Philadelphia Orchestra not out of the woods yet

You might assume that the Philadelphia Orchestra today is benefiting from a popular music director, an economic climate greatly improved since the Great Recession, and the good fortune of living cheek to cheek with a growing - and affluent - downtown population.

Yet this trio of assets has not been enough to buoy some key measures of the orchestra's health. Board Chairman Richard B. Worley diagnosed the core concern at the Philadelphia Orchestra Association's recent annual meeting: Concert attendance between September and May fell again last season - to 153,000 paid listeners in 2014-15 from 160,000 the season before. The goal had been 189,000.

"I don't know if it's because the audience isn't here, or the audience is here and we don't know how to reach them," Worley said at the gathering of board members, musicians, and interested others. On average, Verizon Hall was filled to just 76 percent of capacity with paying listeners for the orchestra's 84 main subscription concerts. (An additional 9,000 student passes were sold through the eZseatU program.)

The slip in attendance is worrisome. Philanthropy tends to spring most naturally from active listeners, and the downtick produced a drop in revenue. "We had a shortfall of $3 million in our ticket sales and in our recurring contributions," orchestra spokeswoman Katherine Blodgett said. "Nevertheless, expenses were within budget and additional extraordinary gifts enabled us to balance the budget."

Looking ahead to the current year, the orchestra has cut $1.8 million to make its $44 million budget. Staff hires have been deferred, theatrical elements have been eliminated from a production of Messiah, and a L'Histoire du soldat joint project with the Mural Arts Program and director James Alexander that was to have been part of the Kimmel's Philadelphia International Festival of the Arts next spring has been shelved.

"It was incredibly painful," president and CEO Allison B. Vulgamore said of the cuts, "because it involved well-thought-out concepts in marketing and development and in global [initiatives] to be delayed."

A new one-year musicians' contract provides a 3 percent raise and continuation of a reduced ensemble size while arts consultant Michael M. Kaiser helps the orchestra come up with a strategic plan that might connect new programming and marketing ideas with prospects for boosting philanthropy.

Musicians are deeply disappointed in the terms of the October labor agreement, in which their base pay slipped in comparison with those at some other major orchestras.

But they are not the only ones with salaries lower than their peers. Music director Yannick Nézet-Séguin earned $519,319 in 2013, which represents 10½ weeks' paid work, according to Vulgamore. In addition, he donated his time for two weeks of subscription concerts, plus educational, fund-raising, and community activities.

That's a lower level of compensation than music directors at other major orchestras: The New York Philharmonic's Alan Gilbert earned $1.7 million in 2012 for 23 weeks of conducting, while the Los Angeles Philharmonic's Gustavo Dudamel was paid $1.4 million for 17 weeks. Franz Welser-Möst, the Cleveland Orchestra's music director, received $977,496 in 2013 for 14 weeks. The Chicago Symphony Orchestra's Riccardo Muti made $2.3 million in 2013 for about 14 weeks of tours and subscription and special concerts.

Music director pay typically is pegged to the number of weeks on the podium, but the job entails more. "Of course, music director responsibilities are a year-round job," said Chicago spokeswoman Rachelle Roe, "which includes artistic planning and oversight of the full season of offerings, as well as musical responsibilities."

Compensation for Nézet-Séguin, recently named Musical America's 2016 Artist of the Year, was lower than for Vulgamore, whose total compensation during that year was $733,242, according to the orchestra's tax returns - on the high end of her colleagues, though not the highest, and a flip of the conductor-CEO compensation model typical of large orchestras.

Nézet-Séguin's immediate predecessor, Charles Dutoit, was paid $1,468,814 in 2010, tax forms show. Blodgett was unable to say how many weeks he conducted that year, but Inquirer records show nine subscription weeks, three tour weeks, and additional summer dates.

Vulgamore would not say whether Nézet-Séguin's contract - which extends through the 2021-22 season - calls for raises, though his number of weeks has increased. "I will say he is generous, both in when he charges us and what he charges, and he gives additional time frequently," she said. "Frankly, we never resist offering him opportunities to conduct beyond the contract."

As an example, Vulgamore said he donated his time for concerts during Pope Francis' visit.

Despite the widespread perception that the orchestra would be just fine after exiting bankruptcy in September 2012, the financial struggle continues.

The gap between recurring costs and expenses in the year ending Aug. 31, 2015, was $8.4 million. Special bridge funding - money raised beyond normal annual contributions - reduced the gap, but still left the orchestra with a deficit of $729,000. The plan over the next few years anticipates that as special bridge funding declines, the orchestra will be raising endowment, whose income each year will eventually replace the bridge funding.

The forecast for fiscal year 2016, for instance, calls for bridge funding to decline to $5 million from this year's $8.5 million. But new endowment income is expected to provide a new nearly $1 million. This means the orchestra will look to a hefty increase in earned revenue to make up the rest of the gap, to $17.7 million in 2016 from $15.3 million in 2015.

It also means raising endowment - a lot of it, and quickly. The orchestra has cash and pledges of $20 million toward a goal of $100 million or more.

Can it get there?

"I think we have a strong start," said Vulgamore, pointing out that the orchestra has exercised its fund-raising muscle by landing $70 million for the bridge fund and $20 million for endowment. "That doesn't solve the endowment problem, but it's worth noting that this organization is an excellent fund-raising organization. I think that's worth sort of pausing on. The orchestra already raised approaching $100 million from this community outside of its annual fund."

Of Worley's question regarding attendance, Vulgamore said: "I would say the audience is here. The question is, is what we're offering sufficiently diverse to be growing new ears for music? That's a programmatic question."

The questions will only multiply in coming months. Kaiser, chairman of the DeVos Institute of Arts Management at the University of Maryland, was brought in at the behest of the musicians during contract talks, and he already is interviewing a broad sampling of the orchestra's constituency - board, staff, musicians, donors, community members - to arrive at an organizational call to action that Worley said would become the orchestra's new five-year plan.

Vulgamore suggests a future that will be much more heavily educational, and that might find the orchestra less frequently in Verizon Hall. She envisions the possibility of a portable stage - or even something like Universe of Sound, an immersive educational musical installation developed by the Philharmonia Orchestra in London to demonstrate how an orchestra works - that would go to audiences, rather than depending on audiences to come to it.

This would mark a startling departure for an orchestra that spent much of the 20th century in pursuit of a custom-built downtown concert hall - something it finally achieved with the opening of the Kimmel Center in 2001.

"Does that mean we would do less subscription? I don't know. Does that redefine the work we do at some of our venues? It might, if it's exciting to all the partners. For me programmatically it's not just the obvious - which is, is there a different way to earn money using an orchestra?"

What that means precisely hinges on Kaiser's report and the orchestra's willingness to accept its conclusions and act on its recommendations.

Vulgamore, who took over as the orchestra's administrative head in 2010, said a lot of ideas had already been generated and tried. "He'll be building on strategic planning that's been here. It's just not been funded." Still, she said the arrival of his "independent voice" was well-timed. "I think he can have more influence now."

"We've raised, to stay the Philadelphia Orchestra, significant funds," she said. "Some like to characterize it as plugging a deficit. I might characterize it as planful investment in getting to where we can actually design a future."

Worley put it like this: "It probably means we're going to figure out new ways to be of value to the community. I can't think of a better set of eyes than Michael Kaiser's."

pdobrin@phillynews.com215-854-5611