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Tuesday, January 29, 2013

Orchestra London: Staying alive

The agenda for the Investment and Economic Prosperity Committee (IEPC) didn't look too onerous—only four scheduled items, all of them consent items. In short, they were routine items that don't require any special direction to staff other than an indication that the committee is aware of progress to date and to allow the normal process to go ahead. I'll be home for dinner, I thought.

And so I was. The meeting ended about an hour after it began at four o'clock. Not only had the four items been discussed and dispensed with, the mayor had found something costing only a million dollars or so to recommend as part of the budget debates that will continue next week.

 The meeting began with Councillor Matt Brown in the chair since the official chair, Councillor Joe Swan, had a conflict of interest on the first item, releasing some grant money to his employer, Orchestra London.

Ever since the orchestra came to the city in 2009 to ask council to provide a guarantee for a half million dollar line of credit it needed to keep afloat, the orchestra has had to report to council how it is doing on its road to economic sustainability. That sustainability includes an annual grant from the Community Arts Investment Program funded by London taxpayers. If the organization runs too high an accumulated deficit, as Orchestra London had done, it needs to get special permission from the council to have its payment released in advance of the passing of the budget. Therefore, on a yearly basis, the Orchestra brings its financial reports to council and asks to have the next grant installment released.

This was the case on Monday afternoon. Newly appointed board chair, Joseph O'Neill acknowledged that things had been difficult over the past year. The orchestra had lost two corporate sponsors—Western University and General Dynamics—and had run into problems when one of its partners opted out of a program that should have brought in some revenue. Although some changes had been made in programming, at least one of these had resulted in reduced subscriptions and increased reliance on the sale of single tickets. It's hard to do good budgeting on the basis of unpredictable ticket sales.

The problems of Orchestra London are not unique. While arts and culture are billion dollar businesses in London, they have two major costs: talent and overhead. They make the difference between a recording and a concert. Hearing a real orchestra in a real performance hall with hundreds of other music lovers is a very different experience from listening to a CD on your way to work no matter how good the equipment on which it is played. But that difference has to be paid for. You can listen to same $20 CD many times but a symphony with forty or fifty some odd artists needs to be paid for each performance and that adds up despite the fact that most are significantly underpaid. Then too, to really appreciate the sound, the surroundings have to be right with good acoustics and sight lines. And, if you are going to sit for two hours, the seats had better be comfortable.

There is no doubt that the artists who make up Orchestra London, along with its artistic director, Alain Trudel, are very talented. There is also little doubt that the venue, Centennial Hall, built on the cheap in 1967 with a federal government grant, is neither comfortable nor attractive. Nor is it cheap to rent.

All of these factors make it hard to keep the orchestra afloat, especially at a time when money is tight. O'Neill, with a strong financial background at Price Waterhouse, recognized the challenge. The orchestra had lost some sponsorships because of the venue; former sponsors claimed they were embarrassed to take their clients there.

They are not alone. While I attend regularly, many of my acquaintances have said they stay away because of the venue.

But Orchestra London has a plan. Last year it formed a new public/private partnership called Music London which is to be a “prosperous facility and event management company” to foster the advancement of the London music industry.

The proposal Music London put to IEPC last summer was the building of a performance hall at a cost of $40M. Most of this, they believed, could be obtained from other levels of government and private donations. All that was needed was $10M from the city over 10 years to kick-start the whole project. Although the orchestra is somewhat short on corporate sponsors for its programming, many local developers seem to be enthusiastic about this proposal, offering to sit on a special task force to make this happen.

That proposal has gone to newly recruited staff which is evaluating that proposal along with 48 others, including one from the Grand Theatre for an expansion to its current building to create a performance hall. The Grand is requesting the city donate a piece of property worth about $2M to swap with the owner of the property adjacent to its building. It believes it can raise the rest itself.

