Contracting Contracts

Well, worst fears and suspicions are beginning to play out. The arts organizations in my little corner of the world plan to cut back activities next year due to tightening finances. Planned renovations and constructed additions have be scrapped or postponed indefinitely. One bit of good news is that at least one of my partners has been assured their organization’s line of credit won’t be impacted by any of the changes in the credit market.

The bad news is that given the downturn in entertainment spending, decreased endowment values and the probable decline in giving due to shrinking real estate and stock values, there is going to be a lot of retrenchment going on in the next year or so. At my consortium meeting today, some of the larger groups said they are going to cut back in the number of performances they present and are going to look to artists to accept smaller fees. One person’s board is more closely scrutinizing the choices being made and is requiring more detailed and complete information before committing. (One silver lining, some of us already feel we have previously cut back to about as far as we can go.)

Performers Get Short End

I am afraid that as frequently is the case, the performer is going to be the one that suffers most. It isn’t even a case of if you won’t cut your price, there are dozens of others out there doing the same thing you are who will. There were a handful of groups that we decided today were mutually exclusive. They were so close together genre wise that we could only ask one or the other. There was no talk of having alternatives in case one of them didn’t play ball. I can’t speak for other booking partnerships, but everyone in my group was approaching the decision making processes sincerely and not planning to leverage one group against another.

Fewer Acts Doesn’t Mean Diminished Quality

My concern is that if three out of ten groups approached won’t lower their prices, it will be viewed as all for the best since the organization wanted to cut back in programming next season anyway. So not only will the original artists not make money, but their competitors won’t either. And as far as the arts organization and its audiences will be concerned, the high quality of the offerings were maintained in tough economic times because the other seven agreed to reduce their fees.

Again, I want to emphasize, this is just one possible outcome I am anticipating. Today’s meeting was very preliminary. Most artists fell at or below our traditional fee ceiling and we weren’t looking to reduce the rate if it fell inside our normal comfort level. There were a number of groups that we were hoping would negotiate into that comfort level. Really, this is the case every year. Though I mentioned asking ten groups to reduce their fees in the previous paragraph, that is because it is a nice round number. This year there are probably five. About three we know are longshots and two are reasonable expectations. Most years if people don’t come down, some partners bite the bullet and accept the higher than average fee because they want to present the group. Next season, I am afraid the motivation, and funds, to pursue these exceptional artists will be gone.

I hate to attribute the best intentions to my group and cast others in a negative light, but I would imagine there are others who look to gain every advantage they can muster.

Burden of Promotion

Another disadvantage I could anticipate based on my experience today is that a much greater burden to promote oneself or group will now fall upon the artists. YouTube may provide a cheap way for people to access information about you but there is a cost to putting together a nice quality video of one’s work. We were looking at a DVD today of a well regarded performance group that was very poorly filmed. This wasn’t a poorly shot video by a friend put on YouTube, this was material they were handing out officially to represent them.

Websites have proved to be a great way to distribute electronic press kits (EPK), but someone has to put the kit together. Gathering reviews, scanning them and transforming them into Acrobat documents for easy download takes awhile.

Artists are also hurt by having an unresponsive agent. Problem is, since performing arts centers are talking to agents first, the artists have no idea they need to be bugging their agent to respond to inquiries. Artists, if you feel comfortable doing so, have your very most up to date tech rider on your website. Make sure your agent is sending it out too. I can’t tell you how many times performers show up and say, “Oh you must have the old rider.” Having access to the EPK and rider password protected doesn’t help if you have a non-responsive agent controlling the password.

The reason why all this is important is that some organizations and their boards are examining the saleability of groups very closely. The more evidence you provide that you appeal to the community they serve, the easier it is to make a decision to engage your services. Some boards, I am sorry to say are scrutinizing potential costs very carefully which is why an updated rider is so important. Better they be alienated by a contract before they sign it than to have the organization try to scrimp on costs come performance time.

I don’t know if it has any repercussions on arts organizations yet, but the Chronicle of Higher Education (subscription required) reported yesterday that Wachovia Bank had resigned as a trustee of Commonfund, which manages funds for non-profit organizations including universities, endowments, healthcare organizations and performing arts organizations. In resigning as a trustee of the Short Term Fund (which it should be noted, is only one of many funds), Wachovia froze the assets of nearly 1000 universities. At first people could only withdraw 10% of their funds, now it is 26% but access to full funds isn’t expected until 2010.

The problem for colleges and universities is that many of them use the fund for operating expenses, including payroll. There is concern that they will not be able to pay employees or bills in the next few weeks. Financial Week says Commonfund has been having a hard time finding a trust bank to take over given that most of the candidates have either failed in recent weeks or are being bought up by others.

While many arts organizations have had their finances profoundly impacted over the last few weeks, what I have read has mostly been in relation to endowments rather than short term funds. The endowments Commonfund administers are in different funds which are apparently not impacted. Given that colleges and universities had placed their money here on the belief, as Financial Week quotes, it was a conservative, safe move, there is a good chance some arts organizations may have invested there with the same intent to use it as a source of operating funds and are looking at some tough times ahead.

At least one college representative said they were okay for now since they had recent the tuition receipts to draw upon. Unless an arts organization has a good subscriber base or has received a large grant recently, they may not have the same security available. Regrettably, many organizations who didn’t invest in this particular fund may find it difficult to conduct business due to the reduction in value of investments and endowments and, of course, reduction in patronage from groups and individuals who have faced these same events.