News
SF Symphony releases some details of its troubled finances
Davies Symphony Hall | Credit: Craig Mole
In the flood of news about the San Francisco Symphonysince the announcement of the orchestra 2024–2025 season to the unexpected decision of Musical Director Esa-Pekka Salonen do not extend your contract After next year, less attention has been paid to a larger issue: the SF Symphony’s financial situation.
A central issue within the organization is the apparent contradiction between management claim of “significant financial pressures”, justifying cuts that eventually forced Salonen to leave, and the proposal renovation of Davies Symphony Hall, a project estimated to cost $100 million or more than double that, a plan that is clearly not necessary but is still under consideration.
Is there money to rebuild Davies when financial problems limit the SF Symphony’s ability (or willingness) to fund the music director’s artistic plans?
SF Symphony CEO Matthew Spivey | Credit: Cody Pickens
Some new information was revealed Monday in a statement from CEO Matthew Spivey and President Priscilla B. Geeslin about the SF Symphony’s finances, which addressed the ownership process for the renovation project.
Crucially, this is not the project itself, but rather the two-year process with the San Francisco City Planning Department that is necessary “before any modernization project proceeds with a development proposal,” the statement says.
“The cost of completing the entitlement process was funded entirely by private donations for the purpose restricted to this project, and the allocation of these contributions did not compete with any other Sinfonia fundraising efforts.
“No additional funding is required to complete the entitlement process. Furthermore, we want to clarify that our priority is to financially stabilize the organization and support our artistic production before embarking on a campaign to support any future renovation projects.”
Questions remain, mainly about where the orchestra would perform during construction – estimated to take three years by architect and two years for administration of the SF Symphony. Davies would be largely unavailable for rehearsals and performances, and the orchestra’s former home, the War Memorial Opera House, is filled to capacity by San Francisco Opera, San Francisco Ballet and others.
Unlike the New York Philharmonic’s three-year, $550 million renovation of David Geffen Hall, during which the orchestra played at Carnegie Hall and other venues, the SF Symphony would have no such options locally.
After Salonen’s decision to leave the SF Symphony, Spivey told the Chronicle of San Francisco that “there are significant financial pressures on the organization that have become impossible to ignore”.
The Chronicle report continues: “Spivey cited recent cuts at SoundBox, the orchestra’s 10-year-old experimental performance venue and concert series, as an example of the organization’s belt-tightening, and said there would be more such moves. kind to come.”
Speaker Input | Credit: Cory Weaver
Additional “belt-tightening” measures at the SF Symphony included the year-long dispute between management and the musicians’ union over the lapsed collective bargaining agreement and its resolution, which was unsatisfactory for musicians; the reduction or elimination of community and educational programs; the cancellation of tours; the decision to reduce commissions and semi-staged productions, defended by Salonen; reducing the number of pre-concert talks offered; and internal measures still unknown to the general public.
Spivey also told the orchestra in January that “absent fundamental changes to our business model and revenue streams, we will sustain increasingly unmanageable deficits in the coming years. Given the magnitude of these challenges, we are examining all aspects of the organization’s activities.”
Facts about the SF Symphony’s budget are difficult to obtain because public information is two years behind the present and depends on when the orchestra’s internal audit and IRS Form 990 become available.
The last acquaintance SFS Budgetfor fiscal year 2022, it reported revenue of US$144.9 million against expenses of US$74.7 million and an endowment of US$326 million, second only in the US to the Boston Symphony.
Davies Symphony Hall | Credit: Drew Altizer
Asked about these impressive numbers, which do not seem to suggest financial problems, an SF Symphony spokesperson told SF Classical Voice in January:
“SF Symphony’s operations, like many of its peers, have historically run an operating deficit year after year. Financial resources available to support current operations are limited, and the SF Symphony has taken austerity measures in recent seasons to address and reduce this operational deficit, including implementing extensive cost-saving measures across all areas of expenditure.
“The income reflected on Symphony’s Form 990 includes many items that are outside those available as cash to support operations. Most notably, the $144.9 million shown in the [990 form for fiscal year 2022] includes “realized” gains from investments, but does not include “unrealized” gains or losses.
“Gains realized from investments represented more than half of the US$144.9 million revenue shown. These gains, offset by unrealized gains/losses, are within the SF Symphony’s endowment. Most endowments are not directly available to support operations.”
Fiscal Year 2021 showed revenues of US$66 million against expenses of US$53 million, and fiscal year 2020 it had revenues of US$65 million against expenses of US$73 million.
SF Symphony President Priscilla B. Geeslin | Credit: Cody Pickens
In its Monday statement, SF Symphony management addressed, for the first time in recent years, specific details of the orchestra’s fiscal problems:
For many years, the Symphony’s expenses exceeded its income and, in recent years, this gap has been increasing. In several of the most recent seasons, including 2022–23, the Symphony received one-time extraordinary grants or pandemic-related federal aid that helped reduce, but were insufficient to consistently bridge, the gap between revenues and expenses.
For reference, in 2022–23, the Symphony’s operating expenses totaled $78.6 million, while operating revenues, excluding one-time extraordinary contributions, totaled just $67.4 million. Revenues to support expenses come predominantly from three areas: earned revenues (primarily ticket sales and performance fees; $26.9 million in 2022–23), contributed income (primarily individual donations, corporate, foundation and government support and fundraising events; $25.3 million in 2022–23) and the donation draw ($15.2 million in 2022–23).
Excluding investment gains/losses, which do not provide direct cash to support operations, Symphony has run a cumulative operating deficit of $116 million over the past 10 years. These losses were funded primarily through non-repeatable sources, including federal COVID relief and the reduction of the Symphony’s operating reserves.
Without immediate action or extraordinary new financing, we anticipate that our accumulated cash losses could grow by an additional $80 million over the next five years, far beyond any means of financing such losses. It is in the face of this unsustainable future that we have begun to make some difficult choices, including those described above, with the aim of emerging as a stronger, more innovative and more community-oriented institution than ever before.”
Given these “significant financial pressures”, where does the multi-million pound Davies renovation project stand, which will certainly pose challenges even if the cost of application and licensing is covered by donations? When asked last week, an SF Symphony spokesperson repeated what the SFCV reported six months ago, indicating no change:
“In September, the San Francisco Symphony submitted a proposal to the San Francisco Planning Department to begin the permitting process for possible future renovations to Davies Symphony Hall.
“The San Francisco Symphony Orchestra is still in an early, exploratory phase of this process and has not yet submitted any building permit applications, nor has it initiated or announced any major renovation projects.”
Davies Symphony Hall | Credit: Craig Mole
Even with funds dedicated to the entitlement process, the plan to rebuild the orchestra’s home appears extremely ambitious. The project would halt all operations and include the building and its surroundings, such as the large outdoor parking lot on Franklin Street.
The plan is to increase the size of the interior, reducing the number of seats from 2,743 to 2,100 and add new facilities to the venue (there are already three Zellerbach rehearsal rooms in the building).
The reduction in seats, which limits revenue, is perhaps motivated by the objective of improving the hall’s acoustics – a measure already taken twelve years after the hall’s completion (in 1980, at a cost of US$28 million). In 1992, Gordon Getty donated $9 million to this reconstruction, which downsized architect Pietro Belluschi’s cathedral-like interior, removed about 200 seats and allowed Kirkegaard Associates to improve the acoustics.