It took an open records request and a comparison of numbers across four different sources, but it appears that I have finally found out how much the Verizon Wireless Amphitheatre (VWA) costs the Atlanta Symphony Orchestra (ASO). I have mentioned before that the financial statements available from the Woodruff Arts Center (WAC) are not clear enough to tease out the real costs related to the various activities of the ASO. I pointed out that the funding model used for the VWA broke from the approaches used for other capital development projects that the WAC has undertaken and that it has resulted in a large financial burden for the ASO. I have also already discussed the fact that there seem to be conflicts of interest among many on the WAC’s Board of Governors when it comes to the VWA and that these conflicts of interest may be preventing them from putting the ASO’s interests first when it comes to decisions relating to that property.
The Woodruff Arts Center leadership has repeatedly stated that the ASO has been running deficits for the past 12 years. That coincides with the WAC’s incorporation of what appears to be a shell company, Encore Park for the Arts, and purchasing the land for the VWA from one of its board member’s companies, Cousins Properties. In 2007, when the WAC issued the bonds for the VWA project, they held a credit rating of AA3 from Moody’s. Since then, their bond ratings have been downgraded twice and, just last year, Moody’s issued a statement downgrading the WAC’s outlook, suggesting that another downgrade is likely. The principal reasons given for this are the ASO’s accumulated deficits and the WAC’s accumulated debt. It is hard to imagine that the debt from the VWA is not related to this — indeed, that is likely part of the reason why the WAC leadership retired that debt early rather than fund ASO operations. But what about the costs of running the venue? Does it pay for itself or is it a liability? If you have been following the reports around this lockout or the one in 2012 then you probably have heard mutterings about the VWA being the real source of the ASO’s financial shortfall. Is this true?
Right now, the WAC leadership are trying to close the ASO’s budget gap on the backs of the musicians. Although they say that they’ve cut everything else that they could, there are many who question this. Unfortunately, the WAC has been unwilling to release any financial documents; even the ones that they are required to make available upon request as a 501(c)3 non-profit organization. This has made it very difficult to tell what the biggest expenses are for the organization. To get around the WAC’s stonewalling, I have taken the liberty of making an open records request for their financial statements from one of the government agencies that has granted money to the WAC. Even after getting these documents, though, it was hard to suss out the specifics of the ASO’s revenues and expenses. It was necessary to review several different sources to pull it all together.
I was able to find how much it costs to run the VWA in the budget for a fiscal year 2015 (this season) application for funding. It seems that it costs nearly $5.5m just to operate the VWA. We can assume that the numbers budgeted for FY 2015 are similar to — if not smaller than –previous years since no major changes have been made to the VWA and the bond that financed it has been retired.
Figuring out how it may be paying for itself is a little tricky. If we look at the WAC’s FY 2013 Form 990 then we see that Part VIII Section 6a lists total rental income for the whole of the WAC as roughly $1.4m. Even if that were all from the VWA — which would not be the case since the WAC has a number of venues and meeting spaces that it makes available for rent — then it still wouldn’t cover the costs. So how about ticket revenue from the pop concerts held there? The figures from the ASO’s schedule of activities from the WAC’s FY 2013 Audit tell us that the ASO brought in nearly $14m from ticket sales in 2013. If ticket sales for the Classical, Pops, and Holiday series of concerts were roughly the same as the amount that the WAC leadership stated in their FAQ for 2014, then $4m of those ticket sales came from orchestra concerts and $10m came from the ASO Presents concerts. In the aforementioned schedule of activities from the audit, we can see that the cost of the ASO Presents “Popular presentations” were roughly $15m. If we assume that $5.5m of that was the cost of running the VWA, then ASO Presents had net revenues of around $500k in 2013.* Even if we pretend that all ASO Presents concerts were held in the VWA — which they weren’t since they also produce concerts at Symphony Hall and Delta Chastain Park Amphitheater — then that leaves a $5m deficit resulting from running the VWA. Now, some small portion of that is probably covered by rental fees. Some more will be covered by food and beverage vending and parking fees, but the schedule of activities from the audit only lists $5.1m in ancillary revenue and there is no way that all of that is generated solely from activities in an amphitheater that is only open part of the year.
If you’re like me — and I know that I am — then you are wondering why the WAC hasn’t idled the VWA to save money instead of idling the orchestra since the operation of the orchestra is a major part of the WAC’s core mission: they’re the Woodruff Arts Center, not the Woodruff Venue Management Center, after all. For that matter, it may be in their best interest to sell it off or even give it away like the Community Foundation for Greater Atlanta did with the 14th Street Playhouse when it was dragging their finances down during tough times. We also have to ask why the WAC has seemingly obfuscated the financial burden that the VWA represents to the organization. Could it be because there are three people on the board of Governors who have financial interests that have directly benefited from its construction? Could it be because it sells booze provided by Douglas Hertz’s company? Could it be some other, less nefarious reason? Are they just incompetent? There’s no way to know: it took four different documents just to tease out these numbers and the WAC leadership has shown that they are not willing to give us the real numbers.
Personally, I hate the idea that my donations are going to run an amphitheater that has nothing to do with the classical music concerts that I hold so dear nor the educational programs that do so much for the Atlanta community. Even if the lockout ends tomorrow then we, the donors and subscribers, need to demand that these questions are answered. If the current leadership of the WAC cannot act in the best interests of the subsidiary arts organizations that they purportedly serve then they need to be driven out.
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* The WAC has stated that net revenue from ASO Presents concerts totaled $2m in FY 2014. The discrepancy between that number and the one that I have calculated is likely due to ASO management increasing the number of ASO Presents concerts dramatically in FY 2014.