The startup symphony: What it will take to sustain a Memphis treasure

Earlier this year, the Memphis Symphony Orchestra ran out of money. Its endowment, which peaked at $6 million in the late 1990s, reached a zero balance in April. Can the organization innovate its way back into the black?

Here's what no one wants to admit about the Memphis Symphony Orchestra. If it goes away, it isn't coming back--at least not anytime soon.

When the thought is put to Gayle Rose, she leans back in her chair.

"I think that's a true statement," she says, finally. "If we take a pause, the musicians will leave. The young talent will leave. And we will never get that back again."

She is sitting at a conference table with Roland Valliere. He is CEO and she the Chairman of the Board of Directors of the Memphis Symphony Orchestra. The mood around the table is somber, and no wonder. Earlier this year, the symphony ran out of money. Its endowment, which peaked at around $6 million in the late 1990s, reached a zero balance in April.

Memphis certainly isn't the first city to see its symphony struggle in the wake of the 2008 market crash. Orchestras in Philadelphia and Albuquerque filed for bankruptcy. In San Jose, the symphony stopped playing and never resumed. But Rose and Valliere say they aren’t willing to accept a fate like that for Memphis.

"I actually think music is the closest you can get to God," says Valliere. "It's important, just like love is important. The orchestra is a vessel of that music, and I think Memphis really needs that."

In order to keep the music playing, Rose and Valliere will have to do something that few orchestras have ever done. At least for now, they will have to figure out how to make the symphony sustain itself from year to year without the benefit of an endowment. In other words, they need a new business model.

Behold the startup symphony.

The meeting takes place on the 16th floor of the iBank Building, at the corporate headquarters of Electronic Vaulting Services, a data protection company that Rose founded, and of which she is the CEO. It has been threatening to rain all day, and now it feels like the woolly clouds are sitting right on top of us. The air is heavy, and every now and again, there is the faraway boom of thunder.

Of course, it may not be possible to save the Memphis Symphony Orchestra. In order to survive, the organization will have to cumulatively increase its revenue by about 8 percent a year over the next three years. That’s a tall order for any nonprofit, especially one with a history of financial mismanagement. But talking to Rose and Valliere, one gets the sense that if anyone can get the MSO back on track, it's these two.

Rose is perhaps best known for helping Memphis land its NBA franchise, an advocacy role for which she was named 2001 Communicator of the Year by the Public Relations Society of America. A tall, slender woman in her late 50s, she has the flawless complexion of a TV news personality and projects an easy confidence in the boardroom.

Where Rose is more of a visionary--waxing eloquent, for instance, on the ability of classical music to heal a broken community--Valliere is more of a let's-get-it-done kind of guy. Originally from Boston, he speaks with a slight accent, using businesslike gestures to bring the conversation back to facts and figures. Before coming to Memphis, Valliere served as CEO of the Columbus Symphony Orchestra, helping to rescue it from a set of dire financial circumstances similar to those faced by the MSO.

"That's why they hired me!" says Valliere, with a chuckle. "I guess you could say I'm attracted to these kinds of … thorny problems."

Though they differ in appearance and demeanor, Rose and Valliere actually have a lot in common. Both are Memphians by choice, not by birth. Both went to conservatory and hold degrees in music performance: Rose for clarinet, Valliere for percussion. And as they are quick to point out, both joined the symphony just last year--Rose in July, Valliere in November.

In other words, they didn't make this mess. They just have to clean it up.

A House on Fire
As it turns out, the Memphis Symphony Orchestra has always had trouble with money.

According to the traditional endowment model, says Valliere, it would require about $20-$25 million to support a full-time professional orchestra in a city like Memphis. As previously mentioned, the highest the MSO's endowment ever got was $6 million. So the symphony was undercapitalized from the very beginning. It was just waiting for a strong wind to come along and blow it away.

That wind came in September 2008. Over the course of a few days, The MSO's endowment, which had been heavily invested in the stock market, lost 50% of its value. At around the same time, private and government gifts to the arts dried up.

