A Muddy Mess

I’ve recently been struck by the opacity of the WAC’s financial statements. As you probably know, the Woodruff Arts Center (WAC) is the parent organization that includes the Atlanta Symphony Orchestra (ASO), the High Museum of Art, the Alliance Theatre, and Young Audiences. Because they do not have separate forms 990 — there is only the one filed by the WAC — the detail on the individual divisions is somewhat limited.

I was hoping to find some information on ticket sales after Romanstein’s announcement that attendance wasn’t a problem so I checked the ASO’s friendly (to management) guide to the lockouts found on the ASO web page, to see if there was any mention of it. Here’s what I found:

“The costs associated with producing and marketing these same concerts were nearly $22 million.”

That sounded odd because I remembered a much higher number listed under expenses on the forms 990 that I had read earlier. I looked back at the FY13 filing and found that they had listed $51,506,092 under expenses for the ASO.

Of course, we know that the ASO division of the WAC has two venues associated with it: Verizon Wireless Amphitheater at Encore Park and Delta Classic Chastain Park Amphitheater. Plus there are the expenses associated with ASO Presents. So if the friendly little guide is only talking about concerts then, hey, maybe less than half of their annual expenses result from the cost of fulfilling its mission by putting on the concerts. Surely the additional $29.5 million dollars of expenses bring in revenue to support the ASO’s primary mission. Right?

So I looked a little deeper and saw that revenues listed on the form 990 for the ASO totaled $22,469,024. Now that’s only going to reflect ticket sales and facility rentals because donations aren’t included in regular revenue. That’s a little strange since that’s roughly the cost of putting on the regular season concerts. What’s more, the expenses column exceeds this amount by enough that there is no way that any expenses, beyond the cost of putting on the regular season concerts. are bringing in more money than they are costing.

Surely they aren’t directing donations, grants, and sponsorship dollars that are ostensibly geared toward supporting the operations of the orchestra to secondary projects that are, themselves, supposed to be bringing in money to support the orchestra? Looking back at the friendly (to management) guide on the ASO website, it says that there are $18m from Orchestra-related revenue sources (donations, WAC support, and interest from the endowment) and an additional $2m dollars from the net revenue of the ASO Presents concerts.

The numbers from the Form 990 are from the season that began with the previous lockout (2012-2013), but if we assume that revenues didn’t decline sharply under Romanstein and that the cost of putting on concerts was the same, since this past season would have been conducted under the same contract as the previous one, then we can only come to the conclusion that there are serious revenue shortfalls coming from non-regular season concert activities.

So now we are left with some pretty serious questions: Where is the disconnect in these numbers? Does the additional $30m reflect the cost of running the Delta Chastain and Verizon Wireless venues? If so, do we know how much of the $22.47m revenue comes from these?

The ASO’s guide says that there is $18m from Orchestra-related revenue sources (donations, WAC support, and interest from the endowment). ASO Presents is contributing $2m.

So are they allocating expenses of $29.5m related to non-orchestra related activities wholly on the ASO and only $2m worth of the proceeds from the same? And wouldn’t only a portion of the ASO Presents proceeds come from the other two venues since some of the concerts are held in Symphony Hall?

Has anyone done a cost-benefit analysis to see if it makes sense to continue running these ancillary functions? Would it make more financial sense to idle or liquidate some of these assets? And how much of the donor, sponsor, and grant money that was designated for the ASO has been directed to these non-orchestra related costs?

We know about the donations that were designated for paying down the remainder of the bond for the Verizon Wireless Amphitheater, but what other funds have been redirected away from operating the orchestra? And of those funds that were directed away from the orchestra operations, where did they come from and what were they originally intended for?

Have the donor development operations of the WAC/ASO been focused more finding funding for non-orchestra related projects than to support the primary mission of the orchestra?

With so many questions and so few answers, we only have the FY13 Form 990 and the possibly misleading numbers from the friendly (to management) guide from the ASO’s webpage so there is no way for us to find out what revenues came from what sources and where they went.

If I were a large donor or grant maker then I might be uncomfortable at this point allocating funds to the ASO since there really doesn’t seem to be any way of knowing where they go. Perhaps there is a good explanation for these numbers — expenses for education programs probably aren’t included in the cost given for putting on concerts, for instance — and maybe they make better information available to the grantors and large donors, but for now there is no way for us to know what is really going on.

Personally, I’d like to believe that there is nothing nefarious going on, but it is getting harder and harder to trust ASO and WAC management.

* * * * * * * * * *

This post originally appeared on Save Our Symphony Atlanta’s Facebook page HERE.

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