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The orchestra that’s planning for 2023

Detroit is in bounceback. After a grievous strike and a dance with death, the DSO’s revenues are back to pre-2008 levels, the governance has been overhauled and the ambition is vertical. There is still an operating deficit and a bank debt, but both are smaller than forecast.

These are the financial results, announced at Thursday’s annual meeting. The key figure is expenses: down $25.58 million.

Operating results at a glance

2012 

Actual

2012 

Budget

2011 

Actual

2010 

Actual

Total earned revenue +$5.29 +$5.66 +$1.37 +$7.2
Total contributed revenue +$13.01 +$12.32 +$9.92 +$11.8
Other revenue, including rental and retail business +$1.12 +$1.28 +$0.62 +$0.8
Endowment draw and endowed fund earnings +$3.34 +$3.21 +$3.76 +$4.3
Expenses -$25.58 -$25.49 -$17.44 -$29.4
Net Unrestricted operating deficit = ($2.81) =($3.02) = ($1.77) = ($5.3)

(dollars in millions – year ended August 31)

(dollars in millions – year ended August 31)

The 2011-12 season resulted in an operating deficit of $2.81 million, which was a favorable variance of $201,000 versus the budgeted operating deficit of $3.02 million. The 2011 season included a work stoppage.

Aiming to become ’the most accessible orchestra on the planet’, the DSO films and streams some of its concerts through a Russian media partner.  It takes more of its music out to the city’s sprawling neighborhoods. It offers students an entire season for just $25. And it has set in place a ten-year plan to put financial and artistic strategy on a firm basis. Read the full board report here.

Find me another orch that thinks so far ahead. Detroit might yet qualify as one of the best orchestras of 2012.

detroit-symphony-orchestra-tickets-ann-arbor_13028879199

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Comments

  1. Larry Jelf says:

    The Detroit orchestra has always been great. We had membershp when we lived there. I remember many years ago Arthur Fiedler playing “Boogie Woogie Bugle Boy of Company B.” People were in the aisles dancing!

  2. That’s good news about the student tickets, but the average and median price of all tickets would tell us much more about accessibility. A new study is out that found the average income of those who attend Broadway shows is $193,000 per year. The performing arts are still often out of range for average people.

    Before placing the orchestra in the best category, we might remember the heavy burden the musicians carried in the budget cuts.

    • The average price of tickets isn’t as revealing as the price range when it comes to accessibility. You can often get a standing ticket to a concert or opera for less than the price of a movie, but if you look at the average price, then yes it is beyond the budget of most people. But if I’m interested in buying the cheapest ticket, why would I care about a calculation that includes the 200€ tickets I’d never be able to afford?

      • An orchestra cannot be built and sustained by looking at only the cheapest or rush tickets. Price range, median price, and average price all provide perspective about the orchestra’s relationship to its community. It’s also important to at who is buying the tickets, which in Detroit’s case is especially troubling. The DSO is facing a perfect storm of troubles, and so many of them based on the general problems of American society.

    • Why are Broadway shows relevant?
      Theatre shows, yes, musicals, yes – but why pick the most expensive sector of that? That’s like saying “flying in comfort isn’t accessible – Tthe average income of people flying first class was XXX”.
      “The average income of people in an expensive city going to see expensive shows was high” Doesn’t tell us much, does it?

  3. harold braun says:

    Well Done!!!

  4. Leonard Slatkin says:

    We are honored to be considered in what will certainly be an august group of orchestras.

    When one thinks about where the Detroit Symphony was just a year ago, our story must qualify as extraordinary. We have reached out to audiences in many ways. All subscription concerts are streamed live, with no cost to the public. They are produced by the Detroit Symphony in conjunction with the local PBS affiliate. These feeds are picked up by several web casting sources, including ParaClassics in Russia.

    The bank debt has been completely resolved. This was key for recovery as the total amount had been 54 million dollars. Now we can move forward with long range capital campaigns. Pricing for single tickets has been reduced with the median cost about $25 dollars. You can sit in the Upper Balcony – probably the best sound in an already outstanding hall – for $15. We are projecting a balanced budget by the end of this season.

    There is still a long way to go but everyone is working hard to achieve the goals both artistically and fiscally. The musicians did take an enormous pay cut, but no one lost their jobs. Unfortunately, we eliminated 33% of the staff positions. Having a real plan is the key for our future. With a great orchestra, staff and board leadership, we see a bright future for orchestral music here in Motor City.

    • Robert Fitzpatrick says:

      Leadership (artistic and managerial) and a plan, an unbeatable combination. Bravo, Maestro.