The board of directors was left with a choice: fold the organization, or try to restructure and raise new funds. They chose the latter. In the meantime, to plug the gap between income and operating costs, they started taking little bites out of the endowment.

It was always supposed to be temporary. Just this one more time, the board would tell themselves with each bite. Just until we get a new conductor. Just until we get a new CEO. Then ticket sales will really take off, and we'll fundraise up a storm.

And for a while it seemed like it might work. After conductor Mei-Ann Chen joined as music director in 2010, the symphony saw a spike in ticket sales and received a raft of favorable press. But income never rose to meet costs, and the kind of heavyweight fundraising that the board had envisioned never materialized.

By 2014, the endowment had dwindled to a few hundred thousand dollars, and an increasingly desperate symphony leadership decided to take its case to the public. In January, Valliere shocked many when he announced that without an influx of new cash, the symphony would go broke by April.

As Valliere puts it, "The house really was on fire."

In the intervening months, Memphians have stepped up to save the symphony. Through a combination of individual gifts, benefit concerts and a Kickstarter campaign, the organization has raised over $475,000 in new donations. Meanwhile, Valliere was able to cut over $200,000 from the current year's budget through a combination of layoffs and canceled programming.

As a result, the house is no longer on fire. On March 16, the symphony announced that it would finish out its spring season. More recently, on May 1, Rose and Valliere announced that the MSO would return for an abbreviated 2014-2015 season.

Although the symphony has secured bridge funding to take it through the next few years, it has not succeeded in restoring its endowment. The problem, says Rose, boils down to a lack of trust.

"One of the hardest things I've had to face since I came on in July," says Rose, "is the fact that we don't have any credibility with the donors. Because in many cases, these donors have been the same throughout the history of the organization. They've had face after face come and tell them, if you just give us this gift, this time will be different. This time we'll really make a change. And historically, that turned out not to be true."

How does the symphony plan to restore that trust?

"Well," answers Rose, "in the short term there's really nothing we can do except ask them to take a bet on the two of us, Roland and myself. And the pressure on us to perform is so unbelievably high. We just basically have to underpromise and overperform."

"Trust," adds Valliere, "is about doing what you say you're gonna do when you say you're gonna do it. And obviously communication is the glue that holds it all together. That's what we've been trying to do, but it doesn't happen overnight. You really have to earn it."

A Tall Order
Susan Schadt is the director of Arts Memphis, a community arts fund whose grants make up about 7 percent of the MSO's annual budget. Over the last 10 years, Arts Memphis has given the organization over $4 million. Schadt maintains that the symphony has an important part to play in the Memphis arts community.

"I think it's a source of a lot of positives," says Schadt. "It's a source of pride for Memphis to have legacy arts organizations like the symphony. It's important as a source of economic development. And I think it's crucial that Memphis be seen as a hub and a home for musicians."

Schadt has met quarterly with Rose and Valliere, and she is guardedly optimistic about their plans to restructure the symphony. But she worries about a projected deficit in the symphony's budget, going forward.

"I think they did a lot of hard work," says Schadt. "They made some major sacrifices internally and externally. But my biggest concern is the ability of the symphony to find and sustain 500,000 dollars in incremental revenue. Dollars they didn’t have the year before."

Here's what that means.

By aggressively cutting costs, Valliere was able to slash the symphony's budget from $5 million to almost $3 million. That was accomplished chiefly by reducing the length of the season from 37 weeks to 24 weeks, just under half the year. Since the musicians are paid by the week, that amounts to a 35 percent pay cut for an orchestra that was already making peanuts--between $25,635 and $29,893 per player, before the cuts.

To put those numbers in perspective: the musicians of the San Francisco Symphony Orchestra recently went on strike to protest their low wages. They are paid a base salary of $141,700 per year.

Despite the severe cuts, Valliere was unable to balance the MSO's budget. Projected revenues for next year are just $2.5 million, about $500,000 shy of expenditures.

To make up the difference, Rose and Valliere have raised $2.4 million in bridge funding. That money is designed to cover deficits over the next three years while the symphony figures out how to sell more tickets and, generally, make more money.