Then, long after the deadline for proposals had passed, Shmuel Farhi, London's biggest property owner got a sympathetic hearing from the committee. If he had known the city was thinking of putting some money into a performance hall, he would have put in a proposal too. He had the perfect property for it. Wouldn't charge anything for the property, either. He could put in some condos on top. It wouldn't cost the city anything. Later, he had to clarify that the city would have to pay for the building; he would just offer up some land to put it on if he could put some stuff on top. Apparently, he would prefer that to doing something with the many properties he already owns and which are standing vacant.

These proposals undoubtedly bring some discomfort to city staff. Although Farhi is a johnny-come-lately in this, he is an influential force in London. He usually knows what is happening at council before the council itself. The administrators of the Grand Theatre have shown themselves to be financially astute and responsible, capable of extensive renovations while keeping an eye on the bottom line.

Orchestra London, on the other hand, has a much more troubled financial history. Although it has managed to operate in the black the last few years, its profits have been declining from nearly $70,000 last year to just over $5,000 this year. Even that has been largely a result of reductions in spending rather than increased revenues. How can it raise capital for a proposed “Celebration Centre” when it can't raise enough money to meet its operating needs? O'Neill himself acknowledged that, without the injection of the CAIP grant, the orchestra would be facing bankruptcy. 

Still, the Orchestra London/Music London proposal does have one compelling feature: its executive director Joe Swan sits on council. Not that he can or will vote; but all his colleagues and the staff know who he is. It's hard not to take that into account when making or endorsing recommendations.

And so, it has been recommended that the two proponents prepare a “fairness report” for review at a public consultation meeting. That will allow the community to make an “independent suggestion as to the most logical investment opportunity for the City.” No mention of the late entry by Farhi.

In the meantime the committee, save and except Stephen Orser who thinks his ward is not interested, voted to support releasing some money from the CAIP grant to the orchestra until the matter is fully dealt with at budget. That should keep the wolf from the door for a couple of months.

But given the way this council has been voting at the budget meetings, there are no guarantees of what may happen there.

As for the funding for economic prosperity initiatives, at present there is none. Whether there can be any agreement on how to do that remains to be seen. Right now, council is a long way from zero, there are millions of dollars needed for the Normal School, and the committee just endorsed the mayor's suggestion to put aside another million dollars to save Lorne Avenue Public School.

That proposal Stephen Orser supported. It is in his ward.


Lyin' Brian said...

I told Steve to dance with the ones who brung him.

Veteran Observer said...

It's certainly difficult to detect a thread of logic or consistency in recent budget decisions by our esteemed leaders.

Was the Harmony House all booked up and Joe couldn't get a reservation?

Kathy Clee said...

Joe Swan has made me so angry with his actions on City Council that I almost find myself vindictively wanting to stick it to Orchestra London.

I wonder if others feel that way too? I wonder if his presence does Orchestra London any favours?

Anonymous said...

Orchestra London has always had a plan...just saying

bill b. said...

Surely before we go down this road there must be a reality check. There is no issue with the talent; there is an issue with spending millions of dollars supported by "Public Dollars" whether from Provincial, Federal or Municipal on something that will forever demand major subsidies to exist. Patron revenus will never come close.

bill b. said...

There is a financial crisis and the only way to survive is millions of dollars from us. (includes federal, provincial or municipal dollars). If patrons can't cover and given last financial statement review major capital expenditure is wrong! This has nothing to do with quality of personnel it has to do with community reality!

Anonymous said...

If you think the province and the feds are going to ante up, you are eating at the Harmony. They are tapped out. Joe's friend Bentley is leaving politics... and the Feds are cutting back.

Anonymous said...

Re Lorne Ave and the councillor from ward 4, as former councillor Paul Yorke would say.... that is ward birding.

Lily Tomlin said...

It sure makes me proud as punch to see that the fine Councillors of the Forest City have seen fit to give themselves a nice medal.

I doubt if anyone else would.