By Janelle Gelfand and Cliff Peale
The Cincinnati Enquirer

The Cincinnati Symphony Orchestra is projecting a $1.45 million deficit this fiscal year. Trustees plan to meet to consider remedies, and the musicians union has said it will work to help solve the fiscal woes. Enquirer file

The Cincinnati Symphony Orchestra is projecting a $1.45 million deficit for the fiscal year ending Aug. 31, more than triple the shortfall last year and its worst deficit in a decade.

Symphony trustees will meet next week to consider ways to narrow the budget gap. Options include raising ticket prices and tapping private donors for more operating or endowment funds.

"We know from being in this for a long time that we can't get out of this by cutting expenses," said Rick Rey-nolds, vice chairman of the symphony board and a partner at Bartlett & Co. "We have to increase revenue."

One option not under consideration, Reynolds said, is cutting the symphony's musician base.

Symphonies and other arts groups all over the country are facing similar plights, with dwindling audiences, increasing production costs and stock-market losses. Up to three-quarters of larger symphonies nationally will post a deficit this year, according to the American Symphony Orchestra League.

"You don't lay off the percussion section, it somehow messes things up," said Jack McAuliffe, chief operating officer of the league. "What you don't dare do is something that impacts the artistic quality of the organization, because that's your asset. You just don't cut into the core."

The orchestra's deficit totaled about $420,000 in the fiscal year that ended in August 2003. When it runs a deficit, the symphony draws money from its endowment or seeks special contributions.

This is the biggest deficit the orchestra has posted since the early 1990s, when it went to patrons and the endowment to close an $8.4 million accumulated operating deficit, which spanned several years. Orchestra attendance averaged 1,900 in 2002, the latest year for which the figure is available.

Critical time

The difficulty comes at a critical time for the orchestra, which recruited Grammy-winning music director Paavo Jarvi three years ago. Jarvi has elevated the quality of the orchestra, resulting in the orchestra's greatest national and international acclaim in decades.

The group also faces labor talks with its 99 musicians when the current union contract expires late this summer. The base salary for the musicians is $89,050 a year.

Eugene Frey, president of the Cincinnati Musicians Association, which represents the orchestra's players, recognizes that nearly every other major U.S. symphony faces financial problems.

He said the union has not proposed a new contract, but that it would work with management to solve the orchestra's fiscal woes.

"I think we'll attempt to maintain the status quo," he said. "We might ask for an increase, but that doesn't mean we'll get it. The players don't really expect that because it's not happening anywhere else. We always like to say, 'We're not going backward.' "

The union's last contract froze wages in the first year, but added a two-phased, 3 percent raise this year.

Little leeway

Because the orchestra's musician costs, the major part of the total budget, are fixed, the group has little leeway to slash costs. In fiscal year 2002, the last year for which the orchestra's tax filings as a nonprofit are available, musician and management salaries were up more than half a million dollars.

Jarvi's salary was $456,030 that year, while orchestra president Steven Monder earned $346,097.

The orchestra has not been immune to financial concerns, despite its international concert schedule, recording contract and an endowment that several years ago totaled close to $95 million, which made it the city's richest arts institution.

Because of stock-market losses, the endowment's value dropped to about $58 million in early 2003. It now stands at close to $70 million.

Yet even as the endowment's value dropped, the orchestra was taking more money out of it. It has traditionally drawn only 6 percent of the total assets to support operations, but increased that draw to 8.7 percent during the current fiscal year.

Trustees seem determined to get the draw back down to 6 percent, but acknowledge that it probably will take several years.

Plans to break even

Reynolds said the orchestra is looking for a plan to break even over the next four years on a budget that totals about $31 million a year.

As part of a larger strategic planning program, the board is studying options.

The orchestra's Music and Event Management Inc. subsidiary lost nearly $300,000 last year on Jammin' on Main, the Over-the-Rhine street festival that suffered because of heavy rain, board chairman Dan Hoffheimer said.

But the unit earns money on consulting contracts, such as the management of the Tall Stacks festival last fall, and probably will look for more of that work, Reynolds said.

One consistent moneymaker has been the Riverbend Contemporary Music Series, which has produced annual profits of more than $1 million.

E-mail jgelfand@enquirer.com and cpeale@enquirer.com