The bottom line is that by 2017, the symphony will have to make $500,000 more per year than it does today. That means growing revenues by about 8 percent per year for the next three years. And that’s what Schadt is worried about.

"In today’s environment," says Schadt, "increasing your revenue by 8 percent in a single year is huge. To do it three years in a row would be a tall order for any nonprofit."

The Startup Symphony
Can the Memphis Symphony Orchestra innovate its way back into the black? When I ask Valliere, he shrugs and gives a wry smile.

"IBM did it. In 10 years they went from a manufacturing organization to a service organization. So it's very hard to do, but not impossible."

Of course no one knows what the new MSO will look like. As recently as two months ago, it wasn't clear that the orchestra would finish out its spring season, and a comprehensive business plan isn't due out until January. But in my conversations with Valliere, one thing becomes clear: when it comes to saving the symphony, nothing is off the table.

"I think it really starts at the macro level," says Valliere. "We have to ask ourselves, what are the needs of Memphis? And how are those needs best met through music? If you go in with the idea that the answer is 'The Symphony'--this legacy organization that we’re familiar with--then you're putting yourself in handcuffs."

No matter what shape the MSO takes, fuller auditoriums and increased ticket sales will have to be a part of its strategy. At present, the symphony only sells about 55 percent of the available seats at its concerts. Valliere says he hopes to increase that number to between 85 and 90 percent full.

Paradoxically, shortening the season could actually help him reach that goal. Fewer concerts, the theory goes, lead to fuller auditoriums as existing symphony patrons are forced to choose from a narrower performance calendar.

But in the long run, says Arts Memphis' Susan Schadt, cuts aren’t the answer.

"On a given Friday," says Schadt, "there may be 40 arts events going on at the same time. If the symphony wants to survive, they to figure out how to stand out in that crowded environment. They have to reach new audiences, younger audiences. They have to listen to the community and find out what it wants to hear."

Rose says she would agree with that assessment.

"Everyone I've spoken to," says Rose, "all the foundations, the corporate leadership, the people who have the money and really care about the cultural landscape--they're all looking to us to ask the question, what does Memphis need? The point is, we can’t just preserve a legacy arts organization because we've always done it."

In terms of listening and being responsive to its community, the Memphis Symphony Orchestra has actually been a pioneer. Over the last six years, the organization has developed what has come to be known in the industry as the "Memphis Model"--a long-term strategy of deep and sustained community involvement. Examples include programs like Prison Stories and Opus One.

One particularly promising program is Leading From Every Chair, a day-long corporate leadership workshop in which symphony musicians use their experience playing in an ensemble as a teachable model for working effectively in a corporation. Past clients have included FedEx and International Paper.

That's a good start, but it's nowhere near adequate. Going forward, says Rose, the MSO will have to figure out how to monetize more of its community involvement.

"In many cases," says Rose, "these programs are already in place. The community inolvement is there. Now we just have to figure out how to evaluate or quantify the effectiveness of what we're doing. Once we have that information, we can take it to foundations or corporations that have an interest in that neighborhood or that population. And hopefully we can make that a part of our funding model."

In their search for additional revenue, Rose and Valliere are also looking outside of Memphis, finding inspiration in programs like the Google’s YouTube Symphony and the Colorado Symphony Orchestra’s High Note Series.

"There are some really cool, really effective things happening in the classical music community," says Valliere. "I think we can learn a lot from them. We're taking kind of a best-practices approach."

One model that Rose and Valliere say they're paying special attention to is Venezuela's El Sistema. The subject of a rapturous segment on CBS's 60 Minutes, El Sistema is a publicly funded music education program that uses classical music training as a way to teach poor children valuable life skills and help lift them out of poverty.

The genius of El Sistema--the brainchild of Venezuelan economist Jose Antonio Abreu--is the way it uses classical music to address a pressing social need: poverty. Maybe more relevant for the Memphis Symphony Orchestra is the fact that El Sistema employs over 15,000 professional musicians in schools throughout Venezuela.

