Section A1.
UTAH SYMPHONY FINANCIAL STRENGTHS
1. Performance Revenues: The USO is projecting an increase in performance revenues in the amount of $679,795. 00. By bringing in more money from ticket sales, the USO will help mitigate some of the damage done by the weakened economy. To reach this increase the USO increased their concert schedule and will likely need to modestly raise ticket prices.
2. Contributions: Fundraising was very strong for the USO. An increase of $619,772 in contributions is projected for the upcoming year. Giving the symphony much needed funds with the loss of some government grants.
3. Box Office Fees and Rentals: Projected to be a huge boon in 2002, the symphony will likely go from $3,829 to an astounding $243,000 dollars. By expanding the fees on ticket sales for the symphony, the organization will be able to tap into a resource that is almost brand new for the group.
UTAH SYMPHONY FINANCIAL WEAKNESSES
1. Government Grants: The symphony depends on government grants for the arts like many other institutions around the United States. But after the terrorist attacks on New York City and Washington D.C. on September 11, 2001, the bubble bursting in the internet boom and other factors, the government was forced to make cutbacks on funding for the arts. The symphony is projecting a loss of $220,687. That is a big hit to the budget that needed to be made up for the group to function and pay their expenses.
2. Orchestra Salaries: Related Benefits and Payroll Taxes: The cost of paying for the unionized symphony is projected to rise from $10,447,382 to $11,851,541. While the skill and talent of the symphony cast is paramount to the success of the entity, and increase in expense of $1,404,159.00 is a high price to pay at a time when certain resources like government grants are shrinking.
3. Surplus Depletion: A critical problem for the symphony is the shrinking surplus. In 2001 the symphony managed a budget surplus of $116,308.00 but the projection for the following year is a stunning drop to $2,042.00. There are a number of factors but the surplus is vital to help cover unexpected expenses and when needed, it gets carried over into the following year to prevent the need for spending cuts.
UTAH SYMPHONY LEADERSHIP STRENGTHS
1. Led to Group 2 Status: Under Keith Lockhart’s ambitious leadership, the symphony increased their schedule to year round and performed more than 200 times. With endowment over the average for Group 2 symphonies (8.8 million dollars) the Utah symphony came in at 10 million.
2. Consolidation: The staff of the administration and the cast of musicians all work under the same roof in Abravanel Hall. This makes for more efficient communication and coordination from the two components of the symphony and gives Mr. Lockhart a much easier time addressing the needs of the entire symphony organization.
3. Keith Lockhart: With over 600 concerts conducted, including concerts at the Olympics and the Super Bowl, Mr. Lockhart brings strength and credibility to the position of conductor. He also brings with him the experience of creating 50 television shows featuring well known symphonies like the Cincinnati Pops and conducted some of the highest profile symphonies in the world.
UTAH SYMPHONY LEADERSHIP WEAKNESSES
1. Lockhart’s Short Tenure: During the course of proposing the merger, it was clear that current symphony director, Keith Lockhart was considered, not only an asset but, integral to the existence of the merger. Without him, the merger proposal would have been withdrawn. But the long term efforts to permanently replace the legendary maestro and musical director, Abravanel did not result in a quick fix. The symphony first employed maestros Varujan Kojian for 3 years and then Joseph Silverstein who was with the USO from 1983-1998. Keith Lockhart has been the USO’s musical director for less than three full years.
2. Outside Influence: Beyond the approval of the board of directors, Lockhart must also seek the approval of the widow of Maestro Abravanel, Carolyn. When the merger proposal went public she immediately released a statement opposing the merger under the assumption that the USO would be getting a second billing to the Utah Opera. As the widow of Maurice Abravanel, whose name graces the home venue and offices of the symphony, Lockhart will need to compete against his predecessor’s memory when taking the USO in a new direction.
3. Financial Planning: Keith Lockart, by his own admission is focused on the artistic direction of the USO and prefers a second person focus on fund raising, managing expenses, negotiating with the union and other business management aspects of the symphony. As the leader of the symphony, this shortcoming can greatly limit the symphony’s growth and financial stability.
Section A1. a.
Key Steps for Anne Ewers to address the weaknesses:
Addressing the weaknesses of the symphony will have advantages and disadvantages. Coming from her experience as executive director of the opera and the fact that all of her most noteworthy experience comes from working for past operas, the symphony will be a completely new environment and culture. She will need to approach it with humility and strength if she is to be an effective leader.
