix Theatre for Children and Opera Columbus). Although it isn’t unheard of for an orchestral organization the size of the CSO to outsource certain divisions or even an entire administrative department, it isn’t common to outsource multiple departments in full.

Questions yet to be answered include how outsourcing will impact the organization’s ability to maximize contributed revenue if the professionals actively fundraising have similar fundraising responsibilities at several competing nonprofit arts groups; likewise for marketing efforts. Will board solicited fundraising efforts be curtailed through any sort of no-compete clause? Lastly, how will this impact the CSO board’s duties and responsibilities related to oversight and stewardship?

At this time, a copy of the CSO’s Strategic Restructuring Plan was not available via the organization’s website although the organization did post a press statement on the matter.

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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8 thoughts on “Dead Cat Bounce

  1. If I read between the lines, the board of the Columbus Symphony is going to hand over not only the day-to-day administration, but also their own responsibilities, dumping them all into lap of the CAPA. How will the board exert any influence or guidance when they’ve suddenly become a competing minority voice on how the CAPA does business?

    I think the Symphony board is abandoning…the Symphony.

    Has anyone pointed out that the CAPA presumably knows little or nothing about how to run an orchestra?

  2. I think you’re asking all the right questions and expressing reasonable concerns Galen. To be fair, the board may have covered these issues in great detail and have some very solid answers but it would certainly be in the organization’s best interest to promote those details ASAP.

    My concerns regarding outsourcing so much administrative responsibility to CAPA would be the impact on CAPA staffers. Are they bringing on extra full time employees to absorb the increased duties? If they are like most groups, staffers are already overworked and under staffed so heaping this much responsibility on top of current responsibilities may produce unanticipated results.

    I remember when the Utah Symphony and Utah Opera merged and one of the assumed benefits would be increased administrative productivity and reduced costs but in reality, it cost as much (if not more) than when the organizations were independent.

    Assuming the deal goes through, I guess we’ll see how this shakes out.

  3. I agree, Drew! I don’t think outsourcing to that huge extent will save a dime–as you said, CAPA will have to add to, or swamp, its staff in order to take on big new responsibilities.

    Certainly, I’m not opposed to farming out certain limited functions: payroll, or website & graphic design, or even ticket sales. But in my experience in opera and orchestra administration, even that kind of outsourcing never saves money, just increases quality… er, sometimes.

  4. It will definitely be interesting to see if CAPA hires any of the symphony staff and if anyone remains at the symphony to oversee these activities.

    This looks like part of the Columbus Foundation’s Arts Challenge Fund Initiative from last fall. You can read the press release here: http://www.columbusfoundation.org/media/press/10032009_.aspx

    Unfortunately, the page with more information seems to be missing. I have been looking for the mailing they sent out to donors which had even more details, but with no luck yet. I emailed a friend in the orchestra about it and these were the major points: 1) Finishing the community Cultural Plan 2) Expand integration of work of the arts into our community’s human service and educational needs 3) Collaborating with downtown sports and marketing entities to strengthen tourism 4) Cooperating with other organizations in a) ticketing b) accounting c) marketing. 5) Prepare 3-year budget scenarios reflecting operations at current and reduced levels, in case the economy does not recover. 6) Financial Strength. Consider and publicly report on the feasibility of a) earned income expansion b) plan to expand endowments dedicated to the arts c) greater public support. 7) Strengthen GCAC’s cultural leadership capacity 8) Identify and support a passionate champion for the sector, not necessarily from the sector

    Maybe you could contact the Foundation directly to get more details.

  5. I have a better mental image. Even Majken Mechling would bounce if dropped from high enough. Is “Executive Director” high enough?

  6. Many of the expressed concerns are legitimate but I caution against jumping to conclusions without adequate information. The CAPA discussions are in process so it would inappropriate to share more detail at this time. But I can assure you that safeguarding the artistic and organizational integrity of the Columbus Symphony is foremost in the CSO Board’s mind.
    Roland Valliere
    President and CEO
    Columbus Symphony Orchestra

  7. Hi Roland, many thanks for taking the time to post a comment. I’m sure everyone will be very interested in learning more about the final details of any proposed agreement when and if it comes to fruition. In addition to the thoughts above, I’m particularly interested in learning more about how the organization will manage to avoid becoming inadvertently dependent on outsourced services to the point of losing the ability take advantage of growth opportunities.

  8. There is a part of the puzzle that I think is being overlooked in the Columbus situation. The takeover of the Symphony by CAPA is NOT the merger of two “arts” organizations, as it has been worded in articles that I’ve read. The Symphony is a LOCALLY produced arts organization. CAPA is a PRESENTING organization- in the business of bringing traveling productions to Columbus. Doesn’t anyone see a basic conflict of interest here? The local arts audience doesn’t always understand that when they go to a CAPA presentation, they are not supporting the local arts community. The current head of CAPA came to the organization from Clear Channel in 2002. It seems to me that there could be some parallels drawn between what Clear Channel has done with locally produced news outlets all over the country and what we are seeing in the early stages in the arts community of Columbus. I think Columbus is a test market for nationalization of the arts. I don’t think they will be able to get it done, just because of the nature of arts communities, at least I hope not! But I think they’ll take a pretty good swing at it. Looking at nothing more than the bottom line, it would be cheaper to bring symphonies in to the Ohio Theater to play concerts than to maintain a local organization- it can be tough to quantify the overall loss of value of enrichment that a locally produced arts organization brings to the community at large in a business model. I also imagine that it involves a lot of money to be made for a couple of people- who probably don’t even live in Columbus. There seems to still be a contingent in the Columbus community that doesn’t always shop at Gap, or Wal-Mart- who are looking for something of higher quality, less homogenized. The cities that are growing jobs are appealing to the new knowledge based economy. This generation of workers can choose to live where they want. And they choose communities where there is a vital, vibrant LOCAL arts scene. Anyone aware of Richard Florida’s work in this area- i.e. “The Rise of the Creative Class?” Take a look. I think Columbus is being led down the primrose path.

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