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Hartford's Cultural Institutions Take Steps To Weather Economic Storm

FRANK RIZZO

March 22, 2009

Over at the museum, it's not a pretty picture. The symphony is striking some sour notes. There are backstage dramas at the theaters. With the national economy in crisis, Hartford's largest arts institutions are facing the greatest threats to survival.

The Wadsworth Atheneum Museum of Art (founded in 1842), the Bushnell Center for the Performing Arts (founded in 1930), the Hartford Symphony Orchestra (founded in 1943) and Hartford Stage (founded in 1963), all are experiencing shrinking endowments and declining contributions.

Economic forces claimed one long-standing arts organization at the start of the year: Connecticut Opera closed abruptly in the middle of its 67th season, leaving ticket-holders and subscribers with the equivalent of junk bonds.

What's different about the four surviving large arts institutions is that their ample assets, and multimillion-dollar endowments, are enough to reassure ticket-holders that they won't disappear anytime soon.

What gives hope to these cultural institutions are significant and in some cases record-breaking ticket sales.

But what most concerns their leaders is not their upcoming seasons, but their longer-term future. They don't know what's going to happen, and they are worried.

In the meantime, arts groups are laying off staff, reducing runs and renegotiating contracts. The times demand program changes, more alliances and new ways to do business and to present art.

"I think the people who are able to adapt will succeed," says Ken Kahn, outgoing director of the Greater Hartford Arts Council. He predicts major changes in how the arts institutions — ever wary of upsetting their power base — do business.

Hartford arts managers are most concerned about contributions from individuals, corporations, foundations and government.

With some local corporations closing, merging or moving out of town, the arts revenue that comes from gifts and sponsorships has generally declined, but some businesses have stepped up and even increased their giving.

Foundations, usually safe havens in an economic storm, have seen their portfolios plummet by the tens of millions, limiting their donating abilities.

And although there's a slight increase in federal funding to the arts nationwide as part of the new stimulus package, the $50 million pool of new money is tiny compared with the scope of the Works Progress Administration efforts during the Depression.

State funding to the arts is also on the chopping block, but arts advocates in the legislature are fighting on its behalf.

On top of these factors lies another unknown: What impact will the new science center, scheduled to open this year, have on giving to cultural organizations?

So, how are Hartford's largest cultural institutions doing now and what do they see in the year ahead?

Take a look.

The Bushnell Center For The Performing Arts

•President, CEO: David Fay

•Founded: 1930

•Operating budget:

Fiscal year '08 (ending June 30, 2008), $7.3 million.

Fiscal year '09, $8 million, revised to about $7.2 million.

Fiscal year '10, Projected to be close to '08 figure.

•Surplus/deficit:

Fiscal year '08, $25,000 surplus.

Fiscal year '09, projected deficit of $147,000.

Long-term debt (from Belding Theater) $13.6 million, with payments of $1.4 million a year from operating budget.

•Endowment:

As of Jan. 1, 2008, $18.4 million.

As of Jan. 1, 2009, $13.5 million.

•Attendance:

Fiscal year '08, 298,000.

Fiscal year '09, projected to be 300,000.

•Staffing: Fiscal year '08, 53 (48 full time and 5 part time).

Fiscal year '09, 50 (47 full time and 3 part time; three positions frozen).

"There's no recession over here," says David Fay, CEO and president of the Bushnell Center for the Performing Arts.

He was speaking after the three-week run of the Broadway tour of "Jersey Boys," which brought in nearly $4 million to the box office (though the arts center would get just a small slice of that) and attracted nearly 70,000 theatergoers to downtown Hartford.

The real question is what happens when "Jersey Boys" isn't in town.

"On the front end of a recession, the entertainment industry does a little better," says Fay. "The question is the long term. We've been OK — so far."

Fay says while the Broadway series, which accounts for 35 percent of the arts center's operating budget, has been great this year and looks good for the '09-10 season, other Bushnell offerings have fared less well.

He says he will not be taking any risks for the new season. "We're going to be very careful in our booking to avoid making any mistakes," says Fay.