  5. Brian Hughes says:

    I believe I mentioned the DSO in my “nomination” for comeback of the year. There is still much work to be done in the city and its cultural entities, but all of this is good news on all fronts. I have too many fond memories from my youth of attending summer concerts at Meadowbrook and even sneaking in on a rehearsal (in that horrible Ford Auditorium!) of the Bartok Concerto for Orchestra with Dorati at the helm.

    Bravo to Maestro Slatkin and all of those who have worked so hard to bring the DSO back from the brink.

  6. The DSO tickets are quite reasonable. I looked at prices for a concert of Beethoven in February 2013. There are six ticket categories (seating areas) and four prices 15, 25, 50 and 100 dollars. The median would be the number in the middle which is either 25 or 50 dollars. The average is a little more complex because it depends on how many seats are in each category. If the information on their website is correct, about a third of the hall’s seats are in the 15 and 25 dollar categories, about a third in the 50 dollar range, and about a third in the 100 dollar group. That makes the average price about 56 dollars (very roughly estimated.) That is quite reasonable, all things considered. Ticketing and parking fees bump the costs up a bit.

    Another positive aspect is that they do not have priority ticketing arrangements for donors, or nothing I could spot on the website. I’m not sure if subscribers are allowed advanced sells before single ticket buyers, but this can be a significant factor in accessibility for poorer people who can’t afford them.

    The population of Detroit is 83% black while the orchestra is around 98% white. (I don’t know the exact number for Detroit but I know it’s near the national norm.) In 1910, fewer than 6000 blacks called the city home but it went through major demographic changes during the Great Migration (which led to the great Motown style of music.) Since 1950 Detroit has lost well over half its population – from 1,849,568 to 713,777 in 2010. About 40 square miles of the city are currently being bull dozed and returned to farm land and unused acreage.

    Poverty is wide-spread. The median household income is only $25,787, which would make the $56 dollar average for tickets a bit of a problem – to say nothing of subscriptions. The U.S. Supreme Court’s 1974 decision in Milliken v. Bradely created a de facto system of educational segregation in the U.S. which probably exacerbates the problems the orchestra faces. The combined nine county statistical area is over 5 million, including some of the richest areas in the country. Most of the orchestra’s patrons come from white suburbs north of the city.

    If Detroit solves problems like these, it is the best hands down. How interesting that Leonard Slatkin graced us with his presence.

    • Chris Felcyn says:

      William, while your numbers are essentially correct, you left out the suburbs from which the DSO draws a substantial percentage of its audience. The actual outlook is far less bleak when you include the entire metro area.

      • That’s true, Chris. See my post below about the metro area which was published a few days ago. Detroit is the 22nd richest metro area in the world. Oakland County is the fourth richest county in the USA with a populations over one million. And yet Detroit ranks 209th for opera performances per year and is barely supporting its orchestra.

        The DSO musicians have claimed that the crisis is actually in management, which has not done a sufficient job of funding raising. Management responds that musicians are making unreasonable demands. I think the truth is much more complex than either side really understands. The private funding system in the USA is collapsing. A patronage funding system depends on a society that has a small middle class with a large wealthy class at the top and a large poorly paid working class at the bottom. When societies begin to develop sizable middle classes, and when skilled labor begins to achieve good pay, a patronage system can no longer sustain the arts. There is not enough wealth concentrated at the top, and the demands of middle class labor are too expensive.

        Some of Wall Street’s proponents of trickle down economics and free markets (technically referred to as ecomonic neo-liberalism) have openly said that they see the late 19th century as a perfect model of what capitalism should be. If they achieve their goals, our patronage system will once again become effective, though fortunately that is unlikely to happen.

        The USA is the only developed country in the world that does not have a comprehensive system of public arts funding and that is why we are facing so many problems – a patronage system and a healthy middle class do not work together. To effectively support the arts the U.S. will need to develop a public funding system over the coming decades. If not, there are two alternatives. The first is to maintain our archaic patronage system, vastly reduce the size of the middle class, and effectively create an economy similar to the 1920s which was known for its wealthy patrons like the Vanderbilts, Carnegies, Fords, and Rockfellars. The second is to continue stumbling along until orchestras and opera houses barely exist. In terms of opera, the second alternative has already been achieved. The USA only has three cities in the top 100 for opera performances per year.

