120423 Philharmonic and SEMT

Funding GPhil – a clearer future – SECOND DRAFT

Julian D S Lyon MBA (distinction) FRICS,
Trustee of The South East Music Trust
26th April 2012

Introduction

Guildford Philharmonic Orchestra (under its original name) was founded by the then Municipal Council in 1945 and has, for 66 uninterrupted years, provided the town with professional classical music.

Initially, the majority of players and conductor were on the Council’s payroll. Today the Council employs 1.81 Full Time Equivalent staff [source: GBC 2010/11 Budget Book].

As I was growing up, my parents took me to the Philharmonic concerts and they were members of the then-linked choir, Guildford Philharmonic Choir (now Vivace) and the supporting group Guildford Philharmonic Society (disbanded 1999) which ran its own series of meetings and concerts for members.

In 1972, the South East Music Trust was formed by declaration of trust (16th May 1972) by Edwin Savory Baron Tangley, George Richard Hodges Baron Nugent and John Gordon-Clark with the intention of widening the reach of the Philharmonic Orchestra outside Guildford.

Traditionally, when the Philharmonic was acquiring musical equipment SEMT’s charitable status was sufficient to ensure Guildford Borough Council attracted grants from arts charities, etc., to which the Council in its own right would not have been entitled.

SEMT typically has income of circa £30,000 to £40,000 and outgoings of around £20,000 to £30,000, mostly from managing professional musicians’ fees when playing outside Guildford Borough.  Of the net proceeds, a significant amount then goes out in grants to amateur groups that wish to use professional players (typically Guildford Philharmonic).

Over the past twenty-five years or so the pressures of funding have been such that the Orchestra has gone from being staffed and having a retained conductor to having an administrative staff and a core of regular players who are paid per concert.

Fifteen years ago the Philharmonic budget was in the region of £300,000 with a significant number of concerts out of a programme of [x] concerts taking place in the former Civic Hall and being of symphonic scale.

Currently the deficit funded by the Council is around £190,000 and pays for ten concerts.

After a long absence, there is once again a concert hall in Guildford, G-Live, seating 1,000 people.

Unlike many local authorities who make concert dates available at a peppercorn or nominal charge [NICOLA – examples please], Guildford Philharmonic is expected to pay full hire rates at G-Live and this includes the ‘hidden’ costs as well as the day rate.

G-Live can seat 1,000 (and to-date Guildford Philharmonic has staged the only concert where a full house has been achieved without heavy discounting of tickets in the few days prior to the event).  A full orchestral symphonic concert typically costs between £25,000 and £30,000 to stage, making a net cost per seat of £25 to £30 BEFORE overheads.

It is to Guildford Borough Council’s credit that it has, subject to the capacities of the venues, made professional music affordable to a wider audience than would be the case otherwise.

Equally, the number of concerts has been reducing along with the falling budget to the extent that the overheads are now divided between a smaller number of events and the average net overhead cost per event is now £13,700.

There is a correlation between the success of the Philharmonic artistically and the presence of the full time staff – and it should be said that Nicola Goold and Clare Lister have between them done an exceptional job of juggling quantity, quality and budgets over the last several years of compression.

Current Status

The Corporate Improvement Scrutiny Committee of Guildford Borough Council is meeting on 26th April 2012 to discuss (among other agenda items) the future of the Guildford Philharmonic.

It is clear from the report submitted by David Hill for discussion at that meeting, that it is anticipated the Councillors will be asked to agree to a reduction or elimination of the Philharmonic budget.

We understand that there have been no concerts arranged for 2012/2013 season (excepting the rearrangement of the postponed Christmas Messiah concert at Holy Trinity). It is probable that, even if the Philharmonic were to be given a ‘stay of execution’ it would be very difficult to engineer the quality of concerts provided hitherto.

The National Association of Local Government Arts Officers in 2011 noted that: “Local Government funding for arts and heritage underpins the sector in England, but that these services are not statutory.”  Ed Vaizey, Minister for Culture, Communications and the Creative Industries said: “I hope that the signal from us that we want to support arts organisations across the country ni terms of their funding will be taken on board.”

Simon Eden, Chief Executive of Winchester City Council said: “the issue is making sure that we properly understand the ramifications and consequences of cultural spend.”

Councillor Gary Millar from Liverpool City Council said that Liverpool had received “£800million of additional economic spend because of arts and culture in 2008 and 27.5 million visitors came to the city because of arts and culture.” He argued that this elevated cultural activities above being luxuries, and made them necessities for the economic health of the city.

