Art, at what price?

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The Current asks what the public’s role will be in supporting The Center for the Performing Arts in its upcoming season.

By Marc Allan and Jordan Fischer
Current in Carmel

Steve Gerardi saw the stories about Carmel’s Center for the Performing Arts possibly requesting a subsidy of as much as $4 million next year and had a one-word reaction: “Why?”

“Concerts are supposed to at least break even – and hopefully make a profit,” said Gerardi, who’s worked in concert promotions locally for more than 25 years, mostly with Sunshine Promotions and, more recently, on his own. “They shouldn’t need $4 million – or anywhere close to that – especially when they’re saying they’ve sold 93 to 96 percent of their tickets.”

But the 2010-2011 concert series at the Palladium did make a profit from its 24 performances – a little more than $370,000. In fact, the partial season on a whole reported slightly under a $50,000 surplus in a preliminary, unaudited report presented to the Carmel City Council on July 18.

Steven Libman, president and CEO of the Center for the Performing Arts, said an apples-to-apples comparison between the non-profit center and for-profit concert venues like Noblesville’s Verizon Wireless Music Center overlooks the large number of additional services performing arts centers traditionally offer. In addition to 81 performances scheduled for the upcoming 2011-2012 season, Carmel’s Center for the Performing Arts will house artistic director Michael Feinstein’s “Great American Songbook” collection, fund a full educational outreach program, and house seven resident companies, among them the Booth Tarkington Civic Theatre, the largest community theatre in Indiana and one of the 10 largest in the United States.

“Venues like a Verizon Wireless exist solely to make money,” Libman said. “We exist to serve the entire community.”

Libman said the $4 million figure widely reported in local media as his 2011-2012 grant request from the City of Carmel is “speculative.” He did acknowledge, however, that the amount requested for the upcoming season – which has a projected budget of $13.5 million – would not be lower than the $2 million provided by the city in the previous season.

“There is no Center for the Performing Arts without funding from the city,” Libman said.

Apples to apples

Performing arts complexes typically do get some public subsidy. That amount can vary significantly based on several factors, among them the age of the facility, size of endowment, and, perhaps most importantly, whether the center was created by public entity like the City of Carmel, or a private arts organization.

The 19-year-old North Carolina Blumenthal Performing Arts Center receives $918,000 — $168,000 from the City of Charlotte and $750,000 from the county. Those government reimbursements are used to maintain the buildings, which are owned by the city and county, a spokesman said.

In Tampa, Florida, the publicly-owned Straz Center for the Performing Arts, which opened 24 years ago and bills itself as the largest performing arts center south of the Kennedy Center, receives a $450,000 operating subsidy from the city. The Straz has a $35 million annual operating budget.

After 32 years in operation, the Civic Center of Greater Des Moines (Iowa) receives $300,000, largely from hotel-motel taxes, toward an annual budget of $15 million, said Director of Development Todd Fogdall.

Miami’s Adrienne Arsht Center, owned by Miami-Dade County, opened in 2006 with an initial $3.75 million subsidy from the county, but required an additional $4.1 million bailout of county funds. Its 2010-2011 season reported an operating budget of $22 million, with a $7 million public subsidy.

The Mesa Arts Center in Arizona, opened in 2005, is wholly owned and operated by the City of Mesa, which funds $6 million of the center’s $10 million operating budget. According to Executive Director Cindy Ornstein, the city has seen dividends returned on its investment in the center.

“We brought in 330,000 visitors last year right into the heart of downtown Mesa,” Ornstein said. “That’s beneficial; both in the money people spend, and people seeing we have a charming downtown. I believe that one of the biggest impacts the art center has had is in reinforcing to people that Mesa is a place committed to the arts and education, and it’s a place they should want to place down roots.”

Carmel Mayor Jim Brainard has said he expects the Center for the Performing Arts to need a subsidy for the foreseeable future. He considers the center to be an investment that will pay the city back in new businesses, jobs and the tax revenues they generate.

Other performing arts centers echo that view. The Blumenthal Center boasts that it infuses $52 million annually into Charlotte’s economy.

