An important piece of history

Thanks to the kindness of the archivists at the New York Philharmonic, I’ve gotten a copy of a report on the state of American orchestras in 1972, written by the big management consulting firm, McKinsey. And actually what I’ve gotten is two documents, one a 1969 McKinsey memo to the presidents of the Big Five orchestras, the other the longer, more formal 1972 report. Both are fascinating, even revelatory.

What’s in them? Try this: the Big Five routinely sold out all their concerts in 1969. This was so much taken for granted that, to calculate the income from ticket sales, McKinsey simply multiplied the capacities of each hall by the number of concerts and the average ticket price. (Which was $4. Adjusted for inflation, that would be around $20 in current money, a good deal lower than the average price of a Big Five ticket today. Orchestral ticket prices, as I’m sure everyone knows, have risen far more than the inflation rate.)

That, to me, is a revelation. Maybe it suggests a declining interest in classical music, in the culture at large, since those bygone days. Though rising ticket prices might play a part, as well. This is something we ought to learn more about. And then there’s the percentage of orchestral revenue that came from earned income, which in turn mostly came from ticket sales. Now it’s somewhere around 25 to 30 percent, for large orchestras. But in 1972 — based on information McKinsey gathered from 28 orchestras –it was 47 percent. Orchestras, in other words, funded their operations very differently back then. They earned more of their money. The immense development apparatus we know today — the constant, intense, organized fundraising from individuals, foundations, government, and corporations — must have been in its infancy.

And this, the report helps show, was a snapshot from a longer history. McKinsey notes that in 1962, the earned income had been 58 percent of revenue. In 1937 (according to a study of American orchestras reported in a 1940 book, America’s Symphony Orchestras and How They Are Supported), earned income was 70 percent of revenue for most orchestras, and fully 90 percent for a few of the largest ones.

So from 1937 to the present, we can see some long-term trends, though they started at different times. Orchestras sell fewer tickets; orchestras raise prices far higher than the inflation rate. (Perhaps because they’re selling fewer tickets?) And ticket sales make up a steadily smaller part of orchestral revenue. This is one aspect of what seems to be a long-term financial crunch — orchestras constantly need to find more money.

Which brings me to the central part of these McKinsey reports, and also to my next post.

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Comments

  1. Andrew says

    I was not aware of the HUGE rise in ticket prices over the years. I’m sure that’s had a large impact on ticket sales. I wonder how the 1960s total revenue from ticket sales (the dollar values, not the proportion), adjusted for inflation, compares to today’s ticket revenues…

    Good question. I’ll try to find out the answer. (Which might take me a while. The available past and present figures don’t seem to be directly comparable.)

  2. Gene Barnes says

    Yes, event prices have gone through the roof, based mainly on higher saleries of orchestra members. Here’s a scenario I find likely.

    (1) Cut-backs in pay won’t happen (the reality of unions and human nature). Instead, orchestras will simply financially fail.

    (2) Out-of-work orchestra members will form their own orchestras, using low-rent venues like university lecture halls for their concerts.

    (3) They’ll make whatever they can and leave it at that.

    (4) For awhile, quality will suffer, until the orchestras stabilize.

    (5) Employee-owned orchestras will have complete say in their destiny, their repertoire, and their conductors. Just the way it should have been all along.

    Gene, this is a very plausible scenario. I reserve the right to steal it from you — well, to quote it with full credit. I’ve thought myself that orchestras should redefine themselves as assemblages of musicians: “Given that we’ve got these people, what can we do that makes musical and economic sense?” Orchestras might then take on completely new functions in the cities they’re in — teaching, playing at public events, much more. Certainly if they can’t survive as they currently are, they’ll have to redefine themselves.

  3. tom reel says

    Ticket costs can be quantified. Quality is harder to measure.

    Are orchestras today better artistically than they were in the 1930s or 1960s? The increase in costs may well have a qualitative impact as well as changing the business model.

    What has happened is a restructuring to where the concert hall audience has changed demographically (and economically), requiring contributed money to make the art form available to a broader spectrum of society via outreach and community engagement initiatives.

    This is, indeed, unfortunate and inefficient. Supporting full-time professional musicians is costly, but might we also examine other costs including music director salaries and guest artist fees?

    Given the multitude of new venues in this century and the proliferation of the number of orchestras in the last half-century, I don’t see the doom & gloom trend toward demise, restructuring and then a phoenix of poor musicians somehow rising from the ashes.

    The “good old days” were seldom as good as artists, politicians and others are wont to proclaim!