In its response the Government (Department for Culture, Media and Sport) in June 2011 said: “Local government is a vital source of funding to arts and cultural organisations alike.  Their support for both large venues in their area, and smaller – more community oriented – projects are crucial to the health of the arts across the UK.  Many enlightened councils realise not only the economic contribution the arts can make to an area, but also the way they can make places more enjoyable environments in which to live.”

Arts Development UK, in its paper [Local Authority Budget Settlement Review 2011] notes the difficulty all or most local authorities have in maintaining funding for the arts, highlights that “the arts demonstrate value for money with a return on investment of over 6:1 that the arts bring into the public sector.”

Arts Development also notes that the average local authority budget for arts spending is now £381,605 – a drop of 16.3% on the 2010 average of £455,819 and a substantial reduction of 38% on the average local authority arts spend in 2008 of £617,750.

Guildford is one of the larger local authorities and its provision for the arts is in excess of the average level – the frozen grant to Yvonne Arnaud Theatre at £334,920 is almost 88% of that figure.

It should be recognised that Guildford Borough Council is to be congratulated for continuing to finance arts projects at such levels even in these difficult times – it should also be noted that these help to add to the ‘Director-Factor’ in locating businesses and economic activities in the area.

It is also the case that, during a period of contraction of budgets, the Council (generically) has been loath to engage with SEMT or other potential partners who could have stood (and in SEMT’s case, did stand) ready to step in and seek to raise any shortfall in funding in parallel with, and with the intention of gradually reducing or even phasing out Guildford Borough Council’s support of the Philharmonic.

Members of The Executive Committee prior to the last election had different ideas from the trust about the establishment of a Friends community from the trustees of SEMT. They were determined to hold scheme membership of what SEMT launched as ‘CRESCENDO” to a low monetary level, contrary to the request and advice of the trust, and delayed and amended a questionnaire we had hoped would help us understand what we needed to develop for Philharmonic audiences.

Those initiatives were intended to prepare us for relaunching the Philharmonic at G-Live – it having been seen by the trust as a return to its spiritual home.  In the event, the opening of G-Live and the continuing funding squeeze on the Philharmonic reduced any leverage SEMT may have been able to achieve in its fund-raising and, by extension,

SEMT’s reserves currently sit at circa £70,000 and interest earned is currently very poor, causing the trustees to be somewhat nervous of spending more than is received in grants.

Former Strategic Director Jim Miles proposed to the Trust that we finance £20,000 per year towards a series of four concerts in Holy Trinity Church in 2012/13.  Due to the pressures on regenerating capital depleted, the trustees were unable to agree to such a mechanism – the remainder of our discussions with Mr Miles were subject to Chatham House rules at his request and I do not propose to breach this confidence.

Suffice it to say, all of the history and baggage counts for nothing aside from ensuring that credit is given where it is due for all of the efforts and achievements of the past.  WE ARE WHERE WE ARE.

The Future of the Philharmonic

As with so many facets of business (and local authorities are no exception) it is important to know what the vision is for Council provision or support of classical music in the future.

Let us say, what would the Councillors like to see as the position five or ten years from today?

If we know that, we can design a path towards achieving it, and the engagement of interested groups (of which SEMT would be one) in facilitating the transition and end-arrangements.

The hiatus of 2012/13 will be an issue for reinstating a programme of similar scope and scale as in recent years – not to mention an aspiration towards a greater number of full symphonic performances – and there would be a requirement to either substantially reorganise the trust or for the trust to employ staff to enable it to manage the relationships with players, venues, agencies, audiences, etc.

I would expect, had we looked to achieve this five years ago when we could see the imminent delivery of the hall and we could have enthused the willing supporters and some sponsors and grant agencies over a period of time, the Trust would have required a similar amount of funding to the Philharmonic’s budget in Years one and two, followed by a fairly rapid reduction year on year in the third, fourth and fifth years.

The model under discussion seems to be more of an end than a transition – trying to get to a similar model to Worthing Borough Council (Guildford has 30% more residents) where the report before committee suggests at 4.4 that WBC pays out only £12,000 to Worthing Symphony Orchestra per year.

A quick scan of WBC’s expenditures over £500 in the year December 2010 to November 2011 inclusive shows around £25,000 of payments to the Worthing Symphony Society, Equally, WBC made payments of £15,000 to Worthing Philharmonic Orchestra, £15,500 to Worthing Musical Comedy Society, and £17,000 to Worthing Light Opera Company.