“We use the economic data supplied by the Broadway League which has studied this nationally, including Charlotte,” public relations coordinator Danny Knaub said. “The multiplier is $2.50 of economic impact for every one dollar of ticket value. So, if we have $20 million in ticket sales, then the economic impact is estimated at $50 million.”

According to Libman and John Hughey, public relations manager for Carmel’s Center for the Performing Arts, the center estimates its local economic impact for the upcoming season at $7.5 million.

Confident, concerned

While Libman maintains that no formal request for funds has been made, and declined to speculate on what that number might eventually be, city council members say with the operating budget increasing from $7.6 million to $13.5 million in the 2011-2012 season, it’s only reasonable to expect the center’s grant request to increase proportionally.

“The assumption was, he’s doubling the budget, he’s going to double the amount he’ll be asking for,” said Council President Eric Seidensticker. He added that, with the center’s budget increasing by about 50 percent, a “reasonable guesstimate” might be that the center will request $3 million.

Seidensticker said while he’s sure the center will receive some amount of funding from the city, anything above the $2 million given last year “will be a struggle.”

“You have to be pragmatic in your approach about funding,” Seidensticker said. “You can’t give them everything, because we should not be in the business of subsidizing anything other than those items that government was built for, and that is to provide health, safety and welfare. A facility like this steps well outside of that. But it’s built. It’s there.”

Seidensticker and fellow council member Rick Sharp said they believe more effort should be put into looking for alternative funding sources. Sharp also said that he’d like to see efforts to create a planned $50 million endowment pick up.

“The bottom line to all of this is, the fundraising that was supposed to be raised from the private sector never materialized,” Sharp said. “The crystal point, from my thinking is, what you need to open and operate the facility is cash, and there was no cash raised. So that’s what put us in the point of having to help subsidize the hall.”

Despite his concerns, Sharp said he has an “enormous faith” in Libman’s ability to do the job.

“I absolutely think he’s the right man for the job,” Sharp said.

Libman said he hopes by the center’s sixth year of operation to begin reducing its dependence upon the city through private donations and other revenue sources.

“I’d love to see that timeframe move faster, but I think that sounds like a relatively realistic approach,” Sharp said. “I don’t want to be sold pie in the sky.”

While Sharp and Seidensticker both accept the reality that the city will likely be providing some funding to the center in perpetuity, they stressed that the city’s resources are not unlimited.

“I understand that we can’t allow it to fail this early,” Seidensticker said. “But, if in five to 10 years we’re still contributing at this level, we have a major problem.”

“There’s only a certain amount of money the city has access to,” he continued. “If the money’s not there, the center isn’t going to get it. We’re not going to take away the health and safety obligations to the taxpayer simply to fund a performing arts center.”

Sharp agreed, saying the city’s liability in the case of a default on an $80 million bond issued to construct the Palladium does not mean a blank check for the center.

“The bottom line is: Those are not obligations of the City of Carmel,” Sharp said. “If some disaster that we can’t foresee today occurred in our budget process, and we had to go to the foundation and say we’re terribly sorry but we can only give you $300,000 this year… my obligation to keep the bond from being supported by a tax increase is not an open-ended obligation. I’m not going to bankrupt the city to avoid a tax increase.”

All parties involved point to private funding, and the creation of an endowment, as the long term solution. According to Mesa’s Ornstein, whose center boasts corporate sponsorships from Target, Boeing, American Express and Blue Cross Blue Shield, the biggest factor in increasing those donations is a successful track record.

“It’s about the community making a long term investment,” Ornstein said.

“The thing is about endowment, is an endowment gift is a statement about an individual or company’s belief in the importance of the sustainability in perpetuity of that organization,” she said. “That kind of affinity, that kind of strong sense of ownership, is developed through experience. It’s in seeing that organization’s impact in the community which inspires that individual or organization to contribute. So it’s hard for a new organization to develop an endowment as it just comes on the scene.”

Ornstein stressed the importance of people taking the “long view” when it comes to performing arts centers.

“Nothing happens overnight,” she said. “But, cumulatively, a gem of a facility with a quality program is going to be a definite boon to the economic development of the city, and of the region.”

For his part, Libman agrees.

“We have to ask, what would life be like without the Center for the Performing Arts?” Libman said. “I think boring.”


Kevin Kane contributed to this report.

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