        Detroit built a magnificient opera house in 1922. It was an active and central part of the city’s life for many years but gradually fell into decline when opera culture was allowed to collapse in the U.S.. You can read about and see photos of the house here:

        http://en.wikipedia.org/wiki/Detroit_Opera_House

  7. While every orchestra faces demographic problems that are clearly related to industry-wide financial issues, I can think of no orchestra that has done so much to address them as has the Detroit Symphony Orchestra. You can be sure that while the orchestra is aware of how far they’ve come in the last two years, they are also acutely aware of how far they must go to ensure the survival of the orchestra and the cultivation of their present and future audiences. I have great confidence in their ultimate success.

  8. The DSO has gone through major financial reforms and is still losing 2.81 million dollars a year, so why is it seen as having a bright future?

  9. Paul Hogle says:

    This is really an encouraging conversation. Thank you, one and all.

    We, in Detroit, still have a great journey to complete but, as Leonard and others have observed, we have already come a long distance. While losing $2.8 million is still significant, that number sits in the context of a 10-year rebuilding plan which “planned” for us to lose a little over $3 million last year. That number was a $6 million loss in 2010. This year, the Board adopted a balanced budget and committed to raising $4 million in interim bridge funding (already secured $3.2 million toward that) beyond a $12.8 million annual fund.

    Our future is bright because our plan, while aggressive and ambitious, has achieved a broad consensus across the institution. To return to financial sustainability, over the next 10 years we have to grow earned revenues by 30%; the annual fund to $14 million/year; manage the overall operation to an all-in annual growth rate of 2.3%; and raise an unprecedented, generation-defining amount of new endowment funds. And, what’s exciting, after hearing the case for such a comprehensive, mission-minded future path, Board leadership unanimously signed on. It won’t be easy, but the alternative is unthinkable.

    It’s a great time to be in Detroit — by 2017, we will double the number of subscribers to classical products; double the number of annual donors; and continue to offer “Patron-Minded Pricing” for classical products resulting in 50% of our concert tickets being available for $25 or less. Thanks to the Ford Foundation, Detroiters can buy concert tickets as part of our “Detroit Rush” program — any available seat — for $15.

    Add to this a world-wide webcast viewing audience which now exceeds 200,000 in 72 countries (www.dso.org/live), we are all working to preserve the next 125 of this great Orchestra.

    From all of us working on behalf of the DSO and this hardworking, easy-to-love city, best wishes for a happy, healthy, and prosperous 2013.

  10. What catches my eye here is the goal to increase earned income by 30% over the next ten years while only increasing donations by about 7% (from ca. 13M to 14M.) How will earned income be increased? And how will this move closer to a for-profit model affect the orchestra, especially in terms of its artistic mission? It sounds like a very interesting challenge.

    • Mr.Osborne — thanks again for posts of interest! We are working to increase income based on a wonderfully old-fashioned premise: we start by committing to selling more subscriptions!! (and it’s working!). Of course, we then extend to excellent, weekly single ticket sales and robust building rentals and food & beverage profits (we own our campus). These aren’t pipe dreams on our part — leading up to Blueprint 2023, we are already growing subscriptions and already growing single ticket sales and have already grown our rental/f&b business.

      I’m not sure what a for-profit orchestra model is, but the reason annual giving grows less aggressively is tied to the extraordinary amount of endowment and interim bridge funding which is required to be raised at the same time and, of course, impacting many of the same people. By 2023, we will continue to be 65/35 contributed to earned income.

      I’ll let the greater community comment on the artistic agenda, which is the central tenant of our mission. A thoughtful Board member coined this phrase at our annual meeting which may provide some insight: “there can be no artistic or educational excellence without financial viability; conversely, there can be no viability without excellence.”

      You can let us know every week via our live, free webcasts, here at a concert in beautiful orchestra hall, or at Carnegie Hall next spring on May 9 & 10. I think you’ll find us “making no small (artistic) plans” either.

      • Thank you for these wonderfully transparent responses. I like the formulation about the relationship between viability and excellence. You’ve got my vote. And I wish you every success with the challenging goals.

  11. More numbers for those trying to put the Detroit story in context. Detroit is the 22nd richest urban area in the world. And yet in terms of opera performances per year Detroit only ranks 209th.

    There is no shortage of rich people who could be donors. Oakland County, for example, is the fourth wealthiest county in the United States among counties with more than one million people.

  12. A shameless plug: For 12 straight days, from Dec. 21 at 5pm to Jan. 2 at 9am, we are going to offer our webcast of Tchaikovsky’s Nutcracker free on-demand at dso.org/live as the DSO’s holiday gift to our global audience.

  13. Perhaps Norman misread the chart. -$25.58 million were expenses. The minus means what was deducted from income, not that expenses were down that much.

  14. Ah! Thanks, William. That puzzled me, too.

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