But the largest concern comes from the contributed income side, principally from corporate support.

"We've been hit hard," says Fay, who counts on at least a $1 million from the business community in sponsorships and gifts. "Corporate support is in jeopardy. We've had several corporations pull back [from] traditional commitments."

The corporate landscape has changed dramatically since the fall, Fay says. Some businesses don't exist anymore, some have merged or downsized and others have been taken over by new players.

"A bunch of individual contributors have stepped up to fill that gap," he says, but it's the coming year he's most concerned about.

The Bushnell also suffers from seven-figure losses as its endowment continues its slide. The principal has gone from $18.4 million on Jan. 1, 2008 to $13.5 million.

But the endowment's decline is not as dire as it could have been because much of the interest it generates is targeted at future growth and debt payments, and less so on operating needs. That growth planning can be deferred, Fay says.

The Bushnell also reduced its budget by 10 percent during the current fiscal year, Fay says. He also eliminated job incentives and left positions unfilled — avoiding layoffs, so far. He also deferred planning costs associated with long-term projects.

Even with the cost-cutting, he anticipates a deficit of about $150,000, though he says "it's too early to tell."

Fay says he is looking at other revenue streams and refinancing the Bushnell's original $20 million debt, now down to $13 million.

"If you look at the nonprofit arts groups, these organizations that are well positioned to weather this downturn will come out well and will take advantage of opportunities," says Fay. " Connecticut Opera was not. I do not see any other instances of arts organizations failing like that.

"But we will have to think more creatively and work much more closely with each other. There are no answers right now. We're still trying to find out what the questions are."

Hartford Symphony

•Executive director: Kristen Phillips

•Music director: Edward Cumming

•Founded: 1943

•Operating budget:

Fiscal '08, $6.5 million.

Fiscal '09, projected to be $5.6 million.

Fiscal '10, $5.1 million (preliminary estimate).

•Surplus/Deficit:

Fiscal '08, $1.1 million deficit (covered through special funding).

Fiscal '09, projected $370,000 deficit (to be covered through special funding).

Fiscal year '10, projected $200,000 surplus (including special funding); accumulated debt of $1.875 million.

•Endowment:

As of Jan. 1, 2008, $10.09 million.

As of Jan. 1, 2009, $6.86 million.

•Attendance:

Fiscal '08, 47,000.

Fiscal '09, (projected with two additional POPS! shows) 52,000.

•Staffing:

Fiscal year '08, 28 (16 full time, 12 part time).

Fiscal year '09, 26 projected (17 full time, 9 part time).

Fiscal year '10, projected to be 21 (14 full time, 7 part time).

Sixteen months ago, the leadership at the Hartford Symphony Orchestra reached a point where they weren't sure there would be a 2008-09 season.

An industry expert was summoned, who quickly created an intense battle plan for HSO's survival.

"We had a structural deficit that was starting to accumulate and we were running out of runway," says Kristen Phillips, a former board member who became the organization's executive director in April.

A stabilization plan was developed and an infusion of special funding was raised, giving the HSO three years of planned-but-declining deficits while it restructured the organization and reduced its costs.

By the end of three years, with the red ink at bay, HSO would launch a campaign to increase its endowment.

Then, late last year, the economy began to tank — and the HSO saw its contributed income decline and its endowment drop about 30 percent, going from nearly $10 million to $6.5 million in less than a year.

The measures taken before the decline served to help the HSO weather the situation, even if it delayed its own recovery.

It had already moved its Masterworks concerts from Mortensen Hall in the Bushnell Center for the Performing Arts into the smaller Belding Theater, allowing it to tap into the more popular weekend bookings; it programmed more popular classical works ("Hartford loves Beethoven," Phillips says of its current season-long salute to the composer); it had already planned for administrative belt-tightening.

Although earned revenue at the box office is robust (single ticket sales tripled; subscriptions rose 10 percent), contributed income, which makes up 55 percent of its budget, is weakening.

Even with the restructuring, reprogramming and the special bridge funding, the HSO will still end the season with a $300,000 to $500,000 deficit.