1. Government Grants: To meet the added pressure of the government lowering the amount of grant money that the symphony will receive, Anne will need to explore additional box office fees and possibly increases to ticket prices. The gains made should suffice to make up the difference.
2. Orchestra Salaries: Much more difficult to mitigate. The union already fears renegotiation in the case of the merger. So while Anne will have to deal with the initial trepidation from the musicians, she will be able to utilize Keith Lockhart as a bridge. The trust the union has put in the conductor will allow him to arbitrate. She can convince Lockhart what must be done to prevent financial catastrophe and protect the symphony and he can articulate that information to the union in a way they can understand and be more likely to accept a proposal he endorses.
3. Surplus Depletion: With the symphony’s surplus being projected to nearly disappear, Anne will need to use her considerable ability to sway donors to help refill the symphony’s coffers. She was able to eliminate a 450,000.00 debt she inherited when accepting the director position in Boston. Here she will have the advantage of telling donors that their contributions will be building the symphony’s future which should be considerably more desirable to donors than was paying for the mistakes of the past.
4. Lockhart’s Short Tenure: Keith Lockhart made a respectable name for himself in the three years he’s been directing the symphony but with two of his predecessors well into double digits, Lockhart will be looking to cement his position and establish his dominance over the symphony half of this new entity. Anne can use this to her advantage by convincing Lockhart that together they can carve out Keith’s legacy at the symphony and get him out of the shadow of Abravanel. By constructing what Lockhart’s legacy might look like, Anne will be able to manipulate the maestro to do what needs to be done to grow the symphony and recover from the financial difficulties.
5. Outside Influence: Anne Ewers can use her power of persuasion to convince influential people like the widow Abravanel to not only give the merger a chance but because of her personal power, she is capable of turning the doubters into great supporters. Her ability to part people from their money is well documented but when people invest their money it is an expression of trust in the entity and the person leading it. By convincing outside critics of the merger to support it, Anne will be able to help control public opinion and keep up morale within the symphony and the opera. One of the simplest ways to start winning over the widow would be to propose naming the newly merged organization the Utah Symphony and Opera as her chief concern seems to be the thought of the symphony being overshadowed by the opera. She doesn’t believe her husband would accept that. With this minor concession Anne could help set a tone that will put the merger in a more positive light for an outside influence that can make a big difference. 6. Financial Planning: Keith Lockhart stated that two types of people need to be in charge of the symphony, with him currently relying on Mr. Parker. While the maestro is quite comfortable directing the symphony musicians and the artistic direction of the symphony, he is not at all comfortable with budgeting and fundraising and relies on Mr. Parker and the board. So to mitigate this weakness, Anne Ewers should empower Lockhart to hire an assistant to specialize in those fiscal management skills. But by having him answer to Lockhart and Lockhart to Ewers, it better allows the maestro to maintain his authority in the symphony.
Section A2.
UTAH OPERA FINANCIAL STRENGTHS
1. Contributions: The opera projected significant growth in contributions from 2001 to 2002. Ewers expects to raise 653,954 more dollars than in the current year. She will bring this incredible talent for fundraising to the new merged entity and while personality cannot be taught, she will likely have an opportunity to help others learn her techniques to grow the opera and the symphony together.
2. Investment Income: The opera’s investment income is expected to rise from 177,730.00 to 183,327.00. While the growth isn’t tremendous, it is still moving in the right direction and as Anne Ewers and her team continue to grow the opera and build on the progress that Anne continues to make in her leadership of the opera.
3. Prop sales and sets: 327900 vs. 365999 The opera has an advantage over the symphony. It has the ability to sell the props and sets it uses for its performances. Wigs and costumes and such vary in value from year to year but it is an excellent way to mitigate a necessary cost. The opera made 327,900.00 in 2001 and the opera is projecting 365,999.00
UTAH OPERA FINANCIAL WEAKNESSES
1. Performance Revenue: The performance revenues from the opera are expected to drop from 1,028,177.00 to 733,900.00. With a drastic drop of over 294,000 the opera could have to look at making some serious cuts if they can’t compensate for the loss.
2. Guild Income: Income from the guild compared to the symphony was already a low 40,000 for the opera but with it being reduced to 30,000 it becomes an even greater weakness. With performance revenue dropping, income from the guild and all other income become so much more crucial.
3. Program Expenses: Program expenses in 2001 were 3,017,069. Even under the accomplished leadership of Anne Ewers the expenses are expected to rise by 320,899.00 to 3,337,968.00.
