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The Arts Are Enough of a Gamble Without Casinos

July 28, 2014

by:

Joe Patti

When you do a S.W.O.T. analysis for your organization (Strengths, Weakness, Opportunities, Threats), Opportunities and Threats were where you listed external situations that could help or hinder you.

When I worked at an arts center in southern New Jersey, one of the biggest threats was Atlantic City. While it might take you hours to get there in summer time traffic, Atlantic City was 45 miles away and therefore fell into the customary 50 mile exclusion zone that prevented performers from appearing within a certain time period before or after their event date. It frustrated the artistic director to no end because we would frequently be outbid and excluded by casinos in Atlantic City.

This is one of those situations where it is too simplistic to claim that arts organizations that can’t support themselves or serve their community ought to close. No one in the local community was going to Atlantic City to see these performers. There was sufficient community interest in seeing them, it was just that the organization was prevented from offering the shows which makes it difficult to generate revenue.

That is why I have been watching an effort by performing arts presenters in upstate NY to prevent the same thing from happening to them. Last October, a coalition of a dozen venues received “assurances from Gov. Andrew Cuomo’s administration that potential private casinos in New York will be required to partner with local arts organizations rather than compete with them.”

Earlier this month, the coalition, Upstate Theaters for a Fair Game, came to an agreement with 10 of the 17 casino license applicants.

“While we were not able to reach agreement with a number (of casino applicants), the agreements we have reached are significant because they declare clearly the size and scope of casino entertainment plans, they have joint booking agreements that will guarantee access for the casinos and for Fair Game groups to touring performers, they support the Fair Game Fund for those same facilities and establish arts granting programs for smaller organizations in every region,” said Philip Morris, the CEO of Proctor’s in Schenectady and the chairman of Fair Game. “Finally, should the plans the casinos propose be significantly changed, each applicant has agreed to mitigate those impacts with additional support.”

According to another article, the state mandated that some sort of agreement be made. The agreements provide some funding for members of the performing arts coalition, keeping a fair bit of the money in the community.

Under the agreements, casinos will share gambling revenue with the coalition. Amounts will vary by casino and region. Of the distributed gambling revenue, 85 percent will remain in the region where the casino is located, with 15 percent going to the Fair Game coalition. Of the 85 percent that remains in our region, 70 percent will be split by the Bardavon and coalition member Bethel Woods Center for the Arts, on the Woodstock site in Sullivan County. Bethel Woods and the Bardavon will distribute the remaining 15 percent to local arts organizations.

But agreements haven’t been made with everyone, some like the Mohegan Sun have publicly stated they will refuse to do so.

As some members of the coalition say, the situation is still evolving. This situation will be a good case study for what to do if faced with casinos or some similar competitive threat in your area.

Advocacy, Info You Can Use, State of the Arts, Working In The Arts

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I Gave Away My Right To Vote

July 23, 2014

by:

Joe Patti

A couple weeks ago, I encouraged others to take away my right to vote.

Why? Because I am an ex-officio director on a board by dint of my position and during a recent review of the board’s by laws, I discovered they did not specify that my position was non-voting.

In a recent repost of one of her blog entries, Ellis Carter clears up some common misunderstandings about ex-officio officers, one of which is that the term means they don’t have voting rights.

There is often a misconception that ex officio board members lack voting rights. The term “ex-officio” has nothing to do with voting rights. Ex-officio directors can be voting or non-voting; therefore, it’s important to clarify in the bylaws whether ex officio board members have voting rights.

No election or appointment is required. Also, it can be very confusing to make a position “ex-officio” and subject the ex-officio director position to term limits. Ex officio directors are not generally subject to term limits because the director position is tied to the office. What happens if the term ends before the director leaves the office the position is tied to? The better practice is to avoid term limits for ex-officio directors all together.

Other than the fact the original intent has always been that the person in my position not have a vote, one of the prime reasons I asked to have the by-laws changed was to remove any concerns about a conflict of interest that might exist. This particular board’s sole existence is as an independent partner in the presenting season of the performing arts center I run. Among the things they vote to approve are fairly significant transfers of funds in support of that partnership.

While I have never attempted to vote and my presence has never been used to establish a quorum, there is always the possibility my position technically having a vote might be used as a tie-breaker in a contentious situation.

On the other side of the coin, there may be decisions the board makes that neither I nor the university will want to be entangled in. Closing an admittedly small opening to claim I might have voted on the decision is a good step to take.

It occurs to me to wonder if ex-officio board members are covered by board insurance depending on whether they have voting privileges or not. Are there any lawyers reading who might know?