    It’s not hard to make quality comparisons between the present and the past. We have recordings. From them, I’d judge that orchestral concerts many years ago weren’t as precise as those we hear now, but were more individual, and arguably more expressive. Certainly orchestras were more different from each other, in their sound, than orchestras are now. And conductors, too, were more indvidual. Or at least the best ones were.

    As for the future, are we sure that the experience of the last 50 years is any sure guide to the future? Just because there are more orchestras than there used to be (and what are the numbers here? can anybody reading this tell us?) doesn’t logically imply that orchestras will keep on thriving in the future. Circumstances can change, and previous trends might therefore not apply.

    As for the new venues, these are built (among other things) on hope. Just because people were hopeful enough to build them doesn’t mean that their hopes will be fulfilled. (We also might look at the dates when these venues were conceived and funded. Might be before the current troubles were clear.) It’s been pointed out, also, that these venues in part arise from a little-noted trouble that orchestras have had. Those that play in multi-use facilities they themselves don’t own were finding that it was harder for them to get the dates they wanted in these halls. The halls’ management found it more profitable to present non-orchestral events. So the orchestras (if we accept this way of thinking) were at least partly forced to build halls for themselves.

    And, once more — just because halls were built doesn’t guarantee that they’ll be filled. Here’s a related circumstance. Lately we’ve seen a rash of large gifts to classical music organizations — a big foundation gift to the Cleveland Orchestra, many millions from a private donor to the Metropolitan Opera, and now quite a large gift to the Pittsburgh Symphony (though, as was sharply pointed out by Susan Elliott on the Musical America site), this came with strict conditions. Do we now conclude that we’re watching the dawn of a new era of plentiful philanthropy (where classical music is concerned)?

    I could just as easily argue the opposite. In all three cases, the organizations involved were having serious financial trouble. That may have been one incentive for the giant gifts, which otherwise might not have been given. And it seems clear that organizations can’t count on getting gifts like that, though understandably they’ll look for them. Each organization, I’d bet, looks at these gifts as both encouragement, and a warning. “The money helps tremendously, but now we’re on our own. From here on out, we’ll have to do a lot better with our bottom line.” (Which was, in fact, one of the conditions of the Pittsburgh gift.)

    And for orchestras that don’t get gifts like these…what happens if, their backs against the wall, financially, they have to do what the Baltimore Symphony did, and use 1/3 of their endowment simply to get out of debt?

  4. tom reel says

    Agreement!

    The “trends” cited in my earlier post (many more orchestras, musicians as vocationists, new venues) are NOT necesarilly harbingers of good times ahead. They are, however, indications that quality orchestras MATTER to many communities and their civic leaders. Exposure to Classical Music outside the concert halls is also ascertainably up BUT that does not translate directly into profitability either!

    However, such facts would seem to balance others that alone might lead to apocalyptic projections. Our problems are real and some of them are fresh. They likely are not mortal.

    Some organizations (often outside the old Big Five or the New Big Whatever) are already finding 21st century solutions that do not depend solely on the recently documented largesse of individuals, corporations and cities. I agree that excessively large one-time contributions (for endowment, stabilization, operations, bricks & mortar, whatever) do NOT equate to sustainability. When strings are attached (as in Pittsburgh’s latest gift), that can provide leverage for extended future health, but without examining lots of trends & facts, positive & negative, even that might prove insufficient. Delivery systems might have to adapt; outreach might have to augment concert hall performances; creative symbiotic partnering might deserve attention.

    We have no shortage of opportunities to develop business & operational models that capitalize on our RELEVANCE in today’s world, even in the face of expanded entertainment choices. It is quite possible that our music has never been more relevant. So I remain a fully informed optimist, not in the 20th century industry model (unaltered) but in the new century’s capacity for change – not the apocalyptic kind – and success.

    Very eloquent, Tom. And very much to the point. Thanks.

  5. Larry Fried says

    What about the total number of concerts the Big 5 orchestras played in the mid to late ’60s? I suspect that there were far fewer than they play today. Thus, back then a concert was much more of a true “experience.” No one wants to admit it but part of the problem today — I repeat that it’s only part of the problem — is that there is too much “product” out there.

    You make a good point. Of course, the amount of concert product helps musicians get what they feel is full employment. Before the major orchestras had 52-week seasons, the musicians felt like second-class professionals, since they were unemployed for a significant part of every year. This became an issue in contract negotiations.

    It was in the mid-60s, approximately, that the big orchestras moved to 52-week seasons, so maybe your point could be better made about the 1950s and earlier, when the question either hadn’t arisen, or wasn’t on anyone’s front burner. It’s still a good point, though. Orchestras need to rethink a lot of things, and one of them should be exactly what their musicians do in the 52 weeks of their contracts.

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