Madame Butterfly is not a business strategy

After 50 years, the San Diego Opera is shutting down because… it’s just too hard:

The San Diego Opera shocked many in the arts world by announcing it will cease operations at the end of the current season, citing a tough fundraising environment and weak ticket sales.
The company’s board voted to shut down rather than declare bankruptcy, allowing it to honor its remaining commitments.
“We wanted to do the responsible thing,” Faye Wilson, a life director and former board president of the company, said Thursday.
San Diego Opera was created close to 50 years ago and has attracted top-notch singers throughout its history. It had been ranked among the top 10 U.S. opera companies, according to the national nonprofit Opera America.
The company’s final production at San Diego’s Civic Theatre will be Massenet’s “Don Quixote,” which will run April 5-13.
“Over the last of several years, we have lost a number of prominent contributors, frequently because of death, but especially during the recent economic downturn,” Ian Campbell, the company’s general director, said Wednesday after the board vote.
“The demand for opera in this city isn’t high enough,” he said.
The closure came as a surprise because San Diego Opera had boasted balanced budgets for 28 consecutive years. But like most opera companies around the country, it was contending with increased competition for donations and dwindling, graying audiences.
Leaders of the San Diego company said that its cash reserves had been shrinking.
“The option was to borrow and limp a little longer and hope something would change, or to ride it out until we hit the wall,” Wilson said.
…In recent years, San Diego Opera had cut the number of productions per season to four from five, and it reduced the total number of performances. It had also laid off some of its staff, which stands at 40.
The company said it earns close to 40% of its income from the box office and relies on donations for the rest. Records show that for the 2011 and 2010 fiscal years, the two most recent years for which records are public, the company posted deficits.
For the 2011 fiscal year, San Diego Opera had expenses of $15.3 million. Ticket revenue for the same year was about $6.3 million, and donations were $5.5 million. That last figure represents a significant decline from 2007, when donations totaled $9.7 million.

So, in a nutshell: the company does 4 productions a year and sells over $6 million of tickets. But “demand for opera isn’t high enough”? It needs 40 staffers (after downsizing) to put on those 4 productions, one of whom (the CEO) makes over $500,000 annually – roughly twice what most CEOs of orchestras in the $15 million budget range do. There was no accumulated debt, and the company reported net assets of over $15 million in their most recent audited financial statements, according to this article. But their options were to “limp along a little longer…or to ride it out until we hit the wall?”
Not surprisingly, local reaction has been… unhappy.

“I’m still trying to wrap my head around this because it’s very confusing,” said Carlos Cota, business manager of the International Alliance of Theatrical Stage Employees Local 122. It has approximately 100 members working for the opera both at the Civic Theatre and in the opera’s scene studio, which builds sets for other opera companies and arts organizations.
His members are among the hundreds of employees and small businesses who depend at least in part on the opera for their livelihood.
“In the arts community, we do whatever we need to do, whenever we are called upon to do it,” Cota said. “It’s a partnership. And we never received a phone call, ‘Hey, we need to tighten up.’ Maybe on some little thing, but nothing like, ‘We need to save the opera.’
“We weren’t given that opportunity. None of us.”

It’s hard not to be appalled by this. Adding to the questions around the decision is the fact that Ian Campbell, the long-time CEO widely credited for the success of the company since coming on board in 1982, just turned 65. The appearance is of a manager too stubborn – or too tired – to try to fight his way towards a different way of doing things, or even just to do the hard work of cutting costs, abetted by a board that regards him as irreplaceable and simply can’t imagine life without him.
One thing is certain, though – if the San Diego model of organizational seppuku was the norm, there would be very few arts organizations of any size left in the US. Mine would have been gone a long time ago – like the San Diego Opera, we don’t have our own hall, we burned through a $10 million bequest, and we would kill to have the kind of ticket revenue that they have.  But we’re still here. And so are lots of orchestras – and a few opera companies – that went through far harder times than anything facing the San Diego Opera next year.

“If you look at Dallas, a company that has always been budgetarily very similar to the San Diego Opera, it was faced with much more severe circumstances,” said Opera America’s Scorca. “It was a company that had tremendous deficits and very little cash on hand with major outstanding lines of credit to the bank.
“It had a general director with a really sharp eye for analysis and a clear communications strategy. He reduced the number of productions in the short term to help balance the budget, launched in the same year HD transmissions to the local sports stadium to build community awareness (among other innovative programming), and galvanized the board and donor community.
“And the company next year is going back to its five-production schedule.”

Does anyone on the board of the San Diego Opera remember what the mission of the organization was? I doubt it was to run balanced budgets while refusing to consider doing anything differently than what worked 5 years ago. Wasn’t it more like “giving great performances of opera”? $6 million in annual ticket sales suggests that there’s still a demand for that in San Diego I’m sure it would be harder with less money than they’re raising now. But doesn’t the board owe it to the community to try?
Madame Butterfly ends very fittingly – for an opera. An opera company should not come so quickly to the conclusion that today is a good day to die.