New York City Opera loses its voice after 70 years
By Sidni Shorter In Podcasts Posted November 19, 2013 0 Comments

New York City Opera loses its voice after 70 years

A week ago, we watched the doors close on one of the most celebrated arts organizations, the New York City Opera (NYCO), which had experimented with fresh material and nurtured early music careers of numerous stars like soprano diva Beverly Sills and Spanish tenor and conductor Placido Domingo.

Years of hardship, a controversial move from the Lincoln Center in 2011, and an emergency appeal to raise $7 million by Sunday couldn’t save the 70-year-old organization. Once called “The People’s Opera,” NYCO recently reached out to its community for smaller donations through a Kickstarter Campaign as well as major gift solicitations. Unfortunately, only $2 million was raised. Noteworthy donors such as Mayor Michael R. Bloomberg said he would not be saving NYCO from its fate because “…the business model doesn’t seem to be working.” The board began the process of closing down the operations and filing Chapter 11 while general manager and artistic director George Steel reflected on the fact that NYCO was home to countless artists and the launching pad for many accomplished singers, composers and conductors.

Innumerable nonprofit leaders throughout the sector have read this news, and we ask, “What went wrong?” As a supporter of the nonprofit sector and leader in financial management for charities, I’m always curious about what can be learned from seemingly stable organizations like one that closes its doors after such a long tenure as a mature organization. Here are the benchmarks worth noting in the articles I have read about NYCO’s unfortunate demise:

  • New York City Opera ran nearly a decade of deficits starting in 2003.
  • NYCO attempted to reboot by hiring European impresario Gerard Mortier, but the 2008 economic crisis hit and he resigned.
  • The board elected to begin drawing from the endowment after the crisis in 2008. City Opera embarked on a plan to shrink the season in 2011.
  • The organization’s decision to leave the Lincoln Center in 2011 was characterized as reckless.
  • NYCO began performing in different venues throughout the city.
  • Despite the accolades for a balanced budget, it continued to struggle with cash flow and fundraising.
  • City Opera’s chorus and orchestra members took a pay cut of more than 80% in 2012.
  • These decisions came to a head in August of 2013 as NYCO cobbled together $1.3 million to produce a U.S. premier of Anna Nicole.
  • This production was its last.

While it doesn’t seem fair to weigh in on NYCO’s situation with the benefit of hindsight and objectivity they may not have had, it is prudent to try and learn something from its challenges over the years. A decade of deficits, an unchanging business model, drawing on the endowment, and struggles with cash flow are a few of the early red flags. If Execute Now! could turn back the clock to 2003 and advise the NYCO, we would have recommended financial exercises and tools we use with nonprofit clients every day. Some of them include:

  • Determine the leadership’s commitment to sound financial management.
  • Evaluate and institute cash flow reporting and shared responsibility of monitoring with staff and board.
  • Assess the efficacy of the financial committee at the board level and implement preventative policies and procedures as needed.
  • Require tough decision making surrounding the budget as it relates to forecasted revenue streams.
  • Build financial scenarios for contingency planning based on earned revenue (ticket sales in this case) and feasible fundraising versus need-based fundraising.
  • Consider the relevance of the business model; is it staying current with the changing competition, funding climate and ticket buyers’ interests?

It’s always difficult to focus on the positive lessons when notable organizations like the New York City Opera close its doors. Some of the NYCO artistic management staff as well as musicians and singers have said they plan to support the opening of a new performing arts organization. If they do, I hope one of their early considerations is a durable financial business model and a commitment to establishing consistent systems that help ensure management and artistic decisions support it.

By Erica McGeachy Crenshaw, CEO of Execute Now!

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