Cleveland Orchestra plans 'deep' cuts; Welser-Most takes pay cut

Franz Welser-Most

Updated at 10:25 p.m.

The Cleveland Orchestra said Tuesday it plans a series of "broad and deep" cuts in response to the financial crisis, another sign that not even great cultural institutions are immune from economic woe.

So serious is the orchestra's position, in fact, that music director Franz Welser-Most and executive director Gary Hanson volunteered to take pay cuts of 20 percent and 15 percent, respectively, reductions amounting to over $300,000. Other senior management will accept cuts of 10 percent, Hanson said Tuesday.

In addition, the orchestra has outlined plans to reduce the number of concerts here and on tour and seek concessions from its musicians and other unionized workers.

"There's clearly an awareness that this economic crisis is very different from anything any of us has seen in the past," Hanson said.

"We believe that the best thing for this institution and the community is the principle of shared sacrifice among everybody who cares about the institution."

Word of the orchestra's need to cut costs spread privately earlier this month to musicians, board members and employees. Trustees already have been solicited to increase their support.

Not until this week, though, did a letter from Hanson go out to a larger circle that includes orchestra patrons.

"We want the community to know that we're looking closely at the impact of the economy on the orchestra, and dealing with it prudently," Hanson said.

Few if any of the reasons for the cost-cutting are surprising. Take the orchestra's endowment.

In the last six months of 2008, Hanson wrote, the "extraordinary market decline" has reduced the orchestra's cushion to $95 million, down $34 million, or 26 percent. As of last October, the orchestra's pension fund was also short $20 million.

At the same time, an expansive "turnaround plan" has been under way for several years.

"The orchestra was way ahead of the curve addressing its financial problems," said Kathleen Cerveny, senior adviser for arts and culture at the Cleveland Foundation.

Yet even that effort has been complicated by the economy, as cutbacks in personal spending and corporate philanthropy have translated into significantly less revenue from ticket sales and donations. By next fiscal year, the orchestra could see a deficit as large as $7.5 million, Hanson wrote in his letter to patrons.

Pay cuts are far from the only measures being taken.

According to Hanson's letter, the orchestra also will reduce the number of subscription-season concerts. Details of the 2009-10 season will be announced next week.

Touring also will be reduced, as the orchestra will cancel any concerts projected to be unprofitable. The policy apparently will not affect the orchestra's successful residency activities in Miami.

Additionally, the ensemble will leave three orchestral seats and three managerial positions unfilled. And when the musicians' contract expires in August, management "will be compelled to seek and achieve meaningful cost reductions and operational flexibility," Hanson wrote.

Several less dramatic steps are also in the works:

• Nonunion administrative staff will take pay cuts of 5 percent.

• Stagehand, box-office and other unionized employees will be approached about similar cuts.

• Guest artists and conductors will be asked to reduce their fees or make donations, as will outside firms providing legal, financial and marketing services.

• Nonessential travel, entertainment and overtime will be eliminated.

• Future programming will be designed to avoid overtime and substitute players.

• Operating hours at Severance Hall will be reduced to save on utility costs.

"When I heard about Cleveland today, I thought, 'They're doing the prudent thing,' " said Judith Kurnick, spokeswoman for the League of American Orchestras.

All these steps represent an effort to avoid layoffs, Hanson said, such as those seen recently at the Philadelphia Orchestra, a fellow member of the so-called "Big Five" club, which also includes orchestras in Boston, New York and Chicago.

Philadelphia also cut salaries among administrators, left staff positions unfilled and canceled a prestigious European tour, all while searching for a new board chairman, president and music director.

Nor is the Cleveland Orchestra the only arts organization in Northeast Ohio to feel the sting of the global financial downturn.

Kalliope Stage in Cleveland Heights went belly-up in February 2008. Akron's Carousel Dinner Theatre, which had a 36-year history, succumbed to cash-flow and credit-crunch problems in January.

Two weeks later, the Cleveland Play House laid off five senior management staffers and announced it would reduce the number of plays it produces from nine this season to seven in 2009-10.

But the orchestra faces a more difficult situation than most local groups, Cerveny said.

"The fixed costs of orchestras put them in a particularly challenging position. There aren't any other arts organizations that need to carry a full roster of artists, whether they're playing in a particular concert or not.

"They've got a carefully thought-out plan, with contingency plans, but sometimes the economy will throw a [wrench] in the best-laid plans, including those of major institutions."