During the past few months, HSO took further measures, reducing staff again, outsourcing some positions, making more program changes and cutting salaries of top personnel by 5 to 10 percent — including the salaries of Phillips and maestro Edward Cumming, who will be leaving in 2011.

The HSO reopened the musicians' contract for the second year in a row and its union contributed more than $150,000 in additional savings on top of the $100,000 already figured for next season, says Phillips.

"And that was done in two weeks," she adds, pointing to the pressure from the poor economy. "They realized how serious the situation is."

How serious is it now?

"For us to be viable going forward, we need to be able to get support from the community, which means continuing to sell tickets, and that's looking very good."

But the contributions are another matter.

"A good chunk of our contributed income to plan next season is already in and there have been some businesses who have stepped up," Phillips says.

But as a whole, the contributed side from corporations and individual donors is down, "with everyone feeling squeezed."

Especially endangered is the Talcott Mountain Music Festival, the HSO's summer program, which will take place this year but is uncertain beyond that.

"Everything is going to be on the table," Phillips says. "... As a general rule, we are putting our resources in our core programs that bring in 85 percent of our revenue."

Program-wise, its POPS! series will be increased and will feature tributes to the top vocal acts of the 20th century; up-and-coming guest artists will be highlighted over higher-priced stars (think young Van Cliburn winners rather than Joshua Bell), and HSO will perform orchestral works that don't require a high rental cost.

But the shows for 2009-10 will definitely go on, she says.

"We would not launch next season if we had any concerns about our ability to execute it," Phillips says.

The Wadsworth Atheneum Museum Of Art

•Director: Susan L. Talbott

•Founded: 1842

•Operating budget:

Fiscal year '08, $9.02 million.

Fiscal year '09, $8.96 million, later reduced to $7.98 million.

Fiscal year '10, being planned

•Surplus/Deficit:

Fiscal year '08, $309,000 surplus.

Fiscal year '09, deficit anticipated, amount uncertain.

•Endowment:

$83.8 million on July 1, 2008.

$62.9 million on Jan. 31, 2009.

•Attendance: Fiscal year '07, 118,094.

Fiscal year '08, 117,500.

•Staffing: Now 103, reduced by six.

Susan L. Talbott had big plans when she arrived nine months ago as the new director of the Wadsworth Atheneum Museum of Art.

As the months went on, she found herself readjusting those expectations in light of the falling economy.

But she knew that the museum in Hartford had two things that would help it weather tough times: a large endowment and its great collection of art.

"The mood was grim," she says of a January gathering of the nation's art museum directors. "Other museums are also looking at their own collections rather than becoming involved with huge million-dollar blockbuster shows." (The Wadsworth, along with several other previously committed museums, recently pulled out of one such show on surrealism.)

The advantage of having the largest arts endowment in the area is that it spins off millions. But the downside shows when that endowment's portfolio plummets and the institution has to replace that much more revenue.

The museum's endowment dropped more than 20 percent in one year, with a dollar fall-off of more than $20 million.

So Talbott took action: She closed the museum for an additional day each week — Tuesdays; it was already closed on Mondays. On one Saturday morning a month the museum offers free admission. There were staff layoffs and shortened work weeks. Talbott also cut the budget from $8.9 million to $7.9 million in several stages as this fiscal year went on.

She still anticipates a deficit this year. "It may be significant, but it's not going to be dramatic," she says.

Most of the adjustments are internal and the "public will not see a major change," she says of the economic recalibrations. "We will stay true to our mission."

But what people see on the museum's walls will be affected, and in ways she says that are good for the museum and its audience.

"We're looking to our permanent collection" rather than outside the museum for exhibits, she says.

In the fall of 2010, the museum will launch a new "masterpieces" series of exhibits over two years that will include great works from its walls and some that have been long unseen from its collection — as well as complementary masterworks from elsewhere.

"Initially, the show was developed to meet our physical need" because of renovations, which will require closing parts of the museum starting next year, she says. "But, by luck, it is also meeting our financial need as well."

