Highlights from the 2014 Annual Meeting

At the Annual Meeting on March 20, 2014, General Director David Gockley discussed San Francisco Opera’s financial outlook, explored ideas for deepening engagement with opera audiences, and shared his enthusiasm for what lies ahead in the upcoming 2014-15 Season.

Here are extended excerpts from David Gockley’s remarks.

Good afternoon everybody. Seeing all of you here and sensing your love of opera and commitment to this Company always inspires me to think that every problem we face can be solved, every challenge met. I cannot express enough my profound gratitude for what you do for the Opera through your attendance and support.

Last year at this time, I reviewed with you the state of the Opera vis-à-vis the “six levers.” These are the components of our strategic plan that deal with the structural problems we face as a company, as well as some of the systemic issues facing the industry as a whole.

I talked about the slowly declining role of subscriptions, the difficulty of balancing budgets, the lack of bankable stars, the marginalization of the classical arts in education and the mass media, as well as the plethora of competing entertainment forms and opportunities.

They never seem to end. There are more and more every year that fight for the attention of people who could be going to the opera.

The six levers have been tremendously successful in meeting some of these challenges. We’ve reconfigured the Company to avoid a cataclysmic budget growth, set to reach $106 million by 2020, bringing that number down to $86 million. We’ve developed a more optimal season structure that you will see in 201415. After trying eight operas a year, we are bouncing back to ten. And we’ve welcomed a dynamic new cadre of directors to our already phenomenal Opera Board. We are also managing production overheads more efficiently to help balance the budget.

But acute challenges still remain. How do we build the audience for our second century, which begins in 2022, and how do we generate enough annual income to support a world-class budget? The minute we slip below this watermark, we could find ourselves in a downward spiral that we may never be able to pull ourselves out of. We may have gotten close to that spiral with our cost-cuttings in recent seasons, as we tried to ride out the Great Recession. The quality of some productions was affected, as was the breadth of repertory offered. I mourn that I cannot provide for you a broader swath of opera every year, but I promise you that it’s coming. Audience surveys have made the point. People want to be wowed every time they enter the Opera House: singers, conductors, productions, and we have to deliver or die.

I told the Board that the 201415 Season had to show a return to undisputable greatness, even though it would increase the budget. So we have bet the ranch that the increased number of productions, the diversity of repertory and five new productions, including one of a massive epic, Les Troyens (which will stretch us to our limits), would increase subscribership, fill the houses and produce the contributions needed to produce Les Troyens and Two Women. So far we are only 150 subscriptions and $1 million ahead of last year’s revenue total as of this date. Will these changes be enough? The jury is still out. That we are not alone in these trends among major opera companies gives us no solace, and yesterday’s very sad announcement of the closure of San Diego Opera is a bitter example. The arts are dealing with changes in broad societal movements that challenge us to the core. I’ve put together a matrix that shows three columns. Look at the trends in key figures, including an extrapolation ahead to the 100th anniversary year.

  1980 2015 2022
Operating Budget $11M $75M $92M
Subscription Ticket # 165,000 93,000 80,000
Single Ticket # 54,000 90,523 100,000
Tickets as % of Budget 58.7% 32% 29%
Subscriptions as % of Tickets 76% 56% 49%
Annual Support $3.7M $40M $40M
Endowment $4M $150M $300M
Endowment Draw $0.7M $9.8M $17.3M
Unrestricted Bequests $0M $1M $5M

So what are the trends? 

  • Budgets have increased at over inflationary rates.
  • Ticket sales cover less and less of the budget.
  • Subscription income is less and less a percentage of ticket sales.
  • More fundraising will be required from the Annual Fund, from endowment draw and a potential source of tangible growth: unrestricted bequests.
  • And everybody who loves opera has to consider making a planned gift. My goal while I’m here is to increase the number of Bel Canto Legacy Society members from 590 up to 750. And we have made great strides on this already. This will be the difference between being alive ten years from now or facing the San Diego Opera scenario. 
  • In order for the Company to break even in 2022, the endowment corpus must be at least $300 Million.

So let’s address the main parameters:

As a company spending 75% of our expenses on personnel costs, we have to ensure that wages and benefits are fair, but viable within the fiscal realities of our revenue streams. This applies across the Companyboth staff and union employees.