UTAH OPERA LEADERSHIP STRENGTHS
1. Anne Ewers: The director of the Utah Opera has an extensive background in the industry. She was a stage director and an administrator with a history of retiring debt and increasing budgets. The ability to diagnose what is going on within an opera and correcting course led her to retire nearly a half million dollar debt in Boston and quadruple the budget in Utah.
2. Forward Thinking: The opera performs throughout the year. But the opera is also looking toward the future, performing for 70,000 students a year. By doing this they are inspiring future audience members, future patrons and future performers.
3. Well Organized Staff: UOC had 23 people that operated at a high level of efficacy. Reaching out to the local community and production, music administration. Organizing the staff in this way led to the UOC endowment to swell to $5 million dollars and diverse support from national and local entities.
UTAH OPERA LEADERSHIP WEAKNESSES
1. After careful evaluation, the only leadership weakness that the UOC faces is in going into the merger. As director of the unified UOC and USO, Anne Ewers will face a new reality. While head of the UOC only, Ewers and her team have excelled at every aspect of the management of the opera. And when the opera merges with the symphony, that team will likely face a restructuring and Anne Ewers’ ability to focus on the needs of the opera will be divided with the needs of the symphony.
Section A2. a.
Key Steps for Anne Ewers to address the weaknesses:
Anne Ewers will face some of the biggest challenges she will face through the division of her attention. She will need to focus on hiring her replacement as she will need to be mindful of the needs for both organizations and no longer able to focus purely on the UOC. There will need to be a great deal of reorganization and culture blending. But as she deals with the leadership challenges, the financial challenges below will also have to be addressed.
1. Performance Revenue: The performance revenues from the opera are expected to drop from 1,028,177.00 to 733,900.00. The opera could mitigate this damage by increasing the schedule to allow for more ticket sales, or make cuts on the costs of future performances to widen the profit margin.
2. Guild Income: Guild income is being reduced from 40,000 to 30,000. Ewers would be well equipped to manage this particular issue. 10,000.00 is a clear and simple number to work with. She should go to donors and see if she can find someone to cover this specific deficit. It would also probably help if the donor(s) were recognized for it.
3. Program Expenses: Program expenses are expected to rise by 320,899.00. Everything will need to be on the table for this. Ewers should evaluate her supply chain. Deciding who to use for things like lighting purchases, travel costs etc. can help reduce costs. Exploring sponsorships for specific programs can eliminate the program expenses one show at a time with the only limit being how many performances can be connected to a sponsor.
Section A3
The Utah Symphony Orchestra (USO) under the direction of Maestro Keith Lockhart:
Vision: The stated vision for the symphony is to create a world class operation using a business model that calls for high quality concerts that will sustain the 83 full-time musicians employed under a union contract. The following are brief summaries of the strategic goals, critical actions for success and measurement tools for the financial, customer, internal process and learning & growth components to the scorecard.
Financial- The goal of the symphony was to be financially stable with a sufficient yearly profit. They decided to accomplish this they needed to raise funds enough to be able to not raise ticket prices. It was decided to accomplish this they would need to raise profitability from 116k to 500k per year.
The symphony failed to meet this goal and due to many things beyond their control, endowment amounts, shrinkage of government grants, they actually are projecting to lose much of the 116k. The price of tickets is likely to rise to make up for the losses although it may be technically possible to keep ticket prices the same while raising box office fees. A significant reason for the merger is the apparent financial stability of the Utah Opera. The hope is that the two entities will complement one another.
Customer-The symphony wished to provide customers with world class performances by hiring high quality talent. They would measure success by customer feedback. By 1979 the then musical director of the symphony, Maurice Abravanel, accomplished the goal of turning the small community orchestra into a world-class organization. And as the most influential and measurable form of customer feedback is contributions and performance revenue, it is possible to extrapolate success from the increases by just under 620k in contributions and just under 680k in performance revenues. Customers continue to buy tickets and contribute money which is a significant form of endorsement.
Internal Process –The symphony stated that they would try and be flexible in decreasing expenses because of a lack of fundraising dollars. It was important to renegotiate their contract with their musicians and improving profitability would be how they tell if they succeeded.
The symphony failed to meet this goal as the cost of employing their musicians increased by $1,404,159.00. Profitability shrank and their projected surplus is expected to shrink to 2k from 116k. Expenses in general rose by 1.5 million dollars with the pay, benefits and payroll taxes for the musicians accounting for the vast majority of the increase.
Learning and Growth- The symphony wishes to include a wider variety of shows offered to better attract a diverse audience. Marketing to a younger audience is considered imperative to that success. Success will be measured by ticket sales and returning customers.