A $15 million renovation project was already funded and in place and will include repair of the arts complex's many roofs, whose problems now prevent the museum from opening some of its galleries.

The museum also has a foundation grant in hand to renovate galleries that are most in need of repair. "But in the long term, we have $40 million in renovation needs," Talbott says. "The $15 million will attack just the most immediate concerns."

There are some upsides. The art market now offers some buying opportunities for the museum's endowed funds, which are restricted for just such purchases. She says the museum will not sell works it owns for operating needs.

Because she started partnerships with community groups and other institutions when she arrived, planning is in place to start pilot programs next spring.

"They are ready to be launched and we know now what grants we are going for to fund those programs," she says.

Talbott says she is also in talks with other museums for collaboration, such as the Yale Art Gallery in New Haven.

Hartford Stage

•Artistic director: Michael Wilson; managing director, Michael Stotts.

•Founded: 1963.

•Operating budget:

Fiscal year '08, $8.1 million.

Fiscal year '09, $8.5 million, but being readjusted.

Fiscal year '10, still planning.

•Surplus/Deficit:

Fiscal year '08, $14,298 surplus.

Fiscal year '09, projected to break even.

•Endowment:

As of Aug. 1, 2008, $6.1 million.

As of January 2009, $4.1 million.

•Attendance:

Fiscal year '08, 115,814.

Projected for fiscal year '09, 119,742.

•Staffing:

Fiscal year '08, 76 full and part time.

At present, 73.

"Given what's going on, Hartford Stage is in fairly good shape," says its managing director, Michael Stotts.

That may be due to the theater's biggest hit of its 45-year history — "To Kill a Mockingbird" — compensating for some modest shortfalls among its other shows this season.

But it's the 2009-10 season that concerns Stotts, especially as income from contributions declines.

The new season will have some initial firepower with its epic "The Orphans' Home Cycle," the late Horton Foote's nine related plays reconfigured as three three-hour presentations. That endeavor, the largest the theater has undertaken, is being co-produced with off-Broadway's Signature Theatre and has special foundation funding.

The rest of the season is being formulated with an eye on very tough economic conditions ahead, Stotts says.

"We are trying to have a bold vision, but there's no question we have to look at every show, see what revenue it can generate, see how we can reduce costs, think in terms of who we can 'co-pro' with or if there's a commercial producer out there who we can partner with."

The summer programming, which is a money maker, will go on this year with two shows each having three-week runs.

For the new season, the regular runs will be cut from 31 performances to 28, and shows that have "matinee potential" (i.e., school audiences) are likely to be built into the schedule. (" Tom Sawyer," part of next year's national "Big Read" program, is being considered for production, with hopes of duplicating the built-in audience appeal of "Mockingbird.")

But with its endowment declining by nearly 32 percent in the past six months, from $6 million to $4.1 million, and an unsure economy ahead, programming may not be enough.

"We've already cut 2 1/2 percent of this year's budget and we're looking to further cut another 5 to 7 percent next year," Stotts says.

Attendance for the 2008-09 season is up slightly, though it may be due to the wider range of "price points" (lower price tickets). Still, earned income — money mostly derived from the box office — is on par with last year because the number of subscribers is stable at 7,500 in various-sized packages.

"We won't be increasing ticket prices next season," Stotts says.

He says Hartford Stage is "feeling a little bit of a squeeze" in the number of individual contributors and in the amounts people are donating. Corporate funding was already in place before the economy tanked this season, but there is uncertainty for the 2009-10 season.

"That is why we're budgeting conservatively," he says. "But we've already cut as much as we can."

No major decreases in staff or wage freezes are anticipated, but staff vacancies have been left open.

Plans to renovate and expand the theater, with construction beginning in the summer of 2010, are moving forward, with architects working on the project now.

"There's no question the economy will have an impact on that project, but we're going to be shovel-ready and be ready if federal and state money become available as part of an economic stimulus," Stotts says. "Foundations and corporations are still in, but the progress we were making has slowed down. People are still giving, but they're stretching it out."

"What makes us encouraged through it all is that people still want to go to arts events," Stotts says.