Leaders at both of Minnesota's major orchestras say they are facing tight times, and the next few years will continue to be a financial struggle.
The Minnesota Orchestra today announced a $2.9 million dollar deficit for 2010 to 2011. The Saint Paul Chamber Orchestra balanced its budget, but projects a deficit for up to a million dollars for 2011 to 2012.
Both organizations are looking for innovative ways to sustain themselves.
The gloomy music at the Minnesota Orchestra annual meeting was an attempt to soothe the wound of bad news. Despite a successful artistic year, with international acclaim, the orchestra is in the hole on a budget of $30 million.
Several factors are to blame, including a decrease in earned revenue, flat ticket sales, and an increase in contractual expenses — especially to pay musicians. The main culprit was decreased revenue from the orchestra's endowment.
Orchestra leaders said the prolonged economic downturn has played havoc with the return from the endowment, and with interest rates likely to stay low, there is no relief in sight.
The orchestra board recently approved a four-year strategic reorganization to maximize revenues and curb expenses. A large part of the plan will be renegotiating contracts with musicians beginning later this year.
Orchestra CEO Michael Henson declined to go into detail on other parts of the plan, but said there will likely be an examination of the number and types of concerts the orchestra plays.
"I think it is very much about making sure we have the right balance with that," Henson said. "I mean we have a very good classical series. We have an excellent pops and presentation series and we do a whole series of concerts that are non-orchestrally based within the hall itself.
"So that's part of a much bigger plan about how we go forward, but the live orchestral concert with the orchestra will remain central to what we are doing."
Also, the plan will build on the renovation of the Minnesota Orchestra Hall which will begin at the end of this season. If all goes as planned, the deficit will be retired in two years.
In St Paul the SPCO is also planning ahead.
"I like to think of this as the most creative time there has ever been to lead an organization because things are changing so rapidly," said SPCO President Sarah Lutman.
It was hard work to balance this year's $10 million budget, and it will be even more difficult next year, Lutman said. The SPCO predicts a shortfall of $750,000 to $1 million in the current fiscal year. All revenue sources are under pressure, she said.
"Particularly, foundation and corporate giving is shifting in this community and it's shifting towards human needs, and we understand that," Lutman said. "But it is having ramifications for our budget, even though individual support has remained very strong."
Basically everything is now on the table as it reviews how to go forward, Lutman said.
Despite the gloomy news, both orchestras believe they are prepared for the upcoming hard times and will weather them. They point to how orchestras in other parts of the country are in much worse state.
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