Playing Together

Hartford’s arts organizations look to endowments, new biz plans

December 4, 2006
By DIANE WEAVER DUNNE, Hartford Business Journal Writer

Hartford’s major nonprofit cultural arts organizations, many facing budget deficits or barely squeaking out small surpluses, are finally realizing their revenue models won’t give them financial stability.

That’s why, starting today, many of those organizations are sitting down and coming up with a plan that ties their fates together.

Although none of the major arts organizations are in jeopardy of collapsing, the traditional business model that once worked for area arts organizations appears to be broken. Ticket sales and charitable giving have eroded in recent years for a number of reasons while expenses continue to rise. A technological explosion of new entertainment options and the state’s popular casinos now compete for discretionary entertainment dollars, explained Ken Kahn, executive director of the Greater Hartford Arts Council.

It’s enough of a concern for the council, which donates $1.3 million annually to the region’s top 10 arts nonprofits, to hold a series of special meetings with the organizations – with accountants and auditors — beginning Dec. 4.

New Models

“I think they are in a period of transition in which the old model to finance their operation is failing to sustain them,” Kahn said. “We, at the arts council, are proposing to work with a team to assess their financial viability.”

Willard Holmes, executive director of the Wadsworth Atheneum Museum of Art, agreed with that concern during a recent interview. “The world has changed and we need to insulate ourselves,” Holmes said.

Kahn said the council’s team would help the arts groups develop a strategy on “what has to be done to make them sustainable.” He noted the arts organizations have a “very heightened sense of urgency” to fix their current business plan, and bring in new revenue streams while also making themselves more relevant to the public and their donors.

Art patrons will be asked to dig deep into their wallets as three arts organizations seek about $60 million in donations for their endowments.

The Wadsworth is looking to boost its endowment by 50 percent, hoping to raise $40 million to be added to its current $85 million endowment. The Hartford Symphony plans on doubling its $10.5 million endowment by raising $10 million and Hartford Stage plans to more than double its endowment, hoping to add about $10 million to its current $6 million endowment.

Cuts Unsustainable

It is a challenge that requires extreme measures by some organizations. Take the Hartford Symphony, which ended its last fiscal year on June 30 in the black for the first time in three years. An $800,000 deficit had been projected for fiscal year 2005. As a result, members of the entire organization took a personal hit in their own wallets, with either pay cuts or pay freezes for the entire staff, including musicians and administrators. Other cost-cutting tactics included the suspension of pension contributions for one year and staff paying a greater share of their health care premiums.

Overall, the organization, which counted 163,000 in attendance at its performances last year, slashed $600,000 in total expenses and developed a strategy to generate an additional $200,000 in revenues, said Charles Owens, executive director of the symphony.

While it eliminated some concerts traditionally performed at The Bushnell and moved others to less expensive venues, it is a move David Fay, president and CEO of The Bushnell, understands.

“They can barely afford to come here at the discounted rates,” he said. The Bushnell charges the symphony between $7,000 and $10,000 per performance.

Money Dwindles

The Bushnell faces its own money problems. Although it is coming off one of its most successful years in a decade, it is projecting a substantial decrease in the coming year.
It will host fewer Broadway shows in the current fiscal year, and that makes a big difference to the performing arts center’s bottom line. Those programs generated 75 percent of its revenue.

In 2005, The Bushnell hosted 14 weeks of Broadway shows as compared to nine in the current year.

“We’ve got to find our role in the 21st century,” Fay said. The organization’s strategy is to increase its control over the quality of the Broadway shows it offers to the public. For that reason, The Bushnell invested $500,000 in a partnership with other performing arts institutions two years ago to create and develop new Broadway shows. The deal would bring shows to The Bushnell, beginning in 2008, and would also generate new revenue, Fay explained. Hit Broadway shows can become enormously profitable, he added.

The Fat Lady

The cash-starved arts organizations tend to rely upon one another, as exemplified by The Connecticut Opera’s reliance upon The Bushnell and The Hartford Symphony. The rub is that the opera, which is currently operating in the red, made revisions to its contracts with both The Bushnell and the symphony as a way to cut expenses.

It moved two of its operas out of The Bushnell’s larger theater to its newer and smaller theater, the Belding Theater.

The opera also revised its contract with the musicians, going to a weekly contract instead of a per-performance contract. If an additional performance is added within a one-week time frame, the opera will not need to pay the musicians more for the extra performance, Jackson said.