We must make subscribing so attractive that future attrition is slowed. We have done this recently by increasing discounts, facilitating exchanges, allowing full and half subscribers to “drop one,” guaranteeing the opportunity to purchase parking for full subscribers and giving free seat upgrades. Critically, 100% of subscribers should be inspired to contribute, and a large percentage to bequeath.

Again, critically, we must create a deeper bond with people who choose not to subscribe, which is a growing group, and more casual attenders. Our new tech-savvy Board members and staff have been brainstorming on this and we are beginning to implement a manifesto of activities and programs that includes:

  • Implementing a lobby concierge service dedicated to ensuring a stress-free experience for people attending San Francisco Opera
  • Hosting pre-, during and post-performance events in the theater to engage casual attendees
  • Better tying our website and digital strategy to draw people into the art form as well as to facilitate the attending, and re-attending, experience
  • Using our extraordinary media capabilities and social media channels to create inspirational media that will capture the attention of casual as well as core patrons
  • Upgrading catering service in the Opera House, including the re-decoration of key areas, like the Opera Lower Level Café and Dress Circle bars
  • Working with the City to make the Civic Center Parking Garage (on the other side of City Hall) more user friendly and secure
  • Finding ways to recognize repeat engagement with the Opera outside the more traditional subscription route
  • Programming the new 300-seat theater at The Wilsey Center for Opera with diverse events that draw diverse audiences
  • Installing new seats in the Opera House starting in Summer 2015 that allow more legroom and lumbar support
  • Reaching more potential audiences members through media
  • Increasing adult education offerings to provide greater opportunities to connect to our productions

Looking to the future, we can make out the Opera’s 100th anniversary through the mist. This major occasion, I repeat, must be used to celebrate the Company’s past by securing its future. As part of this, we must build the endowment to four times the operating budget and the Bel Canto Legacy Society to 1,000 members strong. Remember, these are the saving graces of new income to operate the Company.

Our media activities continue to thrive, with the release of DVD titles on the EuroArts label. We now have some seventy productions in the can, as it were, ready for exploitation! We have developed our own in-house expertise which is very cost-friendly. I am particularly proud that our Porgy and Bess from 2009 will be released on DVD next week, the first home video release of America’s greatest opera in 20 years. I’d like to share a brief clip with you as a reminder of the power of our HD program.

Next comes The Capulets and the Montagues with the lovely Joyce DiDonato and then Mephistopheles, featuring our cast from last fall.

I am happy we will return to AT&T Park for a simulcast on July 5th for La Traviata. This was the only Saturday available in our summer season, and though it is a holiday weekend, I hope many of you will be around to join us. Nothing makes me more sure of the future of this art form than a simulcast: thirty-thousand people from every walk of life, in a setting completely free of constraints, but where the focus is still such that one can hear a pin drop during the performance.

Whether at AT&T Park or in the Opera House, every performance must create this urgency, this fire, this visceral connection.

  • Certainly Radvanovsky as Norma will.
  • Racette as Susannah will.
  • Stoyanova as Amelia will.
  • Haroutounian as Tosca will.
  • Yoncheva and Crocetto as Mimì will.
  • Graham as Dido will.
  • Antonacci as both Cesira in Two Women and Cassandra in The Trojans will.
  • Our very own former Adler Fellow Nadine Sierra in her first Countess, opposite Luca Pisaroni will. 
  • Luisotti in the pit for Norma, Ballo and Two Women, wow!

These are operas I’m passionate to see myself. We are counting on them to deliver audiences.

Let’s take a moment and savor some of the emotional “fire” of our upcoming season.

Here’s a brief clip from the Trojans production coming to us in Summer 2015. This video is courtesy of our co-producer the Royal Opera House Covent Garden.

What a great trailer, huh? That’s how we energize more of the populace to come and experience that “wow” factor. It is the exciting challenge we face. This is how media can impact the audience before they attend an opera.

The actor Jimmy Stewart once quipped, “Never treat your audiences as customers. Treat them as partners!” You are all partners in this creative endeavor of opera. You, the audience, are as critical to the art form as the performers. I am very excited about the opportunities that we have to harness new approaches and to ensure that we keep you all passionate partners in the creative process of opera, and to ensure that we nurture and inspire new audiences to join you as we approach this Company’s second glorious century. Thank you very much.