Success on this can be claimed. Ticket sales and contributions rose, a sure sign of pleasing the audience however with the information available, it is difficult to say if they accomplished this goal by drawing a younger audience. Demographics were not provided.
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The Utah Opera (UOC) under the direction of Anne Ewers:
Vision: The stated vision for the opera is to build a nationally renowned opera house. To do this, they decided a business model that improves the quality of current performances and increases endowment funds would be necessary. The following are brief summaries of the strategic goals, critical actions for success and measurement tools for the financial, customer, internal process and learning & growth components to the scorecard.
Financial- The goal for the opera in finance was to be financially stable with a growing reserve fund. To do this they expect it to be imperative that they raise additional funds and succeed in acquiring endowment funds. An improved amount of reserve funds will make it clear if they met their goal or not.
Technically this goal was not met. But the spirit of the goal may have been. The opera had a surplus of $582,409 in 2001 and in 2002 it was expected to go down by $109,407 in 2002. But it is difficult not to compare the financial management of the opera house to the symphony. While they did not reach their goal of becoming more financially stable than they were, they clearly faired better than the symphony which lost 98% of its reserve fund. Even during the down economy, the opera lost less than 20%. A small victory in a troubled economy.
Customer- The opera’s goal is to have performances that are acclaimed both regionally and nationally. To do this they must excel in creating quality performances and can measure their results by the number of sold-out or near sold-out shows they perform.
Anne Ewers took the opera on tour, exposing it to as many new patrons as possible. The opera attracted audiences everywhere it went and donations from both inside the state and outside the state. While the merger proposal is unclear about whether or not the shows were sold out but the shows drew audiences from inside and outside the state. While not a hundred percent evident, I determine from the quantities of shows and the donations received that the opera was at the very least close to accomplishing the goal.
Internal Process- To maintain financial stability and attract top talent. Critical to the success of this is having successful negotiations with selected performers and it can be measured by profitability and by having critical reviews that note the quality of performance.
The opera’s endowment grew to 5 million dollars in 2002 and with endorsements coming from local businesses and other businesses from out of state, it appears to that the goal for internal process has been close to complete. While the surplus went down in 2002, the opera is still doing quite well.
Learning and Growth- To ensure production of high-quality performances during a five year period. Critical to the success is increased ticket sales and growth in the endowment fund. Measuring this success can be done through seeing capital needs met by increased ticket sales.
The first year from 2001 to 2002, it seems to appear that the opera could sustain itself further but without a five year period to explore but if the trend with the surplus continues it will expire within the five year period and while there is no way to know for certain, it does not appear that the opera will be able to sustain the current trend and reach this goal.
B. Scorecard for Merged Company
Vision: The newly merged Utah Symphony and Opera have a shared vision to be considered individually as world class in their respective category and to set an example as the first merged entity to achieve long term success. The business model charts new territory as it blends to different cultures to create an environment where both the symphony and the opera can thrive.
Financial-
Strategic Goal: Being financially stable enough to continue to perform as both a world class symphony and a world class opera.
Critical Success Factor: Being flexible enough in curbing expenses for performing and charging an adequate amount for tickets and box office fees.
Measure: Once all expenses for both entities are paid, a substantial surplus should still exist.
Customer-
Strategic Goal: Expand the audience of both the symphony and the opera by increasing the number of concerts and locations.
Critical Success Factor: Designing performances that put the emphasis of quality entertainment for a wide variety of audience members.
Measure: Seeing an increase in sold-out shows and seeing positive feedback through critical reviews and new social media efforts.
Internal Process-
Strategic Goal: Blend the two distinct business cultures to create a staff that can successfully execute a new business model that meets shared priorities and tends to the individual needs of both entities.
Critical Success Factor: A staff with a wide range of experience in managing the costs and efforts that go into the production of successful art organizations like the symphony and opera.
Measure: Ability to combine resources and limit conflict.
Learning and Growth-
Strategic Goal: Building a new program where the symphony and opera perform together in a shared effort.
Critical Success Factor: Creating a program that divides the emphasis equally on both the symphony and opera (going beyond the existing program where the symphony acts as the orchestra for the opera)
Measure: A weekly or bi-weekly performance is performed featuring both entities working together in a single show that gives equal time built in three ways – a third symphony, a third opera and a third a combination of the two.
