Kimmel Center trims costs to avoid deficit

With philanthropy down, endowment performance flagging, and ticket sales in important categories hurting, the Kimmel Center for the Performing Arts is trimming its operating budget.

In an attempt to stave off a deficit for the fiscal year ending June 30, the Kimmel has reduced its expected operating budget by about $3.4 million, to $36 million.

The cuts are coming in the form of nips and tucks for now.

A hiring freeze will keep seven positions unfilled. Musicians performing at the center are agreeing to lower fees. Cost-saving moves are being explored through sharing services among the center's eight resident companies. And an anticipated small surplus has given way to a hope of merely breaking even.

No cuts in programming, operating hours, existing staff or salaries are being instituted, said Anne Ewers, president and chief executive officer.

While the Kimmel's financial challenge is hardly dire, Ewers suggested that more cuts would come if needed because the center had "no option but to end" the year with a balanced budget.

"We certainly have numerous plans that we can enact if we have to," she said.

Rather than planning three or four months in advance, the center has put in place a monthly financial analysis to make changes as needed.

"The message is that we're being fiscally responsible and that we are working around the clock to make up for what we're losing in terms of ticket sales," Ewers said.

To help "raise people's spirits," she said, the Kimmel will stage four weeks of daily free concerts in the plaza in April.

Kimmel leaders themselves could use a lift as a counterpoint to the decline in a number of important financial benchmarks. The market value of the endowment had fallen about 21 percent, to $60.2 million, as of December, Ewers said.

The most serious shortfall in ticket sales is in the Broadway series, a cash cow for the center, which is coming in 25 percent short of its revenue goal. Changing repertoire makes it difficult to trace specific reasons for the rise and fall of ticket sales year to year in the series, but Ewers thinks a mix of the economy and the Kimmel's programming and scheduling decisions are responsible for the decline.

Kimmel Center Presents - the series of concerts imported by the Kimmel, as opposed to those produced by residents such as the Philadelphia Orchestra - is 10 percent short of its revenue goal.

"What we're finding is the shows that have big-name recognition sell out amazingly - Itzhak Perlman, the Vienna Philharmonic, the Israel Philharmonic with [conductor Gustavo] Dudamel, Ira Glass did beautifully," she said. "

Spamalot

did not do at all well this summer. People are being very selective."

The Kimmel spent a great deal of energy developing its endowment to help gird against income fluctuations in such categories as ticket sales, but the endowment has withered with the economy.

It was good timing, then, that in April a bailout negotiated by the Pew Charitable Trusts, the state, and a long list of philanthropists with Wachovia and Citizens Banks relieved the center of $30 million in debt lingering from its construction phase.

The center, Ewers said, has no debt: "That $30 million is off the books, totally gone. We have a line of credit, but we have not used it right now."

If its market value does not plunge in coming months, the endowment promises to grow as donors make good on pledges. Ewers said it would reach its $72 million goal. "No one has reneged on a pledge as yet," she said.

Ewers said philanthropy in the form of annual giving was falling 29 percent short of goal. Even with the conclusion last year of a financial-aid package from the Pew, Lenfest and Annenberg foundations that awarded $13 million over five years, the Kimmel thought it could increase donations this fiscal year. But that has not been not the case.

Kimmel expects to announce its 2009-10 programming next month - Ewers said that, on average, ticket prices would stay the same - and is continuing to plan a new festival starting in 2011 whose big vote of confidence is a $10 million grant from the Annenberg Foundation.

The annual event would, for the first time, involve all eight resident companies - the Philadelphia Orchestra, Opera Company of Philadelphia, Pennsylvania Ballet, Chamber Orchestra of Philadelphia, American Theater Arts for Youth, Philadanco, Philadelphia Chamber Music Society, and Peter Nero and the Philly Pops - and the larger arts community.

In its first iteration, the still-unnamed festival will explore the arts in Paris from about 1907 to 1929 with concentration on the influence of African culture, jazz and, in the classical realm, Igor Stravinsky and his circle.