Could something similar be done in Memphis? Imagine, for instance, an immersive after-school program in which MSO players create and train a children’s orchestra in Memphis' Orange Mound neighborhood. Although such a program would be unlikely to attract the kind of government funding in Memphis that it is has found in Venezuela, there might be private money for such a venture.

The Rebirth of the Dream
On a visit to St. Mary's Episcopal Cathedral, everyone is singing.

"We shall overcome! We shall overcome! We shall overcome some day!"

The singers are part of a community chorus that will perform with the Memphis Symphony Orchestra at Friday night's Rebirth of the Dream concert. Led by Music Director Leo Davis of Mississippi Boulevard Christian Church, the chorus is half black and half white, a composition designed to reflect both the demographics of Memphis and its difficult racial history.

While Davis plays the piano, the singers rehearse for the May 16 concert, their voices soaring to fill the vaulted nave of the cathedral. After weeks and months of bad news about the symphony, their song, a stirring rendition of Charles Tindley's "We Shall Overcome," comes as something of a relief.

"I get chills every time I hear it," says tenor Richard Horner Jr. "This song has so much meaning to it, so much more depth to it than anything we would normally sing. And that's because of the Dreamer who laid his life down in this city."

Horner has a point. Anyone looking for ways in which the Memphis Symphony Orchestra has already begun to seek out and address the concerns of its community need look no further than Rebirth of the Dream.

Inspired by the legacy of Rev. Martin Luther King Jr., the concert takes its name from King's famous "I Have a Dream" speech. Incorporating works by Hailstork, Gandolfi, and Beethoven and an original symphonic work by Paul Brantley, the evening's program aims to take listeners on a journey through the history of the civil rights struggle in Memphis, moving from past pain and hardship to a hopeful vision for the future.

Both the concert and Brantley's original work were paid for by Mei-Ann's Circle of Friends, a philanthropic group associated with the Memphis Symphony Orchestra. Members of the group say they commissioned the concert to help Memphians recover from and move forward after King’s assassination at Memphis' Lorraine Motel.

Jocelyn Wurzburg is a member of Mei-Ann's Circle of Friends.

"We have to renew Dr. King’s dream," says Wurzburg, "because frankly, we haven't solved the problems of inequality. We're not moving forward, and in some cases we're actually moving backward. I'm talking about voter suppression and the dismantling of affirmative action. We need to remember what Dr. King fought for and use that to energize a new generation."

At the front of the cathedral, the singers have reached the third verse. Their song, which began as a lament, has become a spirited march, and their voices break into harmony.

"We are not afraid! We are not afraid! We are not afraid today!"

When it was commissioned in summer 2013, Rebirth of the Dream didn't attract much notice. Back then it was just another concert in a busy spring season. But as revelations of the MSO's money troubles piled up, it began to acquire on a new significance. Now it wasn't just King's dream of equality that needed renewing; the symphony itself would have to be reborn.

Since then, the concert has been picking up steam. In particular, the theme of rebirth seems to have struck a chord with local donors and corporations, who have stepped up to fund the event to the tune of about $180,000.

Becky Wilson is the founder of Bridge Builders, a leadership program that brings together Memphis high school students of different races and encourages them to make positive changes in their communities. As an individual, Wilson contributed $10,000 to the Rebirth of the Dream.
"When Ellen [Rolfes, philanthropy consultant at Memphis Symphony Orchestra] came to me with this idea," says Wilson, "I just started hearing music. I heard gospel songs; I heard soul music. Here in Memphis, music is a part of our DNA. And I think we can use that to heal old wounds and unite our community."

Faced with an unexpected influx of cash, the MSO and Mei-Ann’s Circle of Friends decided to give the concert as a gift to the city. They made tickets free, and Rebirth of the Dream sold out within a matter of days. Because of the groundswell of support, the symphony will actually go into the summer with a small cash surplus.

And that, says Rose, is a sign they're doing something right.

"In my mind," says Rose, "classical music is one of the highest art forms that we as a species are capable of. I think it resonates in a certain way with the human body, with our spirit. And that's really what we're saving here. We're saving the music. We’re saving the opportunity for everyone to experience that visceral reaction and be transported."
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