Worthing Symphony Orchestra’s 2012 prospectus notes:

Worthing Symphony Orchestra has been part of the town’s musical heritage for over eighty years. It began as a small municipal orchestra playing on the pier and now, in its home at the Assembly Hall, is a leading professional symphony orchestra for the region. The orchestra includes some of the finest musicians in the country, who play around the world, feature on major film scores and perform alongside some of the greatest classical stars. Led by Julian Leaper and fixed by Martin Turnlund, all players are freelance musicians but many are regular core members who help maintain the continuity of the orchestra’s excellence.

Worthing Symphony Orchestra is funded by Worthing Borough Council with support from the Symphony Society which nurtures the close relationship between players and audience and helps ensure the music played during the season is easily approachable for all.

It is fair to say that comparison is difficult as Worthing owns its theatres and contracts directly with performers.  There is no indication of consequent revenues and so the net position is not stated.

It is also fair to point out that the Philharmonic, including the SEMT-funded and co-promoted concerts reached audiences of approaching 8,000 in each of 2009/10 and 2010/11.

The subsidy of £190,000 translates to £23.75 per ticket – or in terms of the population of 130,000, represents less than the cost of three pints of milk per head.

If Arts Development UK are correct in their analysis, this suggests that the Philharmonic is worth £1.14m to Guildford each year.  I would concede that this is a tenuous figure and the aim is to reduce financial expenditure.

Bournemouth Symphony Orchestra’s funding is from a blend of sources:

Bournemouth Symphony Orchestra is funded through four main income streams: public funding through Arts Council England, South West core grant (42%) and local authority grants (15%); box office income (35%); and private funding through sponsorship, grants from trusts and foundations and individual giving (8%).

Arts Council England, South West core grant underpins much of the BSO’s work across the south west and south east regions. As such the BSO has a remit to fulfil across these two regions in meeting Arts Council key performance indicators both through its work on the concert platform and education/community outreach programme.

Box Office income is received through the sale of tickets at all venues where the BSO promotes concerts, its main promotional venue towns being Poole, Bournemouth, Exeter, Portsmouth, Southampton, Winchester and Weymouth. The BSO performs at additional venues, booked directly by promoters as paid engagements (which provide additional monies for the orchestra) or as venue co-promotions, where the income is divided, as in the case of Basingstoke, Cheltenham and Bristol. The BSO commercial concerts, in particular its summer firework concerts, are key in maintaining this income.

BSO is unique in the number of local authorities that it serves. The four principal funders are Bournemouth Borough Council, Hampshire County Council, the Borough of Poole and Dorset County Council. Service Level Agreements are determined with each, allocating funding across a range of orchestral activities in the concert hall and beyond.

The BSO’s private funding is made possible through generous business sponsorship from a number of national and international companies, as well as a steady income from various private trusts and foundations. Also vital are the many individuals across the south and south west who support the orchestra and its work through donations at all levels, from annual membership to major gifts and legacies

Combining the resources of multiple local authorities and Surrey County Council is probably not an option in the current climate.  It should, perhaps, be explored though in order to identify whether a more wide-reaching vision could be achievable.

It is important in any event to identify a clear vision for the future and set an objective of the level of funding the Councillors are prepared to sanction towards achieving that goal.

It does not appear likely, from the scenarios painted in the report before the committee, that the Philharmonic office as we know it will survive.  It is essential that we recognise the difficulty this will cause but come to terms quickly with whatever tough decisions are required.

If the Council determines it has sufficient professional classical music provision through the G-Live operators, HQ Theatres, it should make the decision quickly and incisively to close the Philharmonic.

If it wishes the Philharmonic to continue in some form, then engage promptly with potential supporters and/or promoters to agree a direction.

Potential Solution

It may be that, by beefing up the board of trustees to widen the skills and reach of the trust, and bearing in mind the legacy relationship between the trust and the Philharmonic, Guildford Borough Council could transfer the assets and name to the trust (with retained rights to reacquire them if the trust fails to meet performance standards or is wound up).

If the Council also then makes a grant payable to the trust at circa £30-40,000 per year, the trust can licence the name to G-Live for concerts meeting pre-defined criteria that can also be performed at its other venues under the Guildford Philharmonic name and therefore getting wider reach than currently.  The trust would aim to stage one concert in the cathedral and three in Holy Trinity each year under the Philharmonic name.  As the trust’s operation ramps up and fundraising and grant monies begin to flow, the Council could seek to reduce its contribution still further.

This has not been agreed with the other trustees and is set out as an example of what could be achieved to maintain the Philharmonic name and to reduce Guildford’s exposure whilst potentially raising Guildford’s profile where HQ’s other theatres are.

SECOND DRAFT

23rd April 2012

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