Transition takes time.
That is the key message from Ralph Craviso, president and CEO of the Rochester Philharmonic Orchestra Inc., as he released the organization’s annual report this week for fiscal year 2015-16.
The RPO has sold out more concerts in the first five months of fiscal year 2017 than in all of fiscal 2016. (Photo by Erich Camping)
The RPO ended the year with its fifth consecutive deficit, yet Craviso said there are more positive signs than ever that the orchestra is on a path to stability with a balanced budget and growth through new audiences.
The report shows total revenues of $10.1 million with total expenses of $10.7 million, resulting in a deficit of $634,382. By funding the deficit through internal resources, the RPO enters fiscal year 2017 with long-term debt of roughly $315,000, Craviso said.
“Fiscal year 2016 was a transition year. We don’t expect to solve our problems all at once,” Craviso said. “We knew we needed to buy some time to restructure, get the skill sets we needed and get things in order.”
How much time? The board approved a five-year strategic plan in March, Craviso said, that is already showing progress and is on track.
“We set out a road map to achieve a sustained balanced budget that included increased sales and concert revenues, and we also launched a quiet funding campaign to be a bridge until we close the funding gap,” he said. “The good news is we raised $3 million toward interim funding outside normal fundraising, which gave us a balanced budget for three of the five years of our plan.”
Craviso anticipated the 2015-16 fiscal year, which ran from Sept. 15, 2015, to Aug. 31, 2016, to be in the red. For the second year under his leadership, the organization drew from the internal endowment, a move that saved the RPO from a deficit of $2.2 million.
“A lot of orchestras borrow money and have to pay off a loan with interest. It makes more sense for us to use our internal endowment,” Craviso said. “It’s not something you want to do long-term, but it made sense in fiscal year ’16 because we knew fiscal year ’17 would be good.”
Even with the deficit, he still sees reason to label the year as a success.
“We need to ask, ‘Are we doing what we need to do?’ The numbers show we are,” he said.
For the 2015-16 season, subscription revenue grew by 4 percent over 2014-15 and subscriber retention rates were the highest in six seasons.
Looking at attendance totals, there were four fewer concerts and broadcasts in 2015-16 than the prior year with a total audience of 159,300 compared with 146 performances in 2014-15 with an audience total of 172,300.
The Philharmonic series expanded from 12 to 14 concerts, and there were five specials that were all sellouts.
Craviso said the diversity in programming put in place for the first time by Music Director Ward Stare is a winning strategy moving forward.
“We had the video game, Yo-Yo Ma, the movie ‘Raiders of the Lost Ark’ and Amy Grant. Each one appealed to a different segment of audience. That is key to growth of ticket sales,” Craviso said. “Once we get them to Kodak Hall, they will come back.”
The diverse programming trend continues with the 2017-18 season, he said, with acts such as world famous violinist Itzhak Perlman, Broadway star Audra McDonald, a new RPO collaboration with the Rochester physical theatre group PUSH, and a Harry Potter film accompanied by the orchestra.
“We’re trying to be as creative as we can in sustaining and growing our audience,” Craviso said.
The future is looking positive.
Subscription revenue is up 10 percent over fiscal year 2016, single-ticket sales are up 28 percent to date and the RPO has sold out more concerts in the first five months of fiscal year 2017 than in all of fiscal 2016.
There has also been a recent 12 percent increase in fundraising.
Craviso credits that to an investment made in growing the development department. The staff has doubled from four to eight full-time fundraisers, including a new hire this week. Robert Dermody is the manager of major gifts—a critical position, Craviso said, because he is responsible for stewarding 200 top donors.
Donor contributions comprise nearly 60 percent of the RPO’s revenues. Ticket sales provide most of the remaining 40 percent.
Dermody fills the post vacated by the promotion in December of Domenic Argentieri to vice president of business development.
“Over the past five years the number of donors had been eroding,” Argentieri said. “But the triage of losing donors is over. We are on pace to hit the target of growth in our five-year plan.”
Part of the strategy includes expanding corporate partnerships by increasing opportunities to sponsor different segments. Constellation Brands Inc. is the sponsor of the Beethoven event in the new season.
Rochester Regional Health is the sponsor for the 2017-18 season.
“Broadening corporate support is a key part of our development strategy,” Argentieri said.
Reaching out to young audiences is also important as the RPO cultivates future orchestra fans. Roughly 30 percent of RPO concerts are education- or community-oriented. Many are funded through grants provided by the state, the city of Rochester and Monroe County.
“We are seeing a turnaround of the RPO,” Craviso said, “with audiences and with our staff. I think we are on a path to fiscal stability, and once we get there we can concentrate on planning for our upcoming centennial celebration.”
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