As Pittsburgh Symphony resumes play, financial woes persist
A shortfall of more than $1.5 million looms for the Pittsburgh Symphony Orchestra, even as its musicians resume performances this weekend.
The symphony, which settled a 55-day strike Nov. 23, hasn’t had a balanced budget since the 2007-08 season. It posted a $1.5 million deficit for the 2015-16 season and had projected a similar shortfall for the current season, but that was before the strike. It lost substantial revenue during the strike and incurred extra expenses, but avoided the larger expense of paying the musicians.
“Our finance committee is meeting on Dec. 13 to rebudget for the year and isolate all the strike expenses, but we haven’t gotten there yet,” said symphony CEO Melia Tourangeau.
The symphony recently implemented savings that go beyond a 7.5 percent wage reduction for its musicians. The administrative staff has been restructured, eliminating 10 positions and saving $800,000 annually. Among those to go was Declan McGovern, vice president of orchestra operations and general manager.
Yet all those savings are not nearly enough to put the symphony in sound financial condition, according to Tourangeau. Increasing revenue through growth of the annual fund and tickets sales are the areas where the symphony’s future health will be decided in the near term. The largest sources of the symphony’s revenue stream are donations to the annual fund and ticket sales — supplemented by government and other grants, and drawing on the endowment.
Building the annual fund to a sustainable level is a top priority at Heinz Hall. The development department raised $8.6 million in 2015-16, exceeding its goal, but the symphony is looking to raise that to $12.5 million to $13 million in five years. The largest potential for growth, according to Tourangeau, is from donors in the $5,000 to $100,000 range.
“It’s going to take a lot of effort,” she said. “Look at the wealth capacity in Pittsburgh compared to other markets such as Cleveland and Cincinnati. Actually, Pittsburgh is a wealthier city than both of those markets. We have a recapitalization campaign that we’re putting together and part of that is building the annual fund. … You’ve got to be able to structure this in a way that’s compelling. If you want to have a world-class orchestra, then we’ve got to have the contributions to support it.”
The size of the development department will be increased to meet the higher goals.
The Allegheny Regional Asset District grantmaking body agreed Thursday to give the symphony $1.3 million in operating support in 2017 — $100,000 more than the taxpayer-funded authority had planned to give in its preliminary budget in September.
RAD’s allocation committee members said in a statement they increased the symphony’s award “in recognition of its recently concluded contract negotiations and ongoing financial challenges.”
The symphony plans to use challenge grants and other strategies to build the annual fund and is in talks with major donors and the foundation community looking for help in the short term.
The organization will be seeking additional funds for pension needs, special projects, recordings, touring and to help execute its strategic plan, a large part of which depends on technology to help build the audience base.
The symphony’s goal is to build the endowment to $200 million. It was reported at $122.92 million in the symphony’s current RAD filing.
Tourangeau is optimistic about being able to increase ticket sales.
“We were actually on a very good trajectory before the strike,” she said. “One of the advantages of it ending when it did is that I don’t think we’re going to lose a ton of that momentum. There was a precipitous drop in attendance for several years prior to my arrival, and there were a lot of factors that went into that.”
Symphony ticket sales dropped to 50 percent for classical concerts and 54 percent for Pops in the 2014-15 season.
“The strategies we put in place saw a huge amount of return of audience,” she said. “When Chris Stager came on board (as marketing consultant) when I first started, he said give me until Christmas. From the holiday pops to the rest of the season we saw a huge attendance uptick.”
Although the symphony previously reported an increase in ticket sales for 2015-16, exceeding revenue goals for the first time in five years, it’s only now revealed that ticket sales rose to 57 percent for classical and 69 percent for pops concerts. Since there were seven fewer classical concerts last season, the percentage is based on a smaller number of seats for sale.
The steps taken to increase attendance made maximum use of a database of 140,000 people who have come to the symphony over the past 10 years.
“All of our strategic planning about building audiences for our core product line is about how we’re building relationships,” Tourangeau said. “As an institution, I feel we need to be more specialized in how we relate to our audience to build loyalty and technology plays an important role, which is why we need to invest in it.”
Many pieces need to come together for the symphony to reach financial health, at least in the orchestral context.
“I feel confident we have a really great shot at making it happen,” Tourangeau said.
Mark Kanny is a Tribune-Review contributing writer.