Info You Can Use, Legal Topics

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If Other People Can Make Money At What You Do…You Might Not Be A Non-Profit

July 22, 2014

by:

Joe Patti

I almost passed by a recent post by Lucy Bernholz on Philanthropy 2173 blog titled What Are Non-Profits For?

I’m glad I didn’t because her news that health clubs were challenging the YMCA’s non-profit status based on the idea that they were competing for customers left me a little incredulous. (my emphasis)

In both cases above the challenge comes because of who the organizations serve – in the YMCA case the membership is very similar to those folks who join commercial gyms, so why does one get tax privileges over the other. The argument raised in the case against free software is that such a resource might be used by commercial enterprises – so where’s the public benefit?

The nature of these challenges focuses on who might be benefitting from the services, not whether the services themselves are a public benefit. This is ironic from a nonprofit standpoint. For decades nonprofit managers and funders have been trying to build sustainable revenue sources for nonprofit organizations so they can survive. So much so, the Red Cross recently argued that its spending practices are trade secrets! BUT, at least in the logic of the two headlines above, if the organizations might serve those who can pay (one source of sustaining revenue) then they may not be nonprofit.

The other case she refers to is a situation where the IRS denied non-profit status to an open source software company because for profit companies might use their product.

While it doesn’t apply to all non-profits, one of the basic reasons often given for why we need non-profit organizations is that they often provide necessary and useful services that other entities won’t, in part because the opportunities for profit were low to non-existent.

In my experience growing up in the 1970s, the YMCA was offering services like swimming, exercise classes, weight rooms and summer camps long before health clubs and specialized exercise clothing were even on anyone’s radar.

The idea that the YMCA is a competitor with an unfair advantage in a niche they pioneered now that businesses can make money running yoga and kettlebell classes, is a little appalling to me. Rather the fact that these challenges have gained traction in different places around the country is what appalls me.

Does that mean that a gallery can open near a museum and challenge the museum’s tax exempt status because they are a competitor in art sales?

Or that if a movie chain notices that a demographic shift in their city has created a substantial demand for foreign films, they can demand that the a venerable art house movie theater be required to pay taxes?

I can understand the skepticism about the non-profit status of organizations like Roundabout Theater, but the vast majority of non-profits haven’t been competition to other companies–until apparently societal views shifted to make what they do worth pursuing.

I wondered if anyone was hearing similar rumblings in other lines of business.

State of the Arts

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Info You Can Use: Who Owns An Artist’s Booking Data?

July 21, 2014

by:

Joe Patti

A very interesting question regarding the relationship between an agent and artist was recently broached on the Musical America blog. An agent who has an artist leaving their representation for another company asks who owns the leads and contacts they have cultivated on behalf of the artist.

However, the question has come up as to whether we are obligated to give the artist all of the leads and contacts we have been pursuing on his behalf that have not been booked yet. That doesn’t seem fair. We have been working on some presenters for years, have invested a lot of time, and consider that to be our proprietary information. If we turn all of that over to his new manager, that’s just going to be a gift to the new manager who will follow up on all of our work and take the commissions.

Now you may think the agent is correct. It doesn’t seem fair that the new manager will benefit from the efforts of the company that the artist is leaving. However, lawyer Brian Taylor Goldstein answers that under the law of agency, representatives, a term which applies to people like attorneys, realtors, accountants, artist agents, etc, work for a principal party and all the work they do belongs to that principal. (my emphasis)

…there are four key concepts:

(1) An agent works for the principal and, while the agent can advise the principal, the agent must follow the instructions and directives of the principal.

(2) An agent can never put his or her own interests above that of the principal.

(3) All of the “results and proceeds” of the agent’s work on behalf of the principal belongs to the principal.

(4) Any contractual provision, written or oral, that contravenes rules (1) – (3) is null and void.

In short, when a manager represents an artist, the manager has no proprietary information. In other words, those aren’t your leads and contacts, they are the artist’s. While your leads and contacts may start out as your own, once you contact someone on behalf of an artist, the artist is legally entitled to know anyone you have spoken to on his or her behalf, including the details of such conversation. Moreover, unless there is an agreement to the contrary, the artist is also free to contact anyone directly on his own behalf.

This information was surprising to me. I knew that this relationship existed with one’s realtor, but didn’t realize it extended to artists and agents/managers as well.

Goldstein goes on to explain that the law is set up this way to protect the agent from liability for any breach by the principal. The agent isn’t liable if the artist fails to show up for a performance, for example.

(Of course, since the agent will be the first to receive an emotionally fraught phone call if the artist doesn’t show, they will bear a lot of non-legal responsibility.)

He also enumerates a number of aspects of the agent-artist relationship that people may assume are a matter of law, but are merely a result of traditional practice, and perhaps due for a change.

Info You Can Use, Legal Topics, Working In The Arts

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