C: Strengths and Weaknesses of the Merged Companies Scorecard:
Financial
Strengths: The symphony has a remarkable surplus and the opera has a strong management team. The new entity will be run by Anne Ewers who has an exemplary track record for fundraising and the merger will be a cause to renegotiate contracts to possibly cut back on the greatest single expenses; wages, employment taxes and benefits.
Weaknesses: Mixing of the two corporate cultures will be complicated as there will invariably be cutbacks in the administration departments on the two separate entities as they become one. Negotiating contracts will put the musical director of the symphony in a difficult position. There is a possibility that some talent will leave and need to be replaced during the process.
Customers
Strengths: Anne Ewers will have at her disposal world class talent in both her opera and the symphony. The touring schedules set up thus far have established many locations for the symphony and the opera to perform. Several of the buildings may prove to be interchangeable and offer venues to both entities even though in the past they had only housed one.
Weaknesses: Expanding to new venues carries with it exploratory process and new production costs. And developing a new program to combine the efforts of both the symphony and the opera will also cost in money but will also incur personal expense as there are various conflicts that can arise based on perceptions of fairness and creative differences as well as logistical issues.
Internal Process:
Strengths: The blending of these two cultures will be aided by the talents of Anne Ewer and Keith Lockhart. Both are strong leaders who have the respect and admiration of their respective branches of the new merged entity. The opera and the symphony also have efficient staffs to choose from to form the new team that will run the new entity.
Weaknesses: The experience from both teams and both leaders will be limited to the entity they represented before the merger. This includes Anne Ewers whose entire breath of experience comes from the opera. There will be a learning process as the teams learn how to collaborate and meet the needs of both entities without neglecting one for the other.
Learning and Growth:
Strengths: Building a show that combines the talents of the Utah Symphony and Utah Opera is not brand new. The opera had used the symphony at times as an orchestra for their shows. The new show can be built upon existing experience. Keith Lockhart will be valuable in this spot as a musical director who had designed special shows for world stage events like the Olympics and the Super Bowl. His ability to craft a show for a specific event will be a great asset.
Weaknesses: The main two weaknesses for creating the new show is conflict and cost. The cost of a new production will involve new sets, new costumes and venue expenses as well as the contracts for the singers and musicians (there may be special needs to consider like paying the performers for additional shows or cutting back on pre-planned programs to avoid this conflict). The human condition: perception is everything and it will be easy for some staff or performers from one entity to feel a lack of balance with the other as well as the possibility of upstaging efforts where members of one entity refuse to work in a concerted effort. These performers are used to sharing the spotlight amongst their own group but sharing the attention of the audience with a completely different group may be difficult to accept. It will be a difficult balance for leaders and teams.
D. Probable Issues:
D. Financial Probable Issue: One entity may become a financial burden to the other.
D1.Actions to mitigate: Continuing separate accounting so that as issues arise they can be immediately addressed. Create a special emergency fund that can be used under predetermined conditions by either entity should a need arise.
D. Customers Probable Issue: Shows designed to reach a wider audience may alienate loyal existing patrons.
D1.Actions to mitigate: Assessing the elements of the show that are most popular and being sure to maintain them in the updated shows wherever possible. Increase communication with audience members by frequently updating them on the efforts of the new Symphony/Opera. Provide simple and efficient means for audience members to provide feedback that can improve performances. Share credit with audience members who contributed to improvement to show appreciation and as a demonstration of the new entity valuing its patrons.
D. Internal Process Probable Issue: Valuable administration team members may find it difficult to work with members of the other entity when some of their colleges will lose their position as a single administration team is formed.
D1.Actions to mitigate: Using team bonding exercises to introduce the new team to one another. Using a blend of democratic and visionary leadership styles, Ewers can empower her team to make decisions based on their ability to convince a majority of their existing and new teammates to go along with new ideas. Ewers can also use her persuasive skills and history of success to inspire her new team to follow her direction. Lockhart’s support of Ewers will be vital to helping the symphony to acclimate to the new merged entity’s director.
D. Learning and Growth Probable Issue: Performers feel taken advantage of when asked to do new shows and share the spotlight with their new “partners.”
D1.Actions to mitigate: Persuasion can be used to help performers grasp the idea of making history and art together. Mergers of this kind in the United States are virtually nonexistent. Should the two entities succeed they would be breaking new ground and quite possibly inspiring cities around the country and the world to seriously consider following their footsteps. It is also important for them to recognize the exposure their respective programs will receive allowing them to reach a wider audience for their art. Finally contracts should be renegotiated to include how performers will be